Webcast Event
October 22, 2004
ISSUED BY:   Corporate Communications 1-800-743-6397


(San Francisco) – Defining its plans for re-establishing a common stock dividend in 2005, PG&E Corporation (NYSE:PCG) has approved a dividend policy and established a target annual dividend of $1.20 per share, or $0.30 per share on a quarterly basis. The company will hold a conference call with the financial community at 11:30 a.m. Eastern time today to discuss the announcement. The conference call will be open to the public on a listen-only basis via webcast at

Payment of the initial quarterly dividend will be subject to an actual dividend declaration at a later date. The declaration could be as early as February 2005 if Pacific Gas and Electric Company refinances part of its balance sheet as planned in early 2005 through the issuance of Energy Recovery Bonds (ERBs). The initial quarterly dividend payment could then be as early as April 2005, with a total of three dividend payments to shareholders for the year.

The refinancing through the issuance of the ERBs is also expected to save Pacific Gas and Electric Company customers up to $1 billion over the next eight years.

“Investors in PG&E Corporation can now see increased specificity regarding the Corporation’s plan to re-establish a common stock dividend as early as possible in 2005,” said Robert D. Glynn, Jr., PG&E Corporation Chairman, CEO and President. “We intend to return as much as $1.75 billion to shareholders by the end of next year through dividends and stock repurchases.”

The $1.20 per share target reflects the Corporation’s policy to pay dividends at levels that strike a balance among comparability with dividend yields and payout ratios of similar utility companies, the ability to sustain payments in the future, and the desire to retain adequate financial flexibility to make investments in its core business. The Corporation’s dividend policy results in a target payout ratio of 50 percent to 70 percent, relative to earnings per share from operations.

The Corporation will fund dividend payments and share repurchases with distributable cash, which is cash from operations that remains available after the company funds capital expenditures and takes any action necessary to ensure it maintains a balanced capital structure. Assuming Pacific Gas and Electric Company issues ERBs early next year to refinance part of its balance sheet, PG&E Corporation estimates that $2.7 billion would be available between now and the end of 2006 for distribution to shareholders through dividends and stock repurchases, as well as for incremental investments in its core utility business.

Underlying the Corporation’s projections is its estimate that capital expenditures at Pacific Gas and Electric Company will average $1.9 billion per year for 2005 and 2006. (The company is actively evaluating the potential for additional investments in new electric generation, additional electric transmission infrastructure and automated metering, which would increase capital expenditures over current estimates.) Assuming average annual capital spending of $1.9 billion, Pacific Gas and Electric Company’s average rate base will increase at a rate of 3.4 percent per year from approximately $15 billion in 2004 to $16 billion in 2006. The Corporation also assumes that the equity portion of the utility’s authorized capital structure will remain at 52 percent, that the authorized return will remain at least at 11.22 percent, and that the utility earns the full authorized rate of return. These and other financial data are outlined in the attached charts and tables.

PG&E Corporation last declared a common stock dividend in October 2000 for the fourth quarter of that year. The last common dividend payment was made in March 2001.

Please visit our website at for more information and instructions for accessing the conference call webcast. The call will be archived at Alternatively, a toll-free replay of the conference call may be accessed shortly after the live call through October 29, 2004, by dialing 877-690-2094. International callers may dial 402-220-0649.

Supplemental Assumptions and Information

Table 1: Assumptions 2005 - 2006
Average Annual CapEx $1,900 million
ROE 11.22%
Equity Ratio 52%
Target Annual Initial Dividend $1.20 per share
Target Dividend Payout Range 50% to 70%
ERB Issuance Target Dates January 2005 & January 2006


Table 2: Select Cash Items
  2004 2005 2006
Capital Expenditures $1,550 $1,850 $1,950
Distributable Cash* $350** $1,400 $950
* Distributable cash is cash available for dividends, share repurchases, and incremental capital expenditures compared to levels assumed above.
**Reflects cash on hand at PG&E Corporation that is no longer restricted as a result of the NEGT settlement.


Table 3: Milestones
ERB Issuance  
    CPUC approval 4th Quarter 2004
    Receipt of IRS PLR 4th Quarter 2004
    SEC Approval 4th Quarter 2004
    Issuance January 2005
Dividend Payout  
    Declaration 1st Quarter 2005
    Dividend Payment April 2005




This press release contains forward-looking statements regarding the anticipated payment of future common stock dividends and stock repurchases based on various assumptions, including anticipated cash flows in 2005 and 2006. These statements are based on current expectations and assumptions which management believes are reasonable and on information currently available to management but are necessarily subject to various risks and uncertainties. In addition to the risk that the assumptions (described above) underlying the target dividend payout ratio and initial target annual dividend amount prove to be inaccurate, other factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include:

  • The timing and resolution of the petitions for review that were filed in the California Court of Appeal seeking review of (i) the CPUC's December 18, 2003 decision approving the Settlement Agreement, and (ii) the CPUC's March 16, 2004 denial of applications for rehearing of the December 18, 2003 decision;

  • The timing and resolution of the pending appeals of the bankruptcy court's order confirming the Utility’s plan of reorganization under Chapter 11;

  • Whether the conditions to issuing the ERBs are met, and if so, the timing and amount of the issuance of the ERBs;

  • Whether the CPUC approves the Utility's long-term electricity resource plan and adopts the Utility's related ratemaking proposals, whether the assumptions and forecasts underlying the long-term resource plan prove to be accurate, and the terms and conditions of the long-term resource commitments the Utility enters into in connection with its long-term resource plan;

  • Unanticipated changes in operating expenses or capital expenditures affecting the Utility’s ability to earn its authorized rate of return;

  • The level and volatility of wholesale electricity and natural gas prices and supplies, the Utility's ability to manage and respond to the levels and volatility successfully, and the extent to which the Utility is able to timely recover increased costs related to such volatility;

  • The extent to which the Utility is able to recover its costs incurred in meeting its obligation to supply electricity to customers, whether costs are incurred to meet or manage the Utility’s residual net open position (i.e., that portion of the Utility's electricity customers' demand not satisfied by electricity that the Utility generates or has under contract, or by electricity provided under the California Department of Water Resources’ electricity contracts allocated to the Utility's customers) or to ensure adequate resources as required by the CPUC;

  • The operation of the Utility's Diablo Canyon nuclear power plant which exposes the Utility to potentially significant environmental and capital expenditure outlays;

  • The impact of current and future ratemaking actions of the CPUC, including the risk of material differences between forecasted costs used to determine rates and actual costs incurred;

  • The extent to which the CPUC or the FERC delays or denies recovery of the Utility's costs from customers due to a regulatory determination that such costs were not reasonable or prudent or for other reasons resulting in write-offs of regulatory balancing accounts;

  • How the CPUC administers the capital structure, stand-alone dividend and first priority conditions of the CPUC's decisions permitting the establishment of holding companies for California investor-owned electric utilities;

  • The impact of future legislative or regulatory actions or policies;

  • Increased competition;

  • The outcome of pending litigation; and

  • Other factors discussed in PG&E Corporation's and the Utility’s SEC reports.