SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 1, 1999
Exact Name of
Commission Registrant State or other IRS Employer
File as specified Jurisdiction of Identification
Number in its charter Incorporation Number
- ----------- -------------- --------------- --------------
1-12609 PG&E Corporation California 94-3234914
1-2348 Pacific Gas and California 94-0742640
Electric Company
Pacific Gas and Electric Company PG&E Corporation
77 Beale Street, P.O. Box 770000 One Market, Spear Tower, Suite 2400
San Francisco, California 94177 San Francisco, California 94105
(Address of principal executive offices) (Zip Code)
Pacific Gas and Electric Company PG&E Corporation
(415) 973-7000 (415) 267-7000
(Registrant's telephone number, including area code)
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Item 5. Other Events
On September 30, 1999, Pacific Gas and Electric Company (Utility),
the California utility subsidiary of PG&E Corporation, filed an
application with the California Public Utilities Commission (CPUC) to
determine the market value of its hydroelectric generating facilities
and related assets through an open, competitive auction. Under the
California electric industry restructuring legislation, the Utility's
hydroelectric generating assets must be valued not later than
December 31, 2001, based on appraisal, sale, or other divestiture.
The Utility filed the application in order to permit the valuation
and transfer of the hydroelectric generating assets to be completed
before December 31, 2001, as required under the electric industry
restructuring legislation.
The Utility plans to use an auction process previously approved by
the CPUC and successfully used in the sale of the Utility's fossil
and geothermal plants. The Utility has requested that the CPUC first
approve (1) the proposed auction process, (2) the proposed forms of
purchase and sale agreement and various service agreements to provide
for sharing facilities and services between the Utility and the new
owner(s) of the generation facilities, and (3) the proposed
accounting and ratemaking treatment (which is consistent with that
previously approved by the CPUC for the Utility's sale of its fossil
and geothermal power plants). The application also requests that the
CPUC determine, among other matters, that the fair market value of
the hydroelectric generating facilities and related assets is the
price received from the winning bidder at closing. After these
initial approvals, the Utility has requested that the CPUC issue a
final decision to approve the terms and price of each transaction and
the Utility's accounting and ratemaking adjustments, among other
matters.
Under the process proposed in the application, another subsidiary of
PG&E Corporation, PG&E Generating Company (PG&EGen), would be
permitted to participate in the auction on the same basis as other
bidders. The Utility has also proposed to appoint a major accounting
firm (other than the Utility's current and past auditors) to
participate in and monitor the auction process to verify that all
bidders are treated equally. At the end of the auction, the
independent auditor would be required to certify to the CPUC that the
auction was conducted in an impartial manner.
The proposed auction process is estimated to take at least 21 weeks
after CPUC approval of the auction process. The duration of the
proceedings at the CPUC related to the proposed auction is uncertain
and any proposed auction is likely to be subject to hearings and
environmental reviews as necessary. The Utility has requested the
CPUC to issue its initial decision approving the auction process in
time to allow the auction to start as soon as possible.
The sale of the hydroelectric facilities would be subject to many
conditions, including the approval of the Federal Energy Regulatory
Commission (FERC) and other agencies to the transfer or re-issuance
of various permits and licenses, and possible filings under the
antitrust laws. In addition, for any facility that the California
Independent System Operator (ISO) has designated as must-run for
reliability, the assignment to the purchaser of the Utility's
Reliability Must Run Contract with the ISO with respect to that
facility would require FERC approval. The Utility cannot estimate
how long the regulatory approval process will take. Under
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the proposed purchase and sale agreement, the CPUC's approval of the
proposed sale on terms acceptable to the Utility in its sole
discretion is also a condition precedent to the closing of any sale.
At June 30, 1999, the book value of the Utility's net investment in
hydroelectric generation assets was approximately $0.8 billion,
excluding approximately $0.5 billion of net investment reclassified
as regulatory assets recoverable as transition costs. Any gain from
the sale of the facilities to a third party would be used to reduce
other transition costs. If the winning bidder for any of the
auctioned assets is PG&EGen, the excess of market value over book
value for those assets would be used to reduce other transition costs
which could result in a material charge to Utility earnings and PG&E
Corporation's consolidated earnings.
Cautionary Statement Regarding Forward-looking Statements
The discussion above contains forward-looking statements about the
possible auction of the Utility's hydroelectric assets, among other
forward-looking statements. These statements are necessarily subject
to various risks and uncertainties and actual results may differ
materially from those currently expected or contemplated by
management. Some of the factors that may affect the outcome of the
issues discussed above include future legislative and regulatory
action; the duration of proceedings at the CPUC, the FERC, and other
regulatory agencies related to the proposed auction; the extent and
nature of any required environmental reviews; the outcome of any
proceedings at the FERC and other agencies related to the transfer or
re-issuance of any required permits; the extent to which PG&EGen is
the successful bidder for any of the auctioned assets; and other
factors that PG&E Corporation and the Utility are unable to predict.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on their
behalf by the undersigned thereunto duly authorized.
PG&E CORPORATION
and
PACIFIC GAS AND ELECTRIC COMPANY
By /s/ CHRISTOPHER P. JOHNS
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CHRISTOPHER P. JOHNS
Vice President and Controller
(PG&E Corporation)
Vice President and Controller
(Pacific Gas and Electric Company)
Dated: October 1, 1999
