Pacific Gas & Electric (PCG)

Accounting for Goodwill and Other Intangible Assets

PG&E Corporation and the Utility had no goodwill on their Consolidated Balance Sheets at December 31, 2004 or 2003. Other intangible assets consist mainly of hydroelectric facility licenses and other agreements, with lives ranging from 17 to 40 years. The gross carrying amount of the hydroelectric facility licenses and other agreements was approximately $73 million at December 31, 2004 and December 31, 2003. The accumulated amortization was approximately $23 million at December 31, 2004 and $19 million at December 31, 2003.

The Utility’s amortization expense related to intangible assets was approximately $4 million in 2004, $3 million in 2003 and $3 million in 2002. The estimated annual amortization expense based on the December 31, 2004 intangible asset balance for the Utility’s intangible assets for 2005 through 2009 is approximately $4 million each year.

Accounting for Goodwill and Other Intangible Assets

        PG&E Corporation and the Utility had no goodwill on their Consolidated Balance Sheets at December 31, 2004 or 2003. Other intangible assets consist mainly of hydroelectric facility licenses and other agreements, with lives ranging from 17 to 40 years. The gross carrying amount of the hydroelectric facility licenses and other agreements was approximately $73 million at December 31, 2004 and December 31, 2003. The accumulated amortization was approximately $23 million at December 31, 2004 and $19 million at December 31, 2003.

        The Utility's amortization expense related to intangible assets was approximately $4 million in 2004, $3 million in 2003 and $3 million in 2002. The estimated annual amortization expense based on the December 31, 2004 intangible asset balance for the Utility's intangible assets for 2005 through 2009 is approximately $4 million each year.