1. Background

PG&E filed this "Biennial Cost Allocation Proceeding" (BCAP) application on July 30, 2004 seeking changes in rates, revenue allocations, and rate design for natural gas sales and services. PG&E proposes allocating $1.063 billion among different customer allocations. Included in this amount, PG&E proposes a revenue increase of $14.8 million. PG&E's application proposes that all subject rates take effect on July 1, 2005. Decision (D.) 01-11-001 was PG&E's last BCAP decision for rate changes that became effective January 1, 2002. Although the Commission has normally processed BCAPs every two years, PG&E explains it delayed filing this application because of intervening events, including the energy crisis and PG&E's bankruptcy proceeding in federal court.

Three parties filed formal protests to this application: the Commission's Office of Ratepayer Advocates (ORA), The Utility Reform Network (TURN), and the California Cogeneration Council (CCC). The California Manufacturers and Technology Association (CMTA), the Indicated Producers (IP), the Western Mobilehome Community Housing Association (WMA), West Coast Gas Company (West Coast), and Clean Energy either commented on PG&E's proposals, made counterproposals, or presented proposals of their own.

The Commission held five days of evidentiary hearings in this proceeding. Parties filed briefs on March 23, 2005, and reply briefs on April 8, 2005, and the proceeding was submitted. No party requested final oral argument.