STATE OF CALIFORNIA GRAY DAVIS, Governor

PUBLIC UTILITIES COMMISSION

505 VAN NESS AVENUE

SAN FRANCISCO, CA 94102-3298

July 5, 2001 Items 12 and 12a

7/12/2001

TO: PARTIES OF RECORD IN APPLICATION 01-06-020

Enclosed are the draft decision of Commissioner Bilas and the alternate order of Administrative Law Judge (ALJ) Brown. These are Items 12 and 12a on the Commission's July 12, 2001 agenda. The Commission may act then, or it may postpone action until later.

When the Commission acts on the draft decision or the alternate, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.

Rule 77.7(f)(9) provides for reduction or waiver of the 30-day period for public review and comment when public necessity requires such reduction. We must balance whether the public necessity of adopting an order outweighs the public interest in having the full 30-day review and comment. Having made that assessment in this case, we have established a shortened period for comments on the draft decision and the alternate.

Parties to the proceeding may serve comments on the draft decision and the alternate no later than July 10, 2001. No reply comments will be accepted. Comments on the draft decision and the ALJ's alternate order must be served separately on the ALJ and the assigned Commissioner, and for that purpose I suggest electronic service, hand delivery, overnight mail, or other expeditious method of service.

/s/ JOHN S. WONG for

Lynn T. Carew, Chief

Administrative Law Judge

LTC:sid

Attachments

COM/RB1/sid DRAFT Item 12

7/12/2001

Decision DRAFT DECISION OF COMMISSIONER BILAS (Mailed 7/5/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Pacific Gas and Electric Company for Approval of Open Season Procedures for Awarding Firm Capacity on its Transmission Facilities. (U 39 G)

Application 01-06-020 (Filed June 13, 2001)

OPINION GRANTING LIMITED APPROVAL OF PACIFIC GAS AND ELECTRIC COMPANY'S APPLICATION FOR APPROVAL OF OPEN

SEASON PROCEDURES FOR AWARDING FIRM CAPACITY

ON ITS TRANSMISSION FACILITIES

I. Summary

This decision grants limited approval of Pacific Gas and Electric Company's (PG&E) application for approval of open season procedures for awarding firm capacity on its transmission. PG&E initiated the open season concurrently with its application and the process may continue with the guidance set forth in this decision. All contracts awarded through the open season will be contingent upon Commission approval and will be subject to the rates, terms, and conditions of service subsequently approved by the Commission for PG&E's gas transportation tariffs.

While this order will allow PG&E to proceed with the open season, the Commission nevertheless declines to grant PG&E's request for specific approval of the open season procedures. Rather than reject the open season, however, the Commission provides guidance to PG&E regarding certain issues of concern should PG&E choose to continue with the current open season. The Commission anticipates reviewing the results of the open season as part of its review of any applications for approval of long-term contracts awarded through the open season. In addition, many of the issues raised in the instant application will also be addressed further in the Gas Accord II proceeding.

Finally, PG&E is ordered to file an application proposing a market structure and rules for the term after the expiration of the Gas Accord (Gas Accord II), as soon as possible, but in no event later than July 20, 2001.