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                                                                    EXHIBIT 10.5

                          MANAGEMENT SERVICES AGREEMENT

     This Management Services Agreement is made and entered into as of the 1st
day of January, 2002, by and between PG&E Gas Transmission Service Company, LLC,
a Delaware limited liability company ("ServiceCo"), and PG&E Gas Transmission,
Northwest Corporation, a California corporation ("Pipeline").

     WHEREAS, Pipeline owns and operates a FERC-regulated interstate natural gas
pipeline extending from the U.S./Canada border near Kingsgate, British Columbia
to an interconnection with the facilities of Pacific Gas & Electric Company near
the California/Oregon border near Malin, Oregon,

     WHEREAS, ServiceCo is an entity engaged in managing and operating natural
gas pipeline facilities; and

     WHEREAS, Pipeline and ServiceCo desire to enter into this Management
Services Agreement pursuant to which ServiceCo shall manage the day-to-day
affairs of Pipeline;

     NOW, THEREFORE, in consideration of the promises and mutual covenants and
provisions contained in this Agreement and subject to all terms and conditions
set forth below, Pipeline and ServiceCo hereby agree as follows:

1.   Appointment as Manager. Subject to the terms and conditions of this
     Management Services Agreement, Pipeline hereby appoints ServiceCo to act as
     Manager hereunder, and ServiceCo hereby accepts such appointment and agrees
     to act pursuant to the provisions of this Management Services Agreement.
     The Manager shall function as an independent contractor under this
     Management Services Agreement, and shall in no event ever act as, or be
     considered to be, an employee of Pipeline.

2.   Manager's General Authority. The Manager is authorized to conduct the
     business and affairs of Pipeline in accordance with the Annual Business
     Plan (as defined in Section 4 herein) and other provisions of this
     Agreement. Except as otherwise expressly provided in this Management
     Services Agreement, the Manager shall have full and complete authority,
     power and discretion to execute contracts and manage and control the
     business, affairs and properties of Pipeline, to make all decisions
     regarding those matters and to perform any and all other acts or activities
     customary or incident to the management of Pipeline's business. Without
     limiting the foregoing, the Manager shall have the authority to make
     decisions with respect to the engineering, design, construction, regulatory
     approvals for, and operation (including physical operation, scheduling and
     dispatch of gas inventory) of Pipeline. The Manager shall not exceed the
     authority granted to the Manager by this Management Services Agreement.

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3.   Manager's Specific Duties.

     The Manager shall be responsible for the operation of Pipeline's interstate
     pipeline facilities in accordance with sound, workmanlike and prudent
     practices of the natural gas pipeline industry and in compliance with
     Pipeline's FERC Gas Tariff and with all applicable laws, statutes,
     ordinances, safety codes, regulations, rules and authorizations and
     requirements of governmental authorities having jurisdiction. Accordingly,
     subject to the provisions of this Management Services Agreement, the
     Manager shall:

          3.1.1  Provide or cause to be provided the day-to-day operating and
                 maintenance services, administrative liaison and related
                 services to Pipeline, including, but not limited to, customer
                 support, legal, accounting, human resources, procurement,
                 electronic bulletin board, engineering, construction, repair,
                 replacement, inspection, operational planning, budgeting, tax
                 and technical services, and insurance and regulatory
                 administration.

          3.1.2  Upon prior approval by Pipeline, file, execute and prosecute
                 applications for the authorizations required by Pipeline for
                 the acquisition, construction, ownership and operation of
                 facilities and the provision of the transportation services on
                 the facilities. The Manager also shall make routine and
                 periodic filings required of Pipeline by governmental
                 authorities having jurisdiction.

          3.1.3  Review from time to time the rates and fees charged for the
                 transportation services, recommend appropriate rate revisions
                 to Pipeline, prepare, and upon prior approval by Pipeline,
                 file, execute and prosecute rate change filings.

          3.1.4  Review from time to time the services offered by Pipeline, and
                 recommend and implement improvements or additions to such
                 service.

          3.1.5  Prepare financing plans for Pipeline and negotiate financing
                 commitments, if any, to be entered into by Pipeline, subject to
                 final approval by Pipeline.

          3.1.6  Negotiate and execute contracts for the purchase of services,
                 materials, equipment and supplies necessary for the operation
                 of Pipeline.

          3.1.7  Prepare, negotiate and execute in the name of company rights-
                 of-way, land in fee, permits and contracts, and, unless
                 otherwise directed by Pipeline, initiate, prosecute and settle
                 (if applicable) eminent domain condemnation proceedings,
                 necessary for

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                 construction, operation and maintenance of the Facilities, and
                 resist the perfection of any involuntary liens against Pipeline
                 property.

          3.1.8  Construct and install, or cause to be constructed and
                 installed, facilities necessary for the safe and efficient
                 operation of Pipeline, including expansions thereto.

          3.1.9  Make reports to and consult with Pipeline regarding all duties,
                 responsibilities and actions of the Manager under this
                 Management Services Agreement in the form and at the times
                 reasonably requested by Pipeline.

          3.1.10 Maintain accurate and itemized accounting records for the
                 operation of the Pipeline, together with any information
                 reasonably required by Pipeline relating to such records.

          3.1.11 Prepare financial reports.

          3.1.12 Cause the operation of the Pipeline to be in accordance with
                 all applicable laws, statutes, ordinances, safety codes,
                 regulations, rules and authorizations and requirements of all
                 governmental authorities having jurisdiction, including, but
                 not limited to, local, state and federal environmental laws and
                 the requirements of the United States Department of
                 Transportation set forth in 49 C.F.R. Parts 192 and 199, and in
                 accordance with sound, workmanlike and prudent practices of the
                 natural gas industry and Pipeline's FERC Gas Tariff, and
                 provide or cause to be provided such appropriate supervisory,
                 audit, administrative, technical and other services as may be
                 required for the operation of the Pipeline.

          3.1.13 Prepare and file all necessary federal and state income tax
                 returns and all other tax returns and filings for Pipeline. The
                 Pipeline shall furnish to the Manager all pertinent information
                 in its possession relating to Pipeline operations that is
                 necessary to enable such returns to be prepared and filed.

          3.1.14 Maintain and administer bank and investment accounts and
                 arrangements for company funds, draw checks and other orders
                 for the payment of money and designate individuals with
                 authority to sign or give instructions with respect to those
                 accounts and arrangements.

          3.1.15 Negotiate, execute and administer the gas transportation
                 contracts in accordance with Pipeline's FERC Gas Tariff,
                 including, but not limited to, the preparation and collection
                 of all bills to the shippers for services rendered thereunder;
                 provided that the Manager shall

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                 execute gas transportation contracts for discounted firm or
                 interruptible transportation services only to the extent the
                 discounts are in accordance with Pipeline's discounting policy
                 in effect from time to time, and provided further that any gas
                 transportation contracts which require the construction of
                 additional facilities for the performance thereof shall be
                 subject to the prior approval of Pipeline.

          3.1.16 Receive requests for service from shippers and potential
                 shippers and issue confirmations for service in accordance with
                 Pipeline's FERC Gas Tariff.

          3.1.17 Recommend and establish guidelines for sale of capacity,
                 including sales at discount and/or negotiated rates on a
                 non-discriminatory basis.

          3.1.18 Propose to Pipeline such procedures as may be reasonable and
                 appropriate to comply with or to obtain an exemption from the
                 marketing affiliate rules set forth in Part 161 of the FERC's
                 regulations (as the same may be amended or superseded), and
                 seek to implement such procedures as are approved by Pipeline.

          3.1.19 Dispatch and allocate daily scheduled nominations for, and
                 effectuate the physical receipt and delivery of, the natural
                 gas quantities to be received, transported and/or delivered on
                 behalf of the shippers in accordance with Pipeline's FERC Gas
                 Tariff.

          3.1.20 Utilize electronic flow measurement equipment for volume
                 determinations and natural gas chromatographs as deemed
                 appropriate by the Manager for heating value determinations at
                 applicable metering points, as further described in Pipeline's
                 FERC Gas Tariff.

          3.1.21 Except as otherwise provided by applicable laws or governmental
                 regulations or as otherwise directed by Pipeline, retain all
                 books of account and Pipeline tax returns for three (3) years
                 from the date of completion of the activity to which such
                 records relate.

          3.1.22 Procure and furnish on behalf of Pipeline all materials,
                 equipment, supplies, services and labor necessary for, and
                 perform, repairs to Pipeline's facilities that Manager
                 determines to be appropriate and prudent.

          3.1.23 Perform such other duties as are reasonably necessary or
                 appropriate in the Manager's discretion and enter into such
                 other arrangements as reasonably requested by Pipeline to
                 discharge the

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                 Manager's responsibilities under this Management Services
                 Agreement.

4.   Manager's Budget and Annual Business Plan. Manager shall prepare an annual
     operating plan and budget for each year ("Annual Business Plan"), as it may
     be adjusted from time to time, setting forth estimates of management costs
     and other costs and expenses anticipated by Manager in connection with
     operating Pipeline. The approval by Pipeline of such Annual Business Plan
     shall constitute authorization for the Manager to incur the costs, expenses
     and expenditures set forth in such budget.

5.   Claims. Any and all claims against Pipeline instituted by anyone other than
     the Manager arising out of the operation of the Facilities that are not
     covered by insurance in accordance with Section 9 of this Management
     Services Agreement shall be settled or litigated and defended by the
     Manager in accordance with its reasonable judgment and discretion except
     when (a) the amount involved is stated to be (or estimated to, as the case
     may be) greater than $1,000,000, or (b) criminal sanction is sought. The
     settlement or defense of any claim described in (a) or (b) above shall be
     decided by Pipeline. The Manager shall provide notice to Pipeline as soon
     as practicable of any claims instituted against Pipeline (regardless of the
     amount or nature of the claim).

6.   Employees, Consultants and Subcontractors.

     6.1  Initial Adoption by Manager of Pipeline Employees and Employee
          Obligations. Upon the Effective Date of this Management Services
          Agreement, Pipeline shall transfer to Manager all employees and
          employment-related agreements, and Manager shall employ all such
          employees and shall adopt, honor and continue all obligations and
          commitments related to such employees, specifically including, without
          limitation, salary and benefit agreements and elective deferral
          agreements under Internal Revenue Code Section 401k and employee
          elections under a cafeteria plan under Internal Revenue Code Section
          125. Notwithstanding the foregoing, Pipeline shall remain responsible
          for, either primarily or as a successor employer, any assets or
          liabilities of any employee benefit plans, arrangements, commitments
          or policies provided by the Manager or any affiliate of the Manager;
          and if and to the extent that Pipeline is deemed by law or otherwise
          to be liable as a successor employer for such purposes, the Manager
          shall indemnify Pipeline for the full and complete costs, fees and
          other liabilities which result. In particular, but without limiting
          the generality of the foregoing, Pipeline shall not assume liability
          for any group health continuation coverage or coverage rights under
          Internal Revenue Code Section 4980B and ERISA Section 601 and related
          provisions which exist as of the Effective Date or which arise as a
          result of the Manager's dissolution and/or termination of its or any
          of its affiliate's group health plan or plans, and if and to the

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          extent that Pipeline is deemed by law or otherwise to be liable as a
          successor employer for such group health continuation coverage
          purposes, the Manager shall indemnify Pipeline for the full and
          complete amount of any resulting costs, fees and other liabilities.

     6.2  Manager's Employees, Consultants, Subcontractors and Independent
          Contractors. The Manager shall employ or retain and have supervision
          over the persons (including Manager's affiliates, consultants and
          professional service or other organizations) required or deemed
          advisable by the Manager to perform its duties and responsibilities
          hereunder in an efficient and economically prudent manner. The
          compensation for the Manager's employees shall be determined by the
          Manager, provided that the amount and terms of such compensation
          billed to Pipeline shall be comparable to those prevailing in the
          natural gas industry for similar work.

     6.3  Standards for Manager and its Employees. The Manager shall perform its
          services and carry out its responsibilities hereunder, and shall
          require all of its employees and consultants, and contractors,
          subcontractors and materialmen furnishing labor, material or services
          for the operation of Pipeline to carry out their respective
          responsibilities in accordance with sound, workmanlike and prudent
          practices of the natural gas pipeline industry and in compliance with
          Pipeline's FERC Gas Tariff and with all applicable laws, statutes,
          ordinances, safety codes, regulations, rules, authorizations and
          requirements of governmental authorities having jurisdiction
          applicable to Pipeline's facilities. The Manager shall take reasonable
          measures to monitor the compliance of such employees and consultants,
          and contractors, subcontractors and materialmen, to these standards.

     6.4  Non-Discrimination and Drugs. In performing under this Management
          Services Agreement, the Manager shall not discriminate against any
          employee or applicant for employment because of race, creed, color,
          religion, sex, national origin, age or disability, and will comply
          with all provisions of Executive Order 11246 of September 24, 1965,
          and any successor order thereto, to the extent that such provisions
          are applicable to the Manager or Pipeline. Neither Pipeline nor the
          Manager shall condone in any way the use of illegal drugs or
          controlled substances. Any person known by the Manager to be in
          possession of any illegal drug or controlled substance will be
          disciplined by the Manager and/or removed in accordance with the
          Manager's policies and procedures. In addition, the Manager shall meet
          all the applicable requirements imposed by the Department of
          Transportation as specified in 49 C.F.R., Parts 40 and 199 (as the
          same may be amended or superseded). Furthermore, upon request and to
          the extent permitted by law, the Manager will furnish Pipeline copies
          of the records of employee drug test results required to be kept under
          the provisions of 49 C.F.R. Part 199. The provisions of this

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          Section 6.4 shall be applicable to any employees, contractors,
          consultants and subcontractors retained in connection herewith, and
          the Manager shall cause the agreements with any contractor, consultant
          or subcontractor to contain similar language.

7.   Financial and Accounting.

     7.1 Accounting and Compensation.

          7.1.1  The Manager shall keep a full and complete account of all
                 costs, expenses and expenditures incurred by it in connection
                 with its obligations hereunder in the manner set forth in the
                 Accounting Procedure attached hereto as Exhibit A, and shall
                 otherwise keep a full and complete account of all accounts that
                 Pipeline is required to maintain.

          7.1.2  The Manager shall be reimbursed by Pipeline at the rate and in
                 the manner set forth in the Accounting Procedure for all costs
                 and expenses of the Manager incurred in accordance with this
                 Management Services Agreement and in connection with the
                 operation of Pipeline or otherwise to fulfill the Manager's
                 duties under this Management Services Agreement.

          7.1.3  Disputed Charges. Pipeline may, within the audit period
                 referred to in Section 7.1.4 hereof, take written exception to
                 any bill or statement rendered by the Manager for any
                 expenditure or any part thereof on the ground that the same was
                 not appropriate for reimbursement under the terms of Section
                 7.1.2 above. Pipeline shall nevertheless pay in full when due
                 the amount of all statements submitted by the Manager. Such
                 payment shall not be deemed a waiver of the right of Pipeline
                 to recoup any contested portion of any bill or statement. If
                 the amount as to which such written exception is taken or any
                 part thereof is ultimately determined not to be appropriate for
                 reimbursement under the terms of Section 7.1.2 of this
                 Management Services Agreement, such amount or portion thereof
                 (as the case may be) shall be refunded by the Manager to
                 Pipeline, together with interest thereon at a rate (which in no
                 event shall be higher than the maximum rate permitted by
                 applicable law) equal to two percent (2%) per annum over the
                 prime rate of Citibank, N.A. (or its successor) from time to
                 time publicly announced and in effect, during the period from
                 the date of payment by Pipeline to the date of refund by the
                 Manager.

          7.1.4  Audit and Examination. Pipeline shall have the right during
                 normal business hours to audit or examine all books and records
                 maintained by the Manager, including support for costs charged
                 by

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                 the Manager's contractors, relating to the operation of
                 Pipeline. The right to conduct an audit or examination shall
                 include the right to meet with the Manager's internal and
                 independent auditors to discuss matters relevant to the audit
                 or examination. Pipeline shall have the right to conduct one
                 (1) audit of the Manager's records for any twelve (12) month
                 period.

8.   Indemnification.

     8.1  By Manager. Manager shall indemnify, defend, save, and hold harmless
          Pipeline and its affiliates, and all of their respective officers,
          directors, employees, agents, partners, shareholders and
          representatives, from and against any and all claims arising out of
          any actions by Manager, its officers, directors or employees which are
          outside the scope of Manager's authority under this Management
          Services Agreement, or actions or failures to act of Manager, its
          officers, directors or employees which in each case constitute gross
          negligence or willful misconduct; provided, however, that Manager's
          total aggregate liability hereunder during the term of this Management
          Services Agreement shall in no event exceed $500,000 over and above
          the amount covered by insurance.

     8.2  By Pipeline. Pipeline shall indemnify, defend, save, and hold harmless
          Manager, its constituent partners and their affiliates, and all of
          their respective officers, directors, employees, agents, partners,
          shareholders and representatives, from and against any and all claims
          arising out of the acts (or failures to act), or for any obligation,
          liability, or commitment incurred by or on behalf of Pipeline as a
          result of any such acts (or failures to act); provided, however, that
          Manager, its officers, directors and employees shall not be entitled
          to indemnification hereunder for any claims resulting from their gross
          negligence or willful misconduct.

     8.3  Other Claims. Except as otherwise provided in Sections 8.1 and 8.2,
          any and all suits or claims against Pipeline asserted by anyone other
          than Manager arising out of the design, construction, supervision,
          operations, maintenance or administration of Pipeline that are not
          covered by insurance shall be litigated and defended by Manager on
          behalf of Pipeline, in accordance with Manager's reasonable judgment
          and discretion.

     8.4  Indemnification Notices. Whenever a party entitled to indemnification
          under Section 8.1 or 8.2 of this Management Services Agreement (an
          "Indemnitee") shall learn of a claim which, if allowed (whether
          voluntarily or by a judicial or quasi-judicial tribunal or agency),
          would entitled such Indemnitee to indemnification under Section 8.1 or
          8.2 of this Management Services Agreement, before paying the same or
          agreeing thereto, the Indemnitee shall promptly notify the party
          required to pay such

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          indemnification (the "Indemnitor") in writing of all material facts
          within the Indemnitee's knowledge with respect to such claim and the
          amount thereof; provided, however, that the Indemnitee's right to
          indemnification shall be diminished by the failure to give prompt
          notice only to the extent that the Indemnitee's failure to give such
          notice was prejudicial to the interests of the Indemnitor. If, prior
          to the expiration of fifteen (15) days from the giving of such notice,
          the Indemnitor shall request, in writing, that such claim not be paid,
          the Indemnitee shall not pay the same, provided that the Indemnitor
          proceeds promptly to settle or litigate, in good faith, such claim.
          The Indemnitee shall have the right to participate in any such
          negotiation, settlement or litigation. The Indemnitee shall not be
          required to refrain from paying any claim which has matured by a court
          judgment or decree, unless an appeal is duly taken therefrom and
          execution thereof has been stayed, nor shall it be required to refrain
          from paying any claim where the delay to pay such claim would result
          in the foreclosure of a lien upon any of the property of the
          Indemnitee, or where any delay in payment would cause the Indemnitee
          an economic loss, unless the Indemnitor shall have agreed to
          compensate the Indemnitee for such loss.

9.   Insurance.

     9.1  Required Insurance. The Manager shall carry and maintain, or cause to
          be carried and maintained, for the benefit of and on behalf of
          Pipeline and the Manager, with insurance companies and deductibles and
          retentions selected by the Manager (unless otherwise required by
          Pipeline), the insurance described below. The parties agree that they
          shall cooperate reasonably with one another in an effort to reduce
          insurance costs hereunder.

          9.1.1 General and/or Excess Liability insurance with limits of not
                less than $10,000,000 per occurrence for bodily injury and
                property damage combined. Limits in excess of $10,000,000 will
                only be procured with Pipeline approval. This insurance will
                include coverage for personal injury, contractual liability,
                broad form property damage, independent contractors,
                products/completed operations, cross liability, explosion,
                collapse and underground hazards.

          9.1.2 At all times during the operation of the facilities and covering
                all employees of the Manager, (a) Worker's Compensation
                insurance complying with the laws of the state(s) having
                jurisdiction over each employee, and (b) Employer's Liability
                insurance with limits of not less than $1,000,000 per accident.
                To the extent permitted by applicable law, the Manager may self-
                insure the Worker's Compensation and Employer's Liability
                Insurance required herein.

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          9.1.3 At all times during the operation of the facilities, Automobile
                Liability insurance with a combined single limit of $1,000,000
                per occurrence for bodily injury and property damage, including
                coverage for all owned, non-owned and hired vehicles, covering
                all vehicles owned or used by or on behalf of the Manager.

          9.1.4 Any other insurance deemed necessary or appropriate by the
                Manager.

     9.2  Conditions. The following conditions shall apply to the foregoing
          insurance provisions:

          9.2.1 For the insurance required in Sections 9.1.1 and 9.1.3 above,
                (a) Pipeline and the Manager will be additional insureds under
                the policies, (b) the affiliates of the Manager will be
                additional insureds with respect to Pipeline and the operation
                of the facilities, (c) the insurance will be primary for such
                additional insureds, and (d) the Manager will provide
                certificates of insurance upon request.

          9.2.2 For the insurance required in Section 9.1.3 above, the policies
                will provide for a waiver of all rights of subrogation in favor
                of Pipeline, and the Manager and their respective affiliates.

          9.2.3 For the insurance maintained pursuant to Sections 9.1.3 and
                9.1.4 above, the Manager will provide a certificate of upon
                request.

          9.2.4 For the insurance required in Section 9.1.4 above, Pipeline and
                the Manager and their affiliates will be additional insureds
                under the policies with respect to Pipeline and the operation of
                Pipeline. Such insurance will be primary for such additional
                insureds.

     9.3  Reimbursement. The costs for premiums, deductibles and retentions for
          the insurance maintained by the Manager pursuant to this Management
          Services Agreement shall be reimbursable costs pursuant to Section
          7.1.2 of this Management Services Agreement. In addition, in the event
          that the Manager self-insures the Workers' Compensation and/or
          Employer's Liability insurance required above, the Manager shall be
          reimbursed as provided in Section 3.09 of the Accounting Procedure.

10.  Term and Termination.

     10.1 Term. This Management Services Agreement shall be effective as of
          January 1, 2002 (the "Effective Date") and shall continue for a Term
          of thirty (30) years unless terminated sooner pursuant to Section 10.2
          below.

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     10.2 Termination.

          10.2.1 Continuing Default by Manager. Unless caused by an event of
                 "force majeure" as defined in or pursuant to Pipeline's FERC
                 Gas Tariff, if the Manager materially defaults in the
                 performance of its obligations under this Management Services
                 Agreement and such material default continues for a period of
                 45 days after notice thereof by Pipeline to the Manager,
                 Pipeline may, by notice to the Manager, terminate this
                 Management Services Agreement; provided, however, that no such
                 termination shall occur if the Manager has initiated action to
                 cure such material default but, despite its good faith efforts,
                 has been unable to complete such cure within such 45 day
                 period, and the Manager's actions to complete such cure
                 continue in good faith beyond the end of the 45 day period
                 until such cure is completed. If, during the 45 day period, an
                 emergency or other situation requiring prompt action arises and
                 the Manager is not reasonably responding in a prompt fashion,
                 Pipeline shall have the right to take such remedial action as
                 it deems appropriate, provided that Pipeline shall use all
                 reasonable efforts to notify the Manager prior to the taking
                 by Pipeline of such action.

          10.2.2 Continuing Default by Pipeline. Unless caused by an event of
                 "force majeure" as defined in or pursuant to Pipeline's FERC
                 Gas Tariff, if Pipeline materially defaults in the performance
                 of its obligations under this Management Services Agreement and
                 such material default continues for a period of 45 days after
                 notice thereof by the Manager to Pipeline, the Manager may, by
                 notice to Pipeline, terminate this Management Services
                 Agreement; provided, however, that no termination shall occur
                 if Pipeline has initiated action to cure such material default
                 but, despite its good faith efforts, has been unable to
                 complete such cure within such 45 day period, and the actions
                 of Pipeline to complete such cure continue in good faith beyond
                 the end of the 45 day period until such cure is completed.

          10.2.3 Additional Events of Termination. In addition to termination in
                 accordance with Sections 10.2.1 and 10.2.2, this Management
                 Services Agreement shall terminate if (a) Pipeline and the
                 Manager mutually agree to terminate this Management Services
                 Agreement, or (b) either party, upon six (6) months prior
                 written notice to the other party, terminates this Management
                 Services Agreement.

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11.  Rights upon Termination and Survival of Obligations.

     11.1 Rights Upon Termination. Upon Pipeline's termination of this
          Management Services Agreement, ServiceCo shall deliver to Pipeline at
          Pipeline's principal place of business all records, documents,
          accounts, files and other materials of Pipeline or pertaining to
          Pipeline's business as Pipeline may reasonably request, provided that
          ServiceCo may retain copies of any such items delivered to Pipeline.
          Pipeline shall assume and become liable for any contracts or
          obligations that ServiceCo may have undertaken with third parties in
          connection with its obligations hereunder, and ServiceCo shall execute
          all documents and take all other reasonable steps requested by
          Pipeline which may be required to assign to and vest in Pipeline all
          rights, benefits, interests and titles in connection with such
          contracts or obligations.

     11.2 Termination Payment. In the event of a termination of this Management
          Services Agreement pursuant to Section 10, ServiceCo shall be
          entitled, in addition to all other amounts due hereunder as of the
          date of termination, to a cancellation payment equal to all costs and
          expenses reasonably incurred by ServiceCo as a direct result of such
          termination, including all reasonable severance and relocation costs
          incurred with respect to third parties. Such amount shall be due and
          payable by Pipeline within fifteen (15) days of ServiceCo's submission
          of an invoice therefore.

     11.3 Survival of Obligations. Expiration or termination of this Management
          Services Agreement shall not relieve any party hereto of liability
          that has accrued or arisen prior to the date of such expiration or
          termination. The obligations of confidentiality and indemnification
          set forth herein shall survive expiration or termination of this
          Management Services Agreement.

12.  Law of the Contract and Dispute Resolution.

     12.1 Law of the Contract. THIS MANAGEMENT SERVICES AGREEMENT SHALL BE
          GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE
          OF DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.

     12.2 Dispute Resolution. Resolution of any and all controversies, disputes
          or claims, arising out of, relating to, in connection with or
          resulting from this Agreement (or any written amendment hereto or any
          transaction contemplated hereby), including as to its interpretation,
          performance, non-performance, validity, breach or termination,
          including any claim based on contract, tort, regulation, rule, statute
          or constitution and any claim raising questions of law, whether
          arising before or after termination of this Agreement (collectively,
          "Disputes"), shall be exclusively governed by and

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          settled in accordance with the provisions of this Section 12. Unless
          otherwise agreed in writing, the parties will continue to honor their
          obligations not subject to Dispute under this Management Services
          Agreement during the course of dispute resolution pursuant to the
          provisions of this Section 12 with respect to all matters not subject
          to such dispute, controversy or claim.

     12.3 Negotiation. The parties shall make a good faith attempt to resolve
          any Dispute through negotiation. Within thirty (30) days after notice
          of a Dispute is given by one party to another party or parties, each
          such party shall select one or more representatives of such party,
          which representatives shall meet and make a good faith attempt to
          resolve such Dispute and shall continue to negotiate in good faith in
          an effort to resolve the Dispute. If a settlement is mutually agreed
          upon as a result of the negotiation, then such settlement shall be
          recorded in writing, signed by the affected parties, and shall be
          binding on them. If such representatives fail to resolve a Dispute
          within thirty (30) days after the first meeting of the
          representatives, such Dispute shall be referred to the chief executive
          officers of the applicable parties for resolution. During the course
          of negotiations under this Section 12.3, all reasonable requests made
          by one party to any other party for information, including requests
          for copies of relevant documents, shall be promptly honored. The
          requesting party shall compensate the providing party for the
          reasonable costs, if any, of creating, gathering and copying such
          requested information. The specific format for such negotiations shall
          be left to the discretion of the designated representatives but may
          include the preparation of agreed upon statements of fact or written
          statements of position furnished by a party to another party or
          parties.

     12.4 Alternative Dispute Resolution.

          a.   Alternative Dispute Resolution. In the event that any Dispute is
               not settled by the parties within fifteen (15) days after the
               first meeting of the chief executive officers under Section 12.3,
               the parties may attempt to resolve such Dispute by mediation
               and/or arbitration and in accordance with the terms and
               conditions (including allocation costs and expenses) established
               by the parties. If the parties elect to mediate the Dispute, once
               mediation has commenced, no litigation for the resolution of such
               Dispute may be commenced until the parties have completed in good
               faith the mediation. If a settlement is mutually agreed upon as a
               result of the mediation, then such settlement shall be recorded
               in writing, signed by the parties, and shall be binding on them
               and their respective successors and assigns. If the Parties elect
               to arbitrate the Dispute (either in lieu of or after mediation),
               the parties shall be deemed to have waived their right to
               litigate such Dispute in court and may not commence a court
               action pursuant to

                       GTN MANAGEMENT SERVICES AGREEMENT
                                  Page 13 of 17

<PAGE>

               Section 12.4(b) of this Agreement. Any arbitration shall be
               governed by the Commercial Arbitration Rules of the American
               Arbitration Association.

          b.   Court Actions. In the event that a party, after complying with
               the provisions set forth in Section 12.3 and, if applicable, the
               mediation provisions of Section 12.4(a), desires to commence a
               court action, suit or other proceeding (an "Action") in respect
               to a Dispute, such party may, subject to the other provisions of
               this Management Services Agreement, submit the Dispute to any
               court of competent jurisdiction. If there is any court Action
               between any parties pursuant to this Section 12.4(b), the
               unsuccessful party to such court Action shall pay the prevailing
               party all costs and expenses, including reasonable attorneys'
               fees and disbursements, incurred by such prevailing party in such
               court Action and in any appeal in connection therewith. If such
               prevailing party recovers a judgment in any such court Action or
               appeal, such costs, expenses and attorneys' fees and
               disbursements shall be included in and as part of such judgment.

          c.   Specific Performance. Notwithstanding Sections 12.2 and 12.3 and
               paragraphs (a) and (b) of this Section 12.4, Manager and Pipeline
               agree that irreparable damage would occur in the event that any
               of the provisions of this Agreement were not performed in
               accordance with their specific terms or were otherwise breached.
               It is accordingly agreed that Manager and Pipeline shall be
               entitled to injunctive relief to prevent breaches of this
               Agreement and to enforce specifically the terms and provisions
               hereof.

13.  Special and Consequential Damages. Except as provided in Section 8 of this
     Management Services Agreement, neither party shall have any liability
     hereunder to the other party for any special, indirect, consequential or
     punitive damages.

14.  Manager's Obligations Not Exclusive. The Parties agree that Manager's
     obligations under this Agreement are not exclusive, and nothing in this
     Agreement shall be deemed to limit Manager's right to offer or provide
     management services to any other entity (a "Third-Party Customer").

15.  General.

     15.1 Effect of Agreement; Amendments. This Management Services Agreement
          reflects the whole and entire agreement between the parties with
          respect to the subject matter hereof and supersedes all prior
          agreements and understandings, oral and written, between the parties
          with respect to the subject matter hereof. This Management Services

                       GTN MANAGEMENT SERVICES AGREEMENT
                                  Page 14 of 17

<PAGE>

          Agreement can be amended, restated or supplemented only by the written
          agreement of the Manager and Pipeline.

     15.2 Notices. Unless otherwise specifically provided in this Management
          Services Agreement, any notice or other communication shall be in
          writing and may be sent by (a) personal delivery (including delivery
          by a courier service), (b) telecopy to the following telecopy numbers
          (until changed in accordance with this Section 15.2) or (c) registered
          or certified mail, postage prepaid, addressed as set forth below (or
          at such other address as may be designated in accordance with this
          Section 15.2):

          If to the Manager:

          PG&E Gas Transmission Service Company, LLC
          1400 SW Fifth Avenue, Suite 900
          Portland, OR 97201
          Attention: Robert T. Howard
          Telecopy number: 503-833-4927

          If to Pipeline:

          PG&E Gas Transmission, Northwest Corporation
          1400 SW Fifth Avenue, Suite 900
          Portland, OR 97201
          Attention: Legal Department
          Telecopy number: 503-402-4004

          Notices shall be deemed given upon receipt. Either party may change
          its address and/or telephone numbers for notice purposes by providing
          notice of such change to the other party.

     15.3 Counterparts. This Management Services Agreement may be executed in
          counterparts, each of which shall be deemed an original, but all of
          which together shall constitute one and the same instrument.

     15.4 Waiver. No waiver by either party of any default by the other party in
          the performance of any provision, condition or requirement herein
          shall be deemed to be a waiver of, or in any manner release the other
          party from, performance of any other provision, condition or
          requirement herein, nor shall such waiver be deemed to be a waiver of,
          or in any manner a release of, the other party from future performance
          of the same provision, condition or requirement. Any delay or omission
          of either party to exercise any right hereunder shall not impair the
          exercise of any such right, or any like right, accruing to it
          hereafter.

                       GTN MANAGEMENT SERVICES AGREEMENT
                                  Page 15 of 17

<PAGE>

     15.5  Assignability; Successors. This Management Services Agreement, and
           the rights, duties, and obligations hereunder, may not be assigned or
           delegated by either party without the written consent of the other
           party, except with respect to delegation by either party of all or a
           portion of its rights and obligations hereunder to its affiliates so
           long as such party remains responsible for all obligations (including
           any liability resulting from any defaults) of said affiliates;
           provided, however, that such consent shall not be unreasonably
           delayed or withheld. This Management Services Agreement and all of
           the obligations and rights herein established shall extend to and be
           binding upon and shall inure to the benefit of the respective
           successors and permitted assigns of the respective parties hereto.
           Unless consent to the assignment has been obtained, any assignment of
           this Management Services Agreement shall not relieve the assigning
           party of any of its obligations hereunder.

     15.6  Third Persons. Except as otherwise provided in this Management
           Services Agreement nothing herein expressed or implied is intended or
           shall be construed to confer upon or to give any person not a party
           hereto any rights, remedies or obligations under or by reason of this
           Management Services Agreement.

     15.7  Laws and Regulatory Bodies. This Management Services Agreement and
           the obligations of the parties hereunder are subject to all
           applicable laws, rules, orders and regulations of governmental
           authorities having jurisdiction, and to the extent of conflict, such
           laws, rules, orders and regulation of governmental authorities having
           jurisdiction shall control.

     15.8  Section Numbers; Headings. Unless otherwise indicated, references to
           Section numbers are to Sections of this Management Services
           Agreement. Headings and captions are for reference purposes only and
           shall not affect the meaning or interpretation of this Management
           Services Agreement.

     15.9  Severability. Any provision of this Management Services Agreement
           that is prohibited or unenforceable in any jurisdiction shall, as to
           that jurisdiction, be ineffective to the extent of that prohibition
           or unenforceability without invalidating the remaining provisions
           hereof or affecting the validity or enforceability of that provision
           in any other jurisdiction.

     15.10 Further Assurances. Each party agrees to execute and deliver all such
           other and additional instruments and documents and to do such other
           acts and things as may be reasonably necessary more fully to
           effectuate the terms and provisions of this Management Services
           Agreement.

                       GTN MANAGEMENT SERVICES AGREEMENT
                                  Page 16 of 17

<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Management Services
Agreement to be executed by their duly authorized representatives as of the date
first above written.

                                    MANAGER:

                                    PG&E Gas Transmission Services Company, LLC

                                    By:  /s/ ROBERT T. HOWARD
                                         --------------------
                                    Name:  Robert T. Howard
                                    Title: Vice President

                                    PIPELINE:

                                    PG&E Gas Transmission, Northwest Corporation

                                    By:  /s/ THOMAS B. KING
                                         ------------------
                                    Name:  Thomas B. King
                                    Title: President and Chief Operating Officer


                       GTN MANAGEMENT SERVICES AGREEMENT
                                  Page 17 of 17

<PAGE>

                                    EXHIBIT A
                                       TO
                          MANAGEMENT SERVICES AGREEMENT
                          -----------------------------

                              ACCOUNTING PROCEDURE


                                    ARTICLE I

                               General Provisions
                               ------------------

1.01 Statements and Billings. The Manager shall bill Pipeline on or before the
     tenth (10th) Day of each Month or as soon as reasonably possible thereafter
     for the costs and expenses for the prior Month, including any adjustment
     that may be necessary to correct prior billings. Bills will be summarized
     by appropriate classifications indicative of the nature thereof and will be
     accompanied by such detail and supporting documentation as Pipeline may
     reasonably request.

1.02 Payment by Pipeline. Pipeline shall pay all bills presented by the Manager
     as provided in this Management Services Agreement on or before the
     fifteenth (15th) Day after the bill is received. If payment is not made
     within such time, the unpaid balance shall bear interest until paid at a
     rate (which shall in no event be higher than the maximum rate permitted by
     applicable law) equal to two percent (2%) per annum over the prime rate of
     Citibank, N.A. (or its successor) from time to time publicly announced and
     in effect. Payment by or on behalf of Pipeline shall not be deemed a waiver
     of the right to recoup any amount in question

1.03 Financial Records. The Manager shall maintain accurate books and records in
     accordance with FERC and FASB accounting procedures covering all of the
     Manager's actions under this Management Services Agreement.

<PAGE>

                                   ARTICLE II

 Capital Items, Non-Capital Items, and Contribution of Inventory and Facilities
 ------------------------------------------------------------------------------

2.01 Capital Items

     2.01.01 Definition of Capital Items. The term "Capital Items" as used
             herein shall mean any item of real and/or personal property that,
             if owned by and utilized for a FERC-regulated interstate pipeline
             company, would qualify for treatment as a capital expense under
             standard FERC accounting practices.

     2.01.02 Certain Capital Items Owned by Manager. To the extent the Manager
             or any of its affiliates own any Capital Items necessary or
             desirable for the operation of the Pipeline ("Manager's Capital
             Items"), that Manager or such affiliates in its sole discretion
             (subject to Section 2.01.03 below) is willing to transfer for
             consideration to Pipeline, the Manager or such affiliates may, if
             approved by Pipeline, transfer such property to Pipeline. In the
             event of such a transfer, the Manager may charge Pipeline the net
             book value thereof (as reflected on the books of the Manager or
             such affiliates on the date of transfer). To the extent the
             Manager or any of its affiliates own Manager's Capital Items, and
             the Manager or such affiliates in its sole discretion chooses not
             to transfer such property to Pipeline, Manager may include as
             part of its costs to be reimbursed by Pipeline carrying costs and
             overhead expense related to such property, provided, however,
             Manager shall not charge carrying costs and overhead expense
             related to such property above the total costs (including return
             on equity) to which Pipeline would be entitled to collect from
             ratepayers if such property were owned by Pipeline.

     2.01.03 Purchase of Additional Capital Items. Capital Items intended
             for the sole use of Pipeline shall be purchased by Manager on
             behalf of Pipeline and be owned by Pipeline. Capital Items
             intended to be utilized by Manager on behalf of Pipeline as well
             as Third-Party Customers (as defined in the Management Services
             Agreement) shall, at Manager's discretion, (i) be owned by
             Manager, subject to reimbursement by Pipeline of an allocated
             share of purchase costs, including carrying costs and overhead
             expense, as specified in Section 2.01.02 above or (ii) be owned
             by Pipeline in proportionate share with Third Party Customers.

2.02 Non-Capital Items

     2.02.01 Contribution by Pipeline. Pipeline owns or holds rights to certain
             non-capital inventory and assets, such as office equipment and
             office


Exhibit A to Management Services Agreement, Page 2 of 5

<PAGE>

             space ("Expense Items"), that Manager may desire to use from
             time to time in providing service to Pipeline and/or Manager's
             other activities. Manager shall credit Pipeline for utilization
             of such Expense Items at fair market value.

                                   ARTICLE III

                               Costs and Expenses
                               ------------------

     Subject to the limitations hereafter prescribed and provisions of this
Management Services Agreement, the Manager shall charge Pipeline for all
reasonable costs and expenses in providing services to Pipeline under this
Management Services Agreement, including, but not limited to, the following
items, to the extent reasonable and actually incurred or allocated to Pipeline:

3.01 Rentals. All rentals paid by the Manager.

3.02 Labor Costs.

     3.02.01 Salaries and wages of employees of the Manager and its
             affiliates engaged in connection with the management of Pipeline
             and, in addition, amounts paid as salaries and wages of others
             temporarily employed in connection therewith. Such salaries and
             wages shall be loaded to include the Manager's actual costs of
             bonuses, holiday, vacation, sickness and jury service benefits
             and other customary allowances for time not worked paid to
             persons whose salaries and wages are chargeable under this
             Section 3.02.01.

     3.02.02 Expenditures or contributions made pursuant to assessments
             imposed by Governmental Authority that are applicable to
             salaries, wages and costs chargeable under Section 3.02.01 above,
             including, but not limited to, FICA taxes and federal and state
             unemployment taxes. Such costs shall be charged on the basis of a
             percentage assessment on the amount of salaries and wages
             chargeable under Section 3.02.01 above or on an actual cost
             basis.

     3.02.03 The costs of plans incurred by or on behalf of the Manager for
             workers' compensation, employers' group life insurance,
             hospitalization, disability, pension, retirement, savings and
             other benefit plans, that are applicable to salaries and wages
             chargeable under Section 3.02.01 above. Such costs shall be
             charged on the basis of a percentage assessment on the amount of
             salaries and wages chargeable under Section 3.02.01 above, or on
             an actual cost basis.

3.03 Programming and Information Processing. All costs incurred relating to
     programming and information processing actually and reasonably incurred or


Exhibit A to Management Services Agreement, Page 3 of 5

<PAGE>

             allocated on behalf of Pipeline in compliance with, and in
             furtherance of, the terms of this Management Services Agreement.

3.04 Reimbursable Expenses of Employees. Reasonable personal expenses of
     employees whose salaries and wages are chargeable under Section 3.02.01
     above. As used herein, the term "personal expenses" shall mean
     out-of-pocket expenditures incurred by employees in the performance of
     their duties and for which such employees are reimbursed. The Manager shall
     maintain documentation for such expenses in accordance with the standards
     of the Internal Revenue Service.

3.05 Transportation. Transportation of employees, equipment and material and
     supplies necessary for management of the Pipeline.

3.06 Services. The cost of contract services and utilities procured from outside
     sources.

3.07 Legal Expenses and Claims. All costs and expenses of handling,
     investigating and settling litigation or claims arising by reason of the
     management of Pipeline or necessary to protect or recover any assets or
     property, including, but not limited to, attorneys' fees, court costs,
     costs of investigation or procuring evidence and any judgments paid or
     amounts paid in settlement or satisfaction of any such litigation or
     claims. All judgments received or amounts received in settlement of
     litigation with respect to any claim asserted on behalf of Pipeline shall
     be for the benefit of and shall be remitted to Pipeline.

3.08 Taxes. All taxes (except those measured by income) of every kind and nature
     assessed or levied upon or incurred in connection with the management of
     Pipeline or on Pipeline's facilities or other property of Pipeline and
     which taxes have been paid by the Manager for the benefit of Pipeline,
     including charges for late payment arising from extensions of the time for
     filing that are caused by Pipeline, or that result from the Manager's good
     faith efforts to contest the amount of application of any tax.

3.09 Insurance. Net of any returns, refunds or dividends, all premiums,
     deductibles and retentions paid and expenses incurred for insurance
     required to be carried under the Management Services Agreement. In the
     event that the Manager self-insures any of the insurance required or
     permitted under this Management Services Agreement, the Manager shall be
     reimbursed only for the amount equivalent to the standard premium(s) which
     would have been paid had such insurance been acquired, and the Manager
     shall not be reimbursed for the costs associated with any claims paid by
     the Manager as an insurer under such self-insurance.


Exhibit A to Management Services Agreement, Page 4 of 5

<PAGE>

3.10 Permits, Licenses and Bond. Cost of permits, licenses and bond premiums
     necessary in the performance of the Manager's duties on behalf of Pipeline
     as herein contemplated.

3.12 Administrative and General and Overhead Costs. Administrative and general
     and overhead costs, including salaries and wages, bonuses and expenses of
     personnel of the Manager and/or the Manager's affiliates (excluding the
     personnel referred to in Section 3.02 of this Article III) who render
     services for the benefit of the Manager (in the performance of its
     obligations hereunder) or Pipeline, office supplies and expenses, office
     rentals and other space costs, less the value of such costs made available
     to Manager by Pipeline

3.11 Changes in Cost Determination and Allocation. The Manager may request a
     change in the cost components or the determination of the cost components
     set forth in this Exhibit A. Any requested change in a cost component or in
     the determination of a cost component must be reviewed and approved by
     Pipeline prior to the implementation of such change by the Manager.

                                End of Exhibit A


Exhibit A to Management Services Agreement, Page 5 of 5