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: August 3, 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 Proceedings - 1995
Electric Rate Stabilization
On August 2, 1994, the Company announced that it will extend its
freeze on retail electric rates through the end of 1995. The
electric rate freeze extension is dependent upon adoption by the
California Public Utilities Commission (CPUC) of certain rate
changes requested by the Company for 1995. As previously
disclosed, in April 1993, the Company had adopted a freeze on
electric rates through the end of 1994.
The Company also announced that when it files its 1996 General Rate
Case (GRC) later this year, it will not seek an increase from
current electric revenues through the end of 1996 for its expenses
other than fuel, purchased power and Diablo Canyon Power Plant
costs. In the GRC proceeding, the CPUC sets the Company's base
revenue requirements for both electric and gas operations. This
revenue is intended to recover the Company's fixed costs and non-
fuel variable costs. The Company ordinarily files a GRC
application once every three years, with a decision issued
approximately 13 months after the application is filed. The
Company's next GRC would establish rates to be effective on January
1, 1996.
To accomplish the electric rate freeze extension, the Company
anticipates that it will forgo electric rate increases that
otherwise would occur on January 1, 1995 under the Attrition Rate
Adjustment (ARA) mechanism, which partially offsets attrition in
earnings due to changes in operating expenses and capital costs.
These increases had previously been authorized by the CPUC in the
Company's 1993 GRC.
As previously disclosed, in April 1994, the Company filed an
application with the CPUC proposing an electric rate increase of
two percent due to a net increase in the Energy Cost Adjustment
Clause/Annual Energy Rate/Electric Revenue Adjustment Mechanism/Low
Income Rate Assistance (ECAC/AER/ERAM/LIRA) electric revenue
requirement. If adopted, the requested rate increase would result
in an estimated net electric revenue requirement increase of $158
million, effective January 1, 1995. In addition, in May 1994, the
Company filed an application with the CPUC in the 1995 Cost of
Capital Proceeding which, if adopted, would result in an annual
revenue requirement increase of $131 million for electric rates,
effective January 1, 1995. Thus, if adopted, the Company's
requests in the ECAC/AER/ERAM/LIRA and 1995 Cost of Capital
proceedings would result in an estimated combined net electric
revenue requirement increase of $289 million, effective January 1,
1995. To the extent that the CPUC grants these electric revenue
requirement increases, the Company anticipates that it will request
a corresponding decrease in base revenues under the ARA mechanism,
such that electric rates will not increase through the end of 1995.
The Company intends to offset any such required decrease in base
revenues through cost reductions. To the extent that these cost
reductions are not achieved, there may be a negative impact on the
Company's 1995 or 1996 results of operations.
The electric rate freeze extension represents another step in the
Company's efforts to improve its ability to succeed in the face of
greater competition. As previously disclosed, the Company already
has taken a number of steps to help reduce its costs and maintain
competitive prices, including: (1) obtaining CPUC approval to
freeze 1993 electric rates through the end of 1994 and to reduce
its electric rates by $100 million for major businesses over an 18-
month period beginning in July 1993, (2) reducing its workforce by
approximately 3,000 positions in 1993, which is expected to result
in a net revenue requirement savings of approximately $170 million
during the three-year 1993 GRC cycle and annual revenue requirement
savings of at least $200 million beginning in 1996, and
(3) reducing its cost of capital by taking advantage of lower
interest rates by refinancing its higher cost long-term debt and
preferred stock.
As previously disclosed, in April 1994, the CPUC issued an order
instituting rulemaking and investigation (OIR/OII) on electric
industry restructuring. The CPUC's proposal, which is subject to
comment and modification, could, among other things, move electric
utilities from traditional cost-of-service rate cases to
performance based ratemaking (PBR) in order to provide stronger
incentives for efficient utility operations, management and
investment. The CPUC indicated that the ongoing energy utility PBR
application proceedings, including the Regulatory Reform Initiative
proposal (RRI) filed by the Company in March 1994, would be used to
develop performance-based programs which may vary in detail among
the utilities. In its RRI filing, the Company had proposed that
base revenue indexing begin in 1995 but that electric base revenue
for 1995 would be held at the 1994 level.
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: August 3, 1994
