Pacific Gas & Electric (PCG)

Pollution Control Bond Bridge Facilities

During the Utility’s Chapter 11 proceeding, approximately $454 million in aggregate principal amount of pollution control bonds, which were issued for the Utility’s benefit and were credit enhanced with letters of credit were redeemed through draws on the letters of credit. On the Effective Date, the Utility executed bridge loans with new lenders who had purchased the $454 million reimbursement obligations owed by the Utility to the letter of credit issuers and entered into four separate amended and restated reimbursement agreements with new lenders. These reimbursement agreements include a covenant requiring the Utility to maintain, as of the end of each fiscal quarter ending after the Effective Date, a debt to capitalization ratio of at most 65%. The Utility intends to refinance the $454 million with long-term tax-exempt bonds or taxable debt. The outstanding balance of $454 million at December 31, 2004 under the amended and restated reimbursement agreements is due and payable on June 5, 2005. At the Utility’s request and at the sole discretion of each lender, each amended and restated reimbursement agreement may be extended for additional periods. On the Effective Date, the Utility supported its obligations under the amended and restated reimbursement agreement with $454 million of First Mortgage Bonds.

Pollution Control Bond Bridge Facilities

        During the Utility's Chapter 11 proceeding, approximately $454 million in aggregate principal amount of pollution control bonds, which were issued for the Utility's benefit and were credit enhanced with letters of credit were redeemed through draws on the letters of credit. On the Effective Date, the Utility executed bridge loans with new lenders who had purchased the $454 million reimbursement obligations owed by the Utility to the letter of credit issuers and entered into four separate amended and restated reimbursement agreements with new lenders. These reimbursement agreements include a covenant requiring the Utility to maintain, as of the end of each fiscal quarter ending after the Effective Date, a debt to capitalization ratio of at most 65%. The Utility intends to refinance the $454 million with long-term tax-exempt bonds or taxable debt. The outstanding balance of $454 million at December 31, 2004 under the amended and restated reimbursement agreements is due and payable on June 5, 2005. At the Utility's request and at the sole discretion of each lender, each amended and restated reimbursement agreement may be extended for additional periods. On the Effective Date, the Utility supported its obligations under the amended and restated reimbursement agreement with $454 million of First Mortgage Bonds.

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