Conclusions of Law

1. The Commission should approve an expanded CPIM tolerance band for the 2005-2006 incentive period as proposed by ORA.

2. In all other respects, the petition for modification should be denied.

IT IS ORDERED that:

1. Decision 04-01-047 is modified to include the following ordering paragraph:

For the incentive year 2005-2006,the Core Procurement Incentive Mechanism tolerance band shall be increased to +3% on the penalty side (from the existing +2%) and -2% (from -1%) on the savings side.

2. In all other respects, the Petition to Modify Decision 04-01-047 filed by the Pacific Gas and Electric Company on September 13, 2005 is denied.

This order is effective today.

Dated ____________, at Los Angeles, California.