ALJ/CAB/tcg Mailed 6/16/2006

Decision 06-06-035 June 15, 2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Pacific Gas and Electric Company for Approval of an Agreement Concerning Certain Generation Assets Known as "Contra Costa 8" Pursuant to a Settlement and Release of Claims Agreement Approved by the Commission on January 14, 2005, for Authority to Recommence Construction, and for Adoption of Cost Recovery and Ratemaking Mechanisms Related to the Acquisition, Completion and Operation of the Assets. (U 39 E)

Application 05-06-029 (Filed June 17, 2005)

OPINION ADOPTING JOINT SETTLEMENT AGREEMENT,
AS MODIFIED, FOR CONTRA COSTA 8

Summary

This decision adopts all provisions of the Joint Settlement Agreement (Settlement Agreement/Settlement)¹ concerning an application for a Certificate of Public Convenience and Necessity (CPCN) by Pacific Gas and Electric Company (PG&E) to accept, complete construction of, and operate the Contra Costa 8 (CC8) generating facility, except for the Nonbypassable Charge (NBC) provision contained in Paragraph 11. The Settling Parties propose an NBC for CC8 for the 30-year life of the project. We do not approve that provision, but instead adopt a 10-year NBC, consistent with Decision (D.) 04-12-048.

¹ The Settling Parties include PG&E, Division of Ratepayer Advocates (DRA), The Utility Reform Network (TURN), and California Unions for Reliable Energy (CURE). A copy of the Settlement Agreement is attached to this decision as Attachment A.