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: January 21, 2000
Exact Name of
Commission Registrant State or other IRS Employer
File as specified Jurisdiction of Identification
Number in its charter Incorporation Number
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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
A. Pacific Gas and Electric Company's General Rate Case Proceeding
On January 14, 2000, a commissioner of the California Public Utilities
Commission (CPUC) issued an alternate 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 alternate proposed decision recommended an increase of
$361 million in electric base revenues and an increase of $92 million in
gas base revenues over 1996 electric and gas base revenues. The alternate
proposed decision states that the net impact of the $361 million proposed
increase in electric base revenues, after subtracting the 1998 electric
base revenues provided by the California electric industry restructuring
legislation of approximately $241 million, would be an increase in electric
base revenues of $120 million over 1998 electric base revenues. As
previously reported, in October 1999, a CPUC administrative law judge
issued a proposed decision in the GRC which recommended a decrease of $43
million in electric base revenues from 1998 electric base revenues and an
increase of $63 million in gas base revenues over 1998 gas base revenues.
The Utility has requested increases in electric and gas base revenues of
$445 million and $377 million, respectively, over 1998 authorized base
revenues. The electric and gas base revenue changes ultimately adopted
would be retroactive to January 1, 1999 as a result of the interim rate
decision issued by the CPUC in December 1998.
The alternate 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 alternate proposed decision is at its February
3, 2000, decision conference. The CPUC may act then, or it may postpone
action until later.
The alternate proposed decision recommends the denial of the
Utility's request for an Attrition Rate Adjustment (ARA) to adjust revenues
in 2000, but recommends adoption of an ARA for 2001. The alternate proposed
decision recommends that the CPUC oversee an audit of the Utility's 1999
distribution capital spending, and that the 2001 ARA be subject to
modification to take into account the results of the audit. The 2001 ARA
would also be subject to modification to recognize amounts recorded in a
new balancing account that the alternate proposed decision recommends be
established for vegetation management expenses.
The alternate proposed decision also orders that the Utility file a
2002 GRC, so that the revenue requirements established in the 2002 GRC will
be the starting point for a future performance based ratemaking (PBR)
mechanism that is intended to eventually replace the GRC mechanism and cost
of capital proceedings. The alternate proposed decision would narrow the
Utility's pending PBR application to consider and adopt various performance
measures and to establish a framework for rewards and penalties based upon
the achievement of the performance measures. The portion of the pending PBR
application that would determine future revenue requirements based
principally on inflation and productivity factors would not be implemented
before 2003.
The alternate proposed decision also recommends the adoption of a
customer quality assurance program that establishes customer service
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standards. The Utility would be required to provide customer rebates of
between $25 to $100 for each failure to comply with the standards.
Based on a preliminary analysis, the Utility believes that on a
results of operations basis, the alternate proposed decision provides for
an increase of $148 million over the distribution portion of 1998 electric
base revenues. Any electric base revenue change ultimately adopted would
not change customer electric rates because electric rates are frozen at
current levels for all customers through a transition period ending no
later than March 2002. The increase in gas base revenues recommended by
the alternate proposed decision would also be retroactive to January 1,
1999, but, if adopted, the increase is not expected to have a significant
effect on gas customer rates.
B. Proposed Auction of Pacific Gas and Electric Company's Hydroelectric
Generating Assets
On January 13, 2000, a scoping memo and ruling was issued in the
proceeding to consider the Utility's proposal to auction its hydroelectric
generating assets. The ruling separates the proceeding into two concurrent
phases: one to review the potential environmental impacts of the proposed
auction under the California Environmental Quality Act (CEQA) and a second
to determine whether the Utility's auction proposal, or some other
alternative to the proposal, is in the public interest. The ruling notes
that the divestiture and valuation issues can best be considered after the
environmental impacts of a change in ownership have been reviewed.
Potential bidders will also be able to incorporate the costs of any
mitigation measures that may be required into their bids. The ruling notes
that establishing an interim valuation for the hydroelectric facilities is
unnecessary because a proposed decision in the 1998 Annual Transition Cost
Proceeding (ATCP), discussed below, contains a proposal to address the
issue.
The ruling also sets a procedural schedule, requiring testimony to be
submitted before hearings begin on April 3, 2000. The schedule calls for a
proposed decision to be issued, and for a draft environmental impact report
(EIR) to be published for public comment, by September 1, 2000, with a
final decision by October 19, 2000, and a final EIR published for public
comment in November 2000. The ruling also sets a schedule to complete the
auction, beginning in early November 2000, and ending in early January
2001. The schedule anticipates that the divestiture process would be closed
by June 1, 2001.
Finally, the ruling prohibits the Utility from withdrawing its
application without express CPUC authority. It is uncertain whether the
CPUC will ultimately approve the Utility's auction proposal.
C. 1998 Annual Transition Cost Proceeding
On January 7, 2000, a proposed decision was issued by a CPUC
administrative law judge in the 1998 ATCP applicable to the California
investor owned electric utilities. The ATCP was established to verify the
accounting and recording of costs and revenues in the transition costs
balancing account (TCBA) and ensure that only eligible transition costs
have been entered. The TCBA tracks the revenues available to offset
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transition costs, including the accelerated recovery of plant balances, and
other generation-related assets and obligations. The proposed decision
contains a proposed change to the rules previously in place for the
amortization of transition costs. Under the proposal, on a prospective
basis the utilities would be required to estimate the market value of their
remaining fossil, geothermal, and hydroelectric generating assets. It is
proposed that the utilities credit or debit the TCBA based upon estimated
market value and establish a balancing account for the actual gain or loss
on eventual disposition or appraisal. The estimate would be subject to
true-up after the assets are market valued through sale, appraisal, or
other divestiture. If actual market value is higher than the estimate, the
excess amount would be refunded to ratepayers. If actual market value is
less than the estimate, the utilities would be authorized to recover such
amount from ratepayers as a transition cost.
The proposed decision in the 1998 ATCP does not specify how or
whether the estimates of market value to be prepared by the Utility will be
reviewed by the CPUC or whether they will be subject to a hearing. The
parties are required to file supplemental briefs. At this time it is
uncertain how and when the issues raised by the proposal to require the
utilities to estimate market value of their generation assets will be
resolved or whether the proposal, if adopted, would be consistent with the
California electric industry restructuring legislation.
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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
CHRISTOPHER P. JOHNS
By
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CHRISTOPHER P. JOHNS
Vice President and Controller
PACIFIC GAS AND ELECTRIC COMPANY
KENT M. HARVEY
By
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KENT M. HARVEY
Senior Vice President, Treasurer, Chief
Financial Officer, and Controller
Dated: January 21, 2000
