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1/'26/78 Wi'1'im:d

pu;r.~ng. C<.'nS:idet~a~ion·,.qf ,Cal'end~r itei:i1· 51, at;:t!(l,Cl;t!?.<:L 'M:r.. A .. D. Wil'lard, Su~e;t:.v.is~hg M~n.e.r~1 Reso\lr:Ge.s .~ng>ineer, f?Up1mar'hze1~~ .tne 'backgtotind' .9f· '.~lli·s ~ten\1 · · · · ·

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~·1~. 'Rpbert PascP,all, $~nior l?ett'()l~l.im A,ppr~·.i:·s?:i .Eng~n~.~r fot t;he •S.~a.t·e Bo~r~l .:>.f 1E~';}a-l:i.~,iitf6n1· .appe~tr.ect.. i~tit-. ~#.scha.!1:1 '.-J(J,.S· ,n,~t · gp,ps;~.'.r~.ng. as .a t~pr.~.sef1.~aeive 9~f ~Ji~ BQ~!.CL. hti.t. Jts. a C:9P.$).t'j:~~n~ :h:i!iied· ·oy th$ st·af.f of ~li-e· St~t~ ·Lanos. ·Corritnts·sio1'l:,,

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The. Eoliow:Lng· ~ppear~n~es -.;.Jere :m~de in oppqs·~tci·oi1 t;o ·t:he ~ t'af,!: 1 s recolii!\.1e~4·a~·~d~.-·:· .... ,'. , ··-· .,, ... · ·· ··· .... ~ ... ·.·.···

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lion" 'William M. -Benne-ct., member, ·Bo:grd o,f E9_uatifzatiott, Third. l"f.ts·trict -, ---- .... -.~-~-;-\--, -.· ·. '' ;-,1 'i\' "\~~~-"'"7'"' ~-:-~-~ ' '' ,' '._' ~ '

ftr I aenne.tt obj t?Ct~~l tb ty.i!·ng the p;-'f'c¢ ·Of jt«\~.s· ·pro9u¢-e4 .. ~:n· Qal;L.€0.rin'ia. ·wh·ich has . no t~<;insmt·ss·;i;qri ·cqs ts j wi~h· ·98:rra:4i.;t~l gas 4'r\4 M~4i;lle Eas t~rn. p1¢4:ces. In addition, he cont;en~~d11th~t ·.~he"lHt,±ng of ·t1r. 'rf~nty L~pp~~t; as .a ~qnsul.tant. ·¢l;e~ted; -cl: ~ff!-f:to.us 'conf'J;.~ct: qf· lt:l:Ceres·t.

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G~ai:r1nan Kt:lrin~th ·Cory ~sked why the Pt;l:»~i;c ~Ut.-;tli!.t.~e.9. :cmrunis::;io11 ·had ·n.ot pl;'ev.~ous~y ·b~en. i:n:VolV.ed ih cgnt:·ro11iing .P·~~·ic~s :f9r ~a:tqr.al gas 1irl ·cali£omia. ·11r .. Benne~~ a.g~~ed thiottf .~11e I?.UG ·~116.µJ.di decl.car~ a. · pp]. .. ~cy 011 thi~ sµoj ect. (A, maJtj 9~m~ehl;J:q,p o:f j:t).e Gowniss',tort· t~~otighou•~ the en·ttre l:l~ciring w.a~ that: t:h~,y .Wf!'l:"? put ~1.1 .$. ·p9$i·~ion o~ .p. f.~g~l<it~-ol:' rr;i.te ptak.'ing body ?;.a:~l)eJ~ t:h9.iJ :th~ ~9,rit:Un:f:s tr.!!-.tor o:e ~):le St;:f3.h~ tease, with t'.he ·~u.b+ic Utf:'l:·~.t:f( J -CrJ~rmi.$.s"i:pp $~rvi.ng a.s . tbe 1:.:?.te sett:iti!];. pub1/1~ agenc.y.): .:Mt:. Cur'j .s1~ate~. that if .the p,r-ivEl,te se9tor c?rt· '!iec.eive tP,e. -c:rutiient ma,:iil:tet ·prttje far .$b~" gas,, che· p~bl·fa~. sector. sho1;tld be ~ll'p,.,ed to dd tl'le sam~. Pit this· !Z~trie Mt. Gory @t.ate.~he J;s will:!ing to.approve ~i'.·price 9-Tid',a~ ehe sam,e ·time advi~se ~h~ ~VC that the St.~te 1Lands· Ggmmis~'ioq i:~ willing ~o· h~:i.v!?. them· cotr1e in and :te,gul~~e px·ic~s. lie want~·~ the t.ecord to <Show thl·ft ·he had suggested t!o PG&E that in Jult 19-76 al} ac¢o'~unPdatd.on. l;>e· p.ut in rm:,- th~ consumer whet'eby the ·pt:~.C€. WOpld. b~ $'1. ;;n, less 111 cents !)'er MOF for g~therfng char;g~s., ap.d th~.'t EGf~~ 'had· ·t~j,ected it as .inappropriate .. 'How~v~r, sin9e ·t:;h~·n,, t.hey-qi\v!;! beet'i paying mach higher pr:i ces fott t:heir gas from Canada and q~hl?t' sci.l:B!:!es.

Hon. RiC:hard Gravelle, Gommiss ioner, ·Pubi'i.c ·Jjti lit:tes· Cotnmiss hm ·---~--.---, - I -W"I""'~-·~, ' ' --~ -, -Hr. G·i::avelle submitted a J;ett¢·t ~~t€id' :Jan~;:trY 2·5. 1978· for tlie i~ecprd. from: ·Gqmniiissioner W'il:'.tiam S'ycnon,s. 1 J~. , a 'n1*n,o1;;Hy Qf one . ~~rt1be.t' on their CC>ITU1t\tssion supp91rtin5 1t:he staff'·~· recominendation .. He stated the majority of ·the :PUC is o.ppo~ea, ~o ~hts "t"e'<;!ommendfl.tion.

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. "M'!;': . .Gr.aY,~'1,~~· fl1l.j".tli~.~. ~ tat:~tl 1;ha,t d:fi t!he 'pt:i~e ·wsi~.e. ·tP' go»ab<;>i,.t~ 'fn~ $1: .. 2'Q·). i~~:t·~gat~Qi:L~C:?i:.1J:d :Q~· ·pµ:¢~\~~Q..,, :··M:.· .·~·:J_~, 1l:?Ol).~1J!usto11 ·()f thl.s J;;~§:~'l,.qiony.; 11r. :Gr~v~·t'le ~:lso ·1?0,1;n't:·~d o~.~ ·th~t ··~hi?: 'h~ifd.tlg: of., · ·M.r" :r~:Lppit't: wQs a c.:11~.ar co,nfl~·qt: o.~ ,~n~:lfr~s·t .. Hr. Oo~y.th~n- :?tated .r;hC}.t .~ri,nc13- ·tli!f· 'hi;r;ittg gE Mr. 1·:iipP,iit:1!: hAi,l bceQ so. -gP,pos~di" ·he ·~~s · ·Pht;pai;~J:t, ;i.~ .. l;~a~h,it;lg »h;Ls. ch~gj,$·~q·¢·,: »tto ·e~c.t\;'u<1e ~hy.thihg ?1r.. Vippj,;tt had to· ~ay. Gdnitnis$ion-Altert.\~r.·~· ·:Si9· McG9-\t.sland aJ:~o inade ·a· sJ.miIAt ~ i:.~temetit · for the re9:ord.1• .Mr,. Gr .. 1ve);J.;e .S, t~ottg:ly· re~ommer!.91:,d ~P,a·s the, ~tagf flt<;lY·'t~it:h· th.e.,$,1.40 1p~*8Pr··,.t,·¢g~ni~h . ~tr,, ·oo+y .. st;;i~·e<:it tP,a~ 1

if the Qpm11~i$$;i;Pp .·~l}f.l':ltd: ~rti;v<§ ·51~ .q, :P~;~;q.~ ~·~ :tt~i~ m~.e.t;ng. with ~ne ca':~t?G!·tr. :~9a t :i~:f . i:n~· ·1mp· sh9\1.J.g en,·qe1f ·blw ·~i:~ i<.1 gqd · s·tat. ~he t?-t~s, . J;:h€l C6m~1iss;i19h ·rldl,.il:d: \pia, w-.ii~,,i,~i'i'tg:····~9· qg~.~r..tn;n~ tf:ha:t · t;t,4e.i~ :tJ.ri:ce an4 j,1,i<igmetit \>Jas app1;opi!1:i'ate: · · . · · , . . . . ·

t ~ > \ < t '!, :• ' \ < \ ,' I , e ' , I ~ - < 1

Mr. ·Goty .~xp:r;~s~·~d· 9on~et.··n t'l\.~t:: i!f 'tine Got\im~:ss':i.on: <J,e~~!itf:\4· 1iin.41 . ~cce.p t~d· ;th!= low~; :pi .. ),c~ .aha: .o.EJi~~· \S.~1:,:t;ers .. r~ceiveq· ~ .highe~ . p tti:ce .qe9f.ll.!~.Ef Q~ ~Ji.$. '?l-fGY,~11 .re:f'!.g.~f??n9f?>. t}p ~:n-1,t'.fJ:·;'. in go.'. lihl? .1:1t~~:a. ;qfi; r;nf:~~i;· · , ~:~giJ'.ta ti!JoP,:; · .tlV~ i~q\1\m:ts'S.~·9'.~l ·~id.V•~d 'have. ·:f'att·IDe.d ;i;h· .th¢ eke·bp~.s~: o.f .;~,t;9. 7;~~-PO~~$.~R~~a,i~:j;$.S·:»u~1q~.t t;q·~ .. ::f':9-t;~ :~~~1$~··· '·. ··:· 'f

'.~."' •'''' ,,, 1 •. 11 ~ ·•,\<I•' f ,, f' .' ,,, • ,,,, ',;,. ... ,! •• ,.''\1~

·9o~·:ts.s;~·~r.i~A1:.f;~tq,f,¢.e. ~et;~~·. J:9 :t?m,l;~C\ '.~~~g4· 1;)1 .,Jhat: .fi.gµtl~ 1:wa_ii :ilJ~~:~r .. :· :PY, th~ l?R9 ·t;o· ~11::.;-.+:Y~ "~~ ·t\i,g,,. ;pt;.qp,of.).~~:!:r 1-W9'~~q.~re., t9 t;h.~ . cqp~\.Wl.¢~ .Q:f : . $110 fu.itl'.$.on; 4). oiter 1~fiq.t .peri!od o.e titne this in:cr.~a·~.~ w91.nP: b.e. ~pi;e~tj. j and· 3) w~g~_ t~~ ~mp,apt;i t'q· tQ~"cpn~~m~.l:: IS, tao,nt:h~1fi '.Oi''J,;i, .. W9U1d 1?,~ ., _ tt~ .. ·G~·ay~~l~. tt)Q.ti.cao¢d 'l;i§ t-Jqµ14, attt~mp~ .~o. 1:1<lve .;·hi~: ·$)Z·~fff .. dev~ 1,.oP, til)es* t~&1!t~~· anp s¢nd a,: 1·~tt;;~'l; · ·~o. -~hg CotT»ni$~:~.<m . $.dYi$SJng of saJlle·; . . . · · · " , , . •' , ' ' f > '1 '

.~ts ... S_yiyif~a- :~1~~t_, .t~B.Ese.entj:ng ~·ow~.;:~ ~4r::~it9:,.~te ~g_tm~11'if~§tf<?& t - " " ' ' '

!:~$· f S·i¢g~1 · irid:j;q.aJif.!.~ ·that if ~h~ C'ornrtti$,sipn {'.!<;lop 1:$ bh~: S, ~cifrf '· § , l;'<;c.o~ne,rid~~ig~.~ ·h~t' ... 9t'g~u~tz~t~o!'.1 j,nt~n9.1? ·to. ;!.~s.t:U~µbe. l.ttig4~i.ot1 pro<;:!'=~4:i:..n~§'· C!-g~;i:t1.~ t; · 911~ Qo$It).·i$s iphJ /ilSk ·th¢.,.Gqve;t:rtaiz tQ .~q.t:e:l;:ce!=J@;~ .flt'.i& .peqL1.¢$t; ·~· ~~g:i.!~rl.~~~Y.!? inv:e~.~riga1;d:.oq· !!!P ·how t:h¢ 99mn'Ji·s~;.on, ftlt)Q~iqri~r, . " · · 1

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Mr .Jarl .Ra4_~on·d.,Lill..5Lt:.i!l~. i"1?.J?2:_esent;_~~.tg :~.h~.n:_ .. ;q~J. ,.G_i'.mf'l.~ll'i. ' I " • •• '

tn a:~di't1qq' t·o O'P,P9$i:1t\g· ~ P.~~~e h,\ghet-· ·~hi:Hi .th~ $.L.2o ~, u~ •· ~a9:.eo~~. c::mte'r19¢d. f.ha:.!= i,~,· Sh:~·~Ll ha·d :qe<m den1.ie4": ,Jue .m:o.c~s:s ilp ~b.('{t '<ltrd,ng· th~ adnd.hlst~f]~·;i.~_.!?< b~aring~ ,, , .:t>hey ~~~~ nqt: i:li1owed ~t<o (!rt;; ~.s examine·;, ~nd· 2') . t.,:he State .has 110 rig~t to d:et1?r.Wine a· :pri¢¢ . btht?r t'q~1~ '.$,·~ .. 20· .11o:r any pe~q,9d at: t:l:>.i'?· 1;d;the.. ·H.'¢ ~~f.l·4~c!, t:l)ac E?hel:1 c;l,;t:d noe ~M:el; 'Ln·t9 any agre~met\t; w:Lth 'I?(~&t; and:' that ·Chevr.on wa:s rio·t se.l l:i;ng', Sfre:q: 1 ·~ .g~~· 1,mcl¢F . t;he· i:;;ou~.lt~<;.tt. ~~~ ~t;ate4. tii;i~~. Pl:i~·~i l'\.?tnql,e$. ~htp $~~.'.l.~11g .q.f ~he}t' g~s ingep~n~len~'l;y .. l,;1$ ·§:kp·lai,ned tha:t;. Ghey;tq~, f:lS· :r::h~ l~~se opet~toi'.,. ~El~~P~~s. tne p~,y.s~aal .wo.t,t<.,0.'1

.. t~e~t .. ha':J,f of -,the: j o~nr.ly· q~ed le.~s·~, ...

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~-~.!:, D.~~-~r-S,_{J:_y_ A-.£~2.t:!}~y~i ty_.£.f:..~ _®,~~J·tll

Ii) .;iddition .to obj~tct:l:r1g to t:h~ st:af',f' $ recommenda~ion,, Mr,. Per.ez cri:t:i.cized t:hc staff for d~nying them Q.ue ·p:t"pce~s by not allowing cross exall\i,nati.qn duri.n~ the agmln,,is tr-a b.va hp~~'i1hgs.

Hr . , RE_~,_cy_ ~,,,..! ec:IkJ;p!~.,...9.9_<;?.Is!j:!l.~2.!-• .. J:.E.9.duc,jE.g__fQ.~;~s-~~--~ nit.:. !i:£~h ron1~<>s 01~t':!&.' 'e"•·o•' U S .:i. 1 nc ' ~~~· ~:__'!:..':- tl ~~-.!.!.!..!.,...,.,'"".,. •r '

Hr. 'Packham cla:rifie!l the :recor.d· ex.pl4i.n.tng hpw t.h~ gas· is .. han91ed \l.,nder. the subject cont.:ract. Due· t:o the cpnftJ$ion whi<;h ftros~ conoerni:ng Ghev·r9n anQ. Sh~;J.:i'' s j91h~ lease tn ~he· Ryer Isiland ·Fi~ld, Hr. Cqry. ins·.tructed Hr .. feckh(lm. to adv.i,s¢ th~ highest corpot:abe lev~l at Cheyron .~hat: hen.ce1=ortb <.):t\' every joint ~~ht:ur.~ ~orrti np,~ befo ri;i th'is C9mrnjA1s_:i.o.n.~ ?.-· wri'·t.Q~.n. ~nq1tana~ ion o,f. . ;o Chevron represents .will :be r~qu~rad f;o ayo-id ~ny rtiti.lre e;r:i, "&.

Hr, I .. e~1~d Sti~_ider .P~~ill:!SJ'_.;dt~X-~t:~:t, ·Cit'l_of_)3_an ~~ ' '

M~, Sµaidet addte?sed· the ~.ssue of r;.h~ gif.t of pu'b.ttc re1$QUices and the quest ion 9f us~ng Canadian pxices $n qet:~rmi,ni·rig the cu>¢·rent mar!~E:"l t va lu¢ of t:he gc;s .

Mr. _G..f.~YJ.JJ~ ti~Y . .t.SJlie f.:.. Gas __ f:ng:~~-IJ..-l.11E_~i;_s._QtU.~~"!:.~__9pmmi s s_ ion p.nd 'Mr. V.ir1cent .!1acKeniie, _t:_rinc~f:E.~J.,,f:! .... ouns~l.:.i~~J.Jc~_Ut'i~-~.f~~~ Ctit,!}!1!J,5sion appeared ano comment~0..-13r.~.\~~W,

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l::iE.:.....:La _s~.f !!. l~_in , at t.s>tl-1~-!-"~..PES ~~.8P..f:1...R~s.i-J.i5t _g~:§._ ah~,,.~1L~£~'!'.!.£ ~1: " ' ' '

~j~;. Fallin prefaced. his stat~ment with a q-µestion as to ·~hy t,he St~te qid t'!Ot deter n.in:e whether o:r: not the Ca:lifor.-1·1 •q'oduc(·?·s w~t.~ rece1ying an adequate t'\:!'tU'lj'.'n on their irt\'.~$ ~r:.t.:;1·t' unde;r present prices. Ch~i~man .Cory and Hr, }lorthrop r~spond~.;l to ~he· ef feet ~hat such ~nvestlgation and stUdt~s weta irrelevant 'to the ,d"ece.rmina·t:i.on of the. reasonabl~ iltq.rk~t value and was· more appl'.'opri.q.t:: iri the regulation Qf ptlces~ a function of the PUC.

The bt. lk of Hr.. r\9.l:lin' s pr~senta.t.ion was a te.iterat:ion of 11"1 s p·revious . testimonies at past heat'Lngs by bot:h tr.he Cottimtssi.on and its staff.

The· following =:·s a list of individtuals appearing irt S1Jpp1.rr:t o'f the staff' recomP«(:nda.tJon:

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Mr .. Mnnte. bori:s., in. pro .. ocr ., .. ,,•"'."" ,,. " ------·- ' .... ,

t1rt,~St.anwo.odji_itliar~ "'co-ovt.n~, Su1t}P..f. ~Til ll§~~an~ '<" I • ' ,1• ' I > '

:Ht. "S~~~ f». ~?·:-:.,onnar·, S~{ng·t H~l.l l~l'!l~ Co!J!P.1<iqY

Hr. ~~~.t)'. 1AE£:i~~-t-}.1!....:Ex~cu·tiv.~ . ..?~£J:t:tar.10_ .'.93..l}l.1.?E!!B~~­·~-:-r.~?u.ce't'S·. 1~~~·ia,ti:on, t'~t·e.se~1~~~:ce$ Cdme_ar1y..!..

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~fr •. Ltpp,i.!:.'.t ·svbrni.t;.~ed· ~wo :co,ri.l=.!s o'f ;tettgrs fott 'th~ record·:

~1 ... ~i;::tei; Jan~1ary 4;~., 1;9·78 ,. fr.om A~dt'.q,;~rpa· 'Oi.l. Cot.poration to '.Hono.ra:bl.'f ·~e.n.neth Cor.y. ' , · ·

.$t!;lt~m.~.\1t .o·~ ~Btg·~es. Reqoutces,. Gonipany. ...

·f9F a tomp.l~~e tex;:: 9f th~ h~ar:~n8 .9n ·t~i~ 11\attter, ·:\719.fer to the 't~.an·s\;!}"i,',Rt ,q·~·t~.d J'ii'i1li~~y 2(:i., ;p11~$ .. i.: •0n f.iJ.~ .in. the off'j,:9§: 9 F ·~h¢ Stat.e· ·La:ti'ffs· :dommissiorL . '' _,, - ~ . , . , ' ' '

At, the coti.clus·i,oh of the 'hearing, flt. h\c¢avsl~ntl. s·tateq. chat d4e ·tp, ·~he Comnri'?s '.i.1;m·1's cha:n~e 1Jt1,~~r the s ta:.tut.e.$, ~nd :the it i:.1~9pon:si·­·b'tl'tt'ies as tandlior,4s, it ~·s i11~p,p.ropriate po 'b~gi:tt .ass.hrt'iqg 1;;P.ems~tves i,nt_o, ·the de~e"'mine,,~fot'l o~ ~hat ~the 9:riq·e of '(lat1.rra1 4~;as should be·. ·H;'.4 s'tate.d i~ was h.is j'ud'gtii~l'i\·r;:: tha ~ the pi:.i:t:re sl)oul<f 1?''2 dei:ert,ni.ne<l by a regJ..1l:atoi:y 'pody who has more. expe.-ctise. .in ·~he field.. Ms. Smith a,gt:·et:!d wi:tb: Ni;. ~1C.Causl;:::nd c;1\d stcrt~d .that q.ec?t~.~e .Q:f ·her .litteres,t in tfo?: cot1sume:c. tP.e staff's recommendation of p~.ices 'its. µpaccep.table to 'her ,?'.t1d that .FGl'tF. ''s pos-it~on is a1so unab9e,.ptab'ie. in ~hat l:tne 'Ht. McGausland t1\Qyed, and Ms,. Smith s~ct;pd¢p::, .that .the reso ~9tt,~oti t;s se~ fb;r.i;h .l~elow pe .:idop,~~d by the 'Con:miss Lon. 1

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Hp~·n,.:;1~e td:efi·~.a~~ly:-mal'le ~,and·-.e.ar.~ ied.7 ~~he ~£0 ~±~win~. -l:'e s o3:~~:i:ei?'l:·~was · ·aae~·a~e~ay~~-v~ ee~ef .... 2~9·r :.wfeh-'¢1.'ie""'e:~st:~Rtten-:- ·

trpon mot·i'on duJy ma.~e ·~m~l c.arri~d; t::he 'fot~owing resolution was adop·t:ed by. ·9- ·vo,t.c 0,fi 2~0. , .

rtHE S1:A1'1.'~ LANOS COHHISSTOH AUTHORIZED· THAT THE REASONABLE MARKF.t \f pj.ffi.: OR CURRt:in• MAR.Kitt PRICE OF' THE GAS :PRODUCED AND SO'LD FROH 'l'H.E &

110 vts'L\:\, R't'.ER I'S LAND, Ri:VI:i'R iSLAND Mm isu:~·roN. FtE-L·ns- FOR

THE ,P,ER10l)S IN OUES1: tON SHALL BE THOSE 'PRICl::~; THAT ARE 'l'HE 'RES!.:l:.T OF THE PE~mrNG, ARJ)!:'i'RATlON· Bki'.Wt-:Etl PACtFt.C GAS AND· I·:U·:<~TR~C COHPi.:N'i ~Nb' TI-~;<Ato:I' ~l'tlNOtt Atrn SUPERIORi PROV.f DrW ~ H.6Wt,:Vt:R, ··.nHAt SHQULD THE PllBL'LG U1ILT;TIES cornnss'IO~l DF.TERMUTC TO R£(HJ.LATE THg NUCE FOR 6AtJ:.~-:o~nA PRObtcF~D GAS A:·lD 1.HPOSES A CE.tt.t~w ON tHg

1

?RJCE THr.i' A cAL1FoRN!,,.. PRobucER ·~u..:'f c1iARGE, "rtrE DET.E~H~lNl'ION 6F TliE stAT:J-; LANDS ·,COHH.tss.J.o~l SHALL Bf. !ilAT CEIL1NG· 'PR-IC8 FOR ALL TlHE flf:RlODS tN QU1;:$'r'i0N.

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At ba6hinent~ ~ ·9alend1~t Item 55 (l~ page$)

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.. w:U, ia rd DE'l'E~MHfAa.'ION. 0'F THE REiA·SONAIH•E NATHrn~· \J;Autre ·QJ~~ ·GU.RRgNT

'Mkatze1.1 l?Ri.t~E Of 1NA1.'LIRAL:~G.M>, b'Q~ THE? ri.t)RrQS.$ @~' ESTABLT:SHlNG ;RQYAl'./rY DUE THF' S'.IA:Tc UNPf~R STt\XP-E

G·AS i;EASES ·~·N NOR'J;HER:N GAL'iFORNIA ' . ,,,, '

·on Sept'~1:nt.>e'r 30.; 19,71>, ... ~h~ S.~f:l~~ :baJ'.\t:i:~ .'e.omnd $Sf.qp; ·?PPt.ovep. t'.li:l i~nterim· .,P,1·19e: fqr ·~~·-~ .-.rqy.c1):~.y g:a$. :fl.r~oi;n ~tbat;.e "l.ea.$te$.

· 'i;fi: the -~:JJo ... y~~:s·~~·, '.RTv~i~ ~.9'.l~.J1q: ~tid ·.Ry@.J• ~ .I1~;i;~T\~. ,.ga.$.- :~~i~Lcls in .. 'Northern· .Q~\liH~:~»t~~a: wh'~.9-~~. ·~t:~-~, ·PP{#lr·~~t~~ ,:h~, 'Q~)/i?Y,11$0',t\ :!J$t\., X'n.c ... The tilht;$'f"L01 .Pr.':f:~:~, ·\'7~5 $1 ~.20 P!E.lt' .MMB'l4u.r, ,~,1tL ·t!\1e· 4H,P.t.,...v:aJ. of ~his. ;p·rice w?(s . :f•or _a, _per:totJ: ·of:. '!) !ll{.)n\ih$· ~gg!~:;i\l~Jtlg ... J,~i ~:y, ). ~ ·:i;9;z5,~ ~he 1a,pp:i.1ov~:l'.. w91S,.:. ,gtv?n: q,ti. ~ih:~- co.p:a;_r:~:~O.:t1~ ·Ph'l.l/~ :,if·t; ,M.'fa,J:q •. h'p~ be de¢~\e.q tj: ·dpte;t1nin~t:i~o:n, by .th~.· Si:,a1t$:e· ·~E ,,t\11~:. r:.i:.:~:~on~:f)~<e ma .. rket ,,~l,µe of:i ~:he r-oY.~1!tv g~~-~ '.the .. ai?'provaL wa1s st,ibjec.t t.q the ·,r~,ght o.'f' :!fhe ':S'~a\~~,. aJ;' 1th¢ 1 end: 9f 'tJi$, :G.,..ffiqntJ\ .per,J.-.o.d or ai1y ·~:i'l'rie ·~,fi,et;ea1f,t:e'.f.j:. i::.¢ ma~¢ \i. de:t:~rin::i. ~t8',t1.bq> .o:; · ~r~ . r-e'4·s9hab1.e' fu?'ltk¢t' va1.ui~ 1 o;r: c.uf.±:ent ma,'f'k~:,.~,.Flf'!,9~ iof::~:he ·r.Qy~t',ty· g·as for. ·~r\.~ ·py~_pos·e ... ~f es.t9bl:Jisljing. '.t:ht:,· ipt.~·o~ t.o· ·oe· '.P#id. ~0· ~:~e .;s.~f..t'-i "Rr.p:.fin~1:71g· .J;,\~~u1·ty i~, 19-W.? ~;i~p-t'· i·t~ " ~oy\h·l,t:y: ga·s .tr·i::m1. ;t~'..S ·~J:.o V:1s.t:a:;. R:rver. J:s.~anq. ·a.nq' .Ry.er Islq1nq leas.j?,s.. " · '

\ > ' ' ' ',! t, 1 I ' I '

·0\1- December '15, i'.9,1()., {h<?· Cc-m~il!,s~,i6.n d~J~ga'.~·e~· .t:p -~.~~· Ex:ecutave ·9f:fl,9~r :~h~' p~we:r.s c-on,fe,i::r.i·~q. by ~e~t . .to'n ;ql'Q.~ .. of th~ J'qpl i:c R~sout.ces Cod'e and ·A:rtiip1·e 2· of· Oh~p~et" .2 of D·i·y.~,s~iioh ~l 0£ Ti..tt~ 2 Qf ·the Government .caide (5ec~i:i:ons ti180 et seq.) to contiuct a:ri. 1\nv.estiga~ion :tnt;o th~· re.af~(.>rH1hle. m~'r:ket v~fa.te of ,~\at\~fral g~~ 1.n Ncr;r::~h~j,r',, ·calM:o17ni.a, ~.or ·th~ pqi.pose of acc:i ... ,nut~ti.ng. rfa·~,a ·~o a.l4 th~J Comm1'$':'S·ion i,n .. J.:t:s ·p~~errnina.tioh Qf the T<f~son?bl:~ maii:::Ke·t .Ya'lue. o.f g·as· pt•.p9.1;tc{1d 11:.t\ ·th~ :R<io·

'Vis~a, ·.Ri;v(~r ~s·l~;pd and: Rye~" J~1.Lancl· gas .filiel~is'!.,A ne.ari;ilg. conducteq1 .by t:·ne·. Exe9utqv.e ·Of,fl c<p r· w~.s ho/l:'fi 1n ·sacr·am¢nt.o on August 11 ~ :i977;· "Ota>1 and V'.'.1ii:t tet;).. strtt¢m1~tll!$ w~re p.r.esented a't :the headng by· ·bh~· Staff o:E bh~ St;~.t.~ LC1n<ls Ooom1~~s.i.on

· and by a number of i,htei:~stied {>a :r:t.i.~s. ~ n~:lu~iin&. Pac:f. fi,c Gc-:is and Elec·t;~ .. ,i c Cornp{:iny, Ch~vi·on U$A.,, \chc., ~.Qd' ~he Cali for.riia 'P\,lbl. ic UtJ'.Li-ti,es. Gominiss:ion,1 9~~veral W.r:i1t·t~n s·t.a'temerits were subm.t·~ teq. sqb,sequra'.t\t 'to· the het.p."1.:rig:. · : · : "

'. ' '1 ' .,

A s.tafr recon1mendat'i«.>n. of ·pr1.ce1s to be us·ecL .Ln a dete·r.m:i.natLon , of the r~ason,a·bl·e !11a;r.ke1t v:a'i-'fle· <itf .the s.~~r~e' s .roya:t·~·Y gas

~.r.aa s.ubitri:tt:~d. t.o· the CommlssiLdn\ ih the f~.rru ofi a· .. c.ale11d::1r. {tem at 11ti$- ,me1:.q:t:n~ 011 $ep.t.~.n1b~H"' 2q,~, 1·9\7.7. .• <;:on~d.d.ei-a:l~le t'e$tf..mony -writ gdvef) py .:."at.fd:estii)d pa.'.(~Jes,, it\ ~Jjpos,tttc.n'\ tto the ·s·tu:ff' s reco111me:ncla•tL"oi1, i~t\d ·the s9bj~c·t g~i11;~·at~d

,5, .9'; :10, '1'2'

l~, 6~. 7

., '

'•,I

',1 l •11 l , 1

' ' \ ~ 'j I >, ' ,,1

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ocms1tde:1;.ab~.e ~li..SCUS:Si«:>.!'l UIJIQ.pg l:ill'?!fi~be:r.s ~.~ the ·Cqmmi:s·sL9r\. A,t th~~ ,.conc:il~1s.1iqn. o:f th¢ te$,e.:tmaoy· ~1)<l d·j, ~~n~1st?il.ons., . .t~~ Comnli. ss·'.l oh1 .4~4·J$'1etL,.to d''¢f.0r~; ~~PY idt~t.f.ti:pr.i,,xwt'i'.011• .. t~ 9 l·:siter. me~t.i .. ng: ~Q bna-~ :i:t!'.;.' ~.;)l~lcJ: f.ur~l!-el7 i)!ives.t::bga~e -t·ht ma;t,t.c't' and s:.t1:1dy .t:"ne• .\,re.c.o.rd.• ,· · · ' · · · • · · · ,. · ·

' 'I' "1, 'i- '

ln· 1t:he c1~\Jtse .<).f i:ts fiur,the·r .i.,r.rv.e·sti:gatiotl:, ~hr.! C'9mm~ssLQn is:SJJ<;1d su'bp9e-ni:t•,?. t<)r ~·he "{'>.rod1.:1cti'Qt\ er~ $~v€n:·flJ ·?>a-Les ~ontrac.ts '£c11·6~S ·pt.lod\~~1 ~1:.i-' ?.rn 'No:r-t.;h~:i;.1i ·,<;;{fl/:il~1b'tnia-, a:nG·lud:i,~\g· .j;h~ cat1t.l;:-a.c·'l:s:. ~nid ·«;l~~he::t u.gi-~p·me:'.nt& · ;b·s.t;.~leop PG&.E a-;nq.. \J.n110tt Q.4:1 eomp<my. · .. ~~n<l\ :e~eiE '~t~iij' :Phl!''U,1:rs- .. ~P'e-:t;"r-o'-1 ~um .Ct)1.11pair\Y", &~v·~,,·,n f.ne ~h~ ~:a:~·$ :G'\t\d;, re~chtH}ge" of g·~;s t\f·P9·\JCetJ ·i:\~1 '-~fht:i "U,hi.on J)?'ll1:nd t i~-ld' .. li'p; S·1'1.h•1 4'.J~qu·i·f\: :qo~nJ;'y:i~. At: .$t:·s• fUfil·e,~:lhg .pn• 'No~emb~1:' ~O·, i·9;77;,, 0tih#· ·Gbinl:ni'.S·~'~<;>'h ... p.}.a~t-~~t .. :~\'n ;t11~ . .i~'i'.l.Ve.s'.ti'.gato;t'.y ri;!¢Q:i;'~ ·

· >J:l:~ ·ii09,lllJ\~'\it.~,1 ;y~r~~'tJ~t~G.o:i:~ ·~~!Sl'. .. \~:fl~r:S~·,f'.~elf.. SUbj)pe·X:l~H!:cl· Jn1

·. tfo~ ·q:ou1.l;ise of· ['.~t7,,,·tn~<:!s·t-i.;g~1~t«i.10.t1·~\ . ' . · . · ' · · . " · . · ' .

' >- ; >I ! I I l l ~ r• · A. .$¢t;:.ccnd :1hea,.r.thg Si,ondt1c:~tt -,g_.y.' :tl~e E~.ecu:titv:e ',Gffi.~Jff!y as.. d.elegCi.b~e o~ .. tb~··'OPri1in.L$~.~1G\r~.r·;5. 'i1'tlve~~:tiga·t·g·rY· p,cY~e:t~.,: "w~s> he l.d in· Baq.,anre;nt,o. 011 .tl"c;nu.{ia:y t2·,, .1·9,:78 ., 'Dh:e t;»r:1,:.'.\ci:p:l~· :p\lrff)Wse o.f the :h1~artng'. W4$• t.o :i;.e,s:e.t.ye ~;'p .. fa:rrm,~"~-ipn c;.on~f.!r.ni p~ !l·h~ ' ana~yses of. tli? '.t;niion. i'.t.$1l~·n.9'tlg~~-~111~n.~s·. Afra·lys~s by bhe· S',t}a.f,.t pff. ·t.~e :.~·~at'<? Land~ .. Col')fi'l\~-1S'~i-qn,.; ~i"! e'ti1ploy,ee o,,E t.he lfoatd· of FJqua'1fi~Qt:ton'. a·nd PG&l~. w.e':i;::e pt·t?~en:tecl., St?tte111e11ts ive,pe pt~::H;t\~,eq by otz\w;r :l,,t'l'~er;est;e.d Pfll;'ti·es .. Se:verP,l: ·t~+i.itten .comments. we.r;.~ 'tl'EH!~'i:i.tv~4· ¥fte:r 1eJ:r~· hJ~a:r.tng,,, . Wt;:Ht•en c~1rim,e.frt;·s we.i·:~·. re¢(:. i.v~l:>.l:e .trntlt1. ,J~nua r'y ;i:o ,. :~9.7:.B.;: while .or.al. .c:otnm~n~.s. m~·:t be pr.e'sente'd n.t ·\:h~. C<;m'lmi.s~,lot;\ ·.rneet'fr1~ ,:

' ' ffa•sed oh. t«he· mabe·riat·s »that 'h·a.v.e" been ·r.ecei-ved. i:-n·to :th'? l:-{lcot.d thr:oqgh:o14µ the .tnves'ti:ga;i;~;on 1 t·h·e st~ff :ls ,ptoplllsi-L''tg 1.q1att t1..~ :r·ea·so·nabLe ma,~k~.t Aral:µs ~»i' cur.ten~ market price ot nattq::<il .. g~.s ~pt0,~~'.u9e:~l' 8·ti~ sol<;! ·~rom· th¢'· $tab11· 1 ,s .let:rses i-n t:h~ R:.!."o V't.s·t.·a.,. iRi ver Is·hl:ln<f ant;}.,, Ry<;;( t.sl,La.'f).d· gas Ei-e leis be d~be1~mlned• ~n ci:ecsn·~ance ttit'h bhs ~e..J;gl;\ted· ~Y.~·tage O'f the prii:~s paid \°>.~r .-1'Q&£ for i.tS ,p'tl,r<Chas"eS Of nci.'t~rra'J: .gas i.n tth~ Ntn:chern .C~li~q~n.t·a g~s n1~·t:k¢·t; :m~~t are. c0mpet:'i~!ve wi ~h ir.ts ,pt.rr.ch<:!-Se~i o'f ga ~ .fr:oitt !fh'~ Rio Vist,::a, Ri.vf.:: i: ls land .m1cl -Ryer 'Psl,and fiel<;l.s t ~Ph~ .p·r:"~c·~s or vat1:1es under th'i.s rn~thod, (.701114 be de:r~:v:e~l1 ·r.t·on, ~·he. \~~-1.ghted aye1.tage bol:'der ·p~rice <::rf. fG~fl ~ s put'cl\{i·s.es p.fl ,.f:;'L. Ba.so 01:.1t-of-~:; t<.>'t~ &?$,, ·the weigh~ed .. averag,e pir~c~· of t!h'? deli ve·ries. i.:o. "PG8(E 1:1.t

1 the· Ca:l."1,:forin.ia. boi;-,d.e·t' Ci~ Cart~di~n ·g·as f-roh1 the· Pacif.-[,c GJ;is T:t'~nsni.t•S"$;iop Cminp~ny,~ 4l'.ntl .. t-he #e+gh'ted ave-rage. o·f t·h'e pl:',icg.s .. paid· py PG&f>fo.t'. Ga 1.tfo·rnf.a-. p1:oduceq gas .. J:h.ese. wc,righted · ave:r~g1~ pr.ic(~·s would bl?. ::tdjl:ls·tt~d f<ifr ·B!:u content and the lbad1 f:a:ccot; or 11,p·i:~·{:l,ki-nt w1:lt.tfJ 11 ~ i ,,,e ~" th·e .f l'~xi;bi 1 i·ty premLum ,pQ&li'. p~ys foti' hf.1v1.i;ng ga·~ ava$'1.:l:b''lia':fmr peak clay. · needs, Th~ t"esu·L~lng p'ri'ces or y~l~,ttes to'\'.' the St:ate teases :i·n que-.irtLoh a·te a·~· foli.liOW$::

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!<i'

f ' ' ., ... :9·· ,, . ' \ .

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R~a s ona;biJ:e · Mar.ke't V.a::Lu~ ct' · O\rrren'h ·M~r\<.e·t \'r1:c~

\Load. ;f; flC,~ 0.r

. · . ·('$/MMHbu·) ~Ja ti~ \-1'1.4ne July.~l)eo" Jan·~ -JuiH)

1~977: 1971' 1:978: !~~~~

~-~ , ..... -~~- ""*_ .. ,_,--r .. --..

'3.~"l~'

:()'$%

S'~:· 7'5 $:a: •'91 :-., ''"· $'2.081

E ·415 I ,t j , ! j ~ I

'l.:sl:o t b-p. · ' I ' ~ ' 1 ' ; ,1 1 ' ;

1.,6-4 ·' t.)1·

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t'.fl·s ~··91 'a,• .... '.

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· .. , 'tn,e abpv~ ·Y:a·1~1es ~-re p~fs'ed· ·on pe'tbre"C·i:e.s o::~· ~·> p:do Bt.u per , cubic 'fO'O\:., ~.i:ld', \~ill o;~ 9d1j'us.t~d fa:n: ·t:he he.qt .c;.p.0.tent of

i .. 9·3

f): ·00 ,..,.~ .

2,,,08\

· gas a~tually deti,:.le:tedJ; · · · , ·

·the staff ha:$· ~t11:i~il;y.ze·a· 1t;:he '1J.nl1on ls land ~gj,eem~mts i..n q~der co d~te~M}pe ·~h~ qo~t~ ~9 FG&B f6r .ga~ pu~9has~d from Union

·.and Phi ll:i~rs d1,1~·i111~ tl)e· cetm c~ t;h<~$e 4gr:eeme9~s. +hes~ cqsts, pro1ni:t·ed fo.r .t.h~ ga·s 1pw:chf\s~d <,tur.ing the ·period of. J;S· months unde.r cons~Cl.~r..ani·on :by the Comrnis$io'h., ~re

·as ·follows: · · . . '

J inr. -Jt1r\~ i·917 .;'u~Y,i.oe;c.' ·~t;Tt

Jan;· ..-J.une 19 7:8

'"1 . .82'

i . .9lt

The s'taf f d'oes ndt. beli'eY'e f:,h~it .t:he.se pri.ces. alone ail!. suff·tcient: to .e.sta1bl t?h the .rea.sonab1e ma tket ·vall..H~ for tiatqta l' ·gas in· NortH~ttn. Cai:l:Ecl:'.ni.a. 'they are i.rtdl.cat i ve of: tl\e f ?ct that PG&.'E is cu~1.ently paytng a pri.c;.e for gfls p1·0dqceq: ·in Npten'er'l}. Ccll.'i·f.o.t.nla t'ha'.t. is .s.tgni. fican~ 1 y i:n· e~te~$ 6f $1.20/MMBt~~ .

The Att:o.r:n~Y Get:\~·r~1 i,n a 'J,et:ter t:o. th,e Executlve O.f fi..cer dated. Novembe:r i-o., t4.77, has ad:visc~ that in making its . <;let:etmtnation o'f tb.E::. reasonable market value of the S~a~·e' s ioralty gas, t~e Commiss~on· m~y consLdc~ the p~ices pal~ i.n Ca,lifor.nta' .tot' ga,.s· produced 01.1~.,..of.-!;>ta-te and· :tn foiil:?tgn natie)~s, ·prfces s1Jbj~ct to goverr1me.n:t;:i.l tegul·ati on ancl· s·et by .go~J"arnmental aatlon.,,. ·and r:rr. Lees · se:l: :by arbH·ta (:LO\\ • . ' '

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CALJi:~l)~~ rr,m~r, :NO .. , ss. .,('.QONTD:) _..__..,~,_...,Wo<\"' ... -ia---.--....~~:.,..~

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Accor:ding; to that le~te'1: qf' .a'dv'ice,, the Cott1m'ls$ion, 1nf.ly . not COf.l~i,d~r .~he. .delJ.y..;ix:~d· pd.ca of gas a.nd alLe:rn{lte 'f:ueis .for inQltS\:l'.li.al u·se.1 1.'h.e ·r\~ttn"n'?Y Geqen11l •"l,dvl:st.1d a'J-so that· th~ Lea1-se·· ;t,atms 1'1;'eas·o,nable mat'.ket v.a:lt1e·li and· ucur:r.ent m;.·q"ll:;(':t .pt'-i;c~~-,, ~,BXTe "?Si$e11:tk{li. iy ,t;h(~ ~ame mean:ing:s and that .bhe same evi.p~nce ma:y- ,l'_>,~ ·u.se9.. i:~'l, a. 9·e:te:t:mina·~ton of both· tti': "-r~ao.~H)in:b.le ma:r.l<;et 'V·a'iu~": a.r\~l 0ou11·1~en'I: n1arkGt prl-;;·e'' of. natu:tal tas.. · , ,

, .Ht ts Rf.CO~f~lEND~7P· TH:i\'..f TH~·· G0~1NISSIQN D.i;i~~;1n·i~~Nr.; TH'f{i.1 TtlE, REAS0NA~H .. F; 'MAfUq:r Y8.J~VE ,Q.R GU!:Utti;~T , MAR~itT 1>tUC~ ,fQ.R ROYz.\L'tY {1i.AS PRonucr.~o, pNt)f::R Tl·1'J~.,:.f1oLtm~n~r.a L~A~E,s. -SR~i4, $K:

t: ~l!l,~>.

PRC 714 & 729.

·P~'C 3 7.4-.'3 & j896

J~!?3son.:)b.t~ .. Market V{).J~~, Pt' C.' ,;v kl-P' , . t,1rr.ent ,,ar J#"' , r11tsi

. , , , .. ' , · (:,!S/Mfl~t'~1;} . : , , . toad· J.a n. -:.T·•~ttie July~Qec ·: .) an i -;-:~\rn~· ·~~.ac·tor i·977. . 1.~77', t9'Nt ~~ ~- ... ~~- --~-· ... ~ -~';"~-?I

, 3'.3% $.i:• ::7·$ $·L :Q.l $1,2:, 0.8 I I

1 1

Rio . ·v,~. s+.a. · . Isl.e.t6n 6 ... , l..16.2 t .. 77 1.9·3

' ! ,' ' ' I',') fQ I

' '

R'~:v.e.J.· .I1sland '3.:13.% 1 ... :7 5· i ' 1.s,i 2 .• 08 ,, '

Rye.r tslr1nd"' 3·3% i. 'rs 1'.9i 2.b·B·

TtiE: ABOVE v A:,Lties f.RE ;~·A·s·r~p· ON GAS DEJLtVE:.RlES 9E' 1, 000 BTU ,PER Cl]lHC FOU'T ANO· \H·Lt. BE ADJUSTED· FOR 'l'.HE HE\A.~r CONTENT OF CAS ACTUAL.LY r1eL,rv~:RED. ·FQR THE ·PF;ruons AND LEASE3 LISTED f\ROYE, 1;HESE V.?\L,.Lr,ES $MALL BE. US~ip: f~)R ,THE PURPOSE OF DF:TlUR-. MINING' ROYt'd.TY PAYMENTS 1to. 'PHT$ sroATE.. ,

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