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Gas Industry Glossary

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A

Abnormal Peak Day (APD)
An abnormal peak day is the coldest day which could reasonably be expected to occur within the Pacific Gas and Electric Company system for planning purposes and is based on the coldest day of record for the Pacific Gas and Electric Company territory.

Administrative Law Judge (ALJ)
An administrative law judge presides over evidentiary hearings for a CPUC or FERC application (hearings are required for many, but not all, applications) and writes a proposed decision after all interested parties have been given the opportunity to present their views. The CPUC or FERC commissioners may adopt all or part of the proposed decision, amend or modify the proposed decision, or set aside the proposed decision and prepare their own decision.

Aggregators
Aggregators act on behalf of groups of producers to collect producer supplies and sell the gas in commingled blocks to end-users. Prior to deregulation, virtually all Canadian gas in California was provided by two aggregators (Alberta & Southern Gas, which supplied Pacific Gas and Electric Company via Pacific Gas Transmission, and Pan-Alberta Gas which supplied Southern California Gas Company via Pacific Interstate Transmission Company). Aggregators do not take title to the gas but simply find markets and negotiate prices for pools of producers. The largest aggregators still active in the California market include CanWest, Pan-Alberta, and Western Gas Marketing. The term "aggregator" also is used as a synonym for "core transport agent".

Alternative Fuel
Any fuel (gaseous, liquid, or solid) that may be used in lieu of natural gas. Electricity shall not be considered as an alternative fuel for purposes of conversion.

American Gas Association (AGA)
An international trade organization representing gas pipeline and distribution companies.

Annual Contract Quantity
The annual gas delivery quantity contracted for during each contract year as specified in a natural gas service agreement.

Average Daily Quantity (ADQ)
The monthly contracted quantity divided by the number of customers' operating days in that month.

Average Day
(operational definition) The temperature condition corresponding to a typical day in an average temperature year. The gas sales or requirements for an average day are annual totals divided by 365 days.

Average Demand
The total amount of energy consumed during a specified interval divided by the number of hours in that same interval.

Average Monthly Use
The total amount of gas used under each rate schedule(s) during the 12 billing months ending with the current billing month, divided by 12. If the customer does not have 12 billing months of use under a noncore rate schedule, the average monthly use will be determined by dividing the cumulative gas use by the number of billing months since service was initiated.

Average Temperature Year
Long-term average recorded temperature.

B

Backbone Credit
A credit representing the marginal cost of backbone transmission in non-Pipeline Expansion transportation rates. It is paid to end-use customers receiving gas via the Pipeline Expansion.

Backbone Transmission System
The Backbone Transmission System, formerly referred to as Lines 300, 400 and 401, is used to transport gas from Pacific Gas and Electric Company's interconnection with interstate pipelines, other local distribution companies, and California gas fields to Pacific Gas and Electric Company's local transmission and distribution system.

Backhaul
A natural gas transportation service which requires movement of gas from a point of receipt to a point of delivery such that the contractual direction of movement on the pipeline is in a direction opposite to the flow of the gas.

Balancing Account
An account established by a utility to record, for recovery through rates, certain authorized amounts and to ensure that the revenue collected is neither less than nor more than those amounts.

Balancing Service
Gas balancing service (Schedule G-BAL) accommodates imbalances between actual customer usage and gas delivered to Pacific Gas and Electric Company for that customer's use.

Barrel of Oil
A unit of measure equal to 42 U.S. gallons, or 5.6 cubic feet, or 159 liters of oil.

Baseline
A rate structure mandated by the California Legislature and implemented at Pacific Gas and Electric Company in 1984 that ensures all residential customers are provided a minimum necessary quantity of gas at the lowest possible cost.

Biennial Cost Allocation Proceeding (BCAP)
A rate adjustment proceeding scheduled to be held every two years to adopt a natural gas fuel revenue requirement, allocate the fuel and transportation revenue requirements among gas customers, and set gas rates.

Billing Month
The period between the dates on which the customer's meter(s) are read.

British Thermal Unit (Btu)
The standard unit for measuring a quantity of thermal energy. One Btu equals the amount of thermal energy required to raise the temperature of one pound of water one degree Fahrenheit and is exactly defined as equal to 1,055.05585262 joule, rounded to 1,055.056 joule, for most applications. (A joule is equal to one watt-second.)

Brokerage Fee
A fee charged to noncore customers, including UEG and wholesale, who procure gas from Pacific Gas and Electric Company's core gas supply portfolios, to cover certain costs of procurement service.

Btu Area
A physically identifiable area of the gas transmission and/or distribution system in which the Btu and specific gravity of the gas is measured at a single point representative of the entire area.

Bundled Gas Service
A gas service in which gas supply, interstate and intrastate transportation, distribution and storage services all are provided for one price. Core customers receive bundled gas service unless they join a core transport group; noncore customers may choose such service by selecting core subscription service.

Bypass
The acquisition of gas service from an alternative source without using the facilities of the supplier/transporter that previously provided the service.

C

California Alternate Rates for Energy (CARE)
A program that provides low-income residential electric and natural gas customers with reductions in their natural gas and electric rates. (Formally known as Low-Income Rate Assistance).

California Public Utilities Commission (CPUC)
The state agency that regulates the rates and services of natural gas, electric, water, steam, pipeline, sewer, telephone, cellular and radio telephone, and telegraph utilities as well as trucking, railroad, airline, moving and privately-owned bus companies.

California-Source Gas
There are two types of California-source gas: (1) regular purchases, which are all gas received or forecasted from California producers, excluding exchange volumes, and (2) gas received for exchange or transport, which is gas received or forecasted from California producers for exchange, payback or transport.

Capacity
A measure of the amount of gas that a pipeline is rated to transport. For example, the capacity of Line 300 is 1,140 million cubic feet per day (MMcf/d), Line 400 is 1,040 MMcf/d, and Line 401 is 850 Mmcf/d.

Capacity Brokering
The CPUC term for LDC sales of firm interstate pipeline capacity rights. These sales are made under FERC terms for CAPACITY RELEASE, as outlined in Order 636.

Capacity Constraint
A restriction or limitation at any point on Pacific Gas and Electric Company's system which affects acceptance, movement, or subsequent redelivery of natural gas. Pacific Gas and Electric Company is the sole judge of whether it has sufficient capacity to deliver gas to customers.

Capacity Factor
The ratio of the average amount of gas transported on a pipeline to the rated capacity of the system. For example, if a pipeline transports 80 MMcf/d and has a rated capacity of 100 MMcf/d, then the capacity factor is 80 percent.

Citygate
The Citygate is any point at which the backbone transmission system connects to the local transmission and distribution system.

Cogeneration
Simultaneous production of electricity and thermal or mechanical energy from the same fuel source. Also used to designate a special category of gas customers.

Coincident (Peak) Demand
The level of demand of an electric or natural gas customer or customer class at the time of the electric or gas system's peak demand.

Cold Temperature Year
Statistically determined, extremely cold design-temperature conditions, based on long-term recorded weather data.

Commercial
Category of gas customers whose establishments consist of services, manufacturing nondurable goods, dwellings not classified as residential, and farming (agriculture).

Commodity Charge
The component of rates charged to customers that reflects the volume of gas actually transported by a utility or the cost of gas actually purchased by the utility.

Common Use Areas
Those areas that may be shared or used by occupants within a multifamily accommodation, including, but not limited to, laundry room, recreation, swimming pool, tennis courts, gardens, hall/outdoor lighting.

Compressors
Equipment which pressurizes the gas to keep it moving through the pipelines.

Condensate
Condensate is formed when "heavy" hydrocarbons, such as ethane, propane, butane, and pentane condense as pressure suddenly drops at the surface. Separators are used to remove condensate from natural gas.

Connection Charge
Any fee in addition to usual rate schedule charges that customers are expected to pay to have their electric and/or natural gas service connected.

Core Customers
Residential and small commercial gas customers who require utility gas service.

Core Fixed Cost Account (CFCA)
The Core Fixed Cost Account is one of Pacific Gas and Electric Company's two gas fixed cost accounts. It is a balancing account that matches the authorized base revenue requirement and certain other costs for core customers with recorded revenues intended to recover that revenue requirement and the other specified costs. Like balancing accounts, the CFCA provides for any overcollection or undercollection of revenues, plus interest to be refunded to or recovered from ratepayers. (See "Noncore Fixed Cost Account")

Core Procurement Incentive Mechanism (CPIM)
CPIM replaces reasonableness reviews with an industry index for benchmarking gas purchase prices.

Core Subscription Customers
The Core Subscription program ended 2/28/01. Noncore customers who elected a bundled service that included firm intrastate transportation service and gas procurement service from Pacific Gas and Electric Company's core gas supply portfolio.

Core Transport Agent
An individual or company that contracts with Pacific Gas and Electric Company and participating core transportation program customers as the responsible agent to manage natural gas deliveries to Pacific Gas and Electric Company on behalf of a core transport group.

Core Transport Group
Any combination of core customers whose total gas use is greater than or equal to 250,000 therms on an annual basis and who contract with a core transport agent for gas procurement service. The aggregation of gas accounts into a core transport group is needed for core customers to qualify for gas service under the Core Gas Transportation Pilot Program. The group is contractually tied together by a core transport agent.

Cost of Service
The total costs incurred by a utility in providing utility service.

Crossover Ban
Crossover Ban is a safeguard designed by the CPUC to insure that shippers paying the higher, incremental Expansion rates on PGT also pay corresponding incremental rates on Line 401, the California portion of the Expansion project. Specifically, volumes that flow on the PGT Expansion for any portion of the path between Kingsgate and Malin are banned from crossing over and flowing on Pacific Gas and Electric Company's Line 400.

Cubic Foot of Gas
Volume of natural gas which, at a temperature of 60 degrees Fahrenheit and an absolute pressure of 14.73 pounds per square inch, occupies one cubic foot.

Curtailment
Temporary suspension, partial or complete, of gas deliveries to a customer or customers because of a projected or actual supply or pipeline-capacity constraint.

Cushion Gas
Volume of gas which is required in underground storage field to maintain minimum field pressure. This cushion gas (or base gas) is not available for withdrawal so long as the storage site is being actively operated.

Customer Demand Charge
The component of rates charged to customers that is expected to cover the capital-related costs and the costs of operation and maintenance of transmission, distribution, and storage facilities. The other component of rates is the commodity charge. This charge is also referred to as a reservation charge.

Cycle Volume
Volume of gas which can be withdrawn from underground storage during the winter season and then be replaced during the summer season.

D

Decatherm (Dth)
The approximate heat content of 1,000 cubic feet (Mcf) of gas; ten therms.

Dehydrator
A natural gas processing equipment that removes water vapor by bubbling natural gas through a glycol contactor, which absorbs water vapor.

Deliverability
The volume of natural gas per day that a well, gas field, storage reservoir, pipeline, or distribution system can supply.

Delivery Point(s)
The place(s) where Pacific Gas and Electric Company delivers natural gas to the shipper.

Demand-Side Management (DSM)
Measures taken by a utility to influence the level or timing of customers' energy demand in order to optimize the use of available utility resources.

Department of Energy (DOE)
A cabinet-level, executive department of the federal government responsible for a variety of regulatory, research, and marketing programs related to energy production and use.

Direct Connect
A direct connect is an interconnection between a transmission facility and a customer where the connection allows the transmission company to directly serve the customer without using any local distribution system facilities. The direct connect customer would typically pay less for service because they would avoid any LDC charges.

Disallowance
A determination by a regulatory body that certain costs incurred by a utility were not prudent or reasonable and therefore are not recoverable from the utility's customers through rates, and must be borne by the utility's shareholders.

Distribution System
This portion of the Pacific Gas and Electric Company system, which includes local transmission, extends from the Citygate to the customer's premises.

Division of Ratepayer Advocates (DRA)
In general rate cases, the CPUC Division of Ratepayer Advocates is responsible for making recommendations arrived at independently and in the long-term interests of all ratepayers. DRA examines cost and quality of service, prudence of management decisions, effectiveness of conservation programs and many other factors. The DRA then makes its recommendations to the administrative law judge handling the case, who considers them along with those of other parties to the proceeding.

Drive Gas Ratio
The drive gas ratio specifies the relationship between an increment of gas held in storage inventory and an increment of additional withdrawal capacity.

E

Embedded Cost
The total current cost of owning, operating, and maintaining a utility's existing system. Under an embedded cost structure, a substantial portion reflects historical capital investments, including depreciation and return on investment.

End-Users
End-users are the ultimate consumers of natural gas. They include residential, commercial, industrial, wholesale, cogeneration, enhanced oil recovery, and utility electric generation customers.

Enhanced Oil Recovery (EOR)
Injection of steam into oilholding geologic zones to increase ability to extract oil by lowering its viscosity. Also used to designate a special category of gas customers.

Equivalent Barrel
A standard measure of thermal energy content, equivalent to 6,250,000 British thermal units, which is the thermal energy content of a representative barrel of oil.

Exchange
Delivery of gas by one party to another and the delivery of an equivalent quantity by the second party to the first. Such transactions usually involve different points of delivery and may or may not be concurrent.

Expedited Application Docket (EAD)
The CPUC offers an alternate procedure for handling requests for approval of special service contracts between public utilities and their gas or electric customers, who may bypass the utility system due to the availability of alternate sources of supply. As soon as an application is filed, a workshop is scheduled at the end of a 20-day period, during which protests can be filed and questions asked of utility representatives. The Commission then votes on the workshop recommendation at the next regularly scheduled meeting, where appropriate.

F

Federal Energy Regulatory Commission (FERC)
A federal executive agency responsible for regulating the activities of key portions of the nation's natural gas utilities, electric utilities, natural gas pipeline transportation utilities, and hydroelectric power producers.

Firm Intrastate Noncore Transportation Service
The highest priority transportation service available to noncore customers on the Pacific Gas and Electric Company system.

Forward Haul
A natural gas transportation service which requires movement of gas from a point of receipt to a point of delivery such that the contractual direction of movement on the pipeline is in the same direction as the flow of the gas.

G

Gas Distribution Line
A gas pipeline, normally operating at pressures of 60 pounds per square inch or less, which brings gas from the high pressure transmission lines to the customer.

Gas Industry Restructuring in California
A long-term regulatory process, initiated in the mid-1980s by the California Public Utilities Commission, to change the fundamental structure of the state's natural gas industry. The new structure among other things now allows gas customers to procure their own gas.

Gas Procurement
Until March, 2001, large commercial and industrial customers may continue to procure gas from Pacific Gas and Electric Company (Schedule G-CSP) for one-year terms. This procurement option will be eliminated three years after the implementation date. Then any noncore customer must receive supply from a marketer or elect to be reclassified as a core customer.

Gas Transmission
A gas pipeline, normally operating at pressures greater than 60 pounds per square inch, transporting gas from other transmission lines or gas production/processing facilities to the lower pressure distribution systems. Pacific Gas and Electric Company's gas transmission system consists of three primary intrastate pipelines (Lines 300, 400 and 401), which receive gas from the interstate pipelines at the California border and transport it to Pacific Gas and Electric Company's distribution and/or storage system and other regional transmission lines.

Gas Transmission Service Agreement (GTSA)
This contract, together with the relevant exhibits, between the customer and Pacific Gas and Electric Company governs Pacific Gas and Electric Company's provision of Gold Coast Transportation Services and Golden Gate Market Center services.

Gathering
The collection and processing of gas from individual wells for delivery to a pipeline system. Gas is processed to remove various solids and liquids and to odorize the gas so it is easy to detect in the event of a leak.

General Rate Case (GRC)
The major regulatory proceeding for California utilities, during which regulators examine in depth a utility's non-fuel related costs and operations as part of the overall process of determining utility rates.

Gold Coast Transportation
Firm and as-available transportation services on Pacific Gas and Electric Company's backbone transmission system.

Golden Gate Market Center
Storage, parking and lending services.

H

Heating Degree Day(s)
A measure of how much below a standard reference temperature actual temperatures have been. A basis for computing how much electricity and gas are needed for heating purposes.

Heating Value
Total heating value of the gas normally measured on a dry basis (unless otherwise specified). It is defined as the number of British thermal units evolved by the complete combustion, at constant pressure, of one standard cubic foot of gas with air. The temperature of the gas, air and products of combustion 60 degrees Fahrenheit and all of the water formed by the combustion reaction condensed to the liquid state.

Hot Temperature Year
Statistically determined extremely hot design-temperature conditions, based on long-term recorded weather data.

Hub (also known as Market Center)
An intersection of several pipelines on a pipeline grid where buyers and sellers can make or take delivery of gas. Two major hubs which affect the California market are the AECO-C hub in eastern Alberta (run by Alberta Energy Company) and the Henry Hub in Louisiana (which is the point used by the New York Mercantile Exchange for pricing natural gas futures).

I

Incremental Pricing
A pricing structure under which the additional costs associated with a project are recovered only from the project's customers (as opposed to rolled-in) pricing. Currently, Line 401 rates are based on incremental pricing.

Incremental Purchases
Similar to short-term supplies, but includes gas purchased under contracts that are longer than 30 days and are economically priced relative to short-term supplies.

Industrial
Category of gas customers who are engaged primarily in a process which creates or changes raw unfinished materials into another form or product.

Interruptible Capacity
The capacity of a pipeline system in excess of firm capacity. Interruptible (as-available) capacity may vary from day to day depending on the operation conditions, e.g., loads pressures, and ambient temperatures, and the availability of facilities and equipment, such as compressor units.

Interruptible Intrastate (As-Available) Transportation Service
The lowest priority transportation service available to noncore customers on the Pacific Gas and Electric Company system.

Interstate Pipeline Company
A federally regulated company that transports and/or sells natural gas across state lines. PGT, Transwestern, and El Paso Natural Gas Company are interstate pipeline companies.

Interstate Transition Cost Surcharge (ITCS)
The ITCS is a balancing account that records the difference between the full rate for Pacific Gas and Electric Company's interstate pipeline capacity reserved for the noncore and brokering revenues received for that capacity. The balance is allocated to all customers on an equal cents-per-therm basis, except that core customers' liability is limited to ten percent of the cost of the core capacity reservation.

Interutility Gas
All gas transported through the Pacific Gas and Electric Company system for ultimate use outside the Pacific Gas and Electric Company service area but within the state of California.

Involuntary Diversion
Involuntary Diversions are called when there is a severe supply shortage and deliveries to core customers are threatened. Emergency Flow Order provisions apply and Pacific Gas and Electric Company may divert as from non-core to core customers. Pacific Gas and Electric Company may also divert as-available off-system deliveries, but firm off-system deliveries will not be diverted. A noncompliance charge of ($100 plus the Daily Citygate Index)/Dth applies for customers, or their balancing agents, whose usage exceeds their supply.

L

Line-Packing
A method used for providing short-term gas storage in which natural gas is compressed in transmission lines, providing additional amounts of gas to meet limited peak demands.

Liquefied Natural Gas (LNG)
Natural gas that has been liquefied by chilling. Natural gas is liquefied to reduce its volume and thereby facilitate bulk storage and transport. (600 cubic feet of natural gas=1 cubic foot of liquefied natural gas)

Local Distribution Company (LDC)
A public utility that delivers natural gas to end-use customers through its own distribution system.

Local Transmission System
The pipeline used to accept gas from the backbone transmission system and transport it to the distribution system.

Lost and Unaccounted-for Gas
The difference between the quantity of natural gas received into a system and the quantity of gas delivered out of a system over a specific period of time.

M

Marginal Cost
The change in total costs resulting from the delivery of one additional therm of gas to a customer on the utility system, referred to as "volumetric cost."

Market Center
See "Hub" definition.

Marketers
Marketers generally purchase gas supplies from producers and then resell them to end-users. Marketers add value and make a profit by saving producers and end-users the trouble of finding each other, arranging transportation and storage, and sometimes by arranging financing or assumption of price risk. Marketers also sometimes market a specific producer's gas without taking title in return for a marketing fee. Numerous marketers currently serve the California market.

Master Metering
Where Pacific Gas and Electric Company installs one service and meter to supply more than one residence, apartment dwelling unit, mobile home space, store, office, etc.

Maximum Daily Quantity (MDQ)
The maximum quantity of natural gas that can be nominated for delivery to a customer's premises. For noncore customers, this is based on the equipment at the customer's facility. For core customers nominating gas from Schedule G-CT, this is the quantity of reserved capacity allocated to the customer or group.

Memorandum Accounts
Memorandum accounts operate similarly to balancing accounts. However, unlike balancing accounts, many of which are routinely recoverable through rates, memorandum accounts may or may not be recoverable through rates and are subject to further scrutiny by the CPUC.

Minimum Bill
A provision of contracts between interstate pipelines and LDCs in which the LDC was obligated to pay interstate pipelines for specified minimum amounts of gas, regardless of whether the LDC took delivery of that amount.

Modified Fixed Variable (MFV)
See Rate Design

Multiplier
A general term used on Pacific Gas and Electric Company's natural gas and electric bills to refer to specific measurement adjustments applied to customers' metered energy use to ensure that all customers are billed equitably.

N

Natural Gas Act (NGA) of 1938
Federal legislation that established regulatory control over companies engaged in the interstate sale and transmission of natural gas.

Natural Gas Heating Value
The amount of thermal energy released by the complete combustion of one standard cubic foot of natural gas.

Natural Gas Pipeline System Minimum Operating Requirements
System requirements that must be met in order to provide uninterrupted natural gas service. The two minimum requirements are that the system must operate within a certain pressure and flowrate range, and that, on average, gas supply must equal demand.

Natural Gas Policy Act of 1978
Federal legislation that provided for a gradual deregulation of wellhead gas prices and encouraged the development of new natural gas supplies.

Natural Gas Processing
The purification of natural gas to meet specifications for use. Natural gas processing includes removing liquids, solids, and vapors; absorbing impurities; and odorizing.

Natural Gas Service Agreement (NGSA)
The agreement between Pacific Gas and Electric Company and a customer governing the provision of natural gas service.

Natural Gas Storage
A means of providing a reserve of natural gas supplies to meet the seasonal demands of natural gas customers.

Natural Gas Transportation System
The pipeline transportation system used to accept, transport, and distribute natural gas.

Natural Gas Vehicle (NGV)
A natural gas vehicle uses conventional combustion engines modified to run on natural gas.

Netback Calculations
A measurement of the value of any given gas sale frequently used by producers. This calculation takes the price of gas in the marketplace and subtracts the transportation cost, thus netting a price in the supply basin. Producers who have market alternatives will calculate the netback from various markets to determine which market is most attractive.

Netforward Calculations
A calculation frequently used by buyers of gas to determine whether it is better to buy gas in a supply basin and arrange for transportation or whether it is better to buy in the market region. A netforward calculation starts with the cost of gas in the supply basin and adds the transportation cost, thus, netting a price in the market region.

New Market Structure
The new market structure refers to Pacific Gas and Electric Company's new business policies, services and rates resulting from the Gas Accord Settlement and CPUC approval.

Nomination
A nomination is the notification by a shipper to a pipeline company of the amount of gas that it wishes to flow on their system on the date specified. The actual amount of gas that flows on the system may be different.

Noncore Balancing Aggregation Agreement (NBAA)
The agreement between Pacific Gas and Electric Company and a Balancing Agent requesting that Pacific Gas and Electric Company provides balancing services, on an aggregated basis, if appropriate, to the Agent.

Noncore Customers
Large customers who have alternative fuel capability, such as large commercial, industrial, cogeneration, wholesale, and utility electric generation customers.

Noncore Fixed Cost Account (NFCA)
The noncore Fixed Cost Account is one of Pacific Gas and Electric Company's two gas fixed cost accounts. It is a balancing account that matches the authorized base revenue requirement and certain other costs for noncore customers with recorded revenues intended to recover that revenue requirement and the other specified costs. The balances in the NFCA have been recoverable through rates in varying degrees over time, as determined by the CPUC. The degree of recoverability has reflected the CPUC's desire, at the time, either to increase of decrease the risk of revenue recovery. (See "Core Fixed Cost Account")

Notice of Intent (NOI)
A major utility first files a Notice of Intent when it seeks a general rate increase. The NOI contains working data in support of the application it will eventually submit. When CPUC staff accepts its document as complete, the NOI filing is then formally accepted by letter from the CPUC executive director. The utility files its formal application 30 days later.

O

Odorizer
A natural gas processing equipment that adds a mercaptan sulfur odor to all natural gas as a safety measure, allowing detection if a leak occurs. Unprocessed natural gas is usually odorless.

Off-System
Off-system refers to a delivery outside of the Pacific Gas and Electric Company service territory.

On-System
On-system means delivery to:
End-use or wholesale loads located within the Pacific Gas and Electric Company service territory
Pacific Gas and Electric Company's storage facilities
Golden Gate Market Center Citygate
A third-party's storage facilities located within the Pacific Gas and Electric Company service territory.

On-System Storage Facility
An entity, acknowledged by the CPUC as providing storage services within California, which is physically connected to the Pacific Gas and Electric Company pipeline transmission system with facilities dedicated to the transmission, injection and withdrawal of gas supply. The storage facility either has an interconnection and a storage operating agreement with Pacific Gas and Electric Company or it belongs to Pacific Gas and Electric Company.

On-System Supply
On-system supply is the supply brought onto the system by any particular path for destination on the system. On-system supply = Total system supply - Off-system deliveries.

Open Season
A specific period in which customers may elect a certain type of service. Pacific Gas and Electric Company holds open seasons for firm transportation service, for core-subscription service and for noncore storage service.

Order 436
An Order issued by FERC in 1985 mandating open-access transportation, i.e., that pipelines must transport gas on a first-come, first-served basis for any local distribution company or shipper requesting service, to the extent that capacity is available.

Order 500
An Order issued by FERC in 1987 confirming the provisions of Order 436, and providing the mechanism for recovery of the take-or-pay costs for interstate pipelines.

Order 636
An Order issued by FERC in 1992 laying out the final blueprint for the gas industry restructuring. It provided for, among other things, the unbundling of gas sales and transport services, implementation of capacity brokering, recovery of transition costs, and changes in transportation rate design.

Order Instituting Investigation (OII)
The CPUC can initiate on its own motion an Order Instituting Investigation to explore broad policy issues, resolve procedural matters, investigate charges of improper or illegal activity by a regulated utility or transportation company, or respond to directives from the Legislature. An OII will name one or more utility companies as respondents and usually requires them to take specific action, e.g., file data or comments on a particular subject or respond at hearings to matters covered in the OII.

Order Instituting Rulemaking (OIR)
An Order Instituting Rulemaking is a proceeding opened by the CPUC to consider the creation or revision of rules or guidelines in a matter affecting more than one utility or a broad sector of the industry. Comments and proposals are submitted in written form. Oral arguments or presentations are sometimes allowed. The CPUC's decision is often implemented in a General Order (which applies to an entire industry), published and made available in CPUC offices.

Original Backbone Transmission System
Those portions of the Backbone Transmission System which are not part of or allocated to the Pipeline Expansion facilities. This system is used to transport gas from Pacific Gas and Electric Company's interconnection with interstate pipelines, other local distribution companies, and the California gas fields to Pacific Gas and Electric Company's local transmission and distribution systems.

Original Firm Shipper
A Pipeline Expansion shipper, with a firm transportation service agreement executed and signed on or before November 1, 1993, when the PGT-Pacific Gas and Electric Company Expansion Project went into operation.

P

Peak Day Sendout
The largest volume of gas delivered on any one day during the year.

Peak Day Use
The highest daily average use as determined by dividing the recorded use in a billing month by the number of days of operation in that month, divided by the therm factor (average Btu per cubic foot divided by 1,000).

Performance-Based Ratemaking (PBR)
Under performance-based ratemaking, non-fuel costs are indexed to changes in inflation and customer growth, minus a productivity target, such that base rates to customers would be expected to decline in real terms.

PGT-Pacific Gas and Electric Company Expansion Project
An 840-mile addition to the existing PGT and Pacific Gas and Electric Company gas pipeline system that went into operation on November 1, 1993, to provide additional, direct access to Canadian gas supplies. The project consists of two components: the PGT Expansion and the Pacific Gas and Electric Company Pipeline Expansion, or Line 401. The PGT Expansion runs from the Canadian border and interconnects with the Pacific Gas and Electric Company portion near Malin, Oregon. Line 401 transports gas from the California-Oregon border to Fresno County, where the gas enters the existing Pacific Gas and Electric Company and Southern California Gas Company systems.

Pipeline Inventory
To maintain a safe and reliable pipeline system, Pacific Gas and Electric Company's pipeline inventory must operate within Pipeline Inventory Limits. If the Total Demand Forecast is below 2,800 MMcf/d, the Pipeline Inventory Limits are 3,900 MMcf to 4,500 MMcf. If the Total Demand Forecast is above 2,800 MMcf/d, the Pipeline Inventory Limits are 4,000 MMcf to 4,600 MMcf.

Pounds Per Square Inch Absolute (PSIA)
Pounds per square inch absolute. Equal to gauge pressure plus local atmospheric pressure.

Priority
The classification assigned to all core customers to be used in the event of curtailment as provided for in Rule 14 of Pacific Gas and Electric Company's gas tariffs.

Producers
Producers, also known as E&P (Exploration and Production) firms, explore for gas reservoirs, drill wells, and produce gas. Often larger producers also market their gas directly to end-users. Others rely on aggregators or marketers to make the connection with end-users. Numerous producers are active in the California market.

Purchased Gas Account (PGA)
A rate adjustment mechanism that allows Pacific Gas and Electric Company to recover through rates its fuel and fuel-related natural gas expenses.

R

Rate Design
The methodology by which the total revenues that a utility requires are translated into rates that can be charged to customers. For example, two methods of interstate gas transportation rate design are: straight fixed variable and modified fixed variable. Under straight fixed variable rate design, all fixed costs associated with transportation service (including return on equity, taxes, and depreciation) are recovered through reservation charges. Under modified fixed variable rate design, the fixed costs of return on equity and income taxes are recovered in the commodity charge paid by the customer for the volume of gas actually shipped on the pipeline. As part of the FERC's Order 636, pipelines were required to switch from modified fixed variable rate design to straight fixed variable rate design.

Rate Schedule
Tariff sheets setting forth the charges and conditions for a particular class or type of service in a given area or location. A rate schedule includes all the wording on the applicable tariff sheets, such as schedule number, title, class of service, applicability, territory, rates, conditions, and references to rules.

Reasonableness Proceeding
A process conducted by the CPUC for judging, after-the-fact, whether a utility's gas operations and expenses were prudent. If the utility's reasonable costs were less than the amount forecasted and collected in rates, there is an over-collection, and the utility's rates are reduced over a certain period to return the excess amount to customers.

Receipt Point(s)
The place(s) where a shipper delivers, or has delivered on its behalf, natural gas into the Pacific Gas and Electric Company pipeline system.

Regulators
Equipment which controls either the pressure or flow rate of gas, depending on the type of regulator.

Resale
Gas customers who are either utilities or municipal entities who resell gas to end-use customers.

Reservation Charge
See "Customer Demand Charge."

Revenue
Money collected by or owed to the company for provision of gas and/or electric service. Pacific Gas and Electric Company's gas revenues consist of two components: procurement revenues and transportation revenues. Procurement revenues recover the actual costs Pacific Gas and Electric Company incurs for purchasing gas for its customers. In other words, the company simply "passes through" the gas purchase costs subject to reasonableness review. Pacific Gas and Electric Company does not earn any return on the gas purchase costs. Transportation revenues have two main components: base revenues and non-base revenues. Base revenues cover the cost of Pacific Gas and Electric Company's investment in building and maintaining the intrastate gas pipeline and storage system, including a return on the company's investment. Non-base revenues recover costs such as interstate pipeline demand charges that the company is obligated to pay for pipeline capacity reserved but not used or otherwise brokered.

Revenue Requirement
The total amount of money a utility must collect from customers to pay all operating and capital costs, including a fair return on investment. Revenue Requirement = expenses + depreciation + taxes + (rate of return x rate base)

Roll-In Pricing
A pricing structure wherein the additional costs associated with a specific project are spread among the existing utility customers as well as the project's customers (as opposed to incremental pricing).

Rules
Tariff sheets which cover the application of all rates, charges, and services, when such applicability is not set forth in and as a part of the rate schedules.

S

Scheduled Maintenance
A cessation of the customer's normal business operations scheduled only for the upkeep of property or equipment that directly affects the customer's ability to accept delivery of natural gas, in whole or in part.

Separator
A natural gas processing equipment that removes solids and liquids, such as sand, water and condensate, usually by reducing the velocity of the gas and allowing the force of gravity to settle out the heavier constituents.

Shippers
Often the term shipper is used to describe a specific category of customer. A shipper is any market participant which holds a contract to transport gas on a pipeline or local distribution company. Shippers often include end-users, marketers, producers, and other local distribution companies.

Short-Term Supplies
Gas purchases usually involving 30-day, short-term contract or spot gas.

Shrinkage
The amount of gas used by a pipeline and the lost and unaccounted for supply, both of which are a function of moving gas for a shipper.

Spot Gas Market
An open market for natural gas characterized by short-term purchase agreements for a delivery period of one month or less.

Spot Purchases
Short-term purchases of gas normally not under contract and generally categorized as surplus or best efforts.

Standard Atmospheric Pressure
A pressure of 14.73 pounds per square inch absolute.

Standard Temperature
Sixty degrees Fahrenheit, based on the international temperature scale.

Storage
A means of maintaining a reserve of natural gas supplies to meet seasonal gas demands. Storage plays a key role in managing pipeline resources efficiently and in matching gas supplies with demand levels. Long-term storage needs are met by injecting compressed gas into depleted oil and gas reservoirs. Pacific Gas and Electric Company has three such gas storage facilities -- Los Medanos near Concord, McDonald Island near Stockton, and Pleasant Creek near Sacramento.

Storage Injection
Quantities of gas delivered into storage facilities for later use by storage customers.

Storage Inventory
The direct use of local distribution company's gas storage facilities by noncore customers and gas marketers-brokers. Pacific Gas and Electric Company stores the gas which the customer/marketer-broker has purchased for future use.

Storage Withdrawal
Quantities of gas delivered from storage facilities for use by storage customers.

Straight Fixed Variable (SFV)
See "Rate Design"

Swing Gas
Gas bought on short-notice to meet unexpected daily demands not covered under long-term contracts.

Synthetic Natural Gas (SNG)
A gaseous fuel similar in composition and energy content to natural gas. SNG contains at least 85 percent methane by volume, plus small amounts of other combustible gases such as hydrogen.

System Capacity or Normal System Capacity
(operational definition) The physical limitation of the system (pipelines and storage) to pass or flow gas to end-users.

System Utilization or Nominal System Capacity
(operational definition) The use of system capacity or nominal system capacity at less than 100-percent utilization.

T

Tariff
Public schedules detailing utility rates, rules, service territory, and terms of service that are filed for official approval with a regulatory agency.

Therm
An amount of thermal energy equal to 100,000 British thermal units. Ten therms equal one decatherm (also spelled dekatherm; abbreviated Dth). One therm equals approximately 100 cubic feet of gas; 10 therms or 1 Dth equal approximately 1,000 cubic feet (Mcf).

Throughput
The total of all natural gas volume moved through a pipeline system, including sales, company use, storage, transportation and exchange.

Tolerance Band
During an OFO, the OFO Tolerance Band defines the maximum difference between supply and usage (as a percentage of usage) allowed without incurring OFO noncompliance charges.

Transmission Paths
Transmission rates are differentiated by path, reflecting facilities used to provide service. Each service on each transmission path requires the execution of a separate exhibit.
Redwood to on-system
Redwood to off-system
Baja to on-system
Baja to off-system
Silverado to on-system
Silverado to off-system
Mission to on-system
Mission to off-system

Transport-Or-Pay Contract
A contract between a gas producer and a pipeline company which requires the pipeline company to pay for a set amount of gas whether or not the buyer takes delivery of the full amount.

Transportation Gas
Nonutility-owned gas transported for another party under contractual agreement.

TSA on the Fly
Creating a "TSA on the fly" is the ability to set up a new Transportation Service Agreement (TSA) within the INSIDEtracc nomination system for immediate use in a nomination. This ability eliminates the need to set up the TSA in a separate screen prior to its use in a nomination.

U

Unbundled Gas Transportation Service
Gas service which includes only gas transmission, distribution or storage services. No gas procurement service is offered. This service is available to noncore customers and to core customers who are participating in the Core Gas Transportation Program.

Utility Electric Generation (UEG)
A term used by regulatory agencies and utilities to refer to utility electric generation facilities using natural gas or other fossil fuels.

Utility Users Tax
A tax imposed by local governments on Pacific Gas and Electric Company's customers. Pacific Gas and Electric Company is required to bill customers within the city or county for the taxes due, collect the taxes from customers, and then pay the taxes to the city or county. The tax is calculated as a percentage of the charges billed by Pacific Gas and Electric Company for energy use.

W

Wholesale Class
The group of customers purchasing natural gas from Pacific Gas and Electric Company to resell to their own retail customers.

Working Gas
Volume of gas present in an underground storage field which is available for withdrawal, although not all of the working gas may be utilized in a given year due to cycle volume constraints. This volume is in addition to the cushion gas volume.