7. Assignment of Proceeding

John A. Bohn is the assigned Commissioner and Timothy Kenney is the assigned ALJ for this proceeding

Findings of Fact

1. The Settlement Agreement is uncontested and is supported by a comprehensive and detailed record.

2. The Settling Parties fairly represent the affected interests.

3. The Settlement Agreement represents a fair compromise of the Settling Parties' positions and interests.

4. The Settlement Agreement provides sufficient information to enable the Commission to (i) implement the provisions, terms, and conditions of the Settlement, and (ii) discharge its future regulatory obligations with respect to the parties and their interests.

5. The Settlement provides customers directly affected by the closure of the nine front counters with reasonably comparable service through alternate means.

6. The Settlement Agreement reduces PG&E's revenue requirement by $2,757,000 for the period of July 2007 through 2010. This reduction may be adjusted based on the date when the nine front counters are actually closed.

7. Today's Opinion resolves all remaining issues identified in the assigned Commissioner's Ruling and Scoping Memo issued on February 3, 2006, and does so within the 18-month period mandated by § 1701.5.

Conclusions of Law

1. The Settlement Agreement is reasonable in light of the whole record, consistent with the law, and in the public interest.

2. The Motion to adopt the Settlement Agreement should be granted.

3. To pass through to ratepayers the reduction in PG&E's revenue requirement from the Settlement, PG&E should follow the guidance provided in the declaration of Bruce T. Smith that is attached to the Settlement Agreement.

4. PG&E should file advice letters with revised tariff sheets to implement the Settlement. The advice letters should be filed and processed in accordance with the procedures described in D.07-01-024 and GO 96-B for Tier 1 advice letters.

5. The following order should be effective immediately so that the Settlement Agreement adopted therein may be implemented expeditiously.

ORDER

IT IS ORDERED that:

1. The Settlement Agreement contained in Appendix B of this Order is adopted.

2. PG&E shall file advice letters with revised tariff sheets to implement the adopted Settlement Agreement. The advice letters shall be filed and processed in accordance with the procedures described in Decision 07-01-024 and General Order 96-B for Tier 1 advice letters. In addition, the advice letters shall be limited to implementing the adopted Settlement Agreement, and shall not incorporate other revenue requirement or tariff changes outside of the Settlement Agreement.

3. The reduction to PG&E's revenue requirement set forth in Attachment 2 of the Settlement Agreement shall be flowed to customers in accordance with the provisions of Attachment 2. The reduction to PG&E's revenue requirement for 2007 that is set forth in Attachment 2 may be adjusted, on a prorated basis, to reflect the date when PG&E actually closes the nine front counters identified in the Settlement Agreement.

4. The Motion to adopt the Settlement Agreement is granted.

This Order is effective today.

Dated May 24, 2007, at San Francisco, California.

MICHAEL R. PEEVEY

President

DIAN M. GRUENEICH

JOHN A. BOHN

RACHELLE B. CHONG

TIMOTHY ALAN SIMON

Commissioners

Appendix A:

List of Appearances

A.05-12-002 and I.06-03-003

************ APPEARANCES ************

Marc D. Joseph, Attorney At Law
ADAMS, BROADWELL, JOSEPH & CARDOZO
601 GATEWAY BLVD., STE. 1000
SOUTH SAN FRANCISCO CA 94080
(650) 589-1660
mdjoseph@adamsbroadwell.com
For: Coalition of California Utility Employees

James Weil, Director
AGLET CONSUMER ALLIANCE
PO BOX 37
COOL CA 95614
(530) 885-5252
jweil@aglet.org
For: Aglet Consumer Alliance

Donald Brookhyser, Attorney At Law
ALCANTAR & KAHL LLP
1300 S.W. 5TH AVENUE, SUITE 1750
PORTLAND OR 97201
(503) 402-9900
deb@a-klaw.com
For: Western States Petroleum Association

Nora Sheriff, Attorney At Law
ALCANTAR & KAHL, LLP
120 MONTGOMERY STREET, SUITE 2200
SAN FRANCISCO CA 94104
(415) 421-4143
nes@a-klaw.com
For: Energy Producers & Users Coalition

Rochelle Becker
ALLIANCE FOR NUCLEAR RESPONSIBILITY
PO BOX 1328
SAN LUIS OBISPO CA 93406
(858) 337-2703
rochelle@a4nr.org
For: Alliance for Nuclear Responsibility

Edward G. Poole, Attorney At Law
ANDERSON & POOLE
601 CALIFORNIA STREET, SUITE 1300
SAN FRANCISCO CA 94108-2818
(415) 956-6413
epoole@adplaw.com
For: Western Manufactured Housing Community Assoc (WMA)

Paul Angelopulo
Legal Division
505 VAN NESS AVE, RM. 5031
San Francisco CA 94102 3298
(415) 703-4742
pfa@cpuc.ca.gov

Ronald Liebert, Attorney At Law
CALIFORNIA FARM BUREAU FEDERATION
2300 RIVER PLAZA DRIVE
SACRAMENTO CA 95833
(916) 561-5657
rliebert@cfbf.com
For: California Farm Bureau Federation

Robert Neenan
CALIFORNIA LEAGUE OF FOOD PROCESSORS
980 NINTH STREET, NO. 230
SACRAMENTO CA 95812
(916) 444-9260
rob@clfp.com
For: California Leagueof Food Processors

Stephen A.S. Morrison, Attorney At Law
CITY AND COUNTY OF SAN FRANCISCO
1 DR. CARLTON B. GOODLETT PLACE, RM 234
SAN FRANCISCO CA 94102
(415) 554-4637
stephen.morrison@sfgov.org
For: City and County of San Francisco

Edward W. O'Neill, Attorney At Law
DAVIS WRIGHT TREMAINE, LLP
505 MONTGOMERY STREET, SUITE 800
SAN FRANCISCO CA 94111-6533
(415) 276-6582
edwardoneill@dwt.com
For: South San Joaquin Irrigation District

Jeffrey P. Gray, Attorney At Law
DAVIS WRIGHT TREMAINE, LLP
505 MONTGOMERY STREET, SUITE 800
SAN FRANCISCO CA 94111-6533
(415) 276-6500
jeffgray@dwt.com
For: South San Joaquin Irrigation District

Ann L. Trowbridge, Attorney At Law
DAY CARTER MURPHY LLC
3620 AMERICAN RIVER DRIVE, SUITE 205
SACRAMENTO CA 95864
(916) 444-1000
atrowbridge@daycartermurphy.com
For: Sacramento Municipal Utility District/Merced Irrigation

David Forkel
DELTA WETLANDS PROJECT
1660 OLYMPIC BLVD., SUITE 350
WALNUT CREEK CA 94596
(925) 932-0251
dforkel@deltawetlands.com
For: Delta Wetlands Properties

Melissa W. Kasnitz, Attorney At Law
DISABILITY RIGHTS ADVOCATES
2001 CENTER STREET, THIRD FLOOR
BERKELEY CA 94704-1204
(510) 665-8644
pucservice@dralegal.org

Roger Heller, Attorney At Law
DISABILITY RIGHTS ADVOCATES
2001 CENTER STREET, THIRD FLOOR
BERKELEY CA 94704-1204
(510) 665-8644
pucservice@dralegal.org
For: Disability Rights Advocates

Peter J. Kiel
ELLISON, SCHNEIDER & HARRIS L.L.P.
2015 H STREET
SACRAMENTO CA 95814
(916) 447-2166
pjk@eslawfirm.com
For: Delta Wetlands Properties

Lynn Haug
ELLISON, SCHNEIDER & HARRIS, LLP
2015 H STREET
SACRAMENTO CA 95816
(916) 447-2166
lmh@eslawfirm.com
For: East Bay Municipal Utility District

Norman J. Furuta, Attorney At Law
FEDERAL EXECUTIVE AGENCIES
1455 MARKET ST., SUITE 1744
SAN FRANCISCO CA 94103-1399
(415) 503-6994
norman.furuta@navy.mil
For: Federal Executive Agencies

James D. Squeri, Attorney At Law
GOODIN MACBRIDE SQUERI DAY & LAMPREY
505 SANSOME STREET, SUITE 900
SAN FRANCISCO CA 94111
(415) 392-7900
jsqueri@goodinmacbride.com
For: California Retailers Association

Gregory Heiden
Legal Division
505 VAN NESS AVE, RM. 5039
San Francisco CA 94102 3298
(415) 355-5539
gxh@cpuc.ca.gov

Clyde S. Murley
INDEPENDENT CONSULTANT
600 SAN CARLOS AVENUE
ALBANY CA 94706
(510) 528-8953
clyde.murley@comcast.net
For: San Luis Obispo Mothers for Peace

Gayatri Schilberg
JBS ENERGY
311 D STREET, SUITE A
WEST SACRAMENTO CA 95605
(916) 372-0534
gayatri@jbsenergy.com
For: TURN

David L. Huard, Attorney At Law
MANATT, PHELPS & PHILLIPS, LLP
11355 WEST OLYMPIC BOULEVARD
LOS ANGELES CA 90064
(310) 312-4247
dhuard@manatt.com
For: Gas Transmission Northwest Corporation

S. Nancy Whang, Attorney At Law
MANATT, PHELPS & PHILLIPS, LLP
11355 WEST OLYMPIC BLVD.
LOS ANGELES CA 90064
(310) 312-4000
nwhang@manatt.com
For: Gas Transmission Northwest Corp.

Joy A. Warren, Attorney At Law
MODESTO IRRIGATION DISTRICT
1231 11TH STREET
MODESTO CA 95354
(209) 526-7389
joyw@mid.org
For: Modesto Irrigation District

Peter W. Hanschen, Attorney At Law
MORRISON & FOERSTER, LLP
101 YGNACIO VALLEY ROAD, SUITE 450
WALNUT CREEK CA 94596
(925) 295-3450
phanschen@mofo.com
For: AECA

Andrew L. Niven, Attorney At Law
PACIFIC GAS AND ELECTRIC COMPANY
77 BEALE STREET, SUITE 3109
SAN FRANCISCO CA 94105
(415) 973-7572
aln2@pge.com
For: Pacific Gas and Electric Company

Patrick G. Golden, Attorney At Law
PACIFIC GAS AND ELECTRIC COMPANY
PO BOX 7442, MAIL CODE B30A
SAN FRANCISCO CA 94120-7442
(415) 973-6642
pgg4@pge.com
For: Pacific Gas and Electric Company

James Ross
RCS, INC.
500 CHESTERFIELD CENTER, SUITE 320
CHESTERFIELD MO 63017
(636) 530-9544
jimross@r-c-s-inc.com
For: Cogeneration Association of California

Johnny Pong
SEMPRA ENERGY
555 WEST FIFTH STREET
LOS ANGELES CA 90013
(213) 244-2990
jpong@semprautilities.com

Frank A. Mcnulty, Attorney At Law
SOUTHERN CALIFORNIA EDISON COMPANY
2244 WALNUT GROVE AVENUE
ROSEMEAD CA 91770
(626) 302-1499
francis.mcnulty@sce.com

Michael Rochman, Managing Director
SPURR
1430 WILLOW PASS ROAD, SUITE 240
CONCORD CA 94520
(925) 743-1292
Service@spurr.org
For: SPURR

Keith R. Mccrea, Attorney At Law
SUTHERLAND, ASBILL & BRENNAN, LLP
1275 PENNSYLVANIA AVE., N.W.
WASHINGTON DC 20004-2415
(202) 383-0705
keith.mccrea@sablaw.com
For: California Manufacturers & Technology Association

Thalia N.C. Gonzalez, Legal Counsel
THE GREENLINING INSTITUTE
1918 UNIVERSITY AVE., 2ND FLOOR
BERKELEY CA 94704
(510) 926-4026
thaliag@greenlining.org
For: Greenlining

Hayley Goodson, Attorney At Law
THE UTILITY REFORM NETWORK
711 VAN NESS AVENUE, SUITE 350
SAN FRANCISCO CA 94102
(415) 929-8876
hayley@turn.org
For: TURN

Marcel Hawiger, Attorney At Law
THE UTILITY REFORM NETWORK
711 VAN NESS AVENUE, SUITE 350
SAN FRANCISCO CA 94102
(415) 929-8876
marcel@turn.org
For: TURN

Matthew Freedman, Attorney At Law
THE UTILITY REFORM NETWORK
711 VAN NESS AVENUE, SUITE 350
SAN FRANCISCO CA 94102
(415) 929-8876
freedman@turn.org
For: TURN

Robert Finkelstein, Attorney At Law
THE UTILITY REFORM NETWORK
711 VAN NESS AVE., SUITE 350
SAN FRANCISCO CA 94102
(415) 929-8876 X310
bfinkelstein@turn.org

Laura J. Tudisco
Legal Division
505 VAN NESS AVE, RM. 5032
San Francisco CA 94102 3298
(415) 703-2164
ljt@cpuc.ca.gov

********** STATE EMPLOYEE ***********

Nilgun Atamturk
Executive Division
505 VAN NESS AVE, RM. 5303
san Francisco CA 94102 3298
(415) 703-4953
nil@cpuc.ca.gov

Bernard Ayanruoh
Division of Ratepayer Advocates
505 VAN NESS AVE, RM. 4205
San Francisco CA 94102 3298
(415) 703-2453
ben@cpuc.ca.gov
For: DRA

Truman L. Burns
Division of Ratepayer Advocates
505 VAN NESS AVE, RM. 4102
San Francisco CA 94102 3298
(415) 703-2932
txb@cpuc.ca.gov
For: DRA

Ron Wetherall
Electricity Analysis Office
CALIFORNIA ENERGY COMMISSION
1516 9TH STREET MS 20
SACRAMENTO CA 96814-5512
(916) 654-4831
rwethera@energy.state.ca.us

Timothy Kenney
Administrative Law Judge Division
505 VAN NESS AVE, RM. 5021
San Francisco CA 94102 3298
(415) 703-1626
tim@cpuc.ca.gov

Donald J. Lafrenz
Energy Division
505 VAN NESS AVE, AREA 4-A
San Francisco CA 94102 3298
(415) 703-1063
dlf@cpuc.ca.gov
For: Energy Division

Laura A. Martin
Energy Division
505 VAN NESS AVE, AREA 4-A
San Francisco CA 94102 3298
(415) 703-2149
lra@cpuc.ca.gov
For: Energy Division

Robert M. Pocta
Division of Ratepayer Advocates
505 VAN NESS AVE, RM. 4205
San Francisco CA 94102 3298
(415) 703-2871
rmp@cpuc.ca.gov
For: DRA

Rashid A. Rashid
Legal Division
505 VAN NESS AVE, RM. 4107
San Francisco CA 94102 3298
(415) 703-2705
rhd@cpuc.ca.gov
For: DRA

Laura Lei Strain
Energy Division
505 VAN NESS AVE, AREA 4A
San Francisco CA 94102 3298
(415) 703-1677
lls@cpuc.ca.gov
For: Energy Division

Clayton K. Tang
Division of Ratepayer Advocates
505 VAN NESS AVE, RM. 4205
San Francisco CA 94102 3298
(415) 703-2728
ckt@cpuc.ca.gov
For: DRA

********* INFORMATION ONLY **********

Tanya Gulesserian
ADAMS BROADWELL JOSEPH & CARDOZO
601 GATEWAY BLVD., SUITE 1000
SOUTH SAN FRANCISCO CA 94080
(650) 589-1660
mdjoseph@adamsbroadwell.com
For: Coalition of California Utility Employees

Dan Geis
AGRICULTURAL ENERGY CONSUMERS ASSO.
925 L STREET, SUITE 800
SACRAMENTO CA 95814
(916) 447-6206
dgeis@dolphingroup.org

Karen Terranova
ALCANTAR & KAHL, LLP
120 MONTGOMERY STREET, STE 2200
SAN FRANCISCO CA 94104
(415) 421-4143
filings@a-klaw.com

John R. Redding
ARCTURUS ENERGY CONSULTING
44810 ROSEWOOD TERRACE
MENDOCINO CA 95460
(707) 937-0878
johnrredding@earthlink.net

Delette Olberg, Chief Of Staff
ASSEMBLYMAN SAM BLAKESLEE
STATE CAPITOL, ROOM 5158
SACRAMENTO CA 95814
(916) 319-2277
delette.olberg@asm.ca.gov

Reed V. Schmidt
BARTLE WELLS ASSOCIATES
1889 ALCATRAZ AVENUE
BERKELEY CA 94703-2714
(510) 653-3399
rschmidt@bartlewells.com

CALIFORNIA ENERGY MARKETS
517-B POTRERO AVENUE
SAN FRANCISCO CA 94110
(415) 552-1764 X 17
cem@newsdata.com

Judy Pau
DAVIS WRIGHT TREMAINE LLP
505 MONTGOMERY STREET, SUITE 800
SAN FRANCISCO CA 94111-6533
(415) 276-6587
judypau@dwt.com

Clarence Binninger, Deputy Attorney General
DEPARTMENT OF JUSTICE
ENERGY &CORPORATE RESPONSIBILITY SECTION
455 GOLDEN GATE AVENUE,SUITE 11000
SAN FRANICSCO CA 94102
(415) 703-5528
clarence.binninger@doj.ca.gov

David Beyer
EAST BAY MUNICIPAL UTILITY DISTRICT
375 11TH STREET
OAKLAND CA 94607
(510) 287-1144
dbeyer@ebmud.com

Wendy L. Illingworth
ECONOMIC INSIGHTS
320 FEATHER LANE
SANTA CRUZ CA 95060
(831) 427-2163
wendy@econinsights.com

Greggory L. Wheatland \, Attorney At Law
ELLISON, SCHNEIDER & HARRIS, LLP
2015 H STREET
SACRAMENTO CA 95814
(916) 447-2166
glw@eslawfirm.com

Carolyn Kehrein
ENERGY MANAGEMENT SERVICES
1505 DUNLAP COURT
DIXON CA 95620-4208
(707) 678-9506
cmkehrein@ems-ca.com

Kevin J. Simonsen
ENERGY MANAGEMENT SERVICES
646 EAST THIRD AVENUE
DURANGO CO 81301
(970) 259-1748
kjsimonsen@ems-ca.com

Bevin Hong
GAS TRANSMISSION NORTHWEST CORP.
43 WOODLAND CT.
SAN RAMON CA 94583
(925) 200-1476
bevin_hong@transcanada.com

David White
GAS TRANSMISSION NORTHWEST
1400 SW FIFTH AVE.
PORTLAND OR 97201
(503) 833-4321
david_white@transcanada.com

Raj N. Pankhania
HERCULES MUNICIPAL UTILITY
111 CIVIC DRIVE
HERCULES CA 94547
(510) 799-8208
raj.pankhania@ci.hercules.ca.us

Roger Levy
LEVY AND ASSOCIATES
2805 HUNTINGTON ROAD
SACRAMENTO CA 95864
(916) 487-0227
rogerl47@aol.com

Karen Lindh
LINDH & ASSOCIATES
7909 WALERGA ROAD, NO. 112, PMB 119
ANTELOPE CA 95843
(916) 729-1562
karen@klindh.com

Jack Lynch
600 SELKIRK RANCH ROAD
ANGELS CAMP CA 95222
jackplynch@sbcglobal.net

Richard Mc Cann
M.CUBED
2655 PORTAGE BAY ROAD, SUITE 3
DAVIS CA 95616
(530) 757-6363
rmccann@umich.edu

Randall W. Keen, Attorney At Law
MANATT, PHELPS & PHILLIPS, LLP
11355 WEST OLYMPIC BLVD
LOS ANGELES CA 90064
(310) 312-4361
rkeen@manatt.com

David Marcus
PO BOX 1287
BERKELEY CA 94701
(510) 528-0728
dmarcus2@sbcglobal.net

C. Susie Berlin, Attorney At Law
MC CARTHY & BERLIN, LLP
100 PARK CENTER PLAZA, SUITE 501
SAN JOSE CA 95113
(408) 288-2080
sberlin@mccarthylaw.com

Christopher J. Mayer
MODESTO IRRIGATION DISTRICT
PO BOX 4060
MODESTO CA 95352-4060
(209) 526-7430
chrism@mid.org

MRW & ASSOCIATES, INC.
1814 FRANKLIN STREET, SUITE 720
OAKLAND CA 94612
(510) 834-1999
mrw@mrwassoc.com

Martin A. Mattes, Attorney At Law
NOSSAMAN, GUTHNER, KNOX & ELLIOTT, LLP
50 CALIFORNIA STREET, 34TH FLOOR
SAN FRANCISCO CA 94111
(415) 438-7273
mmattes@nossaman.com

Annadel Almendras
OFFICE OF THE ATTORNEY GENERAL
455 GOLDEN GATE AVENUE, SUITE 11000
SAN FRANCISCO CA 94102
(415) 703-5565
annadel.almendras@doj.ca.gov

Jayne Battey
PACIFIC FOREST AND WATERSHED LANDS STEWA
303 VINTAGE PARK DRIVE, SUITE 150
FOSTER CITY CA 94404
(650) 286-5150
jbattey@stewardshipcouncil.org

Deborah S. Shefler
PACIFIC GAS AND ELECTRIC COMPANY
77 BEALE ST., B30A
SAN FRANCISCO CA 94105
(415) 973-2959
dss8@pge.com

Peter P. Van Mieghem
Law Department
PACIFIC GAS AND ELECTRIC COMPANY
PO BOX 7442
SAN FRANCISCO CA 94120
(415) 973-2902
ppv1@pge.com

Room File
PACIFIC GAS AND ELECTRIC COMPANY
PO BOX 7442
SAN FRANCISCO CA 94120-7442
lawcpuccases@pge.com

Stella Zahariudakis
PACIFIC GAS AND ELECTRIC COMPANY
77 BEALE STREET, B10A
SAN FRANCISCSO CA 94105
(415) 973-4208
SxZc@pge.com

Keith Melville, Attorney At Law
SAN DIEGO GAS & ELECTRIC COMPANY
101 ASH STREET, HQ 13D
SAN DIEGO CA 92101
(619) 699-5039
KMelville@sempra.com

Andrew Steinberg
SAN DIEGO GAS & ELECTRIC/SOCALGAS
555 WEST FIFTH STREET, GT14D6
LOS ANGELES CA 90071
(213) 244-3817
asteinberg@semprautilities.com

Sean Casey
SAN FRANCISCO PUBLIC UTILITIES COMMISSIO
1155 MARKET STREET, 4TH FLOOR
SAN FRANCISCO CA 94103
(415) 554-1551
scasey@sfwater.org

Morgan Rafferty
SAN LUIS OBISPO MOTHERS FOR PEACE
PO BOX 164
PISMO BEACH CA 93448
(805) 474-4220
mrafferty805@charter.net

Bruce Foster, Vice President
SOUTHERN CALIFORNIA EDISON COMPANY
601 VAN NESS AVENUE, STE. 2040
SAN FRANCISCO CA 94102
(415) 775-1856
bruce.foster@sce.com

Case Administration
SOUTHERN CALIFORNIA EDISON COMPANY
2244 WALNUT GROVE AVE., RM. 370
ROSEMEAD CA 91770
(626) 302-4875
case.admin@sce.com

James M. Lehrer
RUSSEL WORDN; JOHN HUGHES
Attorney At Law
SOUTHERN CALIFORNIA EDISON COMPANY
2244 WALNUT GROVE AVENUE
ROSEMEAD CA 91770
(626) 302-3252
james.lehrer@sce.com

John P. Hughes, Manager, Regulatory Affairs
SOUTHERN CALIFORNIA EDISON COMPANY
601 VAN NESS AVENUE, STE. 2040
SAN FRANCISCO CA 94102
john.hughes@sce.com
For: SOUTHERN CALIFORNIA EDISON COMPANY

Russell G. Worden
SOUTHERN CALIFORNIA EDISON COMPANY
2244 WALNUT GROVE AVENUE
ROSEMEAD CA 91770
(626) 302-4177
russell.worden@sce.com

Robert Gnaizda,
Policy Director/General Counsel
THE GREENLINING INSTITUTE
1918 UNIVERSITY AVENUE, SECOND FLOOR
BERKELEY CA 94704
(510) 926-4006
robertg@greenlining.org

Michael Shames, Attorney At Law
UTILITY CONSUMERS' ACTION NETWORK
3100 FIFTH AVENUE, SUITE B
SAN DIEGO CA 92103
(619) 696-6966
mshames@ucan.org

Michael Kerkorian
UTILITY COST MANAGEMENT LLC
720 GEORGINA AVE.
SANTA MONICA CA 90402
(559) 261-9230
mk@utilitycostmanagement.com

Paul Kerkorian
UTILITY COST MANAGEMENT, LLC
726 W. BARSTOW AVE., SUITE 108
FRESNO CA 93704
(559) 261-9230
pk@utilitycostmanagement.com
For: UTILITY COST MANAGEMENT LLC

Robert Rathie
WELLINGTON LAW OFFICE
857 CASS STREET, SUITE D
MONTEREY CA 93940
(831) 373-8733
attys@wellingtonlaw.com

Adar Zango
ZIMMER LUCAS PARTNERS
45 BROADWAY, 28/F
NEW YORK NY 10006
(212) 440-0749
zango@zimmerlucas.com

(END OF APPENDIX A)

Appendix B:

Settlement Agreement Regarding Front Counter Issues

Note: The Signed Copy of the Settlement Agreement is in the Formal File for this proceeding. Appendix B of today's Opinion is a copy of the Settlement Agreement that does not show the parties' signatures.

Settlement Agreement Among Pacific Gas and Electric Company, Division of Ratepayer Advocates, The Utility Reform Network, the Greenlining Institute, the California Farm Bureau Federation, and the Coalition of California Utility Employees

SETTLEMENT AGREEMENT

1. As a compromise among their respective litigation positions, and subject to the Settlement Conditions set forth in Section 3 of this Agreement, the parties to this Settlement (Settling Parties) agree on a mutually acceptable outcome regarding Pacific Gas and Electric Company's (PG&E) proposal set forth in Application (A.) 05-12-002, Application of Pacific Gas and Electric Company for Authority, Among Other Things, to Increase Rates and Charges for Electric and Gas Service Effective on January 1, 2007 to close the front counters at all of its 84 local offices ("PG&E proposal"). The Settlement is presented to the Commission pursuant to Rule 12 of the Commission's Rules of Practice and Procedure.

SETTLING PARTIES

2. The Settling Parties are as follows: the Division of Ratepayer Advocates (DRA), PG&E, The Utility Reform Network (TURN), the California Farm Bureau Federation (CFBF), the Greenlining Institute (Greenlining) and the Coalition of California Utility Employees (CCUE).

SETTLEMENT CONDITIONS

3. The Settling Parties agree to the following general conditions:

a. This Settlement resolves all issues in this docket associated with PG&E's proposal.

b. This Settlement and attachments thereto embody the entire understanding and agreement of the Settling Parties with respect to the matters described and supersede prior oral or written agreements, principles, negotiations, statements, representations, or understandings among the Settling Parties with respect to those matters.

c. Except as specifically provided herein, the Settling Parties agree that this Settlement should not constitute precedent regarding any principle or issue in this proceeding or in any future proceeding.

d. The Settling Parties agree that this Settlement is reasonable in light of the entire record, consistent with law, and in the public interest.

e. The Settling Parties agree that no provision of this Settlement shall be construed against any Settling Party because that Settling Party or its counsel or advocate drafted the provision.

f. This Settlement may be amended or changed only by a written agreement signed by the Settling Parties.

g. The Settling Parties shall jointly request Commission approval of this Settlement and shall actively support prompt approval of the Settlement.

h. The Settling Parties intend the Settlement to be interpreted and treated as a unified, integrated agreement. In the event the Commission rejects or modifies this Settlement, the Settling Parties reserve their rights under Rule 12.4.

i. This document may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

j. This Settlement shall become effective among the Settling Parties on the date the last Party executes the Settlement as indicated below.

k. In witness whereof, intending to be legally bound, the Settling Parties hereto have duly executed this Settlement on behalf of the Settling Parties they represent.

SETTLING PARTIES LITIGATION POSITION

4. PG&E recommended that all local office front counters be closed on June 30, 2007, and stated that it would credit back to customers the associated revenue requirement.

5. DRA and the CFBF opposed any closures.

6. TURN opposed any closures and recommended that PG&E reduce the costs of providing services in local offices by 20 percent.

7. Greenlining did not specifically oppose PG&E's proposal, but pointed out in its testimony that the primary beneficiaries of the front counters are underserved communities and that the creation by itself of additional contract payment centers does not compensate for closing front counters. Greenlining stated that it would work closely with PG&E to develop an overall plan that will address PG&E's considerations and the needs of low-income communities.

8. CCUE intervened in this case on behalf of its unions whose 35,000 members work at nearly all of the electric utilities in California, including approximately 13,000 employees of PG&E. CCUE did not submit testimony regarding local offices, but was an active participant in the settlement discussions as many union members would have been affected by PG&E's proposal.

SETTLEMENT TERMS

9. Of PG&E's current total of 84 local offices, 9 local offices (as identified in Table 1) would be closed within 6 months of CPUC approval. ("approval date"). These 9 offices were selected based on the proximity of alternative PG&E offices nearby and/or low transaction volumes. PG&E will not seek any additional office closures for a minimum of three years from the approval date. After three years, PG&E could propose to close up to a maximum of an additional 20 offices, with the understanding that PG&E would not in any event seek such closures until the California Public Utilities Commission issues a decision on the merits in response to PG&E's 2010 or 2011 test year GRC. PG&E will not seek any additional front office closures for a minimum of four years from the approval date or for one year following a Commission decision on the merits in response to PG&E's 2010 or 2011 GRC application, whichever comes later.

Table 1

10. In any future proposal to close local offices, PG&E will include within its showing data illustrating how customers formerly served by the 9 closed local offices received comparable payment and nonpayment transaction services after the closure of these offices. Such data shall include transaction volumes at Neighborhood Payment Centers in the vicinity of the closed offices before and after the closures.

11. PG&E agrees to determine via an annual survey the percentage of customers who use the remaining 75 front counters after calling the Call Center and the reasons why they used the front counters after contacting the Call Center. Two such surveys will be conducted following approval of this Settlement. PG&E shall make the results of these surveys available to interested parties upon request.

12. If PG&E at a later date seeks to close any of the remaining 75 front counters, PG&E shall include data showing that each type of transaction performed at the front counter slated for closure can be adequately resolved by other means.

13. PG&E will make a good faith effort to continue to educate customers on alternative payment and non-payment transaction options.

14. DRA, TURN, CFBF, Greenlining, and CCUE reserve the right to protest any PG&E proposal to close any front counter not listed in Table 1 and to assert that PG&E must provide information, analyses, and or studies in addition to the data listed in this Settlement. DRA, TURN, CFBF, Greenlining, and CCUE also reserve the right to challenge the accuracy or relevance of any data or studies prepared by PG&E as part of this Settlement or any other data or studies PG&E may present as part of a future request to close additional front counters. PG&E reserves its right to argue that whatever justification it sets forth in a future request to close additional front counters is sufficient.

15. For each of the 9 local offices PG&E will close, PG&E will maintain for the next three years at least the same number of Neighborhood Payment Centers (NPCs) in close proximity to the local office proposed for closure as existed on January 1, 2007. PG&E will ensure that each of these Neighborhood Payment Centers has either a public phone located within one block, or a phone on the premises that PG&E customers making payments are authorized to use.

16. On a pilot basis, PG&E will create a call center with a toll free phone line staffed with agricultural specialists. PG&E will work with CFBF to communicate and promote the use of this line. Initially the line would be staffed from Monday through Friday from 7:00 AM to 7:30 PM and on Saturdays from 7:00 AM to 4:30 PM. If the line is utilized and valued by agricultural customers, PG&E would consider making this an on-going service.

17. PG&E will dedicate two account representatives throughout the service area to address agricultural customer issues. These representatives will be available to agricultural customers for field visits. Agricultural customers can call the dedicated line mentioned in item 16 above. If the Agricultural Customer Service Representative cannot solve the customer's problem over the phone, the Representative will refer the issue to the dedicated Agricultural Account Services field representative closest to the customer's location. The Agricultural Account Services representative will then call the customer to resolve the issue or schedule a time to meet.

18. Representatives of PG&E and CFBF will meet on a semiannual basis or more frequently if conditions warrant to discuss implementation of the two items above and possible improvements thereto.

19. PG&E reserves the right, as part of its 2010 or 2011 test year General Rate Case, to modify or cancel the service commitments set forth in paragraphs 16, 17, and 18 above, and CFBF reserves its right to assert that such services should continue.

20. PG&E will encourage Neighborhood Payment Centers (NPCs) to provide multilingual staff appropriate to the languages spoken in that neighborhood and will make every effort to maximize the hours and days of operation of its NPC network.

21. PG&E will encourage NPCs to stock brochures on PG&E's low income programs.

22. PG&E will work with the Greenlining Institute to incorporate additional criteria in PG&E's semi-annual NPC audits to address Greenlining's particular concerns regarding NPC customer service issues.

23. Impacted local office employees will have all rights under Title 19 and applicable IBEW/PG&E Transformation Letter Agreements. PG&E will offer voluntary severance within the demotion unit of those offices that are going to be closed. The Company will accept the severance request if it results in a directly impacted employee being placed in a position as a result of the severance.

24. PG&E would be authorized, but not required, to increase its pay station network to a maximum of 800 locations.

25. The costs and savings associated with the closure of the 9 offices are described in the attached declaration of Steve Phillips and Bruce T. Smith, attached hereto as Attachments 1 and 2. Settling Parties agree that these declarations will be admitted into evidence in this proceeding.

26. PG&E will follow the procedures outlined in Attachment 3 in closing the 9 offices.

27. This Settlement is subject to, and expressly contingent on, any ratification that the IBEW deems necessary and approval by the CPUC.

28. PG&E, DRA, TURN, CFBF, Greenlining and CCUE agree to waive the confidentiality provisions of CPUC Rule 12 in order for the IBEW to seek ratification from its members prior to filing a motion requesting approval of the Settlement.

PACIFIC GAS AND ELECTRIC COMPANY By: ______/s/_________________ Name: PATRICK G. GOLDEN Date: February 15, 2007	DIVISION OF RATEPAYER ADVOCATES By: ______/s/_________________ Name: DANA S. APPLING Date: March 9, 2007
THE COALITION OF CALIFORNIA UTILITY EMPLOYEES By: _______/s/______________ Name: MARC JOSEPH Date: February 15, 2007	THE CALIFORNIA FARM BUREAU FEDERATION By: ________/s/________________ Name: RONALD LIEBERT Date: February 15, 2007
THE UTILITY REFORM NETWORK By: ________/s/_____________ Name: HAYLEY GOODSON Date: February 15, 2007	THE GREENLINING INSTITUTE By: _________/s/_______________ Name: THALIA GONZALEZ Date: February 15, 2007

SETTLEMENT AGREEMENT

ATTACHMENT 1

DECLARATION OF STEVE PHILLIPS

I, Steve Phillips, declare:

1. I am employed by PG&E as a Manager in PG&E's Customer Operations department. My responsibilities include sponsoring testimony in regards to Local Office and Pay Station Operations (EXH (PG&E-05), Chapters 6, 6A and 6B) in PG&E's 2007 General Rate Case. I make this declaration in support of the settlement between PG&E, the Division of Ratepayer Advocates (DRA), The Utility Reform Network (TURN), California Coalition of Utility Employees (CCUE), California Farm Bureau Federation (CFBF), and the Greenlining Institute (Greenlining) regarding local office closures.

2. The proposed settlement would close the following nine front counters within 6 months of CPUC approval:

a. Alameda

b. Newman

c. Orland

d. Willits

e. Corcoran

f. Willow Creek

g. Petaluma

h. Half Moon Bay, and

i. Geyserville

3. The volumes of transactions at these offices represent less than 4% of all payment transactions and less than 3% of all non-payment transactions made at front counters in 2005.

4. The costs and savings associated with the closure of the nine offices is shown in Attachment A. Data is included through 2010. This proposal would reduce PG&E's revenue requirements forecast as reflected in the declaration by Bruce Smith.

5. As stated in PG&E's testimony in Exhibit (PG&E-5) Chapter 6A, pp6A-11 to 14, PG&E posted notices in all local offices (including these nine) from September 1, 2005 to October 21, 2005, and mailed notices to all customers regarding the proposed office closures. During this period, PG&E received approximately 1000 responses. This represents less than 1 percent of the customers who visited the local offices during the noticing period and a much smaller percentage of the total number of customers served by PG&E. Out of the 1000 responses, only 19 responses were from customers using one of the nine front counters proposed to be closed. Of the 19, 1 customer supported the closures and 18 opposed. Of the 18 opposing, one thought the service center was closing, not the front counter. Of the remaining comments, most cited convenience and the ability to talk to a person face to face as their reasons for wanting the offices to stay open.

6. Payment alternatives exist for all nine offices in the form of Neighborhood Payment Centers (NPC) that provide longer operating hours at all sites and alternative language capabilities at six of the nine. Seven of the nine offices to be closed have a NPC within one mile. In addition, PG&E will make a good faith effort to continue to educate customers on alternative payment and non-payment transaction options.

7. Another PG&E office is located within 30 minutes driving time of eight of the nine offices to be closed.

8. PG&E believes that there are no longer any transactions that require a customer to go to a local office front counter and none of the alternatives to the front counter for either payment or non-payment transactions would result in the customer having to incur additional costs other than the cost of a telephone call or stamp. Payments can be handled in a variety of ways, including pay by mail, Neighborhood Payment Centers, pay by phone, electronic debiting, and on-line at pge.com. PG&E believes that all non-payment transactions can be handled by calling PG&E's toll free 1-800 number, which is available 24 hours a day and can provide services in over 150 languages.

I declare under penalty of perjury under the laws of the state of California that the foregoing is true and correct.

Executed this 3^rd day of April, 2007 at Sacramento, California.

/s/

Steve Phillips

Table A

Pacific Gas and Electric Company

Costs and Savings Associated with Leaving 75 Front Counters Open

SETTLEMENT AGREEMENT

ATTACHMENT 2

DECLARATION OF BRUCE T. SMITH

I, Bruce T. Smith, declare:

1. I am employed by PG&E as a Manager in PG&E's Operations Revenue Requirements Department. My responsibilities include serving as project manager for PG&E's 2007 General Rate Case. I make this declaration in support of the settlement between PG&E, the Division of Ratepayer Advocates (DRA), the Utility Reform Network (TURN), California Coalition of Utility Employees (CCUE), California Farm Bureau Federation (CFBF), and the Greenlining Institute (Greenlining).

2. As described in the Declaration of Steve Phillips, the proposed settlement allowing PG&E to close nine front counters will allow PG&E to revise its customer services expenses and capital expenditures compared to the forecasts presented in the 2007 GRC. I have computed the reduction in PG&E's forecast revenue requirements for 2007 through 2010 based on the revised expense and capital expenditure forecasts presented in the Declaration of Steve Phillips based on a closure date of July 1, 2007. The revenue requirement reduction includes the reduction in customer service expense and the reduction in depreciation, return and taxes associated with lower capital expenditures and rate base. PG&E's forecast revenue requirements would be reduced as follows:

3. The average reduction in PG&E's annual revenue requirement from July, 2007, through the end of 2010 due to the closure of the nine front counters would be $788,000 ($2,757,000/ 3.5). To pass this revenue requirement reduction on to customers, PG&E will reduce the annual base revenue amounts recorded in the electric Distribution Revenue Adjustment Mechanism (DRAM) and the gas Core Fixed Cost Account (CFCA) by $433,000 and $355,000, respectively. (The revenue requirement reduction is allocated 55% to electric and 45% to gas based on the number of customers.) PG&E will file Advice letters to make these revenue requirement reductions effective on the date of the front counter closures. Thus the total reduction in revenue requirement credited to customers from 2007 through the end of 2010 will be adjusted based on the actual date of the office closures.

4. The input data and revenue requirement computations are shown in Appendix A to this Declaration.

I declare under penalty of perjury under the laws of the state of California that the foregoing is true and correct.

Executed this 2nd day of April, 2007, at Walnut Creek, California.

/s/

Bruce T. Smith

SETTLEMENT AGREEMENT

ATTACHMENT 3

Closure Plan

The following steps will be used in the closure of the nine offices:

1. Prior to the closure of any office, PG&E will notify by mail all customers that have used any of the nine offices to be closed within the last 12 month period for either a payment or non-payment transaction. This communication will also provide specific details regarding the Neighborhood Payment Centers in the area.

2. PG&E will post notices for a 45 day period prior to the actual closure within the nine offices informing customers of the closure and of alternate payment options, including the locations of nearby Neighborhood Payment Centers. These posters will be provided in multiple languages appropriate to the office neighborhoods.

3. PG&E will meet with representatives of each of the towns affected by one of the office closures to discuss ways to reduce any impacts to the community as a result of the office closure.

[END OF APPENDIX B]