PRESS RELEASES 2004
FOR IMMEDIATE RELEASE
March 24, 2004
ISSUED BY:   Corporate Communications 1-800-743-6397

PG&E CORP. CHAIRMAN SAYS COMPANY IS ON COURSE TO ENTER PERIOD OF STABILITY

(New York, NY) - In remarks today at the Morgan Stanley Global Electricity & Energy Conference, Robert D. Glynn, Jr., Chairman, CEO and President of PG&E Corporation (NYSE: PCG) said the company is on course to enter a period that is more stable and more certain than at any time since the onset of the California energy crisis in 2000, as its core business, Pacific Gas and Electric Company, prepares to exit Chapter 11 next month.

"In a few weeks, PG&E Corporation and Pacific Gas and Electric Company will conclude PG&E's Chapter 11 process and turn the corner to a period of significant stability," he said.

Glynn said that he believes the terms and assurances contained in the nine-year settlement agreement with the California Public Utilities Commission (CPUC) to resolve Pacific Gas and Electric Company's Chapter 11 case, establish a strong foundation of financial and regulatory stability as the company moves forward. Further, he said if the CPUC approves the settlement agreement the utility reached with consumer groups in its 2003 general rate case (GRC) to set the utility's base gas and electric rates through 2006, the foundation will be even stronger.

Pacific Gas and Electric Company is now in the process of completing the final steps required for its plan of reorganization to become effective. A significant requirement was the completion of a $6.7 billion bond offering, the proceeds of which will be used to pay creditors on the effective date.

Both Standard & Poor's and Moody's Investors Service announced investment grade credit ratings for the bonds. In addition, Moody's upgraded the utility's issuer rating to investment grade and S&P announced a prospective investment grade corporate credit rating for the utility to be effective upon its exit from Chapter 11.

Other components of the financing include $2.1 billion in new fully committed credit facilities of which approximately $335 million will be initially drawn, and $799 million in a bridge loan to facilitate the re-issue of pollution control bonds. Proceeds of the bond sale, bank borrowings, and approximately $2.6 billion of cash on hand and $1.2 billion of reinstated debt and preferred equity, will be used to satisfy roughly $11.7 billion in claims.

Glynn said that, under the terms of the plan of reorganization, the plan will become effective 11 business days after all conditions have been met. The company expects to officially exit Chapter 11 during the week of April 12.

Upon exit from Chapter 11, the company will have met the goals it said must be accomplished by any reorganization plan for the utility: emerging as an investment grade company, satisfying all valid creditor claims, and doing so without raising customers' rates. In fact, the utility was recently able to lower customers' electric rates by approximately $800 million in 2004 alone, with the average bundled rate decreasing by 8 percent.

Glynn also outlined the utility's previously announced settlement agreement to resolve its 2003 GRC reached with the CPUC's Office of Ratepayer Advocates and other parties in September 2003. The settlement agreement, which still must be approved by the CPUC to become effective, contemplates a revenue increase of $326 million for the utility's electric and gas distribution and electric generation operations. This amount is already accounted for in 2004 rates, which reflect the 8 percent rate reduction approved by the CPUC last month. The settlement agreement also provides for timely revenue increases to cover the utility's rate base growth and inflation starting this year through 2006.

"The GRC settlement agreement provides a level of predictability on allowed costs that we've not had in the past, and as a result, it provides significant advantages for us in our ability to plan and manage the utility over the next few years," said Glynn.
Although the CPUC has not yet issued a final decision in the utility's 2003 GRC, Glynn said the company anticipates the settlement agreement will provide the basis for a final decision.

Glynn said the foundation created by the imminent resolution of the utility's Chapter 11 case and the anticipated resolution of the utility's 2003 GRC will allow the company to focus its efforts on delivering increased value to customers and shareholders.

"Our company is exiting a period that has been uniquely uncertain and challenging, and we're entering an era that we expect will be uniquely stable," he said. "We intend to realize fully the opportunities this creates for us to deliver increased value to customers and shareholders."

Specifically, he said the company and the utility have agreed to pursue securitization of the regulatory asset created under the settlement agreement with the CPUC to resolve the utility's Chapter 11 case to provide further rate reductions to customers, and he restated the company's aspiration to declare common stock dividends for shareholders by the second half of 2005.

A webcast replay of Glynn's presentation is available on the PG&E Corporation web site, www.pgecorp.com.

This release and Mr. Glynn's presentation contain forward-looking statements about the anticipated implementation of the utility's confirmed plan of reorganization, the expected benefits to be received under the settlement agreement PG&E Corporation and the utility entered into with the CPUC in December 2003 which agreement is incorporated into the utility's plan of reorganization, PG&E Corporation's future financial performance and future dividends. These statements are subject to a number of risks and uncertainties and actual results could differ materially depending on many factors, including: the timing and resolution of any appeals that may be filed with respect to the CPUC's denial of the applications for rehearing of the CPUC's decision approving the December 2003 settlement agreement, the timing and resolution of the pending appeals of the Bankruptcy Court's confirmation order; whether the remaining conditions required to implement the utility's plan of reorganization are satisfied; the impact of future legislative or regulatory action, the outcome of pending litigation and regulatory proceedings, including the utility's 2003 general rate case, and other factors discussed in PG&E Corporation's reports filed with the Securities and Exchange Commission.


 

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