Clean Energy Fuels Corp. (“Clean Energy”)

227 Cal. App. 4th 641, 2014 Cal. App. LEXIS 578 (May 29, 2014)

The Court of Appeal (Fourth District, Division Three) affirmed a Commission decision by which the Commission approved Southern California Gas Company’s (“SoCalGas”) proposed Compression Services Tariff (“CST”), allowing SoCalGas to expand its natural gas compression services to include provision of compressed natural gas and Natural Gas Vehicle fueling stations. Clean Energy Fuels Corporation (“Clean Energy”), Integrys Transportation Fuels, LLC and ORA protested the application on the grounds that the proposed expanded service would give SoCalGas, the monopoly gas supplier for customers in its service area, an unfair commercial advantage. The Protestants advanced an alternate proposal pursuant to which the parent of SoCalGas could enter the market through an unregulated affiliate (the “Affiliate Option”). The Commission approved the CST after amending SoCalGas’s proposal to include several “mitigation measures” designed to ensure fair competition. In approving the amended CST the Commission rejected the Affiliate Option as unnecessary in light of the “mitigation measures” it required SoCalGas to adopt. The Commission did not, however, issue a findings comparing the merits of the amended CST with the merits of the Affiliate Option insofar as preventing unfair competition by SoCal gas was concerned. Clean Energy sought rehearing and then review in the Court of Appeal alleging, among other things, that the CST allowed SoCalGas to compete unfairly and that the Commission’s decision was not supported by adequate findings on material issues as required by Public Utilities Code section 1705. With respect to the issue of findings, Clean Energy relied principally on California Manufacturers Association (Para. 50), NCPA (Para. 64), CCity of Los Angeles (Para. 59) and City and County of San Francisco (Para. 63). The Fourth District Court of Appeal, however, affirmed the Commission, finding that (1) the Commission reasonably determined that the CST, as amended, would not allow SoCalGas to compete unfairly and (2) the Commission did not err in failing to make findings comparing the CST to the Affiliate Option. The court reasoned that the Commission has authority under Section 1705 to determine what issues are material to the decision, and found the Commission made adequate findings with respect to the Affiliate Option. The Clean Energy opinion was originally ordered to be unpublished but, at the request of the Commission, the court ordered Clean Energy published on June 27, 2014. Clean Energy sought review of the Court of Appeal decision in the California Supreme Court but the Court denied review.

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