CGT to Widen High/Low Tolerance Bands

Wednesday, August 03, 2011

As we have noted recently, due to pressure reductions on Pacific Gas and Electric Company's California Gas Transmission system and the resulting reduction in pipeline system inventory, CGT has needed to call High/Low Inventory OFOs each day since July 8, 2011. CGT's customers have been diligent in monitoring nominations and keeping supplies within the acceptable levels of system inventory. CGT greatly appreciates these efforts.

Because the market response has been so cooperative, CGT is taking a first, tentative step of widening the High/Low OFO tolerance bands - from plus/minus 10% to plus/minus 15%, with a $0.25/Dth noncompliance charge - starting with the OFO called for gas day Friday, August 5, 2011. The objective is to provide more flexibility to the market and assist customers in avoiding noncompliance charges.

Please be aware that nothing has changed in the operational capabilities regarding the pipeline system inventory. CGT must still operate the pipeline system with reduced pressures and, therefore, reduced pipeline inventory. The pipeline inventory level remains 200 Mmcf, as opposed to 600 Mmcf under normal operating conditions.

CGT asks customers to continue to tightly monitor nominations and keep supplies within the tolerance bands called each day. If the widened tolerance bands fail to keep system inventory within acceptable levels, CGT will be forced to revert to the more restrictive tolerance bands (+/- 10%) in its High/Low Inventory OFOs.

Thank you for the ongoing cooperation. Questions? Please contact your CGT Sales, Account Services, or Scheduling Representative.