Word Document

PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

ENERGY DIVISION RESOLUTION G-3339

RESOLUTION

Resolution G-3339. Pacific Gas and Electric Company (PG&E) seeks to recover in rates assessed core customers costs related to the subscription of turned back El Paso Natural Gas Company (El Paso) pipeline capacity, made in compliance with Order Instituting Rulemaking (OIR) 02-06-041, and existing pipeline capacity held on Transwestern Pipeline Company (Transwestern). PG&E is authorized to collect El Paso pipeline charges from all gas ratepayers, on an equal-cents-per-therm basis, pending the outcome of Phase II in Rulemaking (R.) 02-06-041. PG&E must continue to collect only the currently authorized portion of Transwestern costs.

By Advice Letter (AL) 2401-G, filed on July 31, 2002 and AL 2405-G, filed on August 29, 2002.

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SUMMARY

PG&E is authorized to recover from certain gas ratepayers the costs it incurs subscribing to El Paso pipeline capacity as provided for in Decision (D.) 02-07-037, subject to several conditions. The utility is directed to collect these pipeline charges from its core and noncore gas customers on an equal-cents-per-therm basis. However, the El Paso pipeline charges recovered by the utility are subject to refund or reallocation pending the outcome of Phase II in Rulemaking (R.) 02-06-041.

PG&E's ALs 2401-G and 2405-G are conditionally approved. The utility is ordered to reallocate through the appropriate balancing accounts the El Paso pipeline costs it included in the core rates filed in the ALs to its core and noncore gas customer classes on an equal-cents-per-therm basis. Additionally, the utility is directed to maintain suitable accounting procedures to record these pipeline costs it has incurred and collected from its customers, subject to final disposition in the next phase of the OIR.

Furthermore, PG&E is allowed to continue to collect only the currently authorized proportion of its Transwestern pipeline costs. Prior to our decision in Phase II of R. 02-06-041, PG&E must continue to treat Transwestern pipeline charges under its Core Procurement Incentive (CPIM), as is currently authorized. PG&E must return the Transwestern pipeline charges it collected from its customers in the AL rates, beyond what is allowed under the CPIM.

The protest of the Office of Ratepayer Advocates is granted in part.

BACKGROUND

On June 27, 2002, the Commission opened Order Instituting Rulemaking (OIR) 02-06-041 in response to a Federal Energy Regulatory Commission (FERC) order authorizing marketers serving California to relinquish ("turn back") up to 725 million cubic feet per day of firm capacity on the El Paso interstate pipeline. The OIR was initiated in order to devise rules intended to prevent the loss of a significant portion of this pipeline capacity to customers located outside California. The principal reason for pursuing this action was to avoid the potential devastating rate impacts the state's consumers may suffer if there is insufficient pipeline capacity to meet demand.1

As discussed in the preliminary scoping memo presented in the OIR, the proceeding is to be conducted in two phases. The initial phase would focus on adopting rules mandating certain utilities, including PG&E, to obtain El Paso turned back pipeline capacity not subscribed to by other California replacement shippers. Also under consideration was a proposed rule describing the circumstances under which the Commission would pre-approve the acquisition of the turned back El Paso capacity and find that doing so was just and reasonable. In the next phase, issues such as the recovery of the costs associated with obtaining the turned back pipeline capacity from the utilities' customers or needed adjustments to a utility's core procurement incentive mechanism would be addressed. Respondents to the rulemaking were Southern California Gas Company, PG&E, San Diego Gas & Electric Company, Southern California Edison and Southwest Gas Company.

In the Phase I decision, Decision (D.) 02-07-037, issued July 17, 2002, the Commission adopted rules setting forth conditions by which most California natural gas utilities including PG&E, as well as the state's largest electric utilities were to subscribe to turned back capacity on the El Paso interstate pipeline system. 2 An accommodation was also made for recouping expenses associated with the utilities' holding of any existing interstate pipeline capacity. The utilities were directed under Ordering Paragraphs 2 and 3 of the decision, to abide by the rules and that cost recovery was contingent upon the utilities' compliance with the approved provisions.

Among other things specified in D.02-07-037, PG&E is required under Rule B. 2. Subscription to Turned Back Capacity, to obtain turned back El Paso pipeline capacity as follows:

Reimbursement for PG&E and the other utilities for the pipeline charges is set forth under Rule C. Pre-approval of subscription, as follows:

D.02-07-037 also identified issues that would be addressed in Phase II of the rulemaking proceeding. Among the issues to be explored included "cost allocation, capacity releases, and details concerning the guaranteed recovery in rates of the utilities' costs for subscription to interstate pipeline capacity."3 4

After D.02-07-037 was issued, PG&E filed Advice Letter (AL) 2401-G on July 31, 2002. The AL is generally representative of the routine filings the utility submits monthly to update core gas procurement rates in response to changes in various costs as authorized under D. 97-10-065. 5 As such, the AL contained revisions to core rate schedules G-1, GM, GS, GT, GL-1, GML, GSL, GTL, G-NR1, G-NR2, G-CP, G-NGV1, G-NGV2. The utility placed the rate schedules in effect on the requested date of August 7, 2002.

With AL 2401-G, PG&E included in its calculation of core procurement rates: 1) a $7.7 million prepayment for El Paso pipeline capacity costs, amortized over two months, 2) the monthly reservation charges for Transwestern pipeline capacity6, and 3) a $1.1 million credit to reflect expected Transwestern brokering credits for August 2002. This is the first time these costs have been included in PG&E's monthly core gas procurement advice letter filings.

The $7.7 million prepayment represents a deposit to establish creditworthiness with El Paso. This deposit will be returned to PG&E, and ultimately ratepayers, once PG&E's credit rating is restored to "investment grade" or upon the expiration date of the El Paso contracts at the latest.

PG&E states that it incorporated the cost components highlighted above in core rates under the provisions of D. 02-07-037. With regard to the $7.7 million prepayment for El Paso capacity, PG&E indicated that these costs are being placed in core rates "(p)ursuant to D. 02-07-037 which requires PG&E and other utilities to bid for capacity on the El Paso Natural Gas Company interstate pipeline." PG&E indicated that the Transwestern related costs are being included in core rates "(p)ursuant to D. 02-07-037 which allows utilities full recovery for costs associated with their existing capacity rights on interstate pipelines (Ordering Paragraph 3)."

Additionally, the AL included an amended tariff page eliminating the reference to the Transwestern capacity forecast in the gas supply portfolio description in

Preliminary Statement, Part C - Gas Accounting Terms and Definitions. The tariff provision that was deleted signified that PG&E only collected Transwestern reservation charges in core rates to the extent that the pipeline was utilized to meet core demand. Since PG&E is proposing to recover the entire annual costs of the Transwestern pipeline capacity in its rates, the subject tariff provision would no longer be valid.

On August 29, 2002, PG&E filed AL 2405-G. This AL contained the utility's monthly core rate gas filing for the month of September 2002 and went into effect September 9, 2002. Costs included in the rates were: a $5 million prepayment to El Paso, amortization of the previous month's $7.7 million El Paso prepayment and monthly charges associated with Transwestern pipeline capacity. PG&E again asserted that the provisions of D.02-07-037 allow the utility to include these costs in their rates.

NOTICE

Notice of ALs 2401-G and 2405-G was made by publication in the Commission's Daily Calendar. PG&E states that a copy of the ALs were mailed and distributed in accordance with Section III-G of General Order 96-A.

PROTESTS

ALs 2401-G and 2405-G were protested by the Office of Ratepayer Advocates (ORA). The Utility Reform Network (TURN) submitted a reply to ORA's protest of AL 2401-G.

ORA filed a protest of AL 2401-G on August 20, 2002. ORA objects to PG&E's inclusion of any costs, including the El Paso prepayment and Transwestern capacity costs, associated with D.02-07-037 in its monthly core procurement filings as proposed in AL 2401-G. While acknowledging that D.02-07-037 deemed just and reasonable acquisition of the El Paso turned back capacity as well as existing capacity rights on interstate pipelines, ORA highlights the decision's determination that cost allocation and related issues will be dealt with in Phase II of R.02-06-041.

ORA recommends that PG&E should not include any costs in its core procurement rates associated with subscribed El Paso turned back pipeline capacity and existing Transwestern pipeline capacity unless the Commission specifically authorizes such treatment in Phase II of R.02-06-041. Additionally, ORA recommends that the Commission require PG&E to adjust its Pipeline Demand Charge Balancing Account to reverse the August inclusion of the El Paso and Transwestern capacity cost components in the AL 2401-G rates.

TURN submitted a reply to ORA's protest on August 21, 2002. TURN supports ORA's contentions and recommendation to remove the El Paso and Transwestern charges from core procurement rates. Additionally, TURN suggests that PG&E be penalized for using the advice letter process to circumvent a Commission order.

PG&E issued a reply to the AL 2401-G comments of ORA and TURN on August 27, 2002. The utility contests the arguments raised by ORA and TURN and asserts that they are entitled to immediate recovery of the disputed costs. In justification of their position, PG&E says is making a good faith effort to comply with the rules in D.02-07-037 which finds that subscribing to El Paso turn back capacity and existing pipeline capacity is just and reasonable. Additionally, the utility states delaying reimbursement will cause it to incur finance charges and possibly create further complications because of its status as a debtor in possession under Chapter 11 of the Bankruptcy Code. The utility also says that it is proper to assess core customers the pipeline charges since the capacity is being obtained on their behalf and that postponing cost recovery until later will result in inflated bills that core customers will have to contend with in the future.

ORA filed a protest of AL 2405-G on September 18, 2002 raising similar issues it presented in its protest of AL 2401-G. Additionally, ORA supports TURN's contention that the utility be sanctioned.

PG&E issued a reply to ORA's protest of AL 2405-G on September 25, 2002 and contests ORA's position on principally the same reasons it offered in its previous reply.

DISCUSSION

At issue is whether PG&E should be immediately reimbursed from its ratepayers costs it incurs associated with subscribing to turned back El Paso pipeline capacity as well as for existing pipeline capacity held by the utility. This matter arises because PG&E factored into its core rates effective August 7, 2002, a $7.7 million prepayment to El Paso and annualized the reservation charges the utility pays for its existing contract for firm pipeline capacity on Transwestern.7

We are particularly concerned about the impact of postponing PG&E's cost recovery efforts on the utility's current financial situation and on its prospects for achieving financial health. At this point, reorganization plans intended to settle creditor claims and to enable the company to regain its investment grade credit rating are being considered by the bankruptcy court for approval.8 Ensuring that PG&E becomes financially sound is in the interest of all its customers as it will allow the company to readily maintain its operations and access capital markets for funds necessary to continue to provide essential services to the public. Such extraordinary circumstances require us to be responsive to PG&E's financial condition and to stand ready to take all reasonable steps to facilitate restoration of the utility's investment grade credit rating.

We find, as PG&E suggests in their reply comments to ORA and TURN, that delaying the utility's cost recovery efforts needlessly complicates and, we believe, may jeopardize the utility's orderly transition from bankruptcy. Preventing immediate reimbursement for the El Paso pipeline costs will saddle the utility with a new financial obligation which will grow increasingly burdensome if cost recovery must wait until resolution of the ratemaking issues in Phase II of R. 02-06-041.9 This situation may degrade PG&E's financial condition as the utility's cash position erodes due to payments made to El Paso for the acquired pipeline capacity. Any degradation to PG&E's cash position may not help foster a positive view of the utility's economic outlook by rating agencies and the financial community. At this point, maintaining a high level of investor confidence is extremely important if PG&E must raise capital to successfully implement any approved reorganization plan.

In order to avoid any disruption to the financial markets at this critical juncture of the bankruptcy proceeding, we believe it is prudent to allow PG&E to recover the El Paso pipeline charges immediately as authorized in D.02-07-037, subject to the conditions discussed later. Since the Transwestern costs do not represent a new financial obligation for PG&E, it is appropriate, at this point, for us to limit the recovery of these costs to that allowed under PG&E's current Core Procurement Incentive Mechanism. Rate recovery of the remaining Transwestern costs will be considered in Phase II of R.02-06-041.

Additionally, in further support of PG&E's position, are its efforts to comply with the rules in D.02-07-037 guaranteeing full cost recovery of the costs subscribing to El Paso pipeline capacity and existing pipeline capacity held by the utility. According to information recently submitted to the Energy Division, PG&E claims that it has successfully acquired 200,000 million British thermal units/day of El Paso pipeline capacity with gas flowing under the arrangements beginning November 1, 2002. This amount of pipeline capacity is consistent with the objective of obtaining at least 200 million cubic feet/day we expressed in D. 02-07-037.10 Although we are not prepared at this time to conclude that PG&E has completely met the necessary conditions of D.02-07-037, this showing suggests that the utility is making a good faith effort to comply with our order.

While we must be responsive to PG&E's financial difficulties if consistent with the public interest, we also must consider whether the interests of the utility's ratepayers are properly protected as PG&E commences immediate cost recovery. We note that ORA and TURN state that PG&E is not authorized to collect the pipeline charges from is customers until the cost allocation issues are addressed in Phase II of the rulemaking proceeding and recommend that PG&E return the costs it has collect in the AL rates to its core customers. In reply, PG&E maintains that the D. 02-07-037 rules provide for immediate cost recovery and that the utility is willing to make any retroactive rate adjustments if it is necessary to reallocate the costs differently.

We agree with ORA and TURN that cost allocation and related issues will be examined in Phase II of R.02-06-041. However, we find that PG&E's suggested approach during this interim period before the cost allocation phase is concluded is a suitable method to ensure that its ratepayers will ultimately only pay for costs found to be just and reasonable. This approach was expressed in PG&E's reply to the protestants, wherein the utility conceded that cost recovery "... will be without prejudice to the Commission's disposition of issues in Phase II of R. 02-06-041...", and that, "... appropriate adjustments can be made in compliance with any such decision, including as necessary, retroactive adjustments." 11

We will hold PG&E to its promise to make these rate adjustments, including refunds, if necessary following the resolution of the ratemaking issues considered in Phase II of the rulemaking proceeding. We also remind PG&E that the Commission has the legal authority to compel the utility as well as all other public utilities under its jurisdiction to charge its customers rates deemed to be lawful. To facilitate the possible reallocation or refund of these costs, we will instruct PG&E to establish and maintain suitable accounting procedures to enable the utility to identify and the Commission to audit if necessary, the relevant pipeline costs it has included in its rates and collected from its customers. Furthermore, it is important to note that all the utility's customers are eligible to participate and will be accorded proper due process in Phase II of R.02-06-041 to present their views on the final disposition of these costs.

Although we concur with PG&E's position that it be compensated immediately for the El Paso pipeline charges and that its ratepayers can be adequately protected, we take exception to the utility's rationale that the rules in D.02-07-037 authorize immediate cost recovery as well as the notion that its core customers should pay the entire amount of the subject costs.

We disagree with PG&E's interpretation that the rules implemented in D. 02-07-037 provide for immediate cost recovery and wish to dispel any misconceptions the utility may have about their application. In its reply to the protestants, PG&E, in reference to Rule C., Pre-approval of subscription, states that, "(We) reasonably interpreted "full" cost recovery to mean immediate cost recovery." From our reading of the rule and ordering paragraphs of the decision, we find nothing implicit in our use of the term "full" or "fully" suggesting that a utility can commence immediate cost recovery nor did we intent that the rules or decision confer such authority. Upon reviewing the entire decision, it becomes clear that the ratemaking issues considered in Phase II must be resolved before cost recovery can proceed.

Given the above clarification of our rules, we grant PG&E an exception here because D. 02-07-037 did not make any accommodation to account for the current financial difficulties confronting the utility. As we previously discussed, it appears that postponing immediate compensation of the El Paso costs may negatively affect PG&E's cash position and possibly introduce an unacceptable risk to the utility's efforts to emerge from bankruptcy. We must take the opportunity presented here to address PG&E's unique situation and provide the utility with needed financial relief during this interim period, while protecting the interests of its ratepayers.

PG&E also argues that the question of cost allocation does not need to be resolved in their situation because the pipeline capacity they obtained and plan to acquire is on behalf of their core customers. The utility reasons that since core customers are the beneficiaries of the additional pipeline capacity, they should pay for the entire amount. The utility's view on this subject is contrary to the position we expressed in D.02-07-037, wherein we said the following:

It is plain from these passages that the benefits of holding adequate pipeline capacity are widespread and that no customer group is necessarily exempt from being considered responsible for paying some portion of the pipeline charges. With this direction from D. 02-07-037, we find that it is reasonable, at this point, to allow PG&E to collect the El Paso pipeline charges from their core and noncore gas customers on an equal cents per therm basis. We will limit cost recovery to PG&E's gas customers during this interim period because of the complexities presented by assigning cost responsibility to the utility's electric customers without the benefit of the in-depth review to be conducted in the next phase of R.02-06-041. We reiterate that the allocation of costs we adopt here is not our final decision on the matter and that we may find in Phase II of R.02-06-041 that the costs collected during this interim period should be reallocated or refunded.

Since we find that it is necessary for PG&E to begin immediate cost recovery from its core and noncore gas customers of the El Paso pipeline charges and that suitable ratepayer protections can be instituted, we order PG&E to comply with the following conditions:

1. PG&E is authorized to place into the rates it assesses its core and noncore gas customers the costs associated with subscribing to El Paso interstate pipeline capacity as authorized in D.02-07-037 on an equal-cents-per-therm basis, until further order of the Commission. These costs shall be placed in rates via the utility's currently authorized rate filing procedures.

2. The costs (associated with subscribing to El Paso interstate pipeline capacity) that the utility has placed in its rates and collected from its customers under the authorization provided by this resolution is subject to possible reallocation or refund pending the outcome of Phase II in R.02-07-037.

3. PG&E is required to establish and maintain proper accounting procedures to record the costs associated with subscribing to El Paso interstate pipeline capacity that the utility has incurred, included in its rates, and collected from its ratepayers.

4. PG&E shall reallocate to its core and noncore customers on an equal-cents-per-therm basis the El Paso pipeline charges it included in its AL 2401-G and AL 2405-G rates through the appropriate balancing accounts and report to the Energy Division how this was accomplished.

5. PG&E shall return to the appropriate core ratepayers the portion of the Transwestern charges it collected from the AL 2401-G and 2405-G rates and that the utility was not previously authorized to collect, with interest. These amounts shall be refunded to the ratepayers via the appropriate balancing accounts and report to the Energy Division how this was accomplished.

6. PG&E shall refrain from collecting from its ratepayers any previously unauthorized costs of holding existing pipeline capacity until we rule further on this subject in Phase II of R. 02-06-041.

7. PG&E shall amend its Preliminary Statement, Part C- Gas Accounting Terms and Definitions to restore the tariff language in effect prior to the filling of AL 2401-G.

In conclusion, the action we take here does not commit us to take any particular action on the subject of this resolution in the future. Our action also does not prejudice our views in Phase II of R.02-06-041 when deciding whether PG&E may ultimately retain the pipeline costs it has collected in rates under this resolution and be compensated for the full costs of any existing pipeline capacity the utility holds.

COMMENTS

A draft of the Alternate Resolution was distributed for comment on October 10, 2002, pursuant to Public Utilities Code sections 311(e) and 311(g) and Rule 77.7 of the Commission's Rules of Practice and Procedure.

Comments were filed by _________ on _________.

FINDINGS

1. PG&E filed AL 2401-G on July 31, 2002, requesting, among other things, permission to include in its core rate schedules prepayment charges it paid El Paso and annualized Transwestern pipeline capacity costs.

2. PG&E filed AL 2405-G on August 29, 2002 requesting, among other things, permission to include in its core rate schedules prepayment charges it paid El Paso and annualized Transwestern pipeline capacity costs.

3. ORA filed a protest to AL 2401-G on August 20, 2002 recommending that PG&E adjust its rates to return the El Paso and Transwestern pipeline capacity costs.

4. TURN filed a reply to ORA's protest on August 21, 2002 endorsing ORA's protest and recommending that PG&E be penalized for placing the contested amounts in rates.

5. PG&E is guaranteed full recovery of its costs associated with subscribing to El Paso turn back capacity and existing pipeline capacity held by the utility to the extent it complies with the rules in D. 02-07-037.

6. PG&E is currently in bankruptcy proceedings.

7. Preventing PG&E from immediate recovery of El Paso pipeline charges may erode the utility's financial position.

8. Incurring un-recouped El Paso pipeline charges represents a new financial obligation for PG&E and may negatively affect the utility's efforts to emerge from bankruptcy.

9. PG&E appears to be making a good faith effort to comply with the rules in D. 02-07-037.

10. It is reasonable to allow PG&E to begin cost recovery of the El Paso pipeline charges incurred under compliance with the rules in D.02-07-037, subject to appropriate ratepayer protection.

11. It is reasonable for PG&E to assess its core and noncore gas customers the El Paso pipeline charges on an equal-cents-per-therm basis, subject to reallocation or refund.

12. D. 02-07-037 does not provide for immediate cost recovery nor make any accommodation to PG&E's financial situation.

13. Final disposition of the El Paso pipeline costs PG&E is allowed to collect is subject to final disposition in Phase II of R.02-06-041.

THEREFORE IT IS ORDERED THAT:

1. PG&E AL 2401-G is approved except that the utility must reallocate the El Paso pipeline charges it included in its rates to its core and noncore customers on an equal-cents-per-therm basis through the appropriate balancing accounts as well as return any unauthorized portions of the Transwestern pipeline costs to its core customers, with interest.

2. PG&E AL 2405-G is approved except that the utility must reallocate the El Paso pipeline charges it included in its rates to its core and noncore customers on an equal-cents-per-therm basis through the appropriate balancing accounts as well as return any unauthorized portions of the Transwestern pipeline costs to its core customers, with interest.

3. PG&E is authorized to include in its core and noncore rates costs associated with subscribing to El Paso as authorized in D.02-07-037 on an equal-cents- per-them basis until further order of the Commission and subject to reallocation or refund pending the conclusion of Phase II of R.02-06-041.

4. PG&E is required to establish and maintain accounting procedures to record the El Paso pipeline costs it has incurred, included in its rates and collected from ratepayers as provided for in Ordering Paragraphs 1, 2 and 3.

5. PG&E shall file an Advice Letter within 10 days from today to establish the account referred to in Ordering Paragraph 4. The advice letter is to be effective today subject to Energy Division review.

6. PG&E is ordered to file an advice letter within 10 days from today to restore the tariff language in its Preliminary Statement, Part C- Gas Accounting Terms and Definitions in effect prior to the filling of AL 2401-G. The advice letter is to be effective today subject to Energy Division review.

7. PG&E shall report to the Energy Division how it accomplished the reallocation of the El Paso pipeline charges as well as the refund of the Transwestern pipeline charges referred to in Ordering Paragraphs 1 and 2.

8. ORA's protest is partially granted to the extent it specifies that the Transwestern pipeline charges included in ALs 2401-G and 2405-G should be returned to ratepayers.

9. PG&E shall continue to include Transwestern reservation charges in its CPIM, pending our decision in Phase II of R. 02-06-041.

This Resolution is effective today.

I certify that the foregoing resolution was duly introduced, passed and adopted at a conference of the Public Utilities Commission of the State of California held on October 24, 2002; the following Commissioners voting favorably thereon:

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1 To illustrate the potential for harm, R. 02-06-041 discussed the interplay between available pipeline capacity serving California and dramatic increase in the price of gas during the winter of 2000/2001.

2 In addition to PG&E, the other utilities subject to the D.02-07-037 rules are Southern California Gas Company, San Diego Gas & Electric Company, Southwest Gas Company, and Southern California Edison.

3 D. 02-06-041, pp. 1-2.

4 On August 19, 2002, an Administrative Law Judge's Ruling was issued in R.02-06-041 regarding Phase II. The ruling set a prehearing conference (PHC) for September 10, 2002 and ordered the parties to meet and confer. Respondents in the rulemaking are required to file either a separate or joint PHC statement by September 6, 2002. Parties may suggest that other issues be addressed in the proceeding in addition to those identified in D.02-07-037.

5 D.97-10-065, authorized PG&E to revise its core rate schedules monthly to reflect changes in various procurement related costs, including interstate capacity charges as specified in D. 97-05-093. PG&E was ordered to update these costs through advice letter filings to become effective on the fifth business day of the month. D.98-07-25, authorized PG&E to put into effect the monthly core procurement rates on the first day of the month when transportation rates for core customers are to change the first day of the month.

6 D. 95-12-046, PG&E was denied recovering all Transwestern subscription costs incurred in 1993 and subsequent years unless it established in a reasonableness filing that the benefits directly attributable to the subscription outweighed the requested cost recovery. Under the Core Procurement Incentive Mechanism authorized in D. 97-08-055, PG&E is allowed to include Transwestern reservations charges as a gas cost under specified conditions.

7 Although PG&E is not currently moving gas on the El Paso contracts it obtained, it nonetheless is obligated to pay El Paso prepayment charges to meet creditworthiness standards contained in tariffs on file with FERC.

8 Pacific Gas and Electric Company (Debtor), United States Bankruptcy Court, Northern District of California, San Francisco Division, Case No. 01 30923 DM.

9 Based on discussions at the September 10, 2002 Phase II Prehearing Conference, evidentiary hearings are proposed to begin in March 2003.

10 D. 02-07-037, p. 18, mimeo.

11 PG&E reply to ORA and TURN protests, dated August 27, 2002, page 3.

12 D.02-07-037, p. 20, mimeo.

13 D.02-07-037, Conclusion of Law 5, p. 25 mimeo.

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