ARCHIVED REPORTS LEC APPLICATION FOR CERTIFICATION

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Mr. Ed Warner July 16, 2008 Page 4 Due to the high capital cost of this gas service when compared to the revenue generated PG&E reserves the right to request that this service be provided under a special agreement as provided in PG&E's Gas Rule 15.H.3 and 16.H.3 Exceptional Cases. PG&E and Applicant would negotiate this special agreement and submit the agreement to the California Public Utilities Commission for approval. Applicant's order-of-magnitude costs follow. Costs are based upon 2008 estimates and not escalated for inflation. Total Estimated Cost for Standard Facilities Design at Costs +/- 50% Prevailing Service Delivery Pressure Tap existing pipeline system $ 75,000 Install -2.1 miles of 6" steel pipe $ 2,200,000 Install -100' of 6" Service $ 20,000 Install 16" Ultrasonic Meter Set $ 680,000 Subtotal: $ 2,975,000 Income Tax Contribution to Construction 35% of subtotal $ 1,041,000 Total Standard Facilities Costs $ 4,016,000 These costs do not include allowances, if any. Should Applicant request a Special Facilities Design, a Special Facilities contract would be required which is in addition to the costs identified above. Total Estimated Cost for Special Facilities Design at Costs +/- Elevated Service Delivery Pressure -240 psig 50% Incremental costs for Special Facilities Design $1 ,260,000 Income Tax Contribution to Construction ITCC : $441,000 Cost of Service, Customer Financed Option $990,000 Total Costs for Special Facilities: $2,691,000 Or Total Estimated Cost for Special Facilities Design at Costs +/- Elevated Service Delivery Pressure-360 psig 50% Incremental costs for Special Facilities Design $5,095,000 Income Tax Contribution to Construction ITCC : $1,783,000 Cost of Service, Customer Financed Option $4,002,000 Total Costs for Special Facilities: $10,880,000 Or