Pacific Gas & Electric (PCG)

Changes in Accounting for Certain Derivative Contracts

In November 2003, the FASB approved an amendment to an interpretation issued by the Derivatives Implementation Group, C15, or DIG C15, as previously amended in October 2001 and December 2001, that changed the definition of normal purchases and sales for certain power contracts that contain option-like features.

PG&E Corporation and the Utility had previously adopted the new DIG C15 guidelines prospectively for new derivative instruments entered into after June 30, 2003. On January 1, 2004, PG&E Corporation and the Utility adopted the new DIG C15 guidelines for certain power contracts that contain option-like features that existed prior to July 1, 2003. The adoption of DIG C15 did not have any impact on the Consolidated Financial Statements of PG&E Corporation or the Utility.

Changes in Accounting for Certain Derivative Contracts

        In November 2003, the FASB approved an amendment to an interpretation issued by the Derivatives Implementation Group, C15, or DIG C15, as previously amended in October 2001 and December 2001, that changed the definition of normal purchases and sales for certain power contracts that contain option-like features.

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        PG&E Corporation and the Utility had previously adopted the new DIG C15 guidelines prospectively for new derivative instruments entered into after June 30, 2003. On January 1, 2004, PG&E Corporation and the Utility adopted the new DIG C15 guidelines for certain power contracts that contain option-like features that existed prior to July 1, 2003. The adoption of DIG C15 did not have any impact on the Consolidated Financial Statements of PG&E Corporation or the Utility.