When it began gas restructuring in 1988, the California Public Utilities Commission (CPUC) divided gas utility customers into two classes: core and noncore. The classification was designed to separate the natural gas industry’s competitive functions (gas procurement for customers participating in competitive markets, interstate and high-pressure in-state transportation, and gas storage) from utility functions of local gas transportation and gas procurement for non-competitive customers. Dividing customers into service classes was a means of determining which customers were eligible to participate in the competitive markets. 

Noncore customers are customers considered to have alternatives to bundled utility services. Originally this applied to customers who could utilize alternative fuels such as fuel oil or propane. Later the term also applied to customers with the capability of purchasing gas supply in competitive markets from non-utility suppliers such as producers or marketers. Non-core customers typically include large commercial, industrial, and electric generation customers. They are lower priority than core customers for service during gas curtailments. Noncore customers are required to take unbundled service, thus buying their gas supply from non-utility providers. Any customer that would be classified as noncore that wishes to take bundled service must pay a higher distribution rate to be reclassified.