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: February 23, 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 February 17, 2000, the California Public Utilities Commission
(CPUC) approved a final 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 final decision
adopts the alternate proposed decision that had been issued by a CPUC
commissioner on January 14, 2000. The final decision authorizes an increase
of $377 million in electric base revenues and an increase of $93 million in
gas base revenues over 1996 electric and gas base revenues. The final
decision states that the net impact of the $377 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 $136 million over 1998 electric base revenues. The Utility
had 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 are retroactive to January 1, 1999 as
a result of the interim rate decision issued by the CPUC in December 1998.
The final decision denies the Utility's request for an Attrition Rate
Adjustment (ARA) to adjust revenues in 2000, but adopts an ARA for 2001.
The final decision orders 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
will also be subject to modification to recognize amounts recorded in a new
balancing account that the final decision requires be established for
vegetation management expenses.
The final 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 final decision narrows 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 will not be implemented before 2003.
The final decision also adopts a customer quality assurance program
that establishes customer service standards. The Utility is 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 final decision provides for an increase of
$163 million over the distribution portion of 1998 electric base revenues.
The increase in electric base revenues will 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.
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B. 1998 Annual Transition Cost Proceeding
On February 17, 2000, the CPUC issued a final decision 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
transition costs and the revenues available to offset transition costs,
including the accelerated recovery of plant balances, and other generation-
related assets and obligations. As previously reported, the proposed
decision in the ATCP issued on January 7, 2000, contained a proposed change
to the rules previously in place for the amortization of transition costs.
Under the final decision, on a prospective basis the utilities are required
to assess the estimated market value of their remaining non-nuclear
generating assets, including the land associated with those assets, on an
aggregate basis at a value not less than the net book value of those assets
and to credit the TCBA with the estimated value. The decision encourages
the utilities to base such estimates on realistic assessments of the market
value of the assets. The final decision did not adopt the proposed
decision's recommendation to establish a new regulatory asset account that
would allow a true-up when the estimated market value is greater than
actual market value. However, the decision states that crediting the TCBA
with the aggregate net book value of the remaining non-nuclear generating
assets is a conservative approach and remedies any concerns regarding the
lack of a true-up. The decision provides that if the estimated market
valuation is less than book value for any individual asset, accelerated
amortization of the associated transition costs will continue until final
market valuation of the asset occurs through sale, appraisal, or other
divestiture. If the final value of the assets, determined through sale,
appraisal or other divestiture, is higher than the estimate, the excess
amount would be used to pay remaining transition costs, if any. The
utilities are required to file the adjusted entries to their respective
TCBA based on the estimated market values with the CPUC by March 9, 2000.
The filing will become effective after appropriate review by the CPUC's
Energy Division and the TCBA entries are subject to review in the next
ATCP. If an estimate of the market value of the non-nuclear generating
assets is adopted that exceeds the aggregate net book value of those
assets, a charge to earnings would result.
C. Disposition of PG&E Energy Services Corporation
In connection with its plan of disposition, PG&E Corporation is reviewing
bids for the sale of its energy services business conducted through its
subsidiary, PG&E Energy Services Corporation (PG&E ES). PG&E ES provides
retail gas and electric commodities nationwide, where permitted under
applicable laws, and provides energy-related value-added services,
including billing and information management services, energy efficiency
and other energy management services, regulatory and rate analysis, and
power quality solutions.
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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: February 23, 2000
