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: September 12, 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
A. 1995 Electric Rate Stabilization/ Attrition Rate Adjustment
On September 12, 1994, the Company filed its Attrition Rate
Adjustment (ARA) request for electric rates effective January 1,
1995. The ARA mechanism partially offsets attrition in earnings
due to changes in operating expenses and capital costs. In order
to implement its previously announced electric rate freeze in 1995,
the Company proposes to forgo the electric rate increase of
approximately $170 million that otherwise would occur on January 1,
1995 as authorized in the Company's 1993 General Rate Case. In
addition, the Company proposes a decrease in base revenues equal to
the increase in revenues the California Public Utilities Commission
(CPUC) approves in the Company's 1995 Cost of Capital, Energy Cost
Adjustment Clause/Annual Energy Rate/Electric Revenue Adjustment
Mechanism/Low Income Rate Assistance (ECAC/AER/ERAM/LIRA), and the
Helms Pumped Storage Project (Helms) proceedings, such that
electric rates will not increase through the end of 1995. The CPUC
could approve up to an estimated combined net electric revenue
requirement increase of $289 million in the Company's 1995 Cost of
Capital and ECAC/AER/ERAM/LIRA proceedings and an additional $38
million related to Helms.
As part of the electric rate freeze plan, the Company requested by
a separate filing reductions of approximately $100 million in
authorized funding levels for 1995 electric customer energy
efficiency/demand-side management (CEE/DSM) programs and $17
million for electric research development and demonstration (R&D)
programs. However, the Company did not request that the ARA filing
and implementation of the electric rate freeze be contingent upon
the $117 million reduction in authorized funding levels for those
programs. If the CPUC grants the request, then the CEE/DSM and R&D
reductions would be part of, not in addition to, the ARA decreases
requested.
To the extent that the CPUC does not adopt the reduced CEE/DSM and
R&D funding or other cost reductions are not achieved, there may be
a negative impact on the Company's 1995 or 1996 results of
operations.
B. 1994 Workforce Reduction
On August 30, 1994, the Company announced that it will eliminate
between 2,500 and 3,000 employment positions. Most of the
reductions will be completed by the first quarter of 1995. The
annual labor savings from these planned job cuts are projected to
be between $150 million and $185 million.
The majority of the proposed job reductions are expected to occur
through a voluntary retirement incentive program (VRI), the
specifics of which will be considered by the Company's Board of
Directors in late September. Assuming that the level of benefits
are similar to that offered in the workforce reduction program in
1993 and that a similar percentage of eligible employees accept the
VRI, it is estimated that the VRI and other severance programs will
cost approximately $280 million. In addition, depending on the
impact of the reductions on the Company's pension and other
postretirement benefit plans, the Company may have to recognize an
additional cost of up to approximately $50 million. The cost of
the workforce reduction program would be expensed in the fourth
quarter of 1994, when the VRI acceptance period ends and the
specifics of the severance program are known. The Company does not
plan on seeking rate recovery for the cost of the workforce
reduction as it did in connection with the 1993 program.
C. Diablo Canyon Nuclear Power Plant - Diablo Canyon Rate Case
Settlement
As previously disclosed, in its report on the Company's 1994
ECAC/AER/ERAM/LIRA application, the CPUC's Division of Ratepayer
Advocates (DRA) had recommended that the CPUC reconsider a petition
originally filed in September 1992 by a consumer advocacy group and
reopen the Diablo Canyon Rate Case Settlement (Diablo Settlement)
for the express purpose of modifying the payment methodology for
Diablo Canyon Nuclear Power Plant (Diablo Canyon) generation. On
August 19, 1994, the CPUC granted the Company's motion to strike
the DRA's testimony on the Diablo Settlement from the Company's
ECAC proceeding, noting that if the DRA wished to pursue these
issues it should do so by way of a petition to modify the CPUC's
decision denying the earlier petition seeking modification of the
Diablo Settlement. The CPUC indicated that it would consider any
such request in light of the circumstances then existing.
In response to the CPUC's ruling, the DRA filed a new petition on
August 26, 1994, which seeks to modify the CPUC's 1993 order
refusing to reconsider the Diablo Settlement. The DRA requests
that the CPUC modify its earlier decision for the purpose of
reopening the Diablo Settlement to consider modification of the
payment methodology included in the Diablo Settlement. In
addition, the DRA recommends that the price paid for electricity
generated by Diablo Canyon be frozen at the 1994 price level of
11.89 cents per kilowatthour. The pricing formula set forth in the
Diablo Settlement provides that the price paid for Diablo Canyon
generation in 1995 be increased to 12.1 cents per kilowatthour.
The DRA requested expedited consideration by the CPUC of its
petition. The Company expects to respond to the DRA's petition
within 30 days of its filing.
D. Antitrust Litigation
As previously reported in the Company's Form 10-K for the fiscal
year ended December 31, 1993, in December 1993, the County of
Stanislaus, California, and a residential customer of the Company,
filed a complaint against the Company and Pacific Gas Transmission
Company (PGT), a subsidiary of the Company, on behalf of themselves
and purportedly as a class action on behalf of all natural gas
customers of the Company during the period of February 1988 through
October 1993. The complaint alleged that the purchase of natural
gas in Canada was accomplished in violation of various antitrust
laws which resulted in increased prices of natural gas for the
Company's customers.
On August 25, 1994, the federal district court in Fresno,
California issued a decision granting the Company's motion to
dismiss the federal and state antitrust claims and the state unfair
practices claims against the Company and PGT. The only remaining
claims do not seek monetary damages. In addition, the Court
granted plaintiffs' motion seeking class certification.
In dismissing the antitrust claims, the Court determined that the
prices the Company paid for Canadian gas had been filed with,
reviewed and approved as reasonable by various federal and state
regulatory authorities, and as a result, the plaintiffs were barred
from claiming that those rates were too high. The Court also held
that the CPUC's oversight of the Company's gas acquisition costs
constitutes state action which immunizes the Company from a private
antitrust lawsuit such as this one.
The plaintiffs were given 10 days to amend their complaint to state
a new claim and on September 9, 1994 they filed an amended
complaint with the Court. The Company is in the process of
reviewing the new filing.
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
GORDON R. SMITH
By ________________________________
GORDON R. SMITH
Vice President and
Chief Financial Officer
Dated: September 12, 1994
