SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q
(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
COMMISSION FILE NUMBER 333-30715
---------
CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK
SPECIAL PURPOSE TRUST PG&E-1
----------------------------
(Issuer of the Certificates)
PG&E Funding LLC
----------------
(Exact name of Registrant as Specified in its Charter)
Delaware 94-3274751
-------- ----------
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
245 Market Street, Room 424, San Francisco, California 94105
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 972-5467
-------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X]. No___.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
H 1(A) AND (B) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH
THE REDUCED DISCLOSURE FORMAT.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
PG&E FUNDING LLC
BALANCE SHEET (IN THOUSANDS)
Balance at September 30, December 31,
1998 1997
------------- -------------
<S> <C> <C>
ASSETS
- -------
CURRENT ASSETS:
Cash and cash equivalents $ 2,367 $ 5,188
Current portion of Transition Property receivable 303,190 301,288
Accounts receivable - -
---------- ----------
TOTAL CURRENT ASSETS 305,557 306,476
NONCURRENT ASSETS:
Restricted funds 13,962 14,405
Transition Property receivable 2,406,927 2,602,080
Unamortized debt issuance expenses 16,194 19,813
---------- ----------
TOTAL NONCURRENT ASSETS 2,437,083 2,636,298
---------- ---------
TOTAL ASSETS $2,742,640 $2,942,774
========== ==========
LIABILITIES AND MEMBER'S EQUITY
- ---------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 25 $ 3,468
Interest payable 2,880 11,653
Current portion of long-term debt 197,120 125,000
---------- ----------
TOTAL CURRENT LIABILITIES 200,025 140,121
Long-term debt 2,510,643 2,775,575
---------- ----------
TOTAL LIABILITIES 2,710,668 2,915,696
MEMBER'S EQUITY 31,972 27,078
---------- ----------
TOTAL LIABILITIES AND MEMBER'S EQUITY $2,742,640 $2,942,774
========== ==========
<FN>
The accompanying Notes to Financial Statements are an integral part of this
statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PG&E FUNDING LLC
STATEMENT OF INCOME AND CHANGES IN MEMBER'S EQUITY (IN THOUSANDS)
Three months ended Nine months ended
September 30, 1998 September 30, 1998
----------------- ---------------
INCOME
- ------
<S> <C> <C>
Income from Transition Property receivable $47,902 $148,086
Interest income 1,046 2,272
------- -------
TOTAL INCOME 48,948 150,358
EXPENSES
- --------
Interest expense 45,198 138,377
Servicing fees 1,750 4,901
Administrative and general 105 176
------- -------
TOTAL EXPENSES 47,053 143,454
------- -------
NET INCOME $ 1,895 $6,904
Member's equity - beginning of period 30,077 27,078
Member's distributions - (2,010)
------- ------
MEMBER'S EQUITY AT September 30, 1998 $31,972 $31,972
======= =======
<FN>
The accompanying Notes to Financial Statements are an integral part of this
statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PG&E FUNDING LLC
CONDENSED STATEMENT OF CASH FLOWS (IN THOUSANDS)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
---------
<S> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $191,627
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (192,881)
Equity distributions to Member (2,010)
Net change in restricted funds 443
--------
NET CASH USED IN FINANCING ACTIVITIES (194,448)
--------
NET CHANGE IN CASH AND CASH EQUIVALENTS (2,821)
CASH AND CASH EQUIVALENTS AT DECEMBER 31, 1997 5,188
--------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30, 1998 $ 2,367
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $143,633
<FN>
The accompanying Notes to Financial Statements are an integral part of this
statement.
</TABLE>
<PAGE>
Notes to Financial Statements
- -----------------------------
A. Basis of Presentation
This Quarterly Report on Form 10-Q includes the financial statements of PG&E
Funding LLC, a Delaware special purpose limited liability company, whose sole
member is Pacific Gas and Electric Company, a wholly owned subsidiary of PG&E
Corporation. This quarterly report should be read in conjunction with PG&E
Funding LLC's Financial Statements and Notes to Financial Statements included
in its 1997 Annual Report on Form 10-K.
PG&E Funding LLC believes that the accompanying statements reflect all
adjustments that are necessary to present a fair statement of the financial
position and results of operations for the interim period. All material
adjustments are of a normal recurring nature unless otherwise disclosed in
this Form 10-Q. Results of operations for interim periods are not necessarily
indicative of results to be expected for a full year.
PG&E Funding LLC was organized for the limited purposes of issuing Notes
and holding and servicing the Transition Property. Transition Property is the
right to be paid a specified amount (presented in the financial statements as
"Transition Property receivable") from a nonbypassable charge levied on
residential and small commercial electric customers. The nonbypassable charge
was authorized by the California Public Utilities Commission (the "CPUC")
pursuant to the electric industry restructuring mandated by California
Assembly Bill 1890, as amended by California Senate Bill 477.
PG&E Funding LLC is a single-member limited liability company. Accordingly,
all federal income tax effects and all material State of California franchise
tax effects of PG&E Funding LLC's activities accrue to Pacific Gas and
Electric Company.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
income, expenses, assets, and liabilities and the disclosure of contingencies.
Actual results could differ from these estimates.
B. California Voter Initiative
----------------------------
On November 3, 1998, California voters will vote on Proposition 9, an
initiative sponsored by various consumer groups.
Proposition 9 seeks to amend or repeal Assembly Bill 1890, Chapter 854,
California Statutes of 1996 (as amended, the "Statute") in various respects,
including requiring utilities to provide a 10% reduction in electricity rates
charged to residential and small commercial customers in addition to the 10%
rate reduction that was effective as of January 1, 1998. Among other things,
Proposition 9 would prohibit the collection of the separate nonbypassable
charges payable by residential and small commercial customers
(the "FTA Charges") by Pacific Gas and Electric Company for the payment of
rate reduction bonds, such as the Certificates, or if such a prohibition were
found to be unenforceable by a court of competent jurisdiction, require
Pacific Gas and Electric Company to offset any such FTA Charge by crediting
back to the customer the amount of such charge. In addition, Proposition 9
states that "any underwriter or bond purchaser who purchases rate reduction
bonds after November 15, 1997 . . . shall be deemed to have notice of the
[Voter Initiative]."
If Proposition 9 is approved by the voters, costly and time consuming
litigation will ensue. During the pendency of any such litigation,
Proposition 9 may adversely affect the secondary market for the Certificates,
including the price and liquidity of the Certificates. Further, the collection
of the FTA Charges necessary to pay the Certificates while the litigation is
pending would be precluded if an immediate stay is not granted. Even if a
stay is granted, there may be terms and conditions imposed in connection with
the stay that may adversely affect Certificateholders. The failure to pay
interest on the Certificates when due could give rise to an event of default
permitting acceleration of the maturity of the Certificates.
<PAGE>
Finally, if Proposition 9 is ultimately upheld against legal challenge, the
primary source for payments on the Certificates would become unavailable, and
Certificateholders could incur a loss of their investment.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following analysis of the results of operations of PG&E Funding LLC is in
an abbreviated format pursuant to Instruction H of Form 10-Q. Such analysis
should be read in conjunction with the Financial Statements included herein
and the Financial Statements and Notes to Financial Statements included in
PG&E Funding LLC's Annual Report on Form 10-K for the year ended December 31,
1997.
PG&E Funding LLC is a special purpose, single member limited liability
company organized in July 1997 for the limited purposes of holding and
servicing the Transition Property (as described below), issuing notes secured
primarily by the Transition Property and performing related activities.
Pacific Gas and Electric Company, as the sole member of PG&E Funding LLC, owns
all of the equity securities of PG&E Funding LLC. PG&E Funding LLC's
organizational documents require it to operate in a manner such that it should
not be consolidated in the bankruptcy estate of Pacific Gas and Electric
Company in the event Pacific Gas and Electric Company becomes subject to such
a proceeding.
In December 1997, PG&E Funding LLC acquired Transition Property from
Pacific Gas and Electric Company and issued $2,901,000,000 in principal amount
of the PG&E Funding LLC Notes, Series 1997-1, Class A-1 through Class A-8
(the "Notes"), with scheduled maturities ranging from ten months to ten years
and final maturities ranging from two to eleven years. The Notes were issued
pursuant to an Indenture dated December 8, 1997 between PG&E Funding LLC and
Bankers Trust Company of California, N.A., as trustee (the "Indenture"). PG&E
Funding LLC sold the Notes to the California Infrastructure and Economic
Development Bank Special Purpose Trust PG&E-1, a Delaware business trust
(the "Trust"), which issued certificates corresponding to each class of Notes
(the "Certificates") in a public offering. PG&E Funding LLC entered into a
servicing agreement (the "Servicing Agreement") with Pacific Gas and Electric
Company pursuant to which Pacific Gas and Electric Company is required to
service the Transition Property on behalf of PG&E Funding LLC.
The California Public Utilities Code (the "PU Code") provides for the
creation of "Transition Property." A financing order dated September 3, 1997
(the "Financing Order") issued by the CPUC, together with the related
Issuance Advice Letter, establishes, among other things, separate
nonbypassable charges (the "FTA Charges") payable by residential electric
customers and small commercial electric customers in an aggregate amount
sufficient to repay in full the Certificates, fund the Overcollateralization
Subaccount established under the Indenture and pay all related costs and fees.
Under the PU Code and the Financing Order, the owner of Transition Property is
entitled to collect FTA Charges until such owner has received amounts
sufficient to retire all outstanding series of Certificates and cover related
fees and expenses and the Overcollateralization amount described in the
Financing Order.
In order to enhance the likelihood that actual collections with respect
to the Transition Property are neither more nor less than the amount necessary
to amortize the Notes in accordance with their expected amortization
schedules, pay all related fees and expenses, and fund certain accounts
established pursuant to the Indenture as required, the Servicing Agreement
requires Pacific Gas and Electric Company, as the Servicer of the Transition
Property, to seek, and the Financing Order and the PU Code require the CPUC to
approve, periodic adjustments to the FTA Charges. Such adjustments will be
based on actual collections and updated assumptions by the Servicer as to
future usage of electricity by specified customers, future expenses relating
to the Transition Property, the Notes and the Certificates, and the rate of
delinquencies and write-offs. The Servicer has not sought any such
adjustments to date.
Income generated from the Transition Property receivable for the three and
nine month periods ended September 30, 1998 was approximately $47,902,000 and
$148,086,000, respectively. PG&E Funding LLC also earned interest from other
investments of approximately $1,046,000 and $2,272,000, respectively, for the
three- and nine- month periods ended September 30, 1998. Quarter to date
<PAGE>
and year to date interest expense of approximately $45,198,000 and
$138,377,000, respectively, relates to interest on the Notes and the
amortization of debt issuance expenses and the discount on the Notes. PG&E
Funding LLC also incurred servicing fees of approximately $1,750,000 and
$4,901,000, respectively, for the three- month and nine- month periods ended
September 30, 1998.
PG&E Funding LLC uses collections of the Transition Property receivable to
make scheduled principal and interest payments on the Notes. Income earned on
the Transition Property receivable is expected to offset (1) interest expense
on the Notes, (2) amortization of debt issuance expenses and the discount on
the Notes and (3) the fees charged by Pacific Gas and Electric Company for
servicing the Transition Property and providing administrative services to
PG&E Funding LLC.
For the third quarter of 1998, collections of FTA Charges were
approximately $134,229,000. This brought the total year to date collections
as of September 30, 1998 to approximately $341,339,000. Year to date
scheduled principal and interest payments on the Notes through September 30,
1998 were approximately $336,514,000, with payments of approximately
$5,468,000 for servicing fees and other expenses. In order to meet third
quarter obligations, PG&E Funding LLC drew against the reserve and
overcollateralization subaccounts for approximately $2,583,000, leaving
$489,000 remaining in the overcollateralization subaccount and a zero balance
in the reserve subaccount. The overcollateralization subaccount will be
replenished in subsequent periods to the extent required to meet the
overcollateralization amount provided for in the Indenture. The Indenture
allows the FTA charges to be adjusted at least annually if there is a material
shortfall or overage in collections. Provided that the California Voter
Initiative is not approved by the voters, the Note Issuer expects future
collections of FTA charges to be sufficient to cover expenses and to make
scheduled payments on the Notes on a timely basis.
California Voter Initiative:
- ----------------------------
On November 3, 1998, California voters will vote on Proposition 9, an
initiative sponsored by various consumer groups.
Proposition 9 seeks to amend or repeal Assembly Bill 1890, Chapter 854,
California Statutes of 1996 (as amended, the "Statute") in various respects,
including requiring utilities, such as Pacific Gas and Electric Company, to
provide a 10% reduction in electricity rates charged to residential and small
commercial customers in addition to the 10% rate reduction that was effective
as of January 1, 1998. Among other things, Proposition 9 would prohibit the
collection of the separate nonbypassable charges payable by residential and
small commercial customers by a utility, such as Pacific Gas and Electric
Company, for the payment of rate reduction bonds, such as the Certificates,
or if such a prohibition were found to be unenforceable by a court of
competent jurisdiction, require the utility to offset any such FTA Charge by
crediting back to the customer the amount of such charge. In addition,
Proposition 9 states that "any underwriter or bond purchaser who purchases
rate reduction bonds after November 15, 1997 . . . shall be deemed to have
notice of the [Voter Initiative]."
If Proposition 9 is approved by the voters, costly and time consuming
litigation will ensue. Any such litigation may adversely affect the secondary
market for the Certificates, including the price and liquidity of the
Certificates. Further, the collection of the FTA Charges necessary to pay the
Certificates while the litigation is pending would be precluded if an
immediate stay is not granted. Even if a stay is granted, there may be terms
and conditions imposed in connection with the stay that may adversely affect
Certificateholders. The failure to pay interest on the Certificates when due
could give rise to an event of default permitting acceleration of the maturity
of the Certificates.
As reported in PG&E Funding LLC's Current Report on Form 8-K dated October
15, 1998, Bankers Trust Company of California, N.A., as certificate trustee of
the Trust, informed PG&E Funding LLC that it had transmitted to holders of
certificates of record on October 14, 1998, a letter regarding certain actions
the trustee was taking to prepare to challenge Proposition 9 if it is approved
by voters.
<PAGE>
Finally, if Proposition 9 is ultimately upheld against legal challenge, the
primary source for payments on the Certificates would become unavailable, and
Certificateholders could incur a loss of their investment.
YEAR 2000:
- ---------
The Year 2000 issue exists because software products use only two digits to
identify a year in the date field and were developed without considering the
impact of the upcoming change in the century. Some software products might
fail or function incorrectly if not repaired or replaced with Year 2000
compliant products. In addition, many electronic monitoring and control
systems have two-digit date coding embedded within their circuitry and may
also be susceptible to failure or incorrect operation unless corrected or
replaced with Year 2000 compliant products.
PG&E Funding LLC is dependent on Pacific Gas and Electric Company, as
servicer of the Transition Property, to collect the FTA charges from
residential and small commercial customers and remit the FTA charges to
the Trust. Information regarding Pacific Gas and Electric Company's Year 2000
efforts is contained in Pacific Gas and Electric Company's reports filed with
the Securities and Exchange Commission. If Pacific Gas and Electric Company,
or third parties, fail to achieve Year 2000 readiness with respect to systems
affecting the collection and remittance of FTA charges, there could be a
material adverse impact on PG&E Funding LLC's results of operations,
financial condition, and cash flows.
Forward-looking Information:
- ----------------------------
This Quarterly Report on Form 10-Q, including the preceding discussion of
financial condition and results of operations, and elsewhere, contains forward
looking statements that involve risks and uncertainties. These statements are
based on the beliefs and assumptions of management and on information
currently available to management. Words such as "estimates", "expects",
"anticipates", "plans", "believes", and similar expressions identify forward
looking statements involving risks and uncertainties. Actual results or
outcomes could differ materially as a result of such important factors
discussed above as the passage and implementation of, and the commencement and
outcome of litigation involving Proposition 9 on the November 1998 ballot and
the ability of Pacific Gas and Electric Company to address and to make year
2000 ready the computer systems used by Pacific Gas and Electric Company as
servicer of the Transition Property.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to PG&E Funding LLC or the Trust.
PART II
OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
The Quarterly Servicer's Certificate dated September 25, 1998 attached as
Exhibit 99.1 hereto includes certain additional information regarding
collections of FTA Charges.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits required to be filed by Item 601 of Regulation S-K:
27 Financial Data Schedule for the quarter ended
September 30, 1998.
99.1 Quarterly Servicer's Certificate dated September 25, 1998.
(b) Reports on Form 8-K filed during the quarter ended September 30, 1998:
1. Current Report on Form 8-K dated October 15, 1998.
Item 5. Other Events.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on this the 28th day of October, 1998.
PG&E FUNDING LLC, as Registrant
By /s/ GABRIEL B. TOGNERI
-----------------------------
Gabriel B. Togneri, Treasurer
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
27 Financial Data Schedule
99.1 Quarterly Servicer's Certificate
dated September 25, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information for the period ended
September 30, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 13,926
<TOTAL-CURRENT-ASSETS> 305,557
<TOTAL-DEFERRED-CHARGES> 16,194
<OTHER-ASSETS> 2,406,927
<TOTAL-ASSETS> 2,742,640
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 25,338
<RETAINED-EARNINGS> 6,634
<TOTAL-COMMON-STOCKHOLDERS-EQ> 31,972
0
0
<LONG-TERM-DEBT-NET> 2,510,643
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 197,120
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,905
<TOT-CAPITALIZATION-AND-LIAB> 2,742,640
<GROSS-OPERATING-REVENUE> 0
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 5,077
<TOTAL-OPERATING-EXPENSES> 5,077
<OPERATING-INCOME-LOSS> (5,077)
<OTHER-INCOME-NET> 150,358
<INCOME-BEFORE-INTEREST-EXPEN> 145,281
<TOTAL-INTEREST-EXPENSE> 138,377
<NET-INCOME> 6,904
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 191,627
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 99.1
QUARTERLY SERVICER'S CERTIFICATE
Exhibit E to Servicing Agreement
Quarterly Servicer's Certificate
California Infrastructure and Economic Development Bank Special
Purpose Trust PG&E-1
$2,901,000,000 Rate Reduction Certificates, Series 1997-1
Pursuant to Section 4.01(d)(ii) of the Transition Property Servicing
Agreement dated as of December 8, 1997 (the "Transition Property Servicing
Agreement") between Pacific Gas and Electric Company, as Servicer, and PG&E
Funding LLC, as Note Issuer, the Servicer does hereby certify as follows:
Capitalized terms used in the Quarterly Servicer's Certificate (the
"Quarterly Certificate") have their respective meanings as set forth in the
Agreement. References herein to certain sections and subsections are
references to the respective sections of the Agreement.
Collection Periods: June '98, July '98, August '98
Distribution Date: September 25, 1998
<TABLE>
<CAPTION>
1. Collections Allocable and Aggregate Amounts Available for the Current Distribution Date:
<S> <C>
i. Remittances for the June'98 Collection Period $41,137,601.00
ii. Remittances for the July'98 Collection Period $43,579,943.00
iii. Remittances for the Aug.'98 Collection Period $49,511,622.00
iv. Net Earnings on Collection Account $1,130,357.09
-------------------
v. General Sub-Account Balance $135,359,563.09
vi. Reserve Sub-Account Balance $2,346,919.88
vii. Overcollateralization Sub-Account Balance $725,250.00
viii.Capital Sub-Account Balance (less $100K) $14,405,000.00
-------------------
ix. Collection Account Balance $152,836,732.97
2. Outstanding Principal Balance and Collection Account Balance as of Prior Distribution Date:
i. Class A-1 Principal Balance $24,180,963.00
ii. Class A-2 Principal Balance $265,000,000.00
iii. Class A-3 Principal Balance $280,000,000.00
iv. Class A-4 Principal Balance $300,000,000.00
v. Class A-5 Principal Balance $290,000,000.00
vi. Class A-6 Principal Balance $375,000,000.00
vii. Class A-7 Principal Balance $866,000,000.00
viii.Class A-8 Principal Balance $400,000,000.00
-------------------
ix. Rate Reduction Certificate Principal Balance $2,800,180,963.00
x. Reserve Sub-Account Balance $2,346,919.88
xi. Overcollateralization Sub-Account Balance $725,250.00
xii. Capital Sub-Account Balance $14,405,000.00
3. Required Funding/Payments as of Current Distribution Date:
i. Projected Class A-1 Certificate Balance $0.00
ii. Projected Class A-2 Certificate Balance $197,119,806.00
iii. Projected Class A-3 Certificate Balance $280,000,000.00
iv. Projected Class A-4 Certificate Balance $300,000,000.00
v. Projected Class A-5 Certificate Balance $290,000,000.00
<PAGE>
vi. Projected Class A-6 Certificate Balance $375,000,000.00
vii. Projected Class A-7 Certificate Balance $866,000,000.00
viii.Projected Class A-8 Certificate Balance $400,000,000.00
-------------------
ix. Projected Class A Certificate Balance $2,708,119,806.00
x. Required Class A-1 Coupon $359,087.30
xi. Required Class A-2 Coupon $3,981,625.00
xii. Required Class A-3 Coupon $4,305,000.00
xiii.Required Class A-4 Coupon $4,620,000.00
xiv. Required Class A-5 Coupon $4,531,250.00
xv. Required Class A-6 Coupon $5,925,000.00
xvi. Required Class A-7 Coupon $13,899,300.00
xvii.Required Class A-8 Coupon $6,480,000.00
xviii.Required Overcollateralization Funding $362,625.00
xix. Required Capital Sub-Account Funding $0.00
4. Allocation of Remittances as of Current Distribution Date Pursuant to 8.02(d) of Indenture:
i. Note, Delaware and Certificate Trustee Fees $1,203.33
ii. Quarterly Servicing Fee $1,750,113.10
iii. Quarterly Administration Fee $25,000.00
iv. Operating Expenses (subject to $100,000 cap) $4,138.27
v. Quarterly Interest $44,101,262.30
1. Class A-1 Certificate Coupon Payment $359,087.30
2. Class A-2 Certificate Coupon Payment $3,981,625.00
3. Class A-3 Certificate Coupon Payment $4,305,000.00
4. Class A-4 Certificate Coupon Payment $4,620,000.00
5. Class A-5 Certificate Coupon Payment $4,531,250.00
6. Class A-6 Certificate Coupon Payment $5,925,000.00
7. Class A-7 Certificate Coupon Payment $13,899,300.00
8. Class A-8 Certificate Coupon Payment $6,480,000.00
vi. Principal Due and Payable $0.00
vii. Quarterly Principal $92,061,157.00
1. Class A-1 Certificate Principal Payment $24,180,963.00
2. Class A-2 Certificate Principal Payment $67,880,194.00
3. Class A-3 Certificate Principal Payment $0.00
4. Class A-4 Certificate Principal Payment $0.00
5. Class A-5 Certificate Principal Payment $0.00
6. Class A-6 Certificate Principal Payment $0.00
7. Class A-7 Certificate Principal Payment $0.00
8. Class A-8 Certificate Principal Payment $0.00
viii.Operating Expenses (in excess of $100,000) $0.00
ix. Funding of Overcollateralization Sub-Account (to required level) $0.00
x. Funding of Capital Sub-Account (to required level) $0.00
xi. Net Earnings Released to Note Issuer $0.00
xii. Released to Note Issuer upon Series Retirement: Overcollateralization Sub-Account $0.00
xiii.Released to Note Issuer upon Series Retirement: Capital Sub-Account $0.00
xiv. Deposits to Reserve Sub-Account $0.00
xv. Released to Note Issuer upon Series Retirement: Collection Account $0.00
5. Outstanding Principal Balance and Collection Account Balance as of current distribution date:
(after giving effect to payments to be made on such distribution date):
i. Class A-1 Principal Balance $0.00
ii. Class A-2 Principal Balance $197,119,806.00
iii. Class A-3 Principal Balance $280,000,000.00
iv. Class A-4 Principal Balance $300,000,000.00
v. Class A-5 Principal Balance $290,000,000.00
vi. Class A-6 Principal Balance $375,000,000.00
vii. Class A-7 Principal Balance $866,000,000.00
viii.Class A-8 Principal Balance $400,000,000.00
-------------------
ix. Rate Reduction Certificate Principal Balance $2,708,119,806.00
x. Reserve Sub-Account Balance $0.00
xi. Overcollateralization Sub-Account Balance $488,858.97
xii. Capital Sub-Account Balance $14,405,000.00
6. Sub-Account Draws as of Current Distribution Date (if applicable, pursuant to Section 8.02(e) of Indenture):
i. Reserve Sub-Account $2,346,919.88
ii. Overcollateralization Sub-Account $236,391.03
iii. Capital Sub-Account $0.00
-------------------
iv. Total Draws $2,583,310.91
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7. Shortfalls In Interest and Principal Payments as of Current Distribution Date:
i. Quarterly Interest $0.00
1. Class A-1 Certificate Coupon Payment $0.00
2. Class A-2 Certificate Coupon Payment $0.00
3. Class A-3 Certificate Coupon Payment $0.00
4. Class A-4 Certificate Coupon Payment $0.00
5. Class A-5 Certificate Coupon Payment $0.00
6. Class A-6 Certificate Coupon Payment $0.00
7. Class A-7 Certificate Coupon Payment $0.00
8. Class A-8 Certificate Coupon Payment $0.00
ii. Quarterly Principal $0.00
1. Class A-1 Certificate Principal Payment $0.00
2. Class A-2 Certificate Principal Payment $0.00
3. Class A-3 Certificate Principal Payment $0.00
4. Class A-4 Certificate Principal Payment $0.00
5. Class A-5 Certificate Principal Payment $0.00
6. Class A-6 Certificate Principal Payment $0.00
7. Class A-7 Certificate Principal Payment $0.00
8. Class A-8 Certificate Principal Payment $0.00
8. Shortfalls in Required Sub-Account Levels as of Current Distribution Date:
i. Overcollateralization Sub-Account $599,016.03
ii. Capital Sub-Account $0.00
9. Distributions of Principal per $1,000 of Original Principal Amount
Principal Payment
per $1,000 of
Original Principal Principal Payment Orig. Principal Amt.
[ A ] [ B ] [ B/A x 1,000]
------------------ ----------------- --------------------
i. Class A-1 $24,180,963.00 $24,180,963.00 $1,000.000000
ii. Class A-2 $265,000,000.00 $67,880,194.00 $256.151675
iii. Class A-3 $280,000,000.00 $0.00 $0.000000
iv. Class A-4 $300,000,000.00 $0.00 $0.000000
v. Class A-5 $290,000,000.00 $0.00 $0.000000
vi. Class A-6 $375,000,000.00 $0.00 $0.000000
vii. Class A-7 $866,000,000.00 $0.00 $0.000000
viii.Class A-8 $400,000,000.00 $0.00 $0.000000
----------------- ----------------- -------------------
$2,800,180,963.00 $92,061,157.00
10. Distributions of Interest per $1,000 of Original Principal Amount
Interest Payment
per $1,000 of
Original Principal Interest Payment Orig. Principal Amt.
[ A ] [ B ] [ B/A x 1,000]
------------------ ----------------- --------------------
i. Class A-1 $24,180,963.00 $359,087.30 $14.850000
ii. Class A-2 $265,000,000.00 $3,981,625.00 $15.025000
iii. Class A-3 $280,000,000.00 $4,305,000.00 $15.375000
iv. Class A-4 $300,000,000.00 $4,620,000.00 $15.400000
v. Class A-5 $290,000,000.00 $4,531,250.00 $15.625000
vi. Class A-6 $375,000,000.00 $5,925,000.00 $15.800000
vii. Class A-7 $866,000,000.00 $13,899,300.00 $16.050000
viii.Class A-8 $400,000,000.00 $6,480,000.00 $16.200000
----------------- ----------------- -------------------
$2,800,180,963.00 $44,101,262.30
IN WITNESS HEREOF, the undersigned has duly executed and delivered this
Quarterly Servicer's Certificate this the 15th day of September, 1998.
PACIFIC GAS AND ELECTRIC COMPANY, as Servicer
by: /s/ CHRISTOPHER JOHNS
---------------------------
Christopher Johns
Vice President & Controller
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