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Mr. Ed Warner <br /> July 16, 2008 <br /> Page 5 <br /> Total Estimated Cost for Special Facilities Design at Costs +/- <br /> Elevated Service Delivery Pressure—405 psig 50% <br /> Incremental costs for Special Facilities Design $12,029,000 <br /> Income Tax Contribution to Construction ITCC : $4,210,000 <br /> Cost of Service, Customer Financed Option $9,448,000 <br /> Total Costs for Special Facilities: $25,687,000 <br /> Special Facilities costs and service will be in accordance with PG&E Gas Rule 2. <br /> These costs do not include disposal of hazardous material or associated <br /> environmental mitigation if required, or procurement of land rights. <br /> This project estimated to be approximately 20 miles from the closest PG&E <br /> backbone transmission pipeline. A connection of which may qualify Applicant as <br /> a Backbone Level End-Use Backbone Customer subject to the conditions <br /> explained in PG&E's Gas Rule 1 definitions; <br /> http://www.pge.com/tariffs/doc/GR1.doc. If you would like further information on <br /> a backbone service, please contact Mike O'Brien at the number listed below. <br /> Due to the high capital cost of this gas service when compared to the revenue <br /> generated, PG&E reserves the right to provide this gas service under a special <br /> agreement as described in PG&E Gas Rule 15.H.3 and 16.H.3 Exceptional <br /> Cases. PG&E and Applicant would negotiate this special agreement and submit <br /> the agreement to the California Public Utilities Commission for approval. <br /> Next Steps: <br /> PG&E now provides you with requirements necessary in order for PG&E to proceed <br /> with this project. Applicant should submit to PG&E a request for Formal Application <br /> for Gas Service, which would include the following: <br /> ❑ A cover letter requesting PG&E proceed with the gas service connection <br /> under a Formal Application for Gas Service; <br /> ❑ An Application for Gas Transmission Service; <br /> ❑ Selection of Standard or Special Facilities design; <br /> ❑ A site map of the meter set location; <br /> ❑ The estimated annual gas usage of the proposed Facility; and <br /> ❑ A cash advance of $50,000 to continue engineering. <br />