Filing Will Not Raise Electric Rates; Gas Rates to Increase 99 Cents a Month

SAN FRANCISCO - As required by the California Public Utilities Commission (CPUC), Pacific Gas and Electric Company today submitted to the Office of Ratepayer Advocates a Notice of Intent for a 2003 General Rate Case (GRC) proceeding.

The request will not increase customers' overall electric rates, which are comprised of several components, as it will be offset by anticipated reductions in electric commodity and other costs, which will occur before this GRC takes effect in January 2003.

On the gas side, the average natural gas bill for residential customers would increase by approximately 99 cents per month (2.6 percent), from $37.95 to $38.94.

"PG&E believes that our customers can see declining overall rates in the future even as we invest in our infrastructure to keep up with growth and deliver safe and reliable gas and electric service," said Gordon R. Smith, president and chief executive officer of Pacific Gas and Electric Company. "In fact, we will shortly file an advice letter with the CPUC to allow the one-half cent per kWh rate increase the Commission imposed last year to expire this June."

In total, the filing represents increases of $71 million (natural gas) and $407 million (electric), or a total of $478 million above the current level of authorized distribution revenues.

Revenue increases are required for gas and electric distribution to meet the needs of hundreds of thousands of new customers, maintain current service levels to existing customers, and to adjust for wages and inflation. From 2000 through 2002, Pacific Gas and Electric Company has invested a total of $3 billion dollars into its gas and electric distributions systems to keep the lights on and the gas flowing. In that same timeframe, the company added approximately 300,000 new customers. To meet those customers' needs, the company has installed 2,500 miles of overhead electric lines, 1,800 miles of underground electric lines and 1,350 miles of gas pipeline. In 2003, the company expects to invest another $1 billion on distribution infrastructure improvements to serve customers.

The CPUC requires that a General Rate Case - an exhaustive regulatory review of utility operations and costs - be performed every three years. The last such GRC process for Pacific Gas and Electric Company was for base year 1999, and resulted in the CPUC approving a $469 million increase over 1996 levels, for an average yearly increase in base revenues of $156 million. Today's filing includes an average annual increase of approximately $157 million, equivalent to the rate of growth the CPUC approved in the 1999 GRC.

The filing today is also similar in size and consistent in scope with other investor owned utilities in California, including Southern California Edison, which recently submitted its request for a 2003 electric-only distribution cost increase of $500 million above levels set four years ago.

This regulatory filing applies only to the costs associated with delivering natural gas and electricity to customers' homes and businesses. It does not seek to recover costs incurred as a result of the utility's bankruptcy or its plan of reorganization.

The GRC process requires that the Office of Ratepayer Advocates (ORA) take 25 days to review the Notice of Intent filing, to ensure the application is adequate so that the case may proceed. If there are any deficiencies identified by ORA, the utility then resolves those deficiencies and must wait 60 days to file the actual GRC application with the CPUC. The CPUC will then assign a Commissioner and an administrative law judge to oversee the case. Public hearings will allow public participation prior to the CPUC making its decision. The utility will request that once approved, the distribution revenue increase would be scheduled to take effect in January 2003.