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 16, 1997
Exact Name of
Commission Registrant State or other IRS Employer
File as specified Jurisdiction of Identification
Number in its charter Incorporation Number
- ----------- -------------- --------------- --------------
1-12609 PG&E Corporation California 94-3234914
1-2348 Pacific Gas and California 94-0742640
Electric Company
77 Beale Street, P.O. Box 770000, San Francisco, California 94177
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code:(415) 973-7000
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The following information includes forward-looking statements
that involve a number of risks, uncertainties, and assumptions.
A number of factors which could cause actual results to differ
materially from those indicated in the forward-looking statements
are described in more detail below. Words such as "expects,"
"intends," "plans," and similar expressions identify those
statements which are forward-looking.
Item 5. Other Events
A. California Public Utilities Commission (CPUC) Proceedings
1. 1999 General Rate Case
On September 15, 1997, Pacific Gas and Electric Company (PG&E), a
subsidiary of PG&E Corporation, filed with the CPUC a notice of
PG&E's intent to file its Test Year 1999 General Rate Case (GRC)
application later this year. During the GRC, which occurs every
three years, the CPUC examines PG&E's costs and operations to
determine the amount of base revenues PG&E is authorized to
collect from ratepayers. Base revenues recover PG&E's non-fuel-
related operating and maintenance costs, depreciation, taxes, and
a return on invested capital. PG&E's last GRC adopted revenues
based on a 1996 Test Year.
In its notice of intent, PG&E stated that it would request an
increase in authorized base revenues for electric and gas retail
customers, effective January 1, 1999. The requested increase
consists of an increase of $703 million in electric revenues and
an increase of $506 million in gas revenues over authorized base
revenues presently in effect. PG&E's requested increase in
electric base revenues will not increase customer electric rates
because these rates are frozen at the 1996 levels, as part of the
California electric industry restructuring legislation. In
addition, the restructuring legislation anticipates a 10 percent
rate reduction to begin January 1, 1998 for residential and small
commercial customers to be financed through the issuance of
restructuring bonds. Under the restructuring legislation, the
rates for residential and small commercial customers will be
frozen at the reduced rate. The rate freeze will continue until
the earlier of March 31, 2002 or when PG&E recovers its
transition costs. (Transition costs represent the costs of
utilities' generation-related assets and obligations which prove
to be uneconomic in the new competitive framework.)
Under the frozen electric rates, increases in base revenues will
reduce the amount of revenue available to recover transition
costs. To the extent transition costs are not collected by the
end of the rate freeze period, PG&E will be at risk to recover
its remaining transition costs.
The GRC electric revenue request will include proposed funding for (1)
approximately $400 million for system reliability and safety projects,
including increased distribution capacity (poles, wires, substations,
etc.), equipment inspection and maintenance, and a continuation of
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tree-trimming programs; and (2) approximately $300 million for
enhanced customer service and information technology systems.
Since the Federal Energy Regulatory Commission (FERC) authorizes
the revenue to be collected in rates for electric transmission
services, PG&E's GRC application will not seek approval of
revenues to recover costs of transmission services from the CPUC.
Gas customers would experience an increase in gas distribution
rates as a result of the requested gas revenue increase. The gas
revenue increase consists of approximately $70 million for
distribution system safety and reliability improvements,
approximately $140 million to cover increased depreciation costs
of the gas pipeline system, and approximately $290 million for
expanded customer service and customer and other information
systems. As previously disclosed, on August 1, 1997, the CPUC
approved the Gas Accord which will establish gas transmission and
storage rates for the five-year period from implementation of the
Gas Accord (expected to be December 1, 1997) through December
2002. The requested increase in gas base revenues will not
result in an increase in customer gas transmission and storage
rates, since they have already been established through the Gas
Accord. (The Gas Accord is a multi-party settlement agreement
which will also restructure PG&E's gas services and its role in
the gas market and resolve various gas regulatory issues.)
PG&E expects that the revenue adjustments it will propose in the
GRC will change as a result of other pending CPUC proceedings,
including PG&E's 1998 Cost of Capital proceeding which is
expected to be decided before year end 1997. (In the annual Cost
of Capital proceeding, the CPUC authorizes the amount of the
revenue which can be collected from ratepayers to recover a fair
rate of return on invested capital.) In PG&E's 1998 Cost of
Capital proceeding, PG&E has requested the CPUC to authorize an
overall rate of return of 9.67 percent and a return on equity of
12.25 percent, compared to the 1997 authorized levels of 9.45
percent and 11.60 percent, respectively. PG&E's 1999 Cost of
Capital application is scheduled to be filed in May 1998.
In the GRC application, PG&E will propose an assumed weighted
average rate base for electric operations (excluding facilities
for nuclear operations and FERC-regulated transmission services)
of approximately $9.286 billion and for gas operations (excluding
facilities for storage and transmission services) of
approximately $2.235 billion. The rate base is the amount of
PG&E's net investment in facilities, equipment, and other
property (with the exceptions noted above) used to provide CPUC-
regulated electric and gas services. The authorized rate of
return is calculated on rate base.
Public hearings on the 1999 GRC will be scheduled after PG&E
files its application later this year.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrants have duly caused this report to be signed
on their behalf by the undersigned thereunto duly authorized.
PG&E CORPORATION
and
PACIFIC GAS AND ELECTRIC COMPANY
CHRISTOPHER P. JOHNS
By: _____________________
CHRISTOPHER P. JOHNS
Vice President and
Controller
(PG&E Corporation)
Vice President
and Controller
(Pacific Gas and Electric Company)
Dated: September 16, 1997
