The Padres are working on a deal to extend Jake Peavy's contract through the 2012 season:

The deal, which would lock up Peavy through 2012, will average between $17 million and $17.5 million per season, according to a major-league source. It also could include a club option for a fourth year.

The commitment to Peavy would be by far the largest in club history, surpassing the four-year, $34 million contract that the Padres awarded Phil Nevin in 2001.

Axelrod declined comment on specific dollar figures, but said that Peavy's average annual value would be lower than that of Carlos Zambrano and Barry Zito.

Peavy has on guaranteed year left on his contract and a club option for 2009. I assume a new deal would guarantee the option. Jake posted sub-3.00 ERAs in three of the last four seasons. He's not quite Santana, but he's certainly better than Zito at this point. It seems he wants to stay in San Diego and is willing to take a discount to do so.

His deal should also push up the price of Brandon Webb.