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: October 28, 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. California Public Utilities Commission Proceeding
1. 1995 Cost of Capital Proceeding
On October 18, 1994, the assigned Administrative Law Judge issued
a proposed decision in the Company's 1995 cost of capital
proceeding recommending a return on common equity of 11.70%, an
increase from the 11.00% return on common equity allowed in 1994.
Of the recommended return of 11.70%, .10% is intended to serve as
compensation to investors for the nondiversifiable risks
associated with the timing of the California Public Utilities
Commission's (CPUC) rulemaking and investigation on electric
industry restructuring in California. The proposed decision
authorizes a utility capital structure of 48.00% common equity,
5.50% preferred stock and 46.50% long-term debt, which represents
an increase from 47.50% in the equity component of the Company's
capital structure. When combined with the authorized costs of
debt and preferred stock, the 11.70% return on common equity
results in an overall return on rate base of 9.60% for 1995,
compared with the 9.21% authorized for 1994.
If adopted, the proposed decision would increase revenue
requirements by approximately $70 million for electric rates and
$22 million for gas rates, effective January 1, 1995. However,
consistent with the Company's current electric rate freeze, the
Company has proposed that any electric revenue increase
authorized in this proceeding be offset by a decrease in base
revenues, such that electric rates would not increase through the
end of 1995.
A final CPUC decision is expected on November 22, 1994.
2. Long-Term Noncore Gas Transportation Tariff/Gas
Transmission Jurisdiction
In June 1994, the Company filed a petition with the CPUC
requesting authorization to implement an optional long-term
competitive noncore gas transportation tariff which would be
offered to the Company's largest gas transport customers under a
ten-year firm service agreement. The tariff is intended to
enable the Company to more effectively meet intensified
competition by allowing it to offer a long-term competitive price
without having to obtain CPUC approval on a contract-by-contract
basis. The Company's petition indicated that its shareholders
would bear the risk of any revenue shortfalls attributable to
differences between the long-term rate option and the customer's
otherwise applicable standard rate.
In September 1994, the CPUC issued a decision approving the
Company's proposed long-term noncore gas transportation tariff,
subject to certain conditions that were not contemplated by the
Company's original proposal. Among other things, the CPUC
conditioned its approval on the Company guaranteeing that it
would not seek rolled-in rates for the intrastate portion of the
PGT/PG&E Pipeline Expansion Project in any proceeding before the
Federal Energy Regulatory Commission (FERC) during the ten-year
duration of the proposed long-term noncore gas transportation
service agreements.
On October 20, 1994, the Company filed an application for
rehearing of the CPUC's decision, challenging the
constitutionality of the conditions imposed on the Company by the
CPUC. The Company argued that the CPUC condition precluding the
Company from seeking rolled-in rate treatment for the Company's
portion of the PGT/PG&E Pipeline Expansion Project violates the
Company's right of free speech and right to petition government.
The Company also asserted that other conditions imposed by the
CPUC involving accounting and cost issues potentially would
interfere with the FERC's exercise of jurisdiction in the event
the Company were to seek to have its gas transmission facilities
regulated by the FERC instead of the CPUC. The Company indicated
that if the CPUC continues to insist upon its proposed conditions
as the basis for its approval of the long-term noncore gas
transportation tariff, the Company intends to decline to
implement the proposed tariff as it cannot voluntarily accept
that tariff as modified by the CPUC.
As an alternative service option, on October 20, 1994, the
Company began offering a standard 59-month interruptible
transportation service to substantially the same noncore customer
group as would have been eligible for firm service under the
proposed long-term noncore gas tariff described above at a
comparable rate. The CPUC had previously authorized the use of
interruptible transportation contracts having a term of less than
five years without prior CPUC approval.
As noted above, the conditions imposed by the CPUC in its
decision regarding the Company's proposed long-term competitive
tariff anticipate the possibility that the Company might seek to
have a portion of its gas transmission facilities regulated by
the FERC instead of the CPUC. The Company has been evaluating a
plan under which it would request that the FERC assume
jurisdiction over the Company's "backbone" transmission lines
from the Oregon/California border to the Arizona/California
border, and certain connected, single-purpose lines and storage
facilities. The Company's local gas distribution system would
remain under CPUC jurisdiction. The proposal is intended to
provide the Company greater flexibility to respond to customers'
needs for lower prices, uninterrupted service and price
certainty.
On October 26, 1994, the CPUC issued an order prohibiting the
Company from seeking a change in the jurisdiction over its gas
transmission facilities unless and until such action is approved
by the CPUC. The CPUC expressed its concern that such action by
the Company might have certain adverse impacts, including (i) the
potential impact on the CPUC's pricing policies, which favor
incremental rate design under which users of new facilities bear
the cost of those new facilities, as opposed to rolled-in rates
which blend the cost of new and old facilities, and (ii)
foreclosure of the CPUC's ability to consider alternative means
of introducing competition such as capacity brokering and
divestiture by utilities of certain gas facilities. The CPUC
also adopted an order authorizing its staff to open within 90
days an investigation into intrastate transportation competition.
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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: October 28, 1994
