Line 406 and Line 407 Project Workshops. PG&E will hold workshops to determine if there are any synergies with Sacramento Municipal Utility District (SMUD) or a local storage project that could reduce or defer PG&E’s investments in either the Line 406 or Line 407 projects. These workshops will be held pursuant to the Commission’s Settlement Rule 12. A determination and confirmation of such synergies will be made by June 1, 2007, and will be documented as a contractual term sheet between PG&E and the third-party operator. Any arrangements between PG&E and a third-party operator must provide a level of service consistent with PG&E’s planning standards for its local transmission systems. A contract(s) with the third-party operator(s) must be signed no later than August 15, 2007, in order for PG&E to adjust its project engineering, cost estimates and materials acquisition schedule. PG&E will then provide revised project costs and local transmission revenue requirement and rate adders for the Line 406 or Line 407 projects, as applicable, to all the Settlement Parties based on these contractual arrangements. These adders would include the costs that PG&E may be paying the third-party operator for their services. If arrangements are made and service contracts are signed with SMUD or a storage facility, then PG&E will file an update to the Settlement Agreement to reflect the reduced adder(s) for the affected project(s) and will include a copy of the contract(s) with its filing.
