SAN FRANCISCO - Pacific Gas and Electric Company today issued the following statement, in response to the report released by the California Public Utilities Commission (CPUC):

"It is premature to comment in detail about the CPUC report issued late today. We plan to study and evaluate this report thoroughly. As the CPUC is well aware:

• Pacific Gas and Electric Company procured power for its customers in accordance with all CPUC requirements, despite having to make purchases at rates substantially higher than those that it could charge to customers. As the CPUC report confirms, these purchases have resulted in uncollected amounts of $6.7 billion as of December 31, 2000.

• The transfer of approximately $4 billion from Pacific Gas and Electric Company to PG&E Corporation was consistent with CPUC directives. PG&E shareholders invested their money to build the utility's power plants, and, under California law, when those plants were sold under deregulation, shareholders were entitled to recover their investments.

• CPUC rules require sharp lines between the corporation's utility and non-utility businesses and establish a rigorous framework to ensure that those lines are observed. Ratepayers are not to subsidize the growth of PG&E's national business - and they have not.

• The report suggests that the use of affiliate earnings and greater cash conservation efforts could have made a difference. That is simply not the case. Even if the $117 million of NEG earnings that the report attributes to California were used to purchase power and the utility implemented Draconian cash conservation measures - including laying off every management employee, reducing the rank-and-file workforce by an additional one-thousand employees, breaking contracts and implementing a salary freeze on Union employees -- the total savings would amount to less than one month's worth of power at current prices.

"The important objective of all parties - the utilities, lawmakers and regulators including the CPUC -- should be to move expeditiously to achieve a constructive solution to the energy crisis, which is threatening the safety of Californians and the economic well-being of the state."