Pacific Gas & Electric (PCG)

2003 GRC

On May 27, 2004, the CPUC issued a decision in the Utility’s 2003 GRC that determined the amount the Utility can collect from customers, or base revenue requirements, to recover its basic business and operational costs for electricity and natural gas distribution operations and for electricity generation operations for 2003 through 2006. The CPUC authorized base revenue requirements of approximately $4.3 billion for 2003, an increase of approximately $326 million over the previously authorized amounts. The amount of base revenue requirements authorized for 2004, 2005 and 2006, is based on the 2003 authorized amount, as increased each year to reflect the annual changes in the Consumer Price Index, or CPI, subject to certain minimum and maximum adjustments. These adjustments are called “attrition adjustments.” Base revenue requirements in 2004, including attrition adjustments totaled approximately $4.4 billion. See “Regulatory Matters” below for further detail of the terms of the 2003 GRC.

The impact of the approval of the GRC on the Utility’s results of operations and financial condition is discussed below under “Results of Operations” and “Regulatory Matters.”

2003 GRC

        On May 27, 2004, the CPUC issued a decision in the Utility's 2003 GRC that determined the amount the Utility can collect from customers, or base revenue requirements, to recover its basic business and operational costs for electricity and natural gas distribution operations and for electricity generation operations for 2003 through 2006. The CPUC authorized base revenue requirements of approximately $4.3 billion for 2003, an increase of approximately $326 million over the previously authorized amounts. The amount of base revenue requirements authorized for 2004, 2005 and 2006, is based on the 2003 authorized amount, as increased each year to reflect the annual changes in the Consumer Price Index, or CPI, subject to certain minimum and maximum adjustments. These adjustments are called "attrition adjustments." Base revenue requirements in 2004, including attrition

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adjustments totaled approximately $4.4 billion. See "Regulatory Matters" below for further detail of the terms of the 2003 GRC.

        The impact of the approval of the GRC on the Utility's results of operations and financial condition is discussed below under "Results of Operations" and "Regulatory Matters."