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 14, 2000
Exact Name of
Commission Registrant State or other IRS Employer
File as specified Jurisdiction of Identification
Number in its charter Incorporation Number
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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
A. Valuation and Disposition of Pacific Gas and Electric Company's
Hydroelectric Generation Assets
As previously disclosed, Pacific Gas and Electric Company (Utility), the
California subsidiary of PG&E Corporation, filed an application with the
California Public Utilities Commission (CPUC) in which the Utility has
proposed to determine the market value of its hydroelectric generating
facilities and related assets through an open competitive auction. The
CPUC invited parties to propose alternative methods of valuation and
disposition of the assets. Under the California electric industry
restructuring law, the valuation of the Utility's remaining generation
assets (primarily its hydroelectric facilities) must be completed by
December 31, 2001. Any excess of market value over the assets' book value
would be used to reduce the Utility's remaining transition costs. The
current electric rate freeze for the Utility's customers would end when the
Utility has recovered its eligible transition costs.
On June 12, 2000, the Utility met with the President of the CPUC, who is
also the Presiding Commissioner in this proceeding, to discuss the
valuation and disposition of the Utility's hydroelectric generating assets.
As disclosed in the Utility's ex parte notice filed after the meeting, the
Utility indicated although it remains committed to auctioning the
hydroelectric assets and not retaining them in the Utility, it would be
willing to accept a possible compromise within a framework that would
transfer the hydroelectric facilities at a fair value to a non-utility
affiliate of PG&E Corporation. Under this framework, the affiliate could
hold and operate the assets, subject to a revenue sharing contract between
the affiliate and the Utility similar to the revenue sharing arrangement
proposed by Southern California Edison Company (SCE) in connection with its
hydroelectric generating assets. The revenue sharing arrangement proposed
by SCE permits SCE to recover an authorized inflation-indexed operations
and maintenance allowance, as well as a reasonable return on capital
investment. Under SCE's proposal, revenue sharing would be activated if
revenue from the sale of hydroelectricity exceeds or falls short of the
authorized revenue requirement. SCE would then refund 90 percent of the
excess revenue to ratepayers or recover 90 percent of any shortfalls from
ratepayers.
The Utility indicated in the ex parte meeting that any settlement
proposal that may be developed around this framework would be filed with
the CPUC under the CPUC's settlement rules which provide for a full public
record to be developed on such a potential settlement. Under these rules,
a settlement conference would be held among parties to discuss, obtain
comments with respect to, and invite participation in, the potential
settlement, and the CPUC may hold hearings on the proposal. Under the
CPUC's rules, a settlement proposal could be filed up to 30 days after the
last day of hearings in the proceeding. Hearings are currently scheduled
to run through July 14, 2000. Any settlement that may eventually be reached
between any parties would be subject to approval of the CPUC. The CPUC may
accept the settlement or reject it, suggest changes to it, or adopt a
different valuation approach.
As previously discussed in PG&E Corporation's and the Utility's reports
filed with the Securities and Exchange Commission, if the market value of
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the Utility's hydroelectric generation assets is determined by any method
other than a sale of the assets to an unaffiliated third party, a material
charge to Utility earnings would result if the market value materially
exceeds the book value of the assets.
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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
By CHRISTOPHER P. JOHNS
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CHRISTOPHER P. JOHNS
Vice President and Controller
PACIFIC GAS AND ELECTRIC COMPANY
By KENT M. HARVEY
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KENT M. HARVEY
Senior Vice President, Treasurer, Chief
Financial Officer, and Controller
Dated: June 14, 2000
