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On Thursday, March 15, 2007, Pacific Gas and Electric Company filed the Gas Accord IV Settlement for approval from the California Public Utilities Commission (CPUC). This is an all-party Settlement of PG&E's 2008 Gas Transmission and Storage Rate Case. PG&E and the parties reached this Settlement before the case was to be filed, and therefore, filed this Settlement in lieu of a traditional rate case showing. If approved by the CPUC, the Gas Accord IV settlement will continue the current Gas Accord structure of unbundled rates and services and provide rate certainty for three years beginning January 1, 2008.

Over 50 parties representing all segments of the natural gas industry in California including residential customers, wholesale gas customers, merchant electric generators, cogenerators, gas marketers, manufacturers, gas producers, interstate pipelines and independent storage providers participated in the creation of the Gas Accord IV settlement. Thirty-one parties, including PG&E, signed the Gas Accord IV Settlement Agreement. PG&E is unable to predict whether the CPUC will approve the Gas Accord IV Settlement as agreed to by parties; however, a final CPUC decision is expected before the end of the year.

Proposed Rate Changes

The currently effective rates were approved by the CPUC in December 2004 for a three-year term (2005-2007) under the all-party settlement known as Gas Accord III. The Gas Accord IV settlement, if approved will set rates for CGT's backbone transmission and storage services from January 1, 2008, through December 31, 2010.

The proposed impacts to gas transportation rates will be minimal. For the largest industrial and electric generation customers the changes proposed are less than one cent per Decatherm, reflecting less than a one percent change in their total gas cost. If the settlement is approved, the Baja Path rate will increase by 5.8 percent and the Redwood path will be reduced by 4.4 percent in 2008. Thereafter, all backbone path transportation rates will be reduced by one percent in 2009, with an additional one percent reduction in 2010.

The Gas Accord IV Settlement, like prior Gas Accords, puts an emphasis on rate stability and certainty for the rates covered by the Settlement. The Settlement recognizes that certain other rate components occur through other Commission proceedings, such as the Biennial Cost Allocation Proceeding. The following table shows the current and proposed rates in dollars per decatherm at full contract.

More Information is Available

The Gas Accord IV Settlement will make some minor modifications to the previously approved Gas Accord Structure including some operational factors, a cost accounting method, and Backbone Level End-Use Service eligibility. The Settlement proposes that PG&E form a working group to explore alternatives or clarifications to PG&E's current diversion and curtailment rules.

The Gas Accord IV Settlement agreement is available on Pipe Ranger's regulatory web page. Electronic copies of the testimony and appendices in addition to the settlement agreement are available on the GTS Rate Case 2008 Documents page. Our CGT Account Services Representatives are also available to respond to your inquiries.