Confidential Settlement Document Under CPUC Rule 51

PARTIES:

This is a reminder that PG&E is initiating "Gas Accord II" settlement
discussions under CPUC Rule 51, at a meeting to be held in San Francisco on
Thursday, September 14.  We plan to start at 9:30 a.m. and end around 3:30
p.m.  We will provide lunch.  The meeting is now at PG&E headquarters in
Conference Room A, 245 Market Street (on the ground floor), and not at the
PG&E Energy Center as first announced.

Our objectives for this first meeting are to develop a list of all the major
issues that parties would like to have addressed, and also to agree on a
process for resolving the issues.  Attached is our proposed agenda for this
kick-off meeting.

You can also help us prepare for this meeting and make it a success by
providing us a list of the issues you would like to have addressed in Gas
Accord II.  We would like to put together a preliminary list of issues for
discussion at the meeting.  The following issues were deferred to Gas Accord
II as part of the PG&E's Comprehensive Gas OII Settlement:

* o4.1 Develop Clear Procedures for Allocating Firm Capacity, i.e.
Open-Season Procedures
* o4.2 Transmission Interconnection Policy, Terms and Conditions
* o4.4 Local Transmission Reliability, Design Standards and
Curtailment Provisions
* o4.5 Mechanisms to Reduce Costs to Noncore Customers Connecting
To or Close To PG&E's Backbone Transmission Facilities, including "Direct
Connect" issues
* o2.6 Costs and Rates for Utility Core Procurement Services,
including cost allocations and brokerage fee

Additionally, the OFO Forum recommended the issue of adding more storage to
support balancing be made part of Gas Accord II.

Please provide us with your own preliminary list of issues by midday,
Wednesday, September 13.  We will compile all the identified issues into a
single list and distribute them at the meeting as a first step in building a
working issues list.

Also, please note that we are continuing to compile our new Gas Accord II
mailing list.  We will maintain two lists:  one for general notices of
meetings and settlement conferences, and another for those who have
expressly agreed to abide by the terms of CPUC Rule 51 (attached).  Since
Rule 51 protects the confidentiality of settlement negotiations, those on
this list will be able to receive settlement documents and other related
settlement materials.  Everyone on the Rule 51 list will be automatically
included on the general notice list.  If you have not already done so,
please complete and return the attached form so we can put you on the
appropriate lists and include your up-to-date information.

Please send your list of issues, as well as mailing list information, by
e-mail to Geoff Bellenger at gjb2@pge.com, and to Frank Lindh at
frl3@pge.com, or by FAX to Geoff Bellenger at 415-973-0881.

Next, we have attached a list of our suggested dates for Gas Accord II
workshops and meetings.  We would like to agree on these dates at our
September 14 meeting.  Our prior settlement experience suggests that setting
aside dates early makes it easier on all parties to make necessary
arrangements.

Lastly, we will send by separate e-mail transmittal, for your information,
the original Gas Accord Settlement, the OFO Settlement, and the OII
Settlement.  Each settlement expires as of December 31, 2002, or March 31,
2003, for certain provisions which relate to storage.  We believe these
settlements form the foundation for our Gas Accord II settlement
discussions.

We look forward to meeting with you and starting the Gas Accord II
settlement process.  Please call or e-mail us if you have any questions or
concerns.

Best regards,

Frank Lindh    Ray Williams
Attorney    Director
415-973-2776   415-973-3634
frl3@pge.com   rdw0@pge.com


 <<Agenda 9-14-00 All-Party>>  <<Proposed GA II Meeting Schedule>>
<<Mailing List Information.doc>>  <<CPUC Rule 51>>

 - Agenda 9-14-00 All-Party.doc
 - Proposed GA II Meeting Schedule.doc
 - Mailing List Information.doc
 - CPUC Rule 51.doc