San Francisco, CA -- Pacific Gas and Electric Company filed a motion with the U.S. Bankruptcy Court today asking the court to authorize it to pay past due amounts for low-cost hydroelectric power purchased under contracts with several California irrigation districts and water agencies. Approval would also allow Pacific Gas and Electric Company to clarify with the irrigation districts and water agencies that these contracts are to be honored and retained for the benefit of Pacific Gas and Electric Company's customers going forward.

These long-term contracts account for 1,036 megawatts of generation that is provided to Pacific Gas and Electric Company's electric customers at an average cost of 1.15 cents/kWh. They represent some of the lowest-cost power available to Californians. The benefits of these contracts are passed on to customers with no profit retained by Pacific Gas and Electric Company.

If approved by the court, Pacific Gas and Electric Company's motion will enable the company to continue making monthly and semiannual payments to six California irrigation districts and water agencies for operations and maintenance (O&M) and construction payments of their hydroelectric power generating facilities.

Prior to filing the Chapter 11 petition on April 6, 2001, the company had made all regular payments due to these irrigation districts and water agencies. However, as a result of general bankruptcy law prohibitions against post-petition payment for services rendered but not yet paid for prior to the bankruptcy filing date, Pacific Gas and Electric Company was unable to make $1.6 million in payments due since April 6. Once the bankruptcy court approves this motion, Pacific Gas and Electric Company will be authorized to pay these entities any amounts due for the period prior to its bankruptcy filing.

Specifically, the motion seeks to preserve six major long-term agreements: (1) Tri-Dam project executed with the Oakdale and South San Joaquin Irrigation Districts in 1952; (2) South Fork Project executed with the Oroville-Wyandotte Irrigation District in 1960; (3) Yuba-Bear Project executed with the Nevada Irrigation District in 1963; (4) Middle Fork Project executed with the Placer County Water Agency in 1963; (5) Merced River Development Project executed with the Merced Irrigation District in 1964; (6) Yuba River Development Project executed with the Yuba County Water Agency in 1966. The motion also seeks to preserve two smaller scale agreements both of which involved adding new facilities onto existing projects: (1) Rollins Project executed with the Nevada Irrigation District in 1978; and (2) Sly Creek Project executed with Oroville-Wyandotte Irrigation District in 1981.