Pacific Gas & Electric (PCG)

Environmental Measures

•                  In the Settlement Agreement, the Utility agreed to encumber with conservation easements or donate approximately 140,000 acres of land to public agencies or non-profit conservation organizations.

•                  The Utility has established the Pacific Forest and Watershed Stewardship Council to oversee the environmental enhancements associated with these lands. The Utility has agreed to fund the council with $100 million in cash over 10 years. The Utility paid two installments of $10 million each in October 2004 and in January 2005 to this council. As of December 31, 2004, the Utility has recorded a $75 million liability based on the discounted present value of future cash payments to this council. The Utility will be entitled to recover these payments in rates. Therefore, the Utility recognized an offsetting regulatory asset and the recognition of the obligation had no impact on the Utility’s results of operations.

•                  The Utility has also established a California non-profit corporation that is dedicated to support research and investment in clean energy technology, primarily in the Utility’s service territory. The Utility agreed to fund this corporation with $30 million payable over five years. The Utility paid two installments of $2 million each in July 2004 and in January 2005 to this corporation. These contributions may not be recovered in rates. In the first quarter of 2004, the Utility recorded a $27 million, pre-tax charge to earnings based on the discounted present value of future cash payments.

Of the approximately 140,000 acres referred to above, approximately 44,000 acres may be either donated or encumbered with conservation easements. The remaining land contains the Utility’s or a joint licensee’s hydroelectric generation facilities and may only be encumbered with conservation easements. In the first quarter of 2004, the Utility recorded a $1 million, pre-tax charge to earnings associated with the land donation obligation.

Environmental Measures

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In the Settlement Agreement, the Utility agreed to encumber with conservation easements or donate approximately 140,000 acres of land to public agencies or non-profit conservation organizations.



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The Utility has established the Pacific Forest and Watershed Stewardship Council to oversee the environmental enhancements associated with these lands. The Utility has agreed to fund the council with $100 million in cash over 10 years. The Utility paid two installments of $10 million each in October 2004 and in January 2005 to this council. As of December 31, 2004, the Utility has recorded a $75 million liability based on the discounted present value of future cash payments to this council. The Utility will be entitled to recover these payments in rates. Therefore, the Utility recognized an offsetting regulatory asset and the recognition of the obligation had no impact on the Utility's results of operations.



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The Utility has also established a California non-profit corporation that is dedicated to support research and investment in clean energy technology, primarily in the Utility's service territory. The Utility agreed to fund this corporation with $30 million payable over five years. The Utility paid two installments of $2 million each in July 2004 and in January 2005 to this corporation. These contributions may not be recovered in rates. In the first quarter of 2004, the Utility recorded a $27 million, pre-tax charge to earnings based on the discounted present value of future cash payments.

        Of the approximately 140,000 acres referred to above, approximately 44,000 acres may be either donated or encumbered with conservation easements. The remaining land contains the Utility's or a joint licensee's hydroelectric generation facilities and may only be encumbered with conservation easements. In the first quarter of 2004, the Utility recorded a $1 million, pre-tax charge to earnings associated with the land donation obligation.