February 10, 2005
ISSUED BY:   PG&E News Department (415) 973-5930


TURN-Inspired Refinance Will Provide Customers $1 Billion in Savings

(SAN FRANCISCO) – Pacific Gas and Electric Company today announced the successful marketing and sale of approximately $1.9 billion in Energy Recovery Bonds (ERBs) to refinance a portion of its balance sheet, delivering significant savings to its customers, just as promised by the utility and consumer group The Utility Reform Network (TURN) when they reached a compromise plan to help resolve the utility’s emergence from Chapter 11.

TURN originally proposed this refinancing structure during the summer of 2003, during the public hearing process on the settlement agreement among the California Public Utilities Commission (CPUC), PG&E Corporation, and Pacific Gas and Electric Company. TURN and Pacific Gas and Electric Company reached a compromise in December 2003, under which the utility agreed to the refinancing structure, with the savings being used to lower customer costs. The CPUC authorized this refinancing effort when it approved the final December 2003 settlement agreement, and specifically approved going forward with this ERB sale in a decision issued November 19, 2004. Over the past several months, the utility has worked alongside the CPUC financing team, comprised of CPUC staff and their outside advisors, to approve and monitor the terms of this ERB transaction.

“The sale of the ERBs provides ratepayers some of the best news they’ve received since the energy crisis,” said TURN Senior Attorney Mike Florio. “We appreciate PG&E’s effort to conclude this very successful transaction.”

The proceeds from this ERB sale are being used to refinance the regulatory asset created under the settlement agreement. The total dollar savings to customers as a result of refinancing the regulatory asset will be approximately $1 billion, over the remaining eight-year life of the settlement agreement, assuming that as planned, a second ERB series is issued in November 2005. The customer savings are the result of reduced taxes and finance costs associated with the ERBs compared to conventional utility financing of the regulatory asset.

On Monday, February 7, 2005, Pacific Gas and Electric Company filed a request with the CPUC to begin applying the customer savings in retail rates, starting March 1, 2005, and continuing over the remaining eight years of the agreement.

Under the terms of the CPUC authorizing decision, the ERBs will be paid off through a nonbypassable Dedicated Rate Component charge (a charge per kilowatt hour of electricity consumed in PG&E’s service territory).

The ERBs were issued by PG&E Energy Recovery Funding LLC (PERF), a limited liability company which is wholly owned and consolidated by the utility. PERF is legally separate from the utility. The utility is a subsidiary of PG&E Corporation.