SAN FRANCISCO - The California Public Utilities
Commission (CPUC) today approved a settlement agreement
between Pacific Gas and Electric Company, its parent
PG&E Corporation, and the CPUC, which paves the
way for the utility to emerge from Chapter 11 as
an investment grade company and provides significant
rate reductions to its customers.
"The approval of the settlement agreement helps resolve
much of the uncertainty that our customers, company
and investors have faced, and which has gripped the
state's energy industry for the past three years," said
Robert D. Glynn, Jr., Chairman, CEO and President of
PG&E Corporation. "After Pacific Gas and Electric
Company emerges from Chapter 11, it can return to the
traditional roles it has played in California's economy;
roles that have been interrupted by the challenges of
the energy crisis."
Glynn highlighted some of the important benefits of
the settlement agreement, including:
- A significant rate decrease for customers: Customers
will have their electricity rates reduced by approximately
$670 million in 2004, with the opportunity for additional
rate reductions in the future.
- An opportunity for an additional $1 billion savings
for customers: Through an agreement with The Utility
Reform Network (TURN), the utility would expeditiously
seek to refinance a portion of its costs after emerging
from Chapter 11 under the settlement plan, if specific
conditions are met. The refinancing could potentially
save customers approximately $1 billion in lower interest
rates and tax savings over the term of the agreement.
- Environmental benefits, including the protection
of the 140,000 acres of sensitive watershed lands
surrounding the company's hydroelectric facilities.
- Restoration of the utility's financial health and
investment grade credit rating to allow the company
to access the capital markets in order to finance,
at historically low interest rates, the infrastructure
improvements and long-term procurement of natural
gas and electricity needed to support California's
- Paying in full, or otherwise fully satisfying all
valid creditors claims.
"We are firmly committed to working with the Commission
to strengthen the traditional regulatory relationship
between the utility and the CPUC," said Gordon R. Smith,
Pacific Gas and Electric Company's President and CEO.
"With the world watching today, the Commission demonstrated
the leadership required to help reassure the financial
community that California is back on track, and to provide
for a substantial reduction in customer rates."
PG&E's customers should recognize the efforts of
TURN for forging an agreement that could potentially
save approximately $1 billion in financing costs, and
results in lower rates. The utility will work diligently
with TURN to achieve these additional customer savings.
Last week, the U.S. Bankruptcy Court issued a decision
approving PG&E's plan of reorganization and finding
that the settlement agreement is confirmable. The Court
has scheduled a hearing on December 22 to discuss the
confirmation order. If the final approvals are met,
the utility has targeted the end of the first quarter
of 2004 for its exit from Chapter 11.
The statements in this release regarding management's
beliefs and expectations with respect to Pacific Gas
and Electric Company's future financial health and exit
from Chapter 11 are forward-looking statements that
are subject to a number of risks and assumptions. Actual
results could differ materially depending on many factors,
including whether the plan of reorganization embodying
the terms of the proposed settlement agreement is confirmed
by the Bankruptcy Court and timely implemented, the
timing and the outcome of various regulatory proceedings,
including the utility's 2003 General Rate Case, and
other factors discussed in PG&E Corporation's and
Pacific Gas and Electric Company's reports provided
to the Securities and Exchange Commission.