Findings of Fact

1. Current high gas prices and the potential price volatility spurred by Hurricane Katrina suggest that it may be appropriate for PG&E to acquire additional natural gas hedges for the approaching winter months.

2. PG&E is in the best position to determine the appropriate hedging strategy in the short time available.

3. By expanding the tolerance band that is part of the CPIM formula, PG&E should be encouraged to make additional appropriate hedging decision while protecting shareholders.

4. There is insufficient time and information available to the Commission to approve a specific hedging plan for this winter, or to consider a multi-year hedging strategy.