PG&E; may trim its rates in 2008

Pacific Gas & Electric Co., California’s largest utility, said Thursday that it might lower rates by $105 million next year because forward-market prices for natural gas and electricity had dropped “considerably.”

The company, a unit of San Francisco-based PG&E; Corp., had said it was considering a rate increase of $362 million to compensate for higher costs from purchasing wholesale power.

Pacific Gas & Electric’s residential customers can now expect a rate decrease of about 0.8%, the utility said in a statement on PRNewswire.

The utility typically adjusts rates at the beginning of the year to reflect changes in factors such as power-purchase costs and energy-efficiency programs.

Also Thursday, PG&E; agreed to buy a 25.5% stake in El Paso Corp.’s proposed $2-billion pipeline to bring natural gas from the Rocky Mountains to its West Coast customers.

The companies entered into a letter of intent for the transaction, the terms of which weren’t disclosed, according to a statement from PG&E; and El Paso. The Houston-based company owns the biggest U.S. network of gas pipelines.

The pipeline, expected to be operational in the first quarter of 2011, would stretch 680 miles and would carry gas from the Opal Hub in Wyoming to an interconnection in Malin, Ore., near California’s northern border.