ARCHIVED REPORTS LEC APPLICATION FOR CERTIFICATION

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Mr. Ed Warner July 16, 2008 Page 3 405 psig Alternative: In order to provide Applicant with an elevated service delivery pressure of 405 psig at the inlet to the meter set, PG&E would • Increase the diameter of the 2.8 miles of steel pipeline from 6-inch to12- inches • Uprate L-108 to 720 psig between Ripon-Modesto Meter Station and Eight Mile Road, • Replace approximately 2.2 miles of 16-inch pipe with 24-inch pipe between Eight Mile Road and West Armstrong Road (L-108) with a MAOP of 720 psig. • Perform the above mentioned system reinforcements. Costs: Standard Facilities Design: A portion of the work necessary to serve Applicant's load as reinforcement work, that under PG&E's tariffs will be paid for by PG&E, provided that Applicant actually has the loads requested. If, however, the toads provided by Applicant in its request results in PG&E performing reinforcement work that is in excess of what is needed to serve Applicant's actual loads, Applicant would be required to pay Special Facilities charges for the excess facilities. PG&E estimates the cost to perform the reinforcement work described above to be approximately $7,625,000 based on 2008 cost estimates. These costs include $4,650,000 for PG&E reinforcement work and $2,975,000 that is considered extension. PG&E will request Applicant to execute a Gas Distribution Main and Service Extension Agreement (Agreement) which will include the PG&E's reinforcement work (at PG&E's expense). PG&E will then install the necessary reinforcement. If the project proceeds and gas volumes are taken as requested in the Gas Application and Agreement, reinforcement costs will be borne by PG&E. If the Applicant does not proceed with the project, or if the loads are less than that provided by Applicant such that some or all of the reinforcement work was not necessary, PG&E will treat the reinforcement as Excess Facilities as defined in PG&E's Gas Provisions, Section 11. PG&E will request Applicant pay a monthly charge, (subject to the conditions of Gas Rule 2,C.3.b, Transmission, PG&E Financed), until such time as: 1) Applicant's Facility is on-line and taking gas at the projected level, or 2) PG&E would otherwise have required reinforcement upgrades to meet expanding customer demands.