II. Background

D.03-12-061 was adopted at the December 18, 2003 Commission meeting. Among other things, D.03-12-061 adopted the approach that The Utility Reform Network (TURN) had proposed in the proceeding "to adjust the usage on Line 401 to reflect the risk of undersubscription and underutilization that PG&E had agreed to when Line 401 was built." (D.03-12-061, p. 286.) As a result, the Commission adopted a 95% load factor adjustment for Line 401 as part of the calculation of the system-wide load factor. (D.03-12-061, p. 292.) PG&E refers to this as the "Line 401 at-risk adjustment."

On February 24, 2004, PG&E filed its petition for modification of D.03-12-061, which we refer to as the "First Petition." According to the First Petition:

"The purpose of this Petition for Modification, however, is not to challenge the Line 401 at-risk adjustment with respect to PG&E's gas transmission rates in the year 2004. Rather, PG&E herein merely seeks confirmation that the Commission does not intend to apply the Line 401 at-risk adjustment to new capacity installed long after Line 401 was built, as distinct from the original Line 401 capacity built in 1992-1993. " (PG&E, First Petition, p. 2.)

Responses to the First Petition were filed by Mirant Americas, Inc. (Mirant), the Northern California Generation Coalition (NCGC), and TURN. PG&E filed a reply to the responses on April 8, 2004.

On July 2, 2004, PG&E filed its Second Petition for modification of D.03-12-061. In the Second Petition, PG&E does not seek any change in its approved gas transmission rates for 2004, and does not seek to change the adopted load factor of 77.02% for its backbone transmission system for 2004. Instead, PG&E's Second Petition seeks to strike from D.03-12-061 "certain language and findings requiring the use of an imputed 95% load factor for a portion of PG&E's backbone transmission system known as Line 401 for the purpose of developing PG&E's 2004 backbone transmission rates." (PG&E, Second Petition, p. 1.)

TURN filed a response in opposition to the Second Petition on August 2, 2004.

On September 21, 2004, PG&E filed its "Supplement" to the Second Petition. According to PG&E, the Supplement has two purposes. The first purpose is to provide "an explanation regarding the relationship between the relief requested in the Second Petition, and the recently filed settlement of PG&E's 2005 Gas Transmission and Storage Rate Case, A.04-03-021." (PG&E, Supplement, p. 2.) The second purpose is to provide "a set of mathematical examples to illustrate how the Line 401 throughput adjustment methodology adopted in D.03-12-061 prevents full recovery of PG&E's approved backbone transmission revenue requirement at forecasted levels of throughput." (Ibid.)

An errata to the Supplement, which was served on September 22, 2004, made a slight change to page 8 of the Supplement.¹

The Office of Ratepayer Advocates (ORA) and TURN filed responses to PG&E's Supplement on October 21, 2004. On October 25, 2004, PG&E filed a reply to the responses to the Supplement.