Pacific Gas & Electric (PCG)

California Legislature

        Over the last several years, the Utility's operations have been significantly affected by statutes passed by the California legislature, including:

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Assembly Bill 1890.  AB 1890 mandated the restructuring of the California electricity industry, commencing in 1998 with the implementation of a market framework for electricity generation in which generators and other energy providers were permitted to charge market-based rates for wholesale electricity and the Utility's customers were given the choice of becoming direct access customers;



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Assembly Bill 6X.  AB 6X, enacted in January 2001 in response to the California energy crisis, prohibited disposition of utility-owned generation facilities before January 1, 2006;



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Assembly Bill 1X.  AB 1X authorized the DWR, beginning on February 1, 2001, to purchase electricity and sell that electricity directly to the investor-owned electric utilities' retail customers.

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AB 1X required the California investor-owned electric utilities, including the Utility, to deliver that electricity and act as the DWR's billing and collection agent;

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Senate Bill 1976.  SB 1976, enacted in September 2002, required the CPUC to allocate electricity from contracts that the DWR entered into under AB 1X among the customers of the California investor-owned electric utilities, required the utilities to file short- and long-term procurement plans with the CPUC, contemplated that the utilities would resume buying electricity pursuant to these plans by January 1, 2003, and mandated new electricity procurement balancing accounts to allow timely recovery by the utilities of differences between recorded revenues and costs incurred under approved procurement plans;



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Senate Bill 1078.  SB 1078, enacted in September 2002, creates a renewable portfolio standard for investor-owned utilities that requires annual 1% increases of renewable electrical procurement purchases until renewable resources equal 20% of total retail sales in 2017; and



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Senate Bill 772.  SB 772, enacted in June 2004, (1) authorized the CPUC to approve the issuance of energy recovery bonds, or ERBs, to refinance the $2.21 billion regulatory asset established under the Settlement Agreement, or Settlement Regulatory Asset, (2) established a dedicated rate component to securitize the ERBs, and (3) authorized the CPUC to impose a charge for the dedicated rate component on the Utility's electricity distribution customers, subject to certain limited exceptions. On February 10, 2005, PG&E Energy Recovery Funding LLC, or PERF, a limited liability company which is wholly owned and consolidated by the Utility (but legally separate from the Utility), issued $1.9 billion of ERBs that are secured by this dedicated rate component. The proceeds of the issuance of ERBs were paid by PERF to the Utility and will be used by the Utility to refinance the remaining unamortized after-tax balance of the Settlement Regulatory Asset.