Pacific Gas & Electric (PCG)

On December 18, 2003, the CPUC approved the Settlement Agreement and, on December 22, 2003, the bankruptcy court confirmed the Utility’s plan of reorganization, which fully incorporates the Settlement Agreement as a material and integral part of the plan. On March 16, 2004, the CPUC denied applications that had been filed by several parties seeking rehearing of the CPUC’s decision approving the Settlement Agreement. On April 15, 2004, two of these parties, CCSF and Aglet Consumer Alliance, or Aglet, filed petitions for review of the CPUC’s decisions with the California Court of Appeal. Three California state senators have filed a brief in support of the CCSF and Aglet petitions. The California Court of Appeal has not yet acted on the petitions.

In addition, appeals of the confirmation order were filed in the District Court by the two CPUC commissioners who did not vote to approve the Settlement Agreement, or the dissenting commissioners, and a municipality. On July 15, 2004, the District Court dismissed the appeals filed by the dissenting commissioners. The dissenting commissioners have appealed the District Court’s order with the Ninth Circuit. The municipality’s appeal remains pending at the District Court.

If the bankruptcy court’s confirmation of the Utility’s plan of reorganization or the Settlement Agreement is overturned or modified on appeal, PG&E Corporation’s and the Utility’s financial condition and results of operations, and the Utility’s ability to pay dividends or otherwise make distributions to PG&E Corporation, could be materially adversely affected.

        If either or both of the CPUC's approval of the Settlement Agreement and the confirmation order are overturned or modified on appeal, PG&E Corporation's and the Utility's financial condition and results of operations could be materially adversely affected.