8. Conclusion and Implementation

For the reasons set forth previously in today's decision, we conclude that PG&E's application should be approved pursuant to Pub. Util. Code §§ 701, 702, and 2821. As required by Pub. Util. Code §§ 451 and 454, the rates and charges that result from granting PG&E's application are just and reasonable.

We hereby authorize PG&E to: (1) enter into the gas transportation arrangements on the Ruby Pipeline requested in A.07-12-021; (2) obtain matching downstream capacity for PG&E's Electric Fuels Department on the Redwood Path; (3) recover associated transportation costs for the Ruby Pipeline and Redwood Path in retail rates for core gas customers and bundled electric service customers; and (4) make conforming revisions to the CPIM. The authority granted by today's decision is subject to the following conditions:

1. PG&E shall file an executed copy of each FTSA between PG&E and Ruby LLC with the Commission's Energy Division pursuant to GO 96-B, Sections 3.9 and 6.1, no later than 30 days after the FTSAs are executed. This same requirement shall apply to any subsequent modifications to the FTSAs.

2. PG&E shall file one or more advice letters to obtain approval for the interconnection, operating, and balancing (IOB) agreements between PG&E and Ruby LLC. PG&E shall file the advice letter(s) at least six months before the expected in-service date of the Ruby Pipeline. The advice letter(s) shall be effective pending disposition by the Commission's Energy Division pursuant to GO 96-B, Rules 3.6, 7.5.3, and 8.2.3. PG&E shall use this same advice letter procedure to obtain approval for any subsequent modifications to the IOB agreements.

3. Electric Fuels shall use Tariff Schedule G-AFT for firm on-system deliveries on the Redwood Path. If Electric Fuels seeks to make off-system deliveries from time-to-time, it shall use the provision in G-AFT that specifies the procedures for making off-system deliveries. Like all shippers, Electric Fuels may use other current and future tariffs for proper purposes. Before switching to another tariff, PG&E shall obtain Commission approval (or pre-approval) to the extent required by the Commission's rules at that time. If no procedures are in place for obtaining such approval (or pre-approval), PG&E shall file an advice letter pursuant to GO 95-B, Rule 3.6.

4. The amount of Ruby Pipeline costs that PG&E may recover in retail rates for core gas service shall be limited to the rates and charges that PG&E pays under the Precedent Agreement to transport 250 MDth/d. PG&E may not recover from core gas customers any costs for capacity reserved on the Ruby Pipeline and Redwood Path for Electric Fuels. This prohibition does not apply to short-term capacity acquired by Core Gas Supply through arms-length capacity brokering transactions or to capacity diverted to serve core customers.

6. The amount that PG&E may recover in retail rates for Ruby capacity shall be the lower of (i) $0.68 Dth/d, (ii) the Initial Recourse Rate less 5%, or (iii) any lower rate paid by similarly situated shippers. Whenever PG&E seeks Commission approval to recover Ruby Pipeline costs, PG&E shall certify that it is paying the lowest rate available under the Precedent Agreement.

7. The amount that PG&E may recover in retail rates for Ruby fuel surcharges and other surcharges is limited to the amounts paid pursuant to Section 3(b)(iii) of the Precedent Agreement.

8. PG&E shall obtain prior Commission authorization before exercising, or not exercising, its right under the Precedent Agreement to annually reduce its Ruby capacity by 20% increments beginning in Year 11 of the Agreement.

9. PG&E shall obtain prior Commission authorization before exercising, or not exercising, its right to annually renew the Ruby Pipeline transportation arrangements during Years 16 through 25 of the Precedent Agreement.

10. During Years 11 through 25 of the Precedent Agreement, PG&E may recover the costs for Electric Fuels' Redwood Path arrangements only to the extent the Commission has authorized recovery of matching upstream capacity for Electric Fuels on the Ruby Pipeline.

11. The transportation benchmark component of the CPIM shall reflect the actual transportation rates that PG&E pays under the Precedent Agreement, which will be $0.68/Dth or less, plus tariffed charges for fuel and L&U gas to the extent allowed by the Precedent Agreement.

12. PG&E shall provide prompt responses to Commission requests for information regarding outages on the Ruby Pipeline.

Today's decision does not authorize at this time PG&E's recovery of any rate increases on the GTN system that might occur as a result of de-contracting, or any rate increases on the Ruby Pipeline as a result of FERC actions that might occur under the scenarios raised by GTN that are addressed previously in today's decision. These rate increases are unlikely and/or highly speculative for the reasons stated previously. However, if such rate increases occur, and PG&E seeks to recover these increases in retail rates, the Commission will decide on the appropriate course of action at that time.

Finally, today's decision denies PG&E's request to exclude Ruby-related transportation arrangements on the Redwood Path from the 400 MDth/d that is reserved on the Redwood Path by the Gas Accord for long-term firm capacity. This matter is directly related to the Gas Accord and, as such, should be addressed in PG&E's next Gas Accord proceeding.

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