Pacific Gas & Electric (PCG)

Annual Earnings Assessment Proceeding for Energy Efficiency Program Activities and Public Purpose Programs

In May 2004, 2003, 2002, 2001, and 2000, the Utility filed its annual applications with the CPUC claiming incentives totaling approximately $110 million for past energy efficiency and public purpose program activities. These applications remain subject to verification and approval by the CPUC. PG&E Corporation and the Utility are unable to predict the ultimate outcome of this proceeding.

Annual Earnings Assessment Proceeding for Energy Efficiency Program Activities and Public Purpose Programs

On April 4, 2005, the Utility filed a motion with the CPUC seeking approval of a settlement agreement entered into on April 4, 2005 between the Utility and the CPUC’s Office of Ratepayer Advocates, or the ORA.  The settlement agreement proposes the resolution of the Utility’s claims that have been pending for several years for shareholder incentives earned by the Utility for the successful implementation of demand-side management, energy efficiency, and low-income energy efficiency programs for past program years 1994 through 2001.  The Utility’s claims for shareholder incentives are addressed in the Utility’s Annual Earnings Assessment Proceeding, or AEAP.  In addition to resolving claims made in the pending AEAPs, the settlement agreement proposes to resolve all future claims for shareholder incentives relating to past program years that the Utility would otherwise have made in future AEAPs through 2010.

The Utility’s total current and future shareholder incentive claims aggregate to approximately $207 million.  Under the settlement agreement, the parties have agreed that the results to date show that the energy savings anticipated in the Utility’s shareholder incentive claims are being realized.  The parties have proposed that the Utility receive shareholder incentives of approximately $186 million to resolve the Utility’s claims in the pending and future AEAPs.   The parties have proposed that approximately $160 million be collected from electric customers and approximately $26 million be collected from gas customers, in proportion to the relative allocations of the original claims.

PG&E Corporation and the Utility cannot predict whether or when the CPUC will approve the settlement agreement.  Assuming the CPUC approves the settlement agreement, the Utility would record pre-tax income of approximately $186 million during the quarter in which the settlement agreement is approved by the CPUC.

Annual Earnings Assessment Proceeding for Energy Efficiency Program Activities and Public Purpose Programs

        In May 2004, 2003, 2002, 2001, and 2000, the Utility filed its annual applications with the CPUC claiming incentives totaling approximately $110 million for past energy efficiency and public purpose program activities. These applications remain subject to verification and approval by the CPUC. PG&E Corporation and the Utility are unable to predict the ultimate outcome of this proceeding.