Conclusion of Law

The motion of SDG&E and SoCalGas is granted to the extent set forth in the order.

ORDER

IT IS ORDERED that:

1. San Diego Gas & Electric Company and Southern California Gas Company shall defer their cost of service and performance-based ratemaking applications for one year and base them on a 2004 test year.

2. The merger savings in Year 2003 is deemed to be $65.5 million, to be refunded 100% to ratepayers in the same manner as current merger savings are refunded.

3. These proceedings are closed.

This order is effective today.

Dated _________________, at San Francisco, California.