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: December 5, 1994
PACIFIC GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
California 1-2348 94-0742640
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification Number)
77 Beale Street, P.O.Box 770000, San Francisco, California 94177
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(415) 973-7000
Item 5. Other Events
Proposed Modification of Diablo Canyon Pricing Mechanism
On December 5, 1994, the Company, the Division of Ratepayer Advocates (DRA)
of the California Public Utility Commission (CPUC), the California Attorney
General and several other parties representing energy consumers agreed to a
memorandum of understanding and draft settlement agreement to modify the
pricing provisions of the 1988 rate case settlement (Settlement Agreement)
for the Diablo Canyon Nuclear Power Plant (Diablo Canyon). All other terms
and conditions of the Settlement Agreement would remain unchanged.
Under the proposed modification, the price for power produced by Diablo Canyon
would be reduced from the current level and would be as shown in the following
table. Based on Diablo Canyon's current operating performance, the proposed
modification would result in approximately $2.1 billion less revenue over the
next five years, compared to the Settlement Agreement.
Diablo Canyon Price (cents) per kWh
1995 1996 1997 1998 1999
---------------------------------
Original Settlement Price 12.15 12.42 12.70 12.98 13.28
Proposed Price 11.0 10.5 10.0 9.5 9.0
_____________
* assumes 3.5% inflation
After December 31, 1999, the escalating portion of the Diablo Canyon price will
increase using the same formula specified in the Settlement Agreement. The
proposed modification provides the Company with the right to reduce the price
below the amount specified if it so chooses.
The parties to the proposed modification agree that the difference between the
Company's revenue requirement under the Settlement Agreement and the proposed
prices will be applied to the Energy Cost Adjustment Clause (ECAC) balancing
account until the undercollection is fully amortized. As a result, the
Diablo Canyon price reductions would help achieve amortization of the ECAC
undercollection, currently projected to be approximately $700 million at the end
of 1994. In addition, the parties agree that the prices for the period through
December 31, 1999 are reasonable and shall be the basis for the recovery of
the Company's ECAC revenue requirement pursuant to the pricing of Diablo Canyon
power.
As soon as possible, the parties intend to file the proposed settlement in the
pending CPUC proceeding to reconsider the Diablo Settlement Agreement. A
settlement conference is tentatively scheduled for next week and the parties
will seek expedited CPUC approval of the proposed change.
The reduction in Diablo Canyon prices, together with other cost reductions, are
the means by which the Company plans to meet its objective of bringing its
system average electric rates down from the current level of approximately
10.6 cents per kilowatt hour to 10 cents or less by the end of 1999. The
proposed modification of Diablo Canyon's prices should allow the Company's
portfolio of resources to better compete with others seeking to sell power in
Northern and Central California as the electric generation business becomes
more competitive.
SIGNATURE
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.
PACIFIC GAS AND ELECTRIC COMPANY
LESLIE H. EVERETT
By ________________________________
LESLIE H. EVERETT
Corporate Secretary
Dated: December 5, 1994
