Pacific Gas & Electric (PCG)

Natural Gas Supply and Transportation Commitments

The Utility purchases natural gas directly from producers and marketers in both Canada and the United States to serve its core customers.  The contract lengths and natural gas sources of the Utility’s portfolio of natural gas procurement contracts has fluctuated, generally based on market conditions.

At March 31, 2005, the Utility’s obligations for natural gas purchases and gas transportation services were as follows:

Payments made by the Utility for natural gas purchases and gas transportation services amounted to approximately $588 million for the three months ended March 31, 2005, and $529 million for the same period in 2004.

Natural Gas Supply and Transportation Commitments

The Utility purchases natural gas directly from producers and marketers in both Canada and the United States to serve its core customers. The contract lengths and natural gas sources of the Utility’s portfolio of natural gas procurement contracts has fluctuated, generally based on market conditions.

During the period that the Utility was in Chapter 11, the Utility used several different credit arrangements to purchase natural gas, including a $10 million cash collateralized standby letter of credit and a pledge of its core natural gas customer accounts receivable. In connection with its emergence from Chapter 11, the Utility received investment grade issuer credit ratings from Moody’s and S&P. As a result of these credit rating upgrades, the Utility has obtained unsecured credit lines from the majority of its gas supply counterparties.

At December 31, 2004, the Utility’s obligations for natural gas purchases and gas transportation services were as follows:

Payments for natural gas purchases and gas transportation services amounted to approximately $1.8 billion in 2004, $1.5 billion in 2003, and $898 million in 2002.

Natural Gas Supply and Transportation Commitments

        The Utility purchases natural gas directly from producers and marketers in both Canada and the United States to serve its core customers. The contract lengths and natural gas sources of the Utility's portfolio of natural gas procurement contracts has fluctuated, generally based on market conditions.

        During the period that the Utility was in Chapter 11, the Utility used several different credit arrangements to purchase natural gas, including a $10 million cash collateralized standby letter of credit and a pledge of its core natural gas customer accounts receivable. In connection with its emergence from Chapter 11, the Utility received investment grade issuer credit ratings from Moody's and S&P. As a result of these credit rating upgrades, the Utility has obtained unsecured credit lines from the majority of its gas supply counterparties.

        At December 31, 2004, the Utility's obligations for natural gas purchases and gas transportation services were as follows:

        Payments for natural gas purchases and gas transportation services amounted to approximately $1.8 billion in 2004, $1.5 billion in 2003, and $898 million in 2002.

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