Reid

On May 14, 2007, a meeting was held between El Paso and employees of both PG&E and PG&E's parent company, PG&E Corporation, in which El Paso first raised the idea of a possible PG&E Corporation ownership stake in the Ruby Pipeline. PG&E Corporation responded that it would not consider an ownership interest until October of 2007. On December 20, 2007, PG&E Corporation signed a letter of intent with El Paso to acquire a 25.5% interest in the Ruby Pipeline. On May 6, 2008, PG&E informed the ALJ and the interested parties that PG&E Corporation had decided not to acquire an ownership interest.

Reid is concerned that PG&E Corporation had an outstanding offer to obtain an option for an ownership interest in Ruby LLC at the same time PG&E was negotiating with Ruby LLC and evaluating alternatives to the Ruby Pipeline. Reid notes that two risk management committees reviewed PG&E's negotiations with Ruby: the Utility Risk Management Committee (URMC) and the PG&E Corporation Risk Policy Committee (RPC). The two committees have overlapping membership that includes high-level officers from both PG&E and PG&E Corporation.

The URMC and the RPC approved the Ruby Precedent Agreement on November 14, 2007. Reid argues that it was a clear conflict of interest for PG&E Corporation to review and approve PG&E's agreement with Ruby at a time when PG&E Corporation could obtain an option for an ownership interest in the Ruby Pipeline. To prevent future conflicts of interest, Reid recommends that the Commission take the following actions:

1. Prohibit PG&E from employing any individual who is also employed by PG&E Corporation

2. Prohibit PG&E from having a member of its URMC who is also a member of the RPC.

3. Prohibit PG&E from having a member of its URMC who is employed by PG&E Corporation.