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: June 10, 1999
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
Pacific Gas and Electric Company PG&E Corporation
77 Beale Street, P.O. Box 770000 One Market, Spear Tower, Suite
2400
San Francisco, California 94177 San Francisco, California 94105
(Address of principal executive offices) (Zip Code)
Pacific Gas and Electric Company PG&E Corporation
(415) 973-7000 (415) 267-7000
(Registrant's telephone number, including area code)
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Item 5. Other Events
On June 10, 1999, the California Public Utilities Commission (CPUC)
issued a final decision in Pacific Gas and Electric Company's 1999
Cost of Capital proceeding. (Pacific Gas and Electric Company is the
utility subsidiary of PG&E Corporation.) The decision adopts a
return on common equity (ROE) of 10.6% for Pacific Gas and Electric
Company's electric distribution and gas distribution assets, and an
overall return on utility rate base of 8.75% in 1999. These are
reductions from the utility's 1998 authorized ROE of 11.2% and
overall return of 9.17%.
In this case, the proceeding addressed whether unbundling of the
generation, transmission and distribution functions of the formerly
integrated utility increased or decreased the business risk of the
distribution function. The utilities argued that unbundling and the
introduction of competition increased the risk. Other parties argued
that the distribution function is the least risky of the formerly
integrated utility functions. In its decision, the CPUC determined
that the business risk for the distribution function is no different
than that of the previously integrated utility. The CPUC therefore
concluded that there is no basis for adjusting the ROE associated
with electric distribution.
The decision maintains Pacific Gas and Electric Company's authorized
capital structure for 1999 at 46.2% long-term debt, 5.8% preferred
stock, and 48% common equity. The decision is retroactive to January
1, 1999.
The total change in Pacific Gas and Electric Company's base revenues
in 1999 will be determined by a combination of the final outcomes of
the 1999 General Rate Case (GRC) and other pending CPUC proceedings.
For example, the decision in the 1999 Cost of Capital proceeding
would reduce base revenues in 1999, as compared to 1998, by $35.4
million and $12.3 million for electric and gas distribution,
respectively, based on the rate base authorized in the 1996 GRC.
Based on the rate base proposed by the utility in its 1999 GRC, the
decision would reduce the utility's base revenues in 1999 by $46.3
million and $14.5 million for electric and gas distribution,
respectively. Since the utility has reported earnings reflecting an
ROE of 10.6% since January 1, 1999, the decision in the 1999 Cost of
Capital proceeding is not expected to have a material adverse impact
on the financial condition or results of operations of PG&E
Corporation or Pacific Gas and Electric Company.
In light of the current electric rate freeze, decreases in electric
distribution base revenues would increase the amount of revenues
available to recover transition costs (certain generation-related
costs which prove to be uneconomic under the new competitive electric
generation market).
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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: June 11, 1999
