LOW OFO AND EFO CUSTOMER PRESENTATION

Description of Low OFO Calculation

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» A Low OFO is declared when it is forecasted that the storage withdrawal allocated to the balancing function will be exhausted

» For more information on Low OFO and the formula, please refer to Advice Letter 4822.

Low OFO/EFO Rules

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» Low OFOs can be called at any time of the year.

» A Low OFO declaration will be made no later than 8 pm Pacific Time on the prior gas day.

» A Low OFO will not be declared on the same gas day.

» An EFO can be declared at any time under emergency conditions as determined by Gas Control.

» ATolerance Level and Noncompliance charge are provided in the Low OFO notice.

Low OFO Calculation Deadlines andReduction Codes

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Note: All times specified are in Pacific Time.* Low OFO will not be declared, but the calculation will be displayed

Reduction Codes» Reduction Codes for injection reductions when the system holds to the injection

capacity every day, are HOFO-F and HOFO-I.

» Reduction Codes for Withdrawal nominations cuts are LOFO-F andLOFO-I.

» Cycle 1: Before 9:00 AM on the day before gas flow *» Cycle 2: Before 3:00 PM on the day before gas flow» Cycle 3: Before 8:00 PM on the day before gas flow» Cycle 4: Before 11:30 AM on the day of gas flow *

» Cycle 5: Before 4:00 PM on the day of gas flow *

Envoy Screen Changes» The displays of Balancing Status and Today’s Notices have been

updated to display the High OFO and Low OFO declarationsalong with the stage and percentage.

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A Stage 1 Low OFO is called for Cycle 2 at 10% tolerance. The non-compliance charge of $0.25/dth would always be the applicable for that stage regardless of the percentage tolerance.

Going forward additional receiptsdon’t materialize. It is determinedadditional incentives are required,therefore, the Stage is changed toStage 2 and the tolerance is set at10% for Cycle 3.

The final result for this gas day is a Stage 2 Low OFO with a 10% tolerance and the noncompliance charge of $1.00/dth.

Low OFO Declaration ExampleStage Tolerance Noncompliance Charge

1 Up to -25% $0.25/dth

2 Up to -20% $1.00/dth

3 Up to -15% $5.00/dth

4 Up to -5% $25.00/dth

5 Up to -5% $25.00/dth plus daily balancing standby rate

EFO Zero $50.00/dth plus daily balancing standby rate

Low OFO FAQs

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Stage» The stage will depend on the level of noncompliance charge that the utilities believe

is necessary to get balancing agents to more closely match supply and demand.

Tolerance» The tolerance for a Low OFO can be anywhere between zero and the upper limits of

the Stage.

» The tolerance will be primarily determined by how much flexibility SoCalGas’ balancing assets can provide relative to its sendout forecast.

Rules and Tariff Changes

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» SoCalGas Rule 30 and SDG&E Gas Rule 30• Renames OFO procedures “High OFO.”• Modifies Winter Balancing rules.• Adds Low OFO and EFO procedures.• California Producers with CPOBA contracts are subject to Low OFO and EFO

requirements.

» SoCalGas Rule 23 and SDG&E Gas Rule 14• Removes provisions on Standby Procurement Service curtailment.

» SoCalGas and SDG&E G-IMB• Updates Daily Balancing Standby Rate.• Removes Winter Balancing Rules language.

» SoCalGas Rule 41• Describes methodology used to determine whether a Low OFO or EFO is

required.

Summary» A Low OFO is declared when it is forecasted that the storage withdrawal allocated to

the balancing function will be exhausted.

» Low OFO declarations for each cycle will be subject to a specific deadline.

» For any questions please call the Gas Scheduling Helpline at (213) 244-3900.

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Cycle Low OFO Declaration Deadlines For Gas Day1 9:00 AM** Tomorrow2 3:00 PM Tomorrow3 8:00 PM* Tomorrow4 11:30 AM** Today5 4:00 PM** Today

* Approval is done by 8:00PM prior evening of the Gas Flow Day

**No OFO declarations will be made, only the calculation will display.

An EFO Can be called at any time.