_____________________________________________________________________________________
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________________________________________________________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of
Report: April 25, 2006
(Date
of
earliest event reported)
|
Commission
File Number
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Exact
Name of Registrant
as
specified in its charter
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State
or Other Jurisdiction of Incorporation or
Organization
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IRS
Employer Identification Number
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|||
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1-12609
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PG&E
CORPORATION
|
California
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94-3234914
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|||
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1-2348
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PACIFIC
GAS
AND ELECTRIC COMPANY
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California
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94-0742640
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 |
 |
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PG&E
Corporation
One
Market, Spear Tower
Suite
2400
San
Francisco, California 94105
(Address
of principal executive offices) (Zip Code)
(415)
267-7000
(Registrant's
telephone number, including area code)
|
Pacific
Gas and Electric Company
77
Beale Street
P.O.
Box 770000
San
Francisco, California 94177
(Address
of principal executive offices) (Zip Code)
(415)
973-7000
(Registrant's
telephone number, including area code)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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o
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Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR
230.425)
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o
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Soliciting
Material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17
CFR 240.14d-2(b)
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17
CFR 240.13e-4(c))
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Item
8.01 - Other Events
Pacific
Gas and Electric Company’s General Rate Case Proceeding
On
April
14, 2006, the California Public Utilities Commission’s (CPUC) Division of
Ratepayer Advocates (DRA) submitted testimony in Pacific Gas and
Electric
Company’s (Utility) 2007 General Rate Case (GRC) proceeding currently pending
at
the CPUC. In the GRC, the CPUC will determine the amount of revenue
requirements
the Utility is authorized to collect to recover its basic business
and
operational costs for electric distribution and existing electricity
generation
operations, and natural gas distribution operations. The DRA recommended
that
the Utility’s 2007 revenue requirements be set at a level approximately $20
million lower than existing 2006 authorized amounts. The DRA’s submission of
testimony is part of the regular process in every GRC proceeding.
The Utility’s
current requested increase in revenue requirements for its electricity
distribution and existing electric generation operations, and gas
distribution
operations for 2007 is $389 million and $44 million, respectively,
over the
Utility’s existing 2006 authorized amounts. The Utility’s current request is
lower than its original December 2, 2005 request because it reflects
increases
in the Utility’s authorized 2006 revenue requirements that became effective on
January 1, 2006, including $155 million that the CPUC authorized
the Utility to
collect, subject to refund, to fund a 2006 pension contribution.
The Utility
also has lowered its original request for an annual revenue requirement
to fund
a pension contribution in 2007, 2008 and 2009 from $216 million
to $98 million,
which reflects the increased 2006 revenue requirement and a reduction
the
Utility agreed to in the March 2006 settlement agreement regarding
pension
contributions. As a result of the lower amounts requested for 2007
and other
revisions, the Utility’s current requests for attrition increases are
approximately $143 million for 2008 and $141 million for 2009,
which are net of
cost savings the Utility estimates will result from the implementation
of
various initiatives to improve the Utility’s business processes and systems.
The
DRA’s
recommended net reduction is comprised of a recommended $17 million
increase in
electric revenue requirements offset by a recommended $37 million
decrease in
gas revenue requirements. The DRA’s recommended 2007 electric and gas revenue
requirement is less than the Utility’s requested amount and approximately $85
million of the difference reflects differences in the Utility’s and the DRA’s
estimates for depreciation expenses. Among other assumptions as
to future costs
which differ from the Utility’s assumptions, the DRA has assumed that the
Utility would make fewer capital expenditures and that some capital
additions
would be made over a longer period of time than the Utility projected
in its GRC
application. The DRA assumes that the Utility’s average annual capital
expenditures for electric and gas distribution, and existing electric
generation
over the 2007 through 2009 period would be $1.4 billion, as compared
to the
Utility’s projection of average annual capital expenditures of $1.8 billion
over
the same period. (Capital expenditures related to the GRC do not
include
projected capital spending related to the proposed advanced metering
infrastructure project, electric transmission, or proposed new
generation
resources.)
In
addition, the DRA recommended attrition increases of $98 million
for 2008 and
$51 million for 2009.
As
previously disclosed, due to uncertainty about savings to be realized
from the
implementation of the various initiatives the Utility is undertaking
to improve
its business processes and systems, the Utility proposed a sharing
mechanism in
its 2007 GRC application by which shareholders and customers would
share equally
in any earnings over the amount needed to achieve a return on equity
(ROE) on
GRC rate base equal to the then-authorized ROE plus 50 basis points.
The
Utility’s customers would receive 100% of the earnings over the amount
needed to
achieve an ROE equal to the then-authorized ROE plus 300 basis
points. If the
Utility's actual ROE were less than an amount equal to the then-authorized
ROE
minus 50 basis points, shareholders and customers would share the
shortfall
equally.
The
DRA
recommended a sharing mechanism by which the Utility’s shareholders would
receive 100% of the earnings over the amount needed to achieve
the
then-authorized ROE, up to 50 basis points. Customers would receive
75% of the
earnings over the amount needed to achieve the then-authorized
ROE plus 50 basis
points. Shareholders and customers would share equally in any earnings
over the
amount needed to achieve an ROE equal to the then-authorized ROE
plus 150 basis
points. If the Utility's actual ROE were less than an amount equal
to the
then-authorized ROE, shareholders would bear 100% of the earnings
shortfall.
The
following table summarizes the Utility’s proposed sharing mechanism based on the
Utility's 2006 authorized ROE of 11.35%:
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ROE
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Customer
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Shareholder
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Below
10.85%
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50%
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50%
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10.85%
- 11.85%
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0%
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100%
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11.86%
- 14.35%
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50%
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50%
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Above
14.35%
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100%
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0%
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The
following table summarizes the DRA’s recommended sharing mechanism for the
Utility based on the Utility's 2006 authorized ROE:
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ROE
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Customer
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Shareholder
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||
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Below
11.35%
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0%
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100%
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11.35%-11.85%
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0%
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100%
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11.86%
- 12.85%
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75%
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25%
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Above
12.85%
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50%
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50%
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The
CPUC’s 2007 GRC schedule calls for additional testimony from other parties
to be
due on April 28, 2006. The schedule provides for a final decision
by December
14, 2006 on all issues except the proposed customer service performance
incentive mechanism, for which a decision is expected in April
2007. PG&E
Corporation and the Utility are unable to predict what amount of
revenue
requirements the CPUC will authorize for the 2007 through 2009
period, whether
the current schedule calling for a final decision in December 2006
will be
maintained, or what the impact of a final 2007 GRC decision will
be on their
financial condition or results of
operations.
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SIGNATURE
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Pursuant
to the
requirements of the Securities Exchange Act of 1934, the registrants
have
duly caused this report to be signed on their behalf by the undersigned
thereunto duly authorized.
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PG&E
CORPORATION
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By:
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LINDA
Y.H. CHENG
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LINDA
Y.H. CHENG
Vice
President, Corporate Governance and Corporate Secretary
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PACIFIC
GAS AND ELECTRIC COMPANY
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||
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By:
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LINDA
Y.H. CHENG
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LINDA
Y.H. CHENG
Vice
President, Corporate Governance and Corporate
Secretary
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Dated: April
25,
2006