Reid

On May 14, 2007, a meeting was held between El Paso and employees of both PG&E and PG&E's parent company, PG&E Corporation, in which El Paso first raised the idea of a possible PG&E Corporation ownership stake in the Ruby Pipeline. PG&E Corporation responded that it would not consider an ownership interest until October of 2007. On December 20, 2007, PG&E Corporation signed a letter of intent with El Paso to acquire a 25.5% interest in the Ruby Pipeline. On May 6, 2008, PG&E informed the ALJ and the interested parties that PG&E Corporation had decided not to acquire an ownership interest.

Reid is concerned that PG&E Corporation had an outstanding offer to obtain an option to acquire an ownership interest in Ruby LLC at the same time PG&E was negotiating with Ruby LLC and evaluating alternatives to the Ruby Pipeline. Reid notes that two risk management committees reviewed PG&E's negotiations with Ruby: the Utility Risk Management Committee (URMC) and the PG&E Corporation Risk Policy Committee (RPC). The two committees have overlapping membership that includes high-level officers from both PG&E and PG&E Corporation.

The URMC and the RPC approved the Ruby Precedent Agreement on November 14, 2007. Reid argues that it was a clear conflict of interest for PG&E Corporation to review and approve PG&E's agreement with Ruby at a time when PG&E Corporation was able to obtain an option to acquire an ownership interest in the Ruby Pipeline. To prevent future conflicts of interest, Reid recommends that the Commission take the following actions:

1. Prohibit PG&E from employing any individual who is also employed by PG&E Corporation

2. Prohibit PG&E from having a member of its URMC who is also a member of the RPC.

3. Prohibit PG&E from having a member of its URMC who is employed by PG&E Corporation.