SAN FRANCISCO - Pacific Gas and Electric Company today issued the following statement after Governor Gray Davis responded to the Federal Energy Regulatory Commission's (FERC) draft on the California electricity market:

"Governor Davis understands California's electric energy crisis comes from a dysfunctional wholesale market. California's utilities, whose role under deregulation is mainly to distribute energy, can play a key part in helping to find a balanced solution.

"As the Governor noted, California's utility companies, if allowed, can play an important role in moderating price volatility and ensuring reliability by expanding their ability to purchase in the forward market.

"In order to continue to serve California's economy and citizens, utilities must be financially healthy and stable. We will continue to protect our customers from the shock of high wholesale energy prices and work to ensure that a comprehensive solution recognizes that we cannot continue to borrow money to pay our customers' energy costs."

Pacific Gas and Electric Company has been working collaboratively with regulators, policy makers, and its customers to develop solutions to the current wholesale energy crisis. The company has offered several solutions to address the critical energy crisis facing the state, including efforts to increase supply, reduce demand, protect customers from high prices, and upgrade transmission capability.