ALJ/JSW/hl2 Mailed 7/24/2006

Decision 06-07-010 July 20, 2006

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Pacific Gas and Electric Company for Adoption of Policy and Process for Acquisition of Incremental Core Gas Storage in Compliance with Ordering Paragraph 5 of Decision 04-09-022, And for Adoption of a Core Reliability Planning Standard.

Application 05-03-001 (Filed March 2, 2005)

(See Appendix B for Appearances.)

OPINION REGARDING THE PROPOSAL FOR
INCREMENTAL CORE GAS STORAGE

Table of Contents

Title Page

OPINION REGARDING THE PROPOSAL FOR INCREMENTAL CORE GAS STORAGE 11

I. Summary 22

II. Procedural Background 33

III. Discussion of the Issues 55

A. Introduction 55

B. PG&E Proposal for a One-Day-In-10-Year Planning Standard 55

C. PG&E Creditworthiness Proposal 1414

D. Exhibit 20 2222

E. Request to Modify D.04-09-022 2828

F. System Optimization 2929

G. Changes to the Incentive Mechanism 3030

IV. Conclusion 3131

V. Comments on Proposed Decision 3131

VI. Assignment of Proceeding 3232

Findings of Fact 3232

Conclusions of Law 3535

ORDER 3636

APPENDIX A Pacific Gas and Electric Company Incremental Core Storage Application 05-03-001 Partial Settlement

APPENDIX B Appearances

I.

OPINION REGARDING THE PROPOSAL
FOR INCREMENTAL CORE GAS STORAGE