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OFO Tolerance Bands and Associated Noncompliance Charges

When an OFO is required, the Pacific Gas and Electric Company's California Gas Transmission Operations Department establishes an OFO tolerance band. CGT establishes the OFO tolerance band based primarily upon how much additional (or less, in the low inventory case) inventory the pipeline can absorb while remaining within acceptable operating limits. Customers are then obligated to provide daily supply within the stated tolerance band percentage of usage or face noncompliance charges.

Section D.2.c of the OFO Settlement describes the relationship between OFO stages, tolerance bands, and noncompliance charges. Stage 5 OFOs were added with California Public Utilities Commission Decision 03-12-061. The tolerance band may range from 0% to 25%, as follows:

  Tolerance Band
as % of Usage 
 Noncompliance Charge
$/Dth
 Stage 1  up to +/-25%  $0.25
 Stage 2  up to +/-20%  $1.00
 Stage 3  up to +/-15%  $5.00
 Stage 4  up to +/-5%  $25.00
 Stage 5  up to +/-5%  $25.00 + Daily Citygate Index*

CGT considers a number of factors when setting a noncompliance charge including; real-time market pricing data, response to recently called OFOs and the potential impact of an OFO's failure to maintain inventories within acceptable operating limits. CGT's goal is to set the charge at a level that is sufficient to give customers incentive to balance their loads without being onerous.

*The Daily Citygate Index is defined as the daily PG&E Citygate Index Price as published in Gas Daily for the day of the OFO, rounded up to the next whole dollar.