Pacific Gas & Electric (PCG)

The Utility faces the risk of unrecoverable costs resulting from changes in the number of customers in its service territory for whom the Utility purchases electricity.

As part of California’s electricity industry restructuring, the Utility’s customers were given the ability to choose to purchase electricity from alternate energy service providers and to thus become direct access customers. Customers who did not buy electricity from an alternate provider continued to receive electricity procurement, transmission and distribution services, or bundled service, from the Utility. Customers who chose an alternate electricity provider continued to receive transmission and distribution services from the Utility. The CPUC suspended the right of end-user customers to become direct access customers on September 20, 2001, although customers that were then direct access customers have been allowed to remain on direct access. During the 2003-2004 legislative session, the California legislature considered bills, including California Assembly Bill 428, or

        The Utility faces the risk of unrecoverable costs resulting from changes in the number of customers in its service territory for whom the Utility purchases electricity.

        As part of California's electricity industry restructuring, the Utility's customers were given the ability to choose to purchase electricity from alternate energy service providers and to thus become direct access customers. Customers who did not buy electricity from an alternate provider continued to receive electricity procurement, transmission and distribution services, or bundled service, from the Utility. Customers who chose an alternate electricity provider continued to receive transmission and distribution services from the Utility. The CPUC suspended the right of end-user customers to become direct access customers on September 20, 2001, although customers that were then direct access customers have been allowed to remain on direct access. During the 2003-2004 legislative session, the California legislature considered bills, including California Assembly Bill 428, or AB 428, which would have required the CPUC to establish rules for reintroduction of direct access through a phased implementation and to establish a model for direct access transactions. AB 428 would also have required the CPUC, for the period January 1, 2006 through January 1, 2009, to permit new direct access transactions in an amount equivalent to the combined amount of Statewide utility load growth and reduction in the electricity supply contract obligations of the DWR. While AB 428 was not approved by the legislature, there can be no assurance that a similar bill will not be introduced and approved in future legislative sessions.

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        Separately, the CPUC has instituted a rulemaking implementing California's Assembly Bill 117, which permits California cities and counties to purchase and sell electricity for their residents once they have registered as community choice aggregators. The Utility would continue to provide distribution, metering and billing services to the community choice aggregators' customers. Once registration has occurred, and the applicable community choice aggregator has received CPUC approval for its implementation plan, the community choice aggregator would purchase electricity for all of its residents who do not affirmatively elect to continue to receive electricity from the Utility. The Utility would continue to be the electricity provider of last resort for all customers. If the Utility loses a material number of customers as a result of cities and counties electing to become community choice aggregators or the CPUC once again allows customers to migrate to direct access, the Utility's electricity purchase contracts could obligate it to purchase more electricity than the Utility's remaining customers require, the excess of which the Utility would have to sell, possibly at a loss. Further, if the Utility must provide electricity to customers discontinuing direct access or electing to leave a community choice aggregator, the Utility may be required to make unanticipated purchases of additional electricity at higher prices. If the Utility has excess electricity or it must make unplanned purchases of electricity as a result of changes in the number of community choice aggregators' customers or direct access customers and the CPUC fails to adjust the Utility's rates to reflect the impact of these actions, PG&E Corporation's and the Utility's financial condition and results of operations could be materially adversely affected.