EX-99.2 3 ex9902.htm ADDITIONAL SUPPLEMENTAL INFORMATION ex9902.htm
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

Exhibit 99.2

Table 1:    PG&E Corporation Business Priorities 2008-2011
 



1.    Deliver on Earnings Per Share (EPS) goals

2.    Improve system reliability

3.    Identify and capture operating efficiencies

4.    Focus on customer service and satisfaction

5.    Ensure workforce readiness and alignment





 
 
 


 

Table 2: Reconciliation of PG&E Corporation’s Earnings from Operations to Consolidated Net Income in Accordance with Generally Accepted Accounting Principles (GAAP)
Third Quarter and Year-to-Date, 2008 vs. 2007
(in millions, except per share amounts)
 


   
Three months ended September 30,
    
Nine months ended September 30,
  
             
   
Earnings
    
Earnings per Common Share (Diluted)
    
Earnings
    
Earnings per Common Share (Diluted)
  
   
2008
    
2007
    
2008
    
2007
    
2008
    
2007
    
2008
    
2007
  
                                                 
PG&E Corporation Earnings from Operations (1)
   $ 304     $ 278     $ 0.83     $ 0.77     $ 821     $ 803     $ 2.24     $ 2.22  
Items Impacting Comparability (2)
     -       -       -       -       -       -       -       -  
PG&E Corporation Earnings on a GAAP basis
   $ 304     $ 278     $ 0.83     $ 0.77     $ 821     $ 803     $ 2.24     $ 2.22  

 
 
   
 
 
 
 
 
  
 
1.
  
“Earnings from operations” is not calculated in accordance with GAAP and excludes items impacting comparability as described in Note (2) below.
     
2.
  
Items impacting comparability reconcile earnings from operations with consolidated net income as reported in accordance with GAAP.  For the three and nine month periods ended September 30, 2008 and 2007, PG&E Corporation did not have any items impacting comparability to report.


 
 
 


 

Table 3: Reconciliation of Pacific Gas and Electric Company’s Earnings from Operations to Consolidated Net Income in Accordance with GAAP
Third Quarter and Year-to-Date, 2008 vs. 2007
(in millions)
 


   
Three months ended September 30,
    
Nine months ended September 30,
  
                         
   
Earnings
    
Earnings
  
   
2008
    
2007
    
2008
    
2007
  
Pacific Gas and Electric Company
  Earnings from Operations (1)
   $ 318     $ 279     $ 860     $ 808  
Items Impacting Comparability (2)
     -       -       -       -  
Pacific Gas and Electric Company Earnings
  on a GAAP basis
   $ 318     $ 279     $ 860     $ 808  

 

1.
  
“Earnings from operations” is not calculated in accordance with GAAP and excludes items impacting comparability as described in Note (2) below.
     
2.
  
Items impacting comparability reconcile earnings from operations with consolidated net income as reported in accordance with GAAP.  For the three and nine month periods ended September 30, 2008 and 2007, Pacific Gas and Electric Company did not have any items impacting comparability to report.
 


 
 
 


 

Table 4:  PG&E Corporation EPS from Operations
Third Quarter and Year-to-Date, 2008 vs. 2007
($/Share, Diluted)
 

       
Q3 2007 EPS from Operations (1)
   $ 0.77  
         
Increase in rate base revenue
     0.06  
Billing OII (2)
     0.02  
Gas transmission revenues
     0.01  
Miscellaneous items
     0.03  
         
Expenses for statewide and local initiatives
     (0.03 )
Operating and maintenance - gas system
     (0.02 )
Increase in shares outstanding
     (0.01 )
Q3 2008 EPS from Operations (1)
   $ 0.83  





       
Q3 2007 YTD EPS from Operations (1)
   $ 2.22  
         
Increase in rate base revenue
     0.20  
Billing OII (2)
     0.02  
Gas transmission revenues
     0.01  
         
Storm and outage expenses
     (0.07 )
Operating and maintenance - gas system
     (0.05 )
Expenses for statewide and local initiatives
     (0.03 )
Increase in shares outstanding
     (0.03 )
Nuclear refueling outage (3)
     (0.02 )
Miscellaneous items
     (0.01 )
Q3 2008 YTD EPS from Operations (1)
   $ 2.24  

 
 

1.
See Table 2 for a reconciliation of EPS from operations to EPS on a GAAP basis.
   
2.
Charge for customer refunds related to the installation of a new billing system incurred in 2007 with no similar cost in 2008.
   
3.
There were no refueling outages during the three months ended September 30, 2008 and 2007.  The refueling outage during the nine months ended September 30, 2008 was 69 days as compared to 30 days during the same period in 2007.

 
 
 
 

 
 
 

 
 

 
 

Table 5: PG&E Corporation Share Statistics
Third Quarter 2008 vs. Third Quarter 2007
(shares in millions, except per share amounts)
 


    
  
Third Quarter
 2008
    
Third Quarter
 2007
    
 
% Change
  
                   
Common Stock Data
                  
                   
Book Value per share – end of period (1)
   $ 24.19     $ 22.58       7.13 %
                         
Weighted average common shares outstanding, basic
     357       352       1.42 %
    Employee share-based compensation
     1       1       -  
Weighted average common shares outstanding, diluted
     358       353       1.42 %
    9.5% Convertible Subordinated Notes (participating securities)
     19       19       -  
Weighted average common shares outstanding and participating securities, diluted
     377       372       1.34 %


 

1.
 Common shareholders’ equity per common share outstanding at period end (includes the effect of participating securities).    
 
 
 
 Source:    PG&E Corporation’s Condensed Consolidated Financial Statements and the Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.
 

 

 

 
 
 


 

Table 6: Operational Performance Metrics
Third Quarter Year-to-Date Actual 2008 vs. Targets 2008
 

         
2008
  
 
      
Percentage Weight (1)
    
Q3 YTD Actual
    
Q3 YTD Target
    
EOY Target
  
                             
  1.  
Earnings From Operations (in millions)
    
40%
      
$821
    
See note (2)
    
See note (2)
  
                                   
  2.  
Customer Satisfaction & Brand Health Index
    
20%
      
76.1
      
77.0
      
77.0
  
                                       
  3.  
Reliable Energy Delivery
    
20%
      
0.678
      
1.000
      
1.000
  
                                       
  4.  
Employee Engagement Premier Survey
    
10%
    
See note (3)
    
See note (3)
      
66.00%
  
                                       
  5.  
Safety Performance
    
10%
      
3.310
      
3.483
      
3.483
  

 

 
 1.
 Represents weighting used in calculating PG&E Corporation Short-Term Incentive Plan performance for management employees.
   
 2.  Internal target not publicly disclosed but is consistent with publicly disclosed guidance for 2008 EPS from operations of $2.90-$3.00.
   
 3.  The Employee Engagement Premier Survey will be administered in December 2008 with results available in February 2009.
 

 

 
 
 






DEFINITIONS OF 2008 OPERATIONAL PERFORMANCE METRICS FROM TABLE 6:

1.
Earnings from Operations:
    
 
 
Earnings from operations measures PG&E Corporation’s earnings power from ongoing core operations.  It allows investors to compare the underlying financial performance of the business from one period to another, exclusive of items that management believes do not reflect the normal course of operations (items impacting comparability).  The measurement is not calculated in accordance with GAAP.  For a reconciliation of earnings from operations to consolidated net income in accordance with GAAP, see Tables 2 and 3 above.
 
The 2008 target for earnings from operations is based on Pacific Gas and Electric Company’s 2008 authorized return on equity.  This target is not publicly reported but is consistent with PG&E Corporation’s publicly disclosed guidance range provided for 2008 EPS from operations of $2.90-$3.00.
  
   
2.
Customer Satisfaction & Brand Health Index:
 
 
The Customer Satisfaction & Brand Health Index is a combination of a Customer Satisfaction Score, which has a 75 percent weighting and a Brand Favorability Score, which a 25 percent weighting in the composite.  The Customer Satisfaction Score is a measure of overall satisfaction with PG&E’s operational performance in delivering services such as reliability, pricing of services, and customer service experience.  The Brand Favorability Score is a measure of the overall favorability towards the PG&E brand and measures the emotional connection that customers have with the brand and is based on assessing perceptions regarding PG&E’s image, such as trust, heritage, and social responsibility.  The Brand Favorability Score will measure residential, small business, and medium business customer perceptions with weightings based on revenue; 60 percent for residential customers and 40 percent for business customers.
   
3.
Reliable Energy Delivery:
 
 
Reliable Energy Delivery Index is a composite of four categories outlined below.  Overall, these metrics provide a balanced view on the number and duration of electric systems unplanned interruptions, the integrity of the gas transmission and distribution system, and performance of the appropriate level of maintenance and focused investment on the system infrastructure.
      
1. System Average Interruption Frequency Index (SAIFI)
2. Customer Average Interruption Duration Index (CAIDI)
3. Execution of Electric-Based Work Units
4. Gas Transmission and Distribution Integrity
   
4.
Employee Engagement Premier Survey:
 
 
The employee engagement premier survey is designed around 15 key drivers of employee engagement.  The average overall employee engagement score provides a comprehensive metric that is derived by averaging the percent favorable responses from 40 core survey questions (all fall into one of the 15 key drivers).
   
5.
Safety Performance:
 
 
The Occupational Safety & Health Administration (OSHA) Recordable Rate measures the number of OSHA Recordable injuries, illnesses, or exposures that (1) satisfy OSHA requirements for recordability, and (2) occur in the current year.  In general, an injury must result in medical treatment beyond first aid or result in work restrictions, death, or loss of consciousness to be OSHA Recordable.  The rate measures how frequently OSHA Recordable cases occur for every 200,000 hours worked, or for approximately every 100 employees.
   
 

 

 
 
 
 
 

 

Table 7: Pacific Gas and Electric Company Operating Statistics
Third Quarter and Year-to-Date, 2008 vs. 2007
 

   
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
   
2008
    
2007
    
2008
    
2007
  
                         
Electric Sales (in millions kWh)
                        
    Residential
     8,937       8,641       24,033       23,580  
    Commercial
     9,252       9,304       25,693       25,597  
    Industrial
     4,344       4,145       12,022       11,285  
    Agricultural
     2,157       2,025       4,372       4,252  
    BART, public street and highway lighting
     245       208       664       616  
    Other electric utilities
     -       -       1       2  
Sales from Energy Deliveries
     24,935       24,323       66,785       65,332  
     
                                
Total Electric Customers at September 30
                     5,134,259       5,099,634  
     
                                
Bundled Gas Sales (in millions MCF)
                                
    Residential
     24       24       153       149  
    Commercial
     11       12       49       52  
Total Bundled Gas Sales
     35       36       202       201  
Transportation Only
     165       199       437       454  
Total Gas Sales
     200       235       639       655  
                                 
Total Gas Customers at September 30
                     4,263,133       4,252,349  
     
                                
     
                                
Sources of Electric Energy (in millions kWh)
                                
Pacific Gas and Electric Company Generation
                                
    Nuclear
     4,391       4,775       12,249       13,718  
    Hydro (net)
     2,195       2,087       6,220       5,778  
    Fossil
     111       114       393       348  
Total Pacific Gas and Electric Company Generation
     6,697       6,976       18,862       19,844  
Purchased Power
                                
    Qualifying Facilities
     3,874       4,611       12,179       12,617  
    Irrigation Districts
     842       913       1,809       2,195  
    Other Purchased Power
     1,053       1,647       2,062       2,186  
    Spot Market Purchases/Sales, net
     7,792       3,658       20,503       10,939  
Total Purchased Power (1)
     13,561       10,829       36,553       27,937  
                                 
Delivery from DWR
     3,752       5,635       10,124       15,689  
     
                                
Delivery to Direct Access Customers
     1,627       1,714       4,685       5,114  
     
                                
Other (includes energy loss)
     (702 )     (831 )     (3,439 )     (3,252 )
     
                                
Total Electric Energy Delivered
     24,935       24,323       66,785       65,332  
     
                                
Diablo Canyon Performance
                                
Overall capacity factor (including refuelings)
     89 %     97 %     91 %     94 %
Refueling outage period
  
None
    
None
    
2/3/08-4/12/08
    
4/30/07-5/29/07
  
Refueling outage duration during the period (days)
  
None
    
None
       68.9       29.8  
                                 



1.
For the three months ended September 30, 2008 and 2007, Total Purchased Power is net of Spot Market Sales of 1,165 million kWh and 462 million kWh, respectively.  For the nine months ended September 30, 2008 and 2007, Total Purchased Power is net of Spot Market Sales of 2,824 million kWh and 2,038 million kWh, respectively.

 
 
 


 

Table 8: PG&E Corporation EPS Guidance

 

 
2008 EPS Guidance   
Low
 
High
 EPS Guidance on an Earnings from Operations Basis $
 
$2.90
 
 
 $
 
$3.00
       
Estimated Items Impacting Comparability (1)
0.66
 
0.69
       
Estimated EPS on a GAAP Basis  $
$3.56
 
  $
$3.69

 

 
2009 EPS Guidance
Low
 
High
 EPS Guidance on an Earnings from Operations Basis  $
$3.15
 
 
 $ 
 
$3.25
       
Estimated Items Impacting Comparability
-
 
-
       
Estimated EPS on a GAAP Basis  $
$3.15
 
  $
$3.25

 

1.
 Estimated amount of after-tax income to be recognized in connection with a settlement of 2001-2004 tax audits finalized in the fourth quarter of 2008.      
 
Management's statements regarding 2008 and 2009 guidance for earnings from operations per common share for PG&E Corporation, estimated rate base for 2008 and 2009, and general sensitivities for 2008 and 2009 earnings, constitute forward-looking statements that are based on current expectations and assumptions which management believes are reasonable, including that Pacific Gas and Electric Company earns its authorized rate of return. These statements and assumptions are necessarily subject to various risks and uncertainties. Actual results may differ materially. Factors that could cause actual results to differ materially include:

 
  •  
Pacific Gas and Electric Company’s ability to manage capital expenditures and operating expenses within authorized levels and recover such costs through rates in a timely manner;
     
 
  •  
the outcome of regulatory proceedings, including pending and future ratemaking proceedings at the California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission (FERC);
     
 
  •  
the adequacy and price of electricity and natural gas supplies, and the ability of Pacific Gas and Electric Company to manage and respond to the volatility of the electricity and natural gas markets;
     
 
  •  
the effect of weather, storms, earthquakes, fires, floods, disease, other natural disasters, explosions, accidents, mechanical breakdowns, acts of terrorism, and other events or hazards on Pacific Gas and Electric Company’s facilities and operations, its customers, and third parties on which Pacific Gas and Electric Company relies;
     
 
  •  
the potential impacts of climate change on Pacific Gas and Electric Company’s electricity and natural gas businesses;
     
 
  •  
changes in customer demand for electricity and natural gas resulting from unanticipated population growth or decline, general economic and financial market conditions, changes in technology, including the development of alternative energy sources, or other reasons;
     
 
  •  
operating performance of the Diablo Canyon nuclear generating facilities (“Diablo Canyon”), the occurrence of unplanned outages at Diablo Canyon, or the temporary or permanent cessation of operations at Diablo Canyon;
     
 
 
 
 
 
 
Table 8 (continued): PG&E Corporation EPS Guidance

 

  •  
whether Pacific Gas and Electric Company can maintain the cost savings it has recognized from operating efficiencies it has achieved and identify and successfully implement additional sustainable cost-saving measures;
   
  •  
whether Pacific Gas and Electric Company incurs substantial unanticipated expense to improve the safety and reliability of its electric and natural gas distribution systems;
   
  •  
whether Pacific Gas and Electric Company achieves the CPUC’s energy efficiency targets and recognizes any incentives Pacific Gas and Electric Company may earn in a timely manner;
   
  •  
the impact of changes in federal or state laws, or their interpretation, on energy policy and the regulation of utilities and their holding companies;
   
  •  
the impact of changing wholesale electric or gas market rules, including new rules of the California Independent System Operator to restructure the California wholesale electricity market;
   
  •  
how the CPUC administers the conditions imposed on PG&E Corporation when it became Pacific Gas and Electric Company’s holding company;
   
  •  
the extent to which PG&E Corporation or Pacific Gas and Electric Company incurs costs and liabilities in connection with litigation that are not recoverable through rates, from insurance, or from other third parties;
   
  •  
the ability of PG&E Corporation, Pacific Gas and Electric Company, and counterparties, to access capital markets and other sources of credit in a timely manner on acceptable terms, especially given the recent deteriorating conditions in the economy and financial markets;
   
  •  
the impact of environmental laws and regulations and the costs of compliance and remediation;
   
  •  
the effect of municipalization, direct access, community choice aggregation, or other forms of bypass;
   
  •  
the impact of changes in federal or state tax laws, policies or regulations; and
   
  •  
other factors and risks discussed in PG&E Corporation and Pacific Gas and Electric Company’s 2007 Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission.





 
 
 


 

Table 9: Rate Base - Pacific Gas and Electric Company
 




   
2007
    
2008
    
2009
  
   
Recorded
    
Estimated
    
Estimated
  
Total Weighted Average Rate Base (in billions)
   $
16.9
     $
18.3
     $
20.4
  
                         


 


The rate base estimates for 2008 and 2009 and the forecast of capital expenditures that the estimates are based on are forward-looking statements that are subject to various risks and uncertainties, including whether the forecasted expenditures will be made or will be made within the time periods assumed.  Actual results may differ materially.  For a discussion of the factors that may affect future results, see Table 8.



 
 
 


 

Table 10: General Earnings Sensitivities for 2008 and 2009
PG&E Corporation and Pacific Gas and Electric Company
 





 
Variable
 
  
Description of Change
 
 
 
Estimated 2008 Earnings Impact
 
Estimated 2009
Earnings Impact
       
 
Rate base
 
  
+/- $100 million change in rate base (1)
 
  
+/- $6 million
 
+/- $6 million
       
 
Return on equity (ROE)
  
+/- 0.1% change in allowed ROE
 
  
+/- $10 million
 
+/- $11 million
       
 
Share count
 
  
+/- 1% change in average shares
 
  
-/+ $0.03 per share
 
-/+ $0.03 per share
       
 
Revenues
 
  +/- $7 million change in at-risk revenue (pre-tax), including Electric Transmission and California Gas Transmission
  
+/- $0.01 per share
 
+/- $0.01 per share
       

 
 
 
1.
 Assumes earning an 11.45% combined CPUC- and FERC-authorized weighted average return on 52% equity portion of capital structure.

These general earnings sensitivities that may affect 2008 and 2009 earnings are forward-looking statements that are based on various assumptions that may prove to be inaccurate.  Actual results may differ materially.  For a discussion of the factors that may affect future results, see Table 8.



 
 
 


 

Table 11: Cash Flow Sources and Uses
Year-to-Date 2008
PG&E Corporation Consolidated
(in millions)
 

Cash and Cash Equivalents December 31, 2007
   $ 345  
    
        
Sources of Cash
        
    Cash from operations
   $ 2,182  
    Proceeds from sale of assets
     21  
    Net proceeds from issuance of long-term debt
     693  
    Net borrowings under accounts receivable facility and working capital facility
     283  
    Net issuance of commercial paper
     524  
    Common stock issued
     150  
    
   $ 3,853  
    
        
Uses of Cash
        
    Capital expenditures
   $ 2,691  
    Increase in restricted cash
     3  
    Investments in and proceeds from nuclear decommissioning trusts, net
     40  
    Long-term debt repurchased
     454  
    Energy recovery bonds matured
     260  
    Money market investments
     62  
    Common stock dividends paid
     406  
    Other
     31  
    
   $ 3,947  
    
        
Cash and Cash Equivalents, September 30, 2008
   $ 251  


 

Source:    PG&E Corporation’s Condensed Consolidated Statement of Cash Flows included in PG&E Corporation and Pacific Gas and Electric Company’s combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.




 
 
 


 

Table 12: PG&E Corporation and Pacific Gas and Electric Company’s Consolidated Cash Position
Third Quarter 2008 vs. Third Quarter 2007
(in millions)
 



    
  
2008
    
2007
    
Change
  
    
                  
Cash Flow from Operating Activities (YTD September 30)
                  
     PG&E Corporation
   $ (38 )   $ (15 )   $ (23 )
     Pacific Gas and Electric Company
     2,220       2,093       127  
    $ 2,182     $ 2,078     $ 104  
                         
Consolidated Cash Balance (at September 30)
                        
     PG&E Corporation
   $ 194     $ 324     $ (130 )
     Pacific Gas and Electric Company
     57       460       (403 )
    $ 251     $ 784     $ (533 )
                         
Consolidated Restricted Cash Balance (at September 30)
                        
     PG&E Corporation
   $ -     $ -     $ -  
     Pacific Gas and Electric Company (1)
     1,344       1,464       (120 )
    $ 1,344     $ 1,464     $ (120 )

 

1.
 Includes $19 million and $18 million of restricted cash classified as Other Noncurrent Assets – Other in the Condensed Consolidated Balance Sheets at September 30, 2008 and 2007, respectively.
 
 
Source:  PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements included in PG&E Corporation and Pacific Gas and Electric Company combined Quarterly Report on Form 10-Q for the quarters ended September 30, 2008 and 2007.



 
 
 


 

Table 13: PG&E Corporation and Pacific Gas and Electric Company’s Long-Term Debt
Third Quarter 2008 vs. Year-End 2007
(in millions)
 

   
Balance at
   
September 30,
2008
      
December 31, 2007
     
PG&E Corporation 
            
Convertible subordinated notes, 9.50%, due 2010
   $ 280       $ 280  
Less: current portion
     -         -  
      280         280  
Utility 
                  
Senior notes:
                  
3.60% to 6.35% bonds, due 2009-2038
     6,900         6,300  
Unamortized discount
     (18 )       (22 )
Total senior notes
     6,882         6,278  
Pollution control bond loan agreements, variable rates(1), due 2026(2)
     614         614  
Pollution control bond loan agreements, 5.35%, due 2016
     200         200  
Pollution control bond loan agreements, 4.75% due 2023
     345         345  
Pollution control bond loan agreements, variable rates, due 2016-2026
     -         454  
Pollution control bond loan agreements, 3.75%, due 2026
     50         -  
Pollution control bond loan agreements, 3.75%, due 2018
     45         -  
Less: current portion
     (600 )       -  
Long-term debt, net of current portion
     7,536         7,891  
Total consolidated long-term debt, net of current portion
   $ 7,816       $ 8,171  
                   
 
 
 1.
 At September 30, 2008, interest rates on these loans ranged from 3.63% to 4.50%.
   
 2.  These bonds are supported by $620 million of letters of credit which expire on February 24, 2012. Although the stated
 maturity date is 2026, the bonds will remain outstanding only if the Utility extends or replaces the letters of credit.
   
 Source:    PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company’s combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.



 
 
 
 
 
 
 
Table 14:  PG&E Corporation and Pacific Gas and Electric Company Repayment Schedule and Interest Rates - Long-Term Debt and Energy Recovery Bonds as of September 30, 2008
(in millions, except interest rates)
 
 


 
2008
    
2009
    
2010
    
2011
    
2012
    
Thereafter
    
Total
  
LONG-TERM DEBT:
                                        
PG&E Corporation
                                        
   Average fixed interest rate
   -       -       9.50 %     -       -       -       9.50 % 
   Fixed rate obligations
 $ -     $ -     $ 280     $ -     $ -     $ -     $ 280  
Utility
                                                      
   Average fixed interest rate
   -       3.60 %      -       4.20 %     -       5.68 %     5.41 %
   Fixed rate obligations
 $ -     $ 600     $ -     $ 500     $ -     $ 6,440     $ 7,540  
  Variable interest rate as
    of  September 30, 2008
   -       -       -       -       3.96 %     -       3.96 %
  Variable rate obligations
 $ -     $ -     $ -     $ -     $ 614 (1)   $ -     $ 614  
Total consolidated long-term debt
 $ -     $ 600     $ 280     $ 500     $ 614     $ 6,440     $ 8,434  
                                                       
                                                       
 
 
1.
 The $614 million pollution control bonds, due in 2026, are backed by $620 million of  letters of credit which expire on February 24, 2012. The bonds will be subject to a mandatory redemption unless the letters of credit are extended or replaced. Accordingly, the bonds have been classified for repayment purposes in 2012.
 
 

 
ENERGY RECOVERY BONDS (2):
  
2008
  
2009
  
2010
  
2011
  
2012
    
Total
  
Utility
          
 
                
Average fixed interest rate
    
4.19%
  
4.36%
    
4.49%
  
4.59%
    
4.66%
    
 
4.47%
  
Energy recovery bonds
   $
93
    $
 370
   $
386
    $
 404
   $
422
    
$
1,675
  
                                         
                                         

 
2.
 These bonds were issued by PG&E Energy Recovery Funding LLC (“PERF”), a wholly owned consolidated subsidiary of Pacific Gas and Electric Company.  The proceeds were used by PERF to purchase from Pacific Gas and Electric Company the right, known as "recovery property," to be paid a specified amount from a dedicated rate component.  While PERF is a wholly owned subsidiary of Pacific Gas and Electric Company, it is legally separate from Pacific Gas and Electric Company.  The assets , including  recovery property, of PERF are not available to creditors of PG&E Corporation or Pacific Gas and Electric Company, and recovery property is not legally an asset of PG&E Corporation or Pacific Gas and Electric Company.


Source:    PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company’s combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, and PG&E Corporation and Pacific Gas and Electric Company's Annual Report on Form 10-K for the year ended December 31, 2007.
 
 

 
 
 
Table 15: Pacific Gas and Electric Company
Docket Numbers of Selected Regulatory Cases
 


 
Name
Brief Description
Docket Number
  
 

Cost of Capital 2008
CPUC proceeding to establish capital structure and cost of capital for the California investor-owned electric utilities.  The CPUC issued a final decision on December 20, 2007, maintaining Pacific Gas and Electric Company’s authorized ROE at 11.35% and its common equity ratio at 52%.
 
On May 29, 2008, the CPUC adopted a uniform three-year cost of capital mechanism in the second phase of this proceeding that will replace the annual cost of capital proceeding.
 
  
A.07-05-008
D.07-12-049
 D.08-05-035
  
         
Energy Efficiency Order Instituting Rulemaking (OIR)
Post-2005
CPUC proceeding to establish incentive ratemaking mechanisms applicable to the California investor-owned utilities’ implementation of their 2006-2008 and 2009-2011 energy efficiency program cycles.
 
 
  
R.06-04-010
D.07-09-043
 D.08-01-042
D.08-07-047
  
         
Application to Recover Hydroelectric Generation
Facility Divestiture Costs
Pacific Gas and Electric Company has requested authorization to recover approximately $47 million of hydroelectric generation facility divestiture costs.
 
  
A. 08-05-023
  
         
Proposed Electric Distribution Reliability Program (Cornerstone Improvement Program)
Pacific Gas and Electric Company has filed an application with the CPUC to authorize $2.3 billion in costs associated with electric distribution reliability capital expenditures and operating and maintenance expense incremental to amounts recovered in the 2007 General Rate Case.
 
  
A. 08-05-023
 
         
SmartMeterTM Program Upgrade Application
 
Pacific Gas and Electric Company has requested CPUC approval to upgrade elements of the SmartMeterTM program and to recover additional capital expenditures related to the proposed upgrade.
 
  
A.07-12-009
  
         
Tesla Generating Station
Pacific Gas and Electric Company filed an application requesting that the CPUC authorize Pacific Gas and Electric Company to develop and construct a 560-MW unit at the Tesla Generating Station.  On September 22, 2008, a CPUC administrative law judge issued a proposed decision recommending that Pacific Gas and Electric Company’s application be dismissed.
  
A.08-07-018
  

 
 
 


 

Table 15 (continued): Pacific Gas and Electric Company
Docket Numbers of Selected Regulatory Cases
 


 
Name
Brief Description
Docket Number
  
 

Request for New Generation Offers and Potential Request
New Utility-Owned Generation 
Pacific Gas and Electric Company is conducting a request for offers (“RFO”)  for 800 to 1,200 megawatts of dispatchable and operationally flexible new generation resources to be on-line no later than May 2015.
 
  
R.06-02-013
  
         
Catastrophic Event Memorandum Account
Application
Pacific Gas and Electric Company has requested that the CPUC  permit Pacific Gas and Electric Company to recover approximately $8 million from its customers to cover costs of restoring service and repairing facilities following the January 2008 winter storm.
  
A.08.03-017 
  

 

 
 

Discussion of these regulatory cases is included in PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, and PG&E Corporation and Pacific Gas and Electric Company’s combined Annual Report on Form 10-K for the year ended December 31, 2007.

 
 
 


 

Table 16: PG&E Corporation
Condensed Consolidated Statements of Income
 

   
(Unaudited)
  
   
Three Months Ended
    
Nine Months Ended
  
(in millions, except per share amounts)
  
September 30,
    
September 30,
  
   
2008
    
2007
    
2008
    
2007
  
Operating Revenues
                        
Electric
   $ 2,880     $ 2,574     $ 8,039     $ 7,107  
Natural gas
     794       705       2,946       2,714  
Total operating revenues
     3,674       3,279       10,985       9,821  
Operating Expenses
                                
Cost of electricity
     1,282       998       3,406       2,606  
Cost of natural gas
     351       281       1,613       1,431  
Operating and maintenance
     983       953       3,010       2,794  
Depreciation, amortization, and decommissioning
     419       465       1,240       1,325  
Total operating expenses
     3,035       2,697       9,269       8,156  
Operating Income
     639       582       1,716       1,665  
Interest income
     23       36       82       125  
Interest expense
     (178 )     (196 )     (550 )     (571 )
Other income (expense), net
     (17 )     7       (14 )     22  
Income Before Income Taxes
     467       429       1,234       1,241  
Income tax provision
     163       151       413       438  
Net Income
   $ 304     $ 278     $ 821     $ 803  
Weighted Average Common Shares Outstanding, Basic
     357       352       356       350  
Weighted Average Common Shares Outstanding, Diluted
     358       353       357       352  
Net Earnings Per Common Share, Basic
   $ 0.83     $ 0.77     $ 2.25     $ 2.23  
Net Earnings Per Common Share, Diluted
   $ 0.83     $ 0.77     $ 2.24     $ 2.22  
Dividends Declared Per Common Share
   $ 0.39     $ 0.36     $ 1.17     $ 1.08  


 
Source:  PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.


 
 
 


 

Table 17: PG&E Corporation
Condensed Consolidated Balance Sheets
 

   
(Unaudited)
  
   
Balance At
  
(in millions)
  
September 30,
2008
    
December 31, 2007
  
 
ASSETS
            
Current Assets
            
Cash and cash equivalents
   $ 251     $ 345  
Restricted cash
     1,325       1,297  
Accounts receivable:
                
Customers (net of allowance for doubtful accounts of $75 million in 2008 and  $58
 million in 2007)
     2,530       2,349  
Regulatory balancing accounts
     1,117       771  
Inventories:
                
Gas stored underground and fuel oil
     333       205  
Materials and supplies
     172       166  
Income taxes receivable
     -       61  
Prepaid expenses and other
     580       255  
Total current assets
     6,308       5,449  
Property, Plant, and Equipment
                
Electric
     27,146       25,599  
Gas
     10,016       9,620  
Construction work in progress
     1,668       1,348  
Other
     16       17  
Total property, plant, and equipment
     38,846       36,584  
Accumulated depreciation
     (13,422 )     (12,928 )
Net property, plant, and equipment
     25,424       23,656  
Other Noncurrent Assets
                
Regulatory assets
     4,233       4,459  
Nuclear decommissioning funds
     1,819       1,979  
Other
     1,094       1,089  
Total other noncurrent assets
     7,146       7,527  
TOTAL ASSETS
   $ 38,878     $ 36,632  




Source:  PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.


 
 
 


 

Table 17 (continued): PG&E Corporation
Condensed Consolidated Balance Sheets
 

   
(Unaudited)
  
   
Balance At
  
(in millions, except share amounts)
  
September 30,
2008
    
December 31, 2007
  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
            
Current Liabilities
            
Short-term borrowings
   $ 1,335     $ 519  
Long-term debt, classified as current
     600       -  
Energy recovery bonds, classified as current
     366       354  
Accounts payable:
                
Trade creditors
     962       1,067  
Disputed claims and customer refunds
     1,588       1,629  
Regulatory balancing accounts
     906       673  
Other
     385       394  
Interest payable
     708       697  
Income taxes payable
     116       -  
Deferred income taxes
     156       -  
Other
     1,375       1,374  
Total current liabilities
     8,497       6,707  
Noncurrent Liabilities
                
Long-term debt
     7,816       8,171  
Energy recovery bonds
     1,310       1,582  
Regulatory liabilities
     4,456       4,448  
Asset retirement obligations
     1,628       1,579  
Income taxes payable
     231       234  
Deferred income taxes
     3,383       3,053  
Deferred tax credits
     95       99  
Other
     2,071       1,954  
Total noncurrent liabilities
     20,990       21,120  
Commitments and Contingencies
                
Preferred Stock of Subsidiaries
     252       252  
Preferred Stock
                
Preferred stock, no par value, authorized 80,000,000 shares, $100 par value, authorized
 5,000,000 shares, none issued
     -       -  
Common Shareholders' Equity
                
Common stock, no par value, authorized 800,000,000 shares, issued 358,198,735
common and 1,315,818 restricted shares in 2008 and issued 378,385,151 common and
1,261,125 restricted shares in 2007
     5,883       6,110  
Common stock held by subsidiary, at cost, 24,665,500 shares in 2007
     -       (718 )
Reinvested earnings
     3,238       3,151  
Accumulated other comprehensive income
     18       10  
Total common shareholders' equity
     9,139       8,553  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
   $ 38,878     $ 36,632  




Source:  PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.


 
 
 


 
Table 18: PG&E Corporation
Condensed Consolidated Statements of Cash Flows
 

   
(Unaudited)
  
   
Nine Months Ended
  
(in millions)
  
September 30,
  
   
2008
    
2007
  
Cash Flows From Operating Activities
            
Net income
   $ 821     $ 803  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation, amortization, decommissioning, and allowance for equity funds used during construction
     1,337       1,419  
Deferred income taxes and tax credits, net
     482       (33 )
Other changes in noncurrent assets and liabilities
     87       281  
Gain on sale of assets
     (1 )     (1 )
Effect of changes in operating assets and liabilities:
                
Accounts receivable
     (181 )     (80 )
Inventories
     (153 )     (92 )
Accounts payable
     (100 )      (322 )
Income taxes receivable/payable
     177       234  
Regulatory balancing accounts, net
     (94 )     (238 )
Other current assets
     (123 )     120  
Other current liabilities
     (68 )     19  
Other
     (2 )     (32 )
Net cash provided by operating activities
     2,182       2,078  
Cash Flows From Investing Activities
                
Capital expenditures
     (2,691 )     (2,035 )
Proceeds from sale of assets
     21       15  
Increase in restricted cash
     (3 )     (32 )
Proceeds from nuclear decommissioning trust sales
     1,121       703  
Purchases of nuclear decommissioning trust investments
     (1,161 )     (805 )
Money market investments
     (62 )     -  
Net cash used in investing activities
     (2,775 )     (2,154 )
Cash Flows From Financing Activities
                
Borrowings under accounts receivable facility and working capital facility
     533       600  
Repayments under accounts receivable facility and working capital facility
     (250 )     (300 )
Net issuance of commercial paper, net of $9 million discount in 2008 and $2 million in 2007
     524       91  
Proceeds from issuance of long-term debt, net of premium, discount, and issuance costs of $2 million in 2008 and $10 million in 2007
     693       690  
Long-term debt repurchased
     (454 )     -  
Rate reduction bonds matured
     -       (217 )
Energy recovery bonds matured
     (260 )     (251 )
Common stock issued
     150       120  
Common stock dividends paid
     (406 )     (367 )
Other
     (31 )     38  
Net cash provided by financing activities
     499       404  
Net change in cash and cash equivalents
     (94 )     328  
Cash and cash equivalents at January 1
     345       456  
Cash and cash equivalents at September 30
   $ 251     $ 784  
Supplemental disclosures of cash flow information
                
Cash paid for:
                
Interest (net of amounts capitalized)
   $ 449     $ 443  
Income taxes paid (refunded), net
     (146 )     307  
Supplemental disclosures of noncash investing and financing activities
                
Common stock dividends declared but not yet paid
   $ 140     $ 127  
Capital expenditures financed through accounts payable
     224       170  

Source:  PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.

 
 
 


 

Table 19: Pacific Gas and Electric Company
Condensed Consolidated Statements of Income
 

   
(Unaudited)
  
   
Three Months Ended
    
Nine Months Ended
(in millions)
  
September 30,
    
September 30,
   
2008
    
2007
    
2008
    
2007
Operating Revenues
                      
Electric
   $ 2,880     $ 2,574     $ 8,039     $ 7,107  
Natural gas
     794       705       2,946       2,714  
Total operating revenues
     3,674       3,279       10,985       9,821  
Operating Expenses
                                
Cost of electricity
     1,282       998       3,406       2,606  
Cost of natural gas
     351       281       1,613       1,431  
Operating and maintenance
     982       950       3,009       2,788  
Depreciation, amortization, and decommissioning
     419       465       1,239       1,325  
Total operating expenses
     3,034       2,694       9,267       8,150  
Operating Income
     640       585       1,718       1,671  
Interest income
     20       33       77       116  
Interest expense
     (170 )     (189 )     (528 )     (549 )
Other income (expense), net
     (2 )     13       24       38  
Income Before Income Taxes
     488       442       1,291       1,276  
Income tax provision
     167       159       421       458  
Net Income
     321       283       870       818  
Preferred stock dividend requirement
     3       4       10       10  
Income Available for Common Stock
   $ 318     $ 279     $ 860     $ 808  


 
Source:  PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.


 
 
 


 

Table 20: Pacific Gas and Electric Company
Condensed Consolidated Balance Sheets
 

   
(Unaudited)
  
   
Balance at
  
(in millions)
  
September 30,
2008
    
December 31,
2007
  
 
ASSETS
            
Current Assets
            
Cash and cash equivalents
   $ 57     $ 141  
Restricted cash
     1,325       1,297  
Accounts receivable:
                
Customers (net of allowance for doubtful accounts of $75 million in 2008 and $58
million in 2007)
     2,530       2,349  
Related parties
     -       6  
Regulatory balancing accounts
     1,117       771  
Inventories:
                
    Gas stored underground and fuel oil
     333       205  
    Materials and supplies
     172       166  
Income taxes receivable
     -       15  
Prepaid expenses and other
     517       252  
Total current assets
     6,051       5,202  
Property, Plant, and Equipment
                
Electric
     27,146       25,599  
Gas
     10,016       9,620  
Construction work in progress
     1,668       1,348  
Total property, plant, and equipment
     38,830       36,567  
Accumulated depreciation
     (13,407 )     (12,913 )
Net property, plant, and equipment
     25,423       23,654  
Other Noncurrent Assets
                
Regulatory assets
     4,233       4,459  
Nuclear decommissioning funds
     1,819       1,979  
Related parties receivable
     27       23  
Other
     1,011       993  
Total other noncurrent assets
     7,090       7,454  
TOTAL ASSETS
   $ 38,564     $ 36,310  
   

 

Source:  PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.

 
 
 


 

Table 20 (continued): Pacific Gas and Electric Company
Condensed Consolidated Balance Sheets
 

   
(Unaudited)
  
   
Balance at
  
(in millions, except share amounts)
  
September 30,
2008
    
December 31,
2007
  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
            
Current Liabilities
            
Short-term borrowings
   $ 1,335     $ 519  
Long-term debt, classified as current
     600       -  
Energy recovery bonds, classified as current
     366       354  
Accounts payable:
                
Trade creditors
     962       1,067  
Disputed claims and customer refunds
     1,588       1,629  
Related parties
     33       28  
Regulatory balancing accounts
     906       673  
Other
     371       370  
Interest payable
     701       697  
Income taxes payable
     193       -  
Deferred income taxes
     161       4  
Other
     1,185       1,200  
Total current liabilities
     8,401       6,541  
Noncurrent Liabilities
                
Long-term debt
     7,536       7,891  
Energy recovery bonds
     1,310       1,582  
Regulatory liabilities
     4,456       4,448  
Asset retirement obligations
     1,628       1,579  
Income taxes payable
     82       103  
Deferred income taxes
     3,421       3,104  
Deferred tax credits
     95       99  
Other
     1,974       1,838  
Total noncurrent liabilities
     20,502       20,644  
Commitments and Contingencies
                
Shareholders' Equity
                
Preferred stock without mandatory redemption provisions:
                
    Nonredeemable, 5.00% to 6.00%, outstanding 5,784,825 shares
     145       145  
    Redeemable, 4.36% to 5.00%, outstanding 4,534,958 shares
     113       113  
Common stock, $5 par value, authorized 800,000,000 shares, issued 264,374,809 shares in
2008 and issued 282,916,485 shares in 2007
     1,322       1,415  
Common stock held by subsidiary, at cost, 19,481,213 shares in 2007
     -       (475 )
Additional paid-in capital
     2,150       2,220  
Reinvested earnings
     5,910       5,694  
Accumulated other comprehensive income
     21       13  
Total shareholders' equity
     9,661       9,125  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
   $ 38,564     $ 36,310  


Source:  PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.

 
 
 


 
Table 21: Pacific Gas and Electric Company
Condensed Consolidated Statements of Cash Flows
 

   
(Unaudited)
  
   
Nine Months Ended
  
(in millions)
  
September 30,
  
   
2008
    
2007
  
Cash Flows From Operating Activities
            
Net income
   $ 870     $ 818  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation, amortization, decommissioning, and allowance for equity funds used during construction
     1,337       1,417  
Deferred income taxes and tax credits, net
     470       (35 )
Other changes in noncurrent assets and liabilities
     55       270  
Gain on sale of assets
     (1 )     (1 )
Effect of changes in operating assets and liabilities:
                
Accounts receivable
     (179 )     (82 )
Inventories
     (153 )     (92 )
Accounts payable
     (85 )      (315 )
Income taxes receivable/payable
     208       228  
Regulatory balancing accounts, net
     (94 )     (238 )
Other current assets
     (125 )     120  
Other current liabilities
     (80 )     35  
Other
     (3 )     (32 )
Net cash provided by operating activities
     2,220       2,093  
Cash Flows From Investing Activities
                
Capital expenditures
     (2,691 )     (2,035 )
Proceeds from sale of assets
     21       15  
Increase in restricted cash
     (3 )     (32 )
Proceeds from nuclear decommissioning trust sales
     1,121       703  
Purchases of nuclear decommissioning trust investments
     (1,161 )     (805 )
Net cash used in investing activities
     (2,713 )     (2,154 )
Cash Flows From Financing Activities
                
Borrowings under accounts receivable facility and working capital facility
     533       600  
Repayments under accounts receivable facility and working capital facility
     (250 )     (300 )
Net issuance of commercial paper, net of discount of $9 million in 2008 and $2 million in 2007
     524       91  
Proceeds from issuance of long-term debt, net of premium, discount, and issuance costs of $2 million in
2008 and $10 million in 2007
     693       690  
Long-term debt repurchased
     (454 )     -  
Rate reduction bonds matured
     -       (217 )
Energy recovery bonds matured
     (260 )     (251 )
Equity contribution
     90       200  
Common stock dividends paid
     (426 )     (381 )
Preferred stock dividends paid
     (10 )     (10 )
Other
     (31 )     29  
Net cash provided by financing activities
     409       451  
Net change in cash and cash equivalents
     (84 )     390  
Cash and cash equivalents at January 1
     141       70  
Cash and cash equivalents at September 30
   $ 57     $ 460  
Supplemental disclosures of cash flow information
                
Cash paid for:
                
Interest (net of amounts capitalized)
   $ 436     $ 416  
Income taxes paid (refunded), net
     (138 )     403  
Supplemental disclosures of noncash investing and financing activities
                
        Capital expenditures financed through accounts payable    $ 224       $ 170   

Source:  PG&E Corporation and Pacific Gas and Electric Company’s Condensed Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.