VII. Assignment of Proceeding

John A. Bohn is the assigned Commissioner and Jonathan Lakritz is the assigned ALJ in this proceeding.

Findings of Fact

1. LGS has requested authority to issue debt under Sections 816 and 851.

2. LGS' request for financing authority will be used to fund its Kirby Hills Expansion Project and to secure LGS' Working Capital facility with its assets.

3. LGS provides gas storage services at market-based rates to customers who take service voluntarily.

4. Allowing LGS to secure its debt with its assets will not adversely affect the public interest.

5. It is reasonable to use financial tools such as swaps, caps, and collars to manage interest rate payments.

6. Whenever the Commission authorizes a utility to issue debt and stock, the Commission is required to charge and collect a fee pursuant to Sections 1904(b) and 1904.1.

7. In D.00-12-026, the Commission rejected LGS' request for permanent exemption from Sections 816-830 and Sections 851-856.

8. LGS did not request an exemption from Sections 1904(b) and 1904.1.

9. Exhibit C of LGS' application and Exhibit A of its October 30, 2006 amendment contain competitively sensitive information.

10. No protests have been filed in this proceeding.

11. A hearing is not required.

Conclusions of Law

1. The requested financing authority is allowable under Sections 816 and 817(b).

2. The application should be granted.

3. LGS should pay $18, 500 fee in accordance with Section 1904(b).

4. The authority granted by this Opinion should not become effective until LGS has paid the $18, 500 fee prescribed by Sections 1904(b) and 1904.1.

5. Exhibit C of LGS' application and Exhibit A of its October 30, 2006 amendment should remain confidential and under seal. These materials should not be made accessible or disclosed to anyone other than Commission staff processing the application. If LGS believes that protection is needed beyond two years, it should request further protection in a motion.

6. This proceeding should be closed.

7. This order should be effective immediately.

ORDER

IT IS ORDERED that:

1. Lodi Gas Storage, L.L.C. (LGS) is authorized to issue long-term debt for up to $25 million and to secure the financing by a perfected, first security interest in its assets. LGS is authorized to enter into contracts for the purpose of managing the variable interest risk associated with its outstanding debt. LGS is also authorized to issue long-term debt to secure its Working Capital facility by a perfected, first security interest in its assets.

2. LGS shall remit to the Commission's Fiscal Office a check for $18,500 as required by Section 1904(b) of the Public Utilities Code. The decision number of this Order shall appear on the face of the check.

3. The authority granted by this Order shall not become effective until LGS remits $18,500 to the Commission's Fiscal Office.

4. Exhibit C of LGS' application and Exhibit A of its October 30, 2006 amendment shall remain under seal for a period of two years from the effective date of this order, except upon further order or ruling of the Commission or Administrative Law Judge then designated as the Law and Motion Judge. If LGS believes that further protection of sealed information is needed beyond two years after the effective date of this order, it may file a motion stating the justification for further withholding of the sealed information from public inspection, or for such other relief as the Commission may provide. This motion shall be filed no later than 30 days before the expiration of this ordering paragraph.

5. Application 06-09-018 is closed.

This order is effective today.

Dated November 30, 2006, at San Francisco, California.

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