Pacific Gas & Electric (PCG)

Working Capital Facility

On March 5, 2004, the Utility entered into an $850 million revolving credit facility, or working capital facility, with a syndicate of banks. Loans under the working capital facility will be used primarily to cover operating expenses and seasonal fluctuations in cash flows. Letters of credit under the working capital facility will be used primarily to provide credit enhancements to counter parties for natural gas and electricity procurement transactions. The working capital facility has a term of three years and all outstanding amounts will be due and payable on March 5, 2007. At the Utility’s request and at the sole discretion of each lender, the working capital facility may be extended for additional periods. On the Effective Date, the Utility supported its obligation under the working capital facility with First Mortgage Bonds. At December 31, 2004, there were $300 million of loans outstanding under the working capital facility, which had a weighted average interest rate of 3.42%. The Utility repaid the $300 million of loans outstanding on February 11, 2005. The Utility also had approximately $285 million of letters of credit outstanding at December 31, 2004.

Working Capital Facility

        On March 5, 2004, the Utility entered into an $850 million revolving credit facility, or working capital facility, with a syndicate of banks. Loans under the working capital facility will be used primarily to cover operating expenses and seasonal fluctuations in cash flows. Letters of credit under the working capital facility will be used primarily to provide credit enhancements to counter parties for natural gas and electricity procurement transactions. The working capital facility has a term of three years and all outstanding amounts will be due and payable on March 5, 2007. At the Utility's request and at the sole discretion of each lender, the working capital facility may be extended for additional periods. On the Effective Date, the Utility supported its obligation under the working capital facility with First Mortgage Bonds. At December 31, 2004, there were $300 million of loans outstanding under the working capital facility, which had a weighted average interest rate of 3.42%. The Utility repaid the $300 million of loans outstanding on February 11, 2005. The Utility also had approximately $285 million of letters of credit outstanding at December 31, 2004.

        The working capital facility includes covenants requiring:

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Maintenance, as of the end of each fiscal quarter ending after the Effective Date, of a debt to capitalization ratio of at most 65%; and



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Until the lien securing the First Mortgage Bonds is released, a limitation on liens other than those specifically permitted by the indenture for the First Mortgage Bonds. As noted above, after the release of the lien, the First Mortgage Bond indenture then limits the ability of the Utility and its significant subsidiaries to incur secured debt and enter into sale and leaseback transactions.