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 20, 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 October 19, 1999, an administrative law judge (ALJ) of the
California Public Utilities Commission (CPUC) issued a proposed
decision in Pacific Gas and Electric Company's 1999 General Rate Case
(GRC). (Pacific Gas and Electric Company (Utility) is the California
utility subsidiary of PG&E Corporation.) The ALJ recommends an
electric base revenue reduction of $43 million and a gas base revenue
increase of $63 million from 1998 base revenues. The Utility has
requested increases in electric and gas base revenues of $445 million
and $377 million, respectively, over 1998 authorized revenues. The
electric and gas base revenue changes, if approved, would be
retroactive to January 1, 1999 as a result of the interim rate
decision issued by the CPUC in December 1998.
The Utility intends to vigorously oppose the proposed decision
because the Utility believes that the proposed decision, if adopted,
would seriously jeopardize its ability to provide safe, reliable, and
responsive natural gas and electric service at current levels. The
Utility's comments to the proposed decision are due November 8, 1999.
The proposed decision is not a final decision by the CPUC, and is
subject to change prior to a final vote of the CPUC. The earliest
the CPUC could consider the ALJ's proposed decision is at its
November 18, 1999, decision conference. The CPUC may act then, or it
may postpone action until later.
In determining the amount of the proposed electric base revenue
change, the ALJ excluded the electric base revenue increase for 1998
provided by the California electric industry restructuring
legislation of approximately $241 million, in addition to other
adjustments. The amounts recommended by the ALJ reflect the 1999
cost of capital decision issued by the CPUC on June 10, 1999 which
reduced the Utility's return on equity to 10.6% from the 1998
authorized amount of 11.2%.
The Utility's GRC application also contained a proposal for an
Attrition Rate Adjustment (ARA) to adjust revenues in 2000 and 2001
if a performance based ratemaking (PBR) mechanism is not adopted for
2000 or 2001. The CPUC has not issued a decision in the Utility's
pending PBR application. Therefore, on October 1, the Utility filed
a request for electric and gas distribution revenue increases in the
2000 ARA of $118 million and $23 million, respectively, based on the
Utility's requested revenues in its 1999 GRC. The ALJ also has
proposed to deny the Utility's proposal for any ARA increases for the
years 2000 and 2001.
Any electric revenue change ultimately adopted by the CPUC would not
affect customer electric rates because electric rates are frozen at
current levels for all customers through a transition period ending
no later than March 2002, as part of the California electric industry
restructuring legislation. Under this frozen electric rate
structure, the proposed decrease in electric base revenues would
increase the amount of revenues available to recover transition costs
(certain generation-related transition costs which prove to be
uneconomic under the new competitive electric generation market).
The ALJ's proposed gas base revenue increase, if adopted, would
increase gas customer rates retroactive to January 1, 1999.
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If the ALJ's proposed decision were adopted by the CPUC without
change, earnings for the nine month period ended September 30, 1999,
adjusted to give retroactive effect to the final decision, would not
be materially different than previously reported in the Corporation
and the Utility's quarterly report on Form 10-Q for the quarter ended
September 30, 1999. If the proposed decision were adopted it would
cause 1999 earnings per share to fall materially short of previous
financial analysts' expectations of $2.05 to $2.20 per share.
Cautionary Statement Regarding Forward-looking Statements
The discussion above contains forward-looking statements about the
effect of the ALJ's proposed decision in the Utility's 1999 GRC, if
adopted by the CPUC, on the Corporation's 1999 earnings. These
statements are necessarily subject to various risks and uncertainties
and actual results may differ materially from those currently
expected or contemplated by management. The primary factor that will
determine the outcome of the issues discussed above is the CPUC's
final decision in the Utility's 1999 GRC.
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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 CHRISTOPHER P. JOHNS
---------------------
CHRISTOPHER P. JOHNS
Vice President and Controller
(PG&E Corporation)
Vice President and Controller
(Pacific Gas and Electric Company)
Dated: October 20, 1999
