John:

Kim and I have been working on the spreadsheet to calculate the pricing under our new deal.  We have made some significant changes from the latest draft you prepared.  Here is.  The way we are thinking about this is a s follows:

1.  We will be selling the volume to Citizens at Thoreau.  The volume will be the Griffith City Gate volume, grossed up for fuel
2.  The price will be San Juan Gas Daily, divided by (1 - fuel), plus 100% of the lateral fixed and variable pipeline charges, plus $.075 times the "Spread Value"
3.  "Spread Value" = a - b where

	a = PG&E Topock minus the discount and

	b = San Juan index divided by fuel, plus lateral charges, that divided by mainline fuel, plus all mainline charges

Let me know if you agree.  We need to resolve this by close of business Friday so we can properly do month end close.  I will be out all day today, but working Friday.  The attached spreadsheet shows the arithmetic but the volumes and actual indexes are not correct.  Please check the arithmetic and call me Friday.

Also, what should we assume for July 1st?

Thanks

C