Comments on Draft Decision

Pursuant to Rule 77.7, the draft decision of the assigned ALJ was mailed to the parties on July 23, 2002. In accordance with Rules 77.2 and 77.5, comments to the draft decision were filed by the signatories to the proposed settlement agreement, EPNG, and LGS. Those comments have been considered, and appropriate changes have been made.

Findings of Fact

1. PG&E held two settlement conferences to discuss a possible settlement of this application to extend the provisions of the Gas Accord.

2. A joint motion was filed on May 20, 2002 requesting that the Commission approve the Gas Accord II Settlement Agreement.

3. Comments and reply comments were filed in response to the joint motion and the proposed settlement agreement.

4. The Gas Accord II Settlement Agreement would, among other things, extend the existing Gas Accord gas market structure, rate, tariffs, and terms and conditions of service for PG&E's gas transmission and storage system for an additional year.

5. Under the proposed settlement agreement, the rates for transmission and core storage services for the Gas Accord II period would be equal to the adopted rates in effect on January 1, 2002, the rates for market center storage services would be equal to the adopted rates in effect on April 1, 2002, and the rates for customer access charges for noncore customers would be equal to the adopted rates in effect on January 1, 2002.

6. Under the proposed settlement agreement, existing holders of firm transportation or storage rights would be given the opportunity to extend those rights for the Gas Accord II period, or until the first day the subject transportation or storage arrangements are under the jurisdiction of the FERC, whichever occurs first.

7. Under the proposed settlement agreement, an open season would be held for all firm transportation and storage rights that are not subject to extension.

8. Under the proposed settlement agreement, PG&E's gas financial risk management program, which was approved in D.98-12-082 as modified by D.99-04-013, would continue through the Gas Accord II period.

9. Under the proposed settlement agreement, the Scoping Memo issues would be deemed resolved through the Gas Accord II period.

10. A settlement is defined as "an agreement between some or all of the parties to a Commission proceeding on a mutually acceptable outcome to the proceedings."

11. No one has asserted in their comments that hearings are necessary, nor has any party indicated the extent of its participation if a hearing is held.

12. Although some of the commenting parties seek to make certain changes, or condition the approval of the proposed settlement agreement, they do not contest the one-year extension of the Gas Accord or any of the factual issues relating to the settlement.

13. A broad cross-section of gas industry participants and customer groups have signed the proposed settlement agreement.

14. Extension of the Gas Accord for an additional year will confer commercial certainty over how PG&E's gas and transmission market structure will work in the coming year, and what rates customers can expect.

15. Although the Scoping Memo issues are deemed resolved for the Gas Accord II period, these issues will be litigated or resolved in the upcoming months, and are to take effect after the Gas Accord II period has expired.

Conclusions of Law

1. A proposed settlement should not be approved unless the settlement is reasonable in light of the whole record, consistent with the law, and in the public interest.

2. If a party decides to contest a settlement, it must specify in its comments the portions of the settlement that it opposes, the legal basis of its opposition, and the factual issues that it contests.

3. The Commission may decline to set a hearing where the contested issue of fact is not material or when the contested issue is one of law.

4. If no one requested a hearing in their comments, one could infer that the requested changes or conditions to the settlement agreement are issues that can be resolved without a hearing.

5. None of the changes or conditions that the commenting parties seek to impose are material to any of the issues in the proposed settlement agreement, and consequently, no hearings regarding the settlement are needed.

6. The May 17, 2002 Gas Accord II Settlement Agreement is reasonable in light of the whole record, consistent with the law, and in the public interest.

7. The joint motion for approval of the Gas Accord II Settlement Agreement is granted.

ORDER

IT IS ORDERED that:

1. The joint motion that was filed on May 20, 2002, seeking approval of the Gas Accord II Settlement Agreement, a copy of which is attached to this decision as Appendix A, is granted.


a. Pursuant to the terms of the Gas Accord II Settlement Agreement, the natural gas market structure, rates, and terms and conditions of service for Pacific Gas and Electric Company (PG&E), which were adopted in Decision (D.) 97-08-055 and modified in D.00-02-050 and D.00-05-049, shall be extended through December 31, 2003 for gas transmission service, and through March 31, 2004 for gas storage service.

2. The authority granted to PG&E in D.98-12-082 to engage in a natural gas financial risk management program shall be extended through the Gas Accord II extension period.

3. This proceeding shall remain open to address the issues identified in the February 26, 2002 Scoping Memo, and as discussed in this decision.

This order is effective today.

Dated August 22, 2002, at San Francisco, California.

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