he nation's largest gas utility, Southern T California Gas Company (SoCalGas) has requested that the California Public Utilities Commission permit SoCalGas to shift from traditional cost-of-service regulation to a performance-based ratemaking (PBR) mechanism. Within this PBR program, SoCalGas proposes to index rates as opposed to indexing annual revenues or revenues per customer. In SoCalGas's view, once the CPUC approves starting rates and the indices to be applied to those rates, SoCalGas should be permitted to offer new products and services on an unregulated basis without prior regulatory review or approval.
To an extent, utilities have proposed to offer new products and services on an unregulated basis. However, they have proposed to make the offerings through affiliated companies with some sort of guidelines in place. These are an attempt to limit the cross subsidization between the regulated utility and the unregulated affiliate. However, SoCalGas has emphasized that it should be permitted to offer new products and services itself rather than through an affiliate. In effect, SoCalGas openly proposes a no-holdsbarred use of utility assets for providing competitive products and services.