(San Francisco) - Pacific Gas and Electric Company (PG&E), the California Public Utilities Commission (CPUC) Division of Ratepayer Advocates and the Coalition of California Utility Employees today filed a proposed settlement agreement in the company’s 2007 General Rate Case (GRC). The settlement agreement would provide additional base revenues of approximately $213 million in 2007 to ensure sufficient funding for the upkeep, improvement and growth of PG&E’s electric and gas distribution systems and its electric generation facilities. The additional revenues are not expected to result in a significant net change in customer electric and gas rates for 2007, as declines in other revenue requirements are expected to partially offset GRC-related adjustments.

In addition to the CPUC Division of Ratepayer Advocates and the Coalition of California Utility Employees, parties supporting specific elements of the settlement agreement include the California Farm Bureau Federation, the Modesto, Merced, and South San Joaquin irrigation districts, the Western Manufactured Housing Communities Association and the Disability Rights Advocates, among others.

The proposed settlement agreement addresses all revenue requirement issues in the GRC and has been submitted to the CPUC for approval. It is anticipated that the CPUC will reach a decision on the settlement in February 2007. If the CPUC approves the settlement agreement and other currently expected electric and gas revenue changes during the first quarter of 2007, the net change in the monthly PG&E bill for a typical residential customer would be an increase of 0.2 percent for electric service, from an estimated $69.96 to $70.09, and an increase of 1.6 percent for gas service from $60.80 to $61.77.

The settlement agreement extends the typical three-year GRC time period for an additional year, through 2010. The settlement also provides for incremental revenues of $125 million per year in 2008, 2009 and 2010 to cover cost increases resulting from inflation and customer growth.

The increased revenues in the settlement will support PG&E’s previously stated plans to make average annual capital investments of $2.5 billion per year in its infrastructure over the next several years, and provide better, faster, more effective customer service. The company also connects approximately 85,000 new electric customers and 75,000 new gas customers each year throughout its service territory. In addition, like many utilities across the United States, PG&E faces the need to upgrade or replace elements of its infrastructure that are reaching the end of their normal life span.

Specifically, the proposed settlement would provide additional funding of approximately $222 million for electric distribution, including the connection of new customers to the grid, as well as projects such as the replacement of underground cable and the upgrade of substation transformers; an additional $21 million for gas distribution, including pipeline replacement and the connection of new customers; and a decrease of $30 million for electric generation.

PG&E’s proposal after hearings earlier this year called for $343 million of additional funding for electric distribution, $36 million for gas distribution, and $16 million for electric generation. In addition, the company had requested incremental revenues of $143 million in 2008 and $180 million in 2009.

The company is still in discussions with the CPUC Division of Ratepayer Advocates, Farm Bureau, Greenlining, The Utility Reform Network and a number of other parties regarding PG&E’s future delivery of local office services and is hopeful that a cooperative solution can be reached. PG&E will continue to operate its 84 front counters at local offices pending resolution of this issue.

As part of the regulatory process, parties will be given the opportunity to comment on the settlement through briefs and other filings, and hearings may be held if needed. A final decision is expected in February 2007.

For more information about Pacific Gas and Electric Company, please visit our web site, www.pge.com.