On February 24, 2004, SoCalGas and SDG&E filed a joint proposal in response to Rulemaking 04-01-025 issued by the California Public Utilities Commission to establish policies and rules to ensure reliable, long-term supplies of natural gas to California. SoCalGas and SDG&E request that the Commission adopt the following policies by June 2004:

A diverse portfolio approach for the handling of interstate capacity across supply basins and interstate pipelines maximizes opportunities to benefit core customers with enhanced supply reliability and gas price stability.

Establishing an approved range for diverse interstate capacity holdings will achieve security of supply in a manner that balances Commission oversight and utility flexibility to contract for capacity on terms favorable to core customers.

Customers benefit through portfolio flexibility that adjusts to changing market conditions by staggering terms and expiration dates for interstate pipeline capacity holdings.

New gas supply projects and the construction of competitive new interstate capacity will be encouraged through flexibility in the utility's ability to contract for firm interstate capacity.