Pacific Gas Transmission Company

First Revised Volume No. 1-A

Effective Date: 07/06/2002, Docket: RP02-362-000, Status: Effective

Second Revised Sheet No. 68A Second Revised Sheet No. 68A : Effective

Superseding: First Revised Sheet No. 68A

TRANSPORTATION GENERAL TERMS AND CONDITIONS

18. OPERATING PROVISIONS (Continued)

18.1 Firm Service (Continued)

(d) After the close of the Bidding Period, PG&E GT-NW may

tender a Service Agreement for execution to the

requestor(s) submitting the bid(s) having the greatest

economic value for the capacity available, subject to the

provisions of Paragraph 18.1(f).

(e) Valuation of Bids

Unless otherwise specified in its open season posting, the bid(s)

with the greatest economic value will be the bid(s) with the

highest net present value ("NPV") based on the reservation charge

and any proposed usage charge revenues guaranteed by a minimum

volume commitment or otherwise that requestor(s) would pay at the

rates the requestor(s) has bid, over the term of service specified

in the request. If the economic values of separate bids are

equal, then service shall be offered to such requestors on a

pro-rata basis. The NPV is the discounted cash flow of the bid

according to the following formula, net of revenues lost or

affected by the requests for service:

(1 + i) -1

Present Value per = P * R * _________

i (1 + i)

where: P = percent of the rate or charge that the

Shipper is willing to pay.

R = Rate or charge calculated as: The applicable

maximum authorized reservation charge(s) per

Dth in effect at the time of the bid for

service.

i = FERC's annual interest rate divided by 12.

n = number of periods for which the bidder

wishes to contract.

The NPV formula will be affected by the term and rate requested.

In the event PG&E GT-NW intends to entertain bids for service

under index-based or other Negotiated Rate Formulae, the future

value of which cannot be determined at the time of the bidding,

PG&E GT-NW shall estimate the future revenues to be received

under the Negotiated Rate Formula using currently available data.

(Continued)