Comments on Draft Alternate Decision

The draft alternate decision of Commissioner Peevey in this matter was mailed to the parties in accordance with Rule 77.6 of the Commission's Rules of Practice and Procedure. Comments were filed on August 15, 2002 by PG&E and Oildale. They concur with the outcome of the decision.

Findings of Fact

1. PG&E filed A.02-01-042, January 31, 2002 requesting Commission approval of a Third Amendment to PG&E's PPA with Oildale.

2. On July 20, 2001, PG&E and Oildale entered into a first amendment to the PPA under the one-year option approved in D.01-06-015.

3. On August 22, 2001, PG&E and Oildale entered into a second amendment to the PPA that changed the energy price to a fixed price of 5.37 cents/kWh. The second amendment became a nullity when the safe harbor date for non-standard contract modifications was not extended beyond July 31, 2001.

4. PG&E and Oildale estimate that under the Third Amendment, PG&E will pay approximately $4.7 million more for energy then PG&E's energy payments using the current generic SRAC formula, on a net present value basis.

5. Without Commission approval of the Third Amendment by July 31, 2002, energy payments by PG&E to Oildale will revert to the Commission's generic SRAC formula.

6. No party has protested PG&E's Application.

7. The Assumption Agreement was approved by the respective federal bankruptcy court of PG&E and Oildale.

8. The maximum litigation risk for PG&E is approximately $45 million.

Conclusions of Law

1. The motion of PG&E for an expedited order is denied.

2. Energy and capacity payments to QFs are defined by PURPA and Pub. Util. Code § 390.

3. The Third Amendment to the PPA, or the settlement agreement with Oildale, is in the public interest, consistent with the law, and reasonable in light of the whole record.

ORDER

IT IS ORDERED that:

1. Pacific Gas and Electric Company's application for an amendment to the Power Purchase Agreement between Pacific Gas and Electric Company and Oildale Energy LLC is approved.

2. This proceeding is closed.

This order is effective today.

Dated August 22, 2002, at San Francisco, California.

HENRY M. DUQUE

GEOFFREY F. BROWN

MICHAEL R. PEEVEY

Commissioners

I dissent.

/s/ LORETTA M. LYNCH

President

I will file a written dissent.

/s/ CARL W. WOOD

Commissioner