FORM 8-K

             SECURITIES AND EXCHANGE

             COMMISSION WASHINGTON, DC 20549

             

        CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
             
             
             
             
    Date of report (date of earliest event reported):
                            
                            
                            
                            
                   September 11, 1996
                            
                            
                            
                            
               COMMISSION FILE NO. 0-25842
                            
              PACIFIC GAS TRANSMISSION COMPANY
 (Exact name of registrant as specified in its charter)
                            
          California                       94-1512922
(State or other jurisdiction of         (I.R.S. Employer
incorporation or organization)          Identification No.)

2100 SW River Parkway, Portland, OR             97201
(Address of principal executive offices)     (Zip code)


Registrant's telephone number,
including area code:                 (503)  833-4000


Item 5. Other Events
        ------------

   On September 11, 1996, the Federal Energy Regulatory
Commission (FERC) approved, without modification,  the
proposed settlement of Pacific Gas Transmission Company's
(PGT) rate case, which was initially filed in February
1994. The settlement was supported or unopposed by most of
PGT's shippers and by state regulatory authorities and was
opposed by only a small number of shippers and by certain
competitors.  PGT will file tariff sheets on or before
October 11, 1996 placing into effect the settlement rates,
although the contesting parties may seek reconsideration
of the FERC order.

     PGT is an interstate natural gas pipeline company and
a wholly owned subsidiary of Pacific Gas and Electric
Company (PG&E).  PGT's transportation system provides
access to natural gas from producing fields in western
Canada and extends from the British Columbia-Idaho border
to the OregonCalifornia border.  PGT's transportation
system also provides service to various delivery points in
Idaho, Washington and Oregon.

     The settlement provides that all rates for
transportation service on PGT's system will be based on
the total, "rolled-in" cost of the PGT mainline
facilities, including both the original system and two
major expansions built in 1980 and 1993.  One of the
contested issues in the case was whether the 1993
expansion should continue to be priced separately, as it
was under the terms of the temporary, initial rates FERC
approved when it authorized the 1993 expansion.  Those
initial rates for the 1993 shippers were significantly
higher than the rates paid by preexisting shippers.  The
settlement results in blended, or "rolled-in" rates for
all shippers.  To mitigate the rate impact on preexisting
shippers, most of the pre-1993 firm shippers will receive
a discount from the full rolled-in rate for a six year
period, while the 1993 expansion firm shippers will pay a
corresponding surcharge in addition to the rolled-in rate.

     Although the implementation of rolled-in rates by
itself will not change PGT's total revenue requirement,
the settlement provides for, among other things, a cost of
service of $206 million, lower depreciation rates, and a
return on equity of 12.2 percent.  As a result of the
settlement, approximately three percent of PGT's firm
transportation service capacity will be turned back to PGT
to be sold to other shippers.

     The overall effect of the settlement on current
rates, including mitigation measures and agreed upon lower
cost of service, will be to decrease PGT's current 100
percent load factor transportation rates for the full
distance of the pipeline (from the Canadian-U.S. border to
the OregonCalifornia border) from $.48 to $.33 per
Decatherm (Dt) for the 1993 expansion  shippers, and to
increase the transportation rate for most of the pre-1993
expansion shippers from $.16 to either $.20 or $.24 per Dt
depending upon the level of mitigation.  The rolled-in
rate for the full distance will be $.26 per Dt.

     PGT has recorded a reserve for revenues subject to
refund and related interest of $33.2 million at August 31,
1996.  PGT believes that the resolution of this rate case
will not have a material impact on its financial position,
liquidity or results of operations.





                         SIGNATURE
                             
     Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.



                            PACIFIC GAS TRANSMISSION COMPANY
                                             (Registrant)
                                             
                                             
                                             
September 27, 1996            By:       /S/ FRANK R. LINDH
                                        ------------------
                              Name:    Frank R. Lindh
                              Title:   General Counsel and Corporate Secretary