8-K

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: December 3, 2001

Commission File Number	Exact Name of Registrant as specified in its charter		State or other Jurisdiction of Incorporation	IRS Employer Identification Number
_____________	_____________		_____________	_____________
1-12609 1-2348	PG&E Corporation Pacific Gas and Electric Company		California California	94-3234914 94-0742640
Pacific Gas and Electric Company 77 Beale Street, P. O. Box 770000 San Francisco, California  94177		PG&E Corporation One Market, Spear Tower, Suite 2400 San Francisco, California  94105

(Address of principal executive offices) (Zip Code)

Pacific Gas and Electric Company
(415) 973-7000 PG&E Corporation
(415) 267-7000

(Registrant's telephone number, including area code)

Item 5. Other Events

1. Pacific Gas and Electric Company Bankruptcy

Regulatory Filings

As previously disclosed, on September 20, 2001, Pacific Gas and Electric Company (Utility) and its parent company, PG&E Corporation, jointly filed with the U.S. Bankruptcy Court for the Northern District of California a proposed plan of reorganization (Plan) of the Utility under Chapter 11 of the U.S. Bankruptcy Code and their proposed disclosure statement describing the Plan. The Plan contemplates that the Utility will disaggregate and restructure its business by transferring certain assets and liabilities of its traditional business lines to newly created limited liability companies.

The Plan proposes that the majority of the assets and liabilities associated with the Utility's electric transmission business will be transferred to ETrans LLC (ETrans), the majority of the assets and liabilities associated with the Utility's gas transmission business will be transferred to GTrans LLC (GTrans), and the majority of the assets and liabilities associated with the Utility's generation business will be transferred to Electric Generation LLC (Gen) and its subsidiaries. The Utility also has created subsidiaries or affiliates to hold other assets and may create additional entities as deemed necessary. In addition, the Utility has created Newco Energy Corporation (Newco) to hold the membership interests of each of ETrans, GTrans and Gen. The Utility is the sole shareholder of Newco. The Plan proposes that certain other assets of the Utility deemed not essential to operations will be sold to third parties or transferred to one or more special purpose entities wholly-owned by Newco under the Pl an. The Plan also proposes that the Utility will declare and, after the assets are transferred to the newly-formed entities, pay a dividend of all of the outstanding common stock of Newco to PG&E Corporation, and each of ETrans, GTrans and Gen will continue to be an indirect wholly-owned subsidiary of PG&E Corporation (the foregoing transactions are referred to herein collectively as the "Internal Restructurings"). The Reorganized Utility Debtor would retain the name "Pacific Gas and Electric Company." Finally, the Plan contemplates that on or as soon as practicable after the date on which the Plan becomes effective (Effective Date), PG&E Corporation will distribute the shares of the reorganized Utility's common stock it holds to the holders of PG&E Corporation common stock on a pro rata basis (hereinafter referred to as the "Spin Off").

On November 30, 2001, the Utility and PG&E Corporation on behalf of its subsidiaries ETrans, GTrans, and Gen, filed various applications with the Federal Energy Regulatory Commission (FERC) seeking approval to implement the proposed Internal Restructurings. Among other matters, the applications request that the FERC approve:

• The transfer of the Utility's electric transmission assets, including associated contracts for transmission and related services, and certain agreements related to participation in the California Independent System Operator Corporation, to ETrans or its subsidiaries or affiliates,

• The transfer to Gen and its subsidiaries of certain limited transmission facilities associated with generation,

• The transfer of the Utility's 26 hydroelectric licenses and 11 transmission-only licenses to Gen or ETrans or their subsidiaries,

• The assignment of the beneficial interest in the Nuclear Decommissioning Trust associated with the Utility's Diablo Canyon Nuclear Power Plant to a subsidiary of Gen, Diablo Canyon LLC,

• The transfer of the Utility's gas transmission and storage assets to GTrans or its subsidiaries or affiliates and the establishment of new rate tariffs,

• The Utility's declaration and payment of the dividend of the outstanding common stock of Newco to PG&E Corporation,

• The Utility's declaration and payment of a stock dividend to PG&E Corporation so that the issued and outstanding shares of the Utility's common stock owned directly by PG&E Corporation will be the same as the number of issued and outstanding shares of PG&E Corporation common stock,

• The Spin Off,

• The securities issuances and debt financings contemplated by the Plan,

• Various agreements proposed to be entered into between the reorganized Utility and one or more of the disaggregated entities, consisting of: (1) the 12-year bilateral power sales agreement between the reorganized Utility and Gen, (2) the "back to back" agreement between the reorganized Utility and ETrans to enable the disaggregated entities to continue to provide service under the rates, terms, and conditions of certain of the Utility's existing wholesale transmission and distribution contracts, (3) a Transmission Availability Agreement between Gen and ETrans to comply with Nuclear Regulatory Commission (NRC) requirements to assure delivery of off-site backup power to the Utility's Diablo Canyon nuclear power plant among other NRC requirements, (4) a Generation Interconnection Agreement between ETrans and Gen with respect to Gen's facilities that are interconnected directly with the interstate transmission grid, (5) a Generation Interconnection Agreement between ETrans and the reorganized Utility with respect to the generation facilities to be retained by the reorganized Utility that are interconnected directly with the interstate transmission grid, a (6) Generation Interconnection Agreement between the reorganized Utility and Gen with respect to Gen's facilities that are interconnected to the distribution level facilities to be retained by the reorganized Utility, (7) the Load Interconnection Agreement between the reorganized Utility and ETrans to interconnect the reorganized Utility's distribution facilities to the interstate transmission grid, (8) a bilateral agreement between GTrans and the reorganized Utility to provide gas transportation and storage services to the reorganized Utility, and (9) an agreement between GTrans and the reorganized Utility covering metering of natural gas,

• The acquisition and operation by the Utility of an approximately 2.6 mile segment of the Oregon portion of the interstate pipeline owned by PG&E Gas Transmission Northwest Corporation (the Utility's sister subsidiary), and the transfer of this pipeline and the Utility's existing gas transmission system to GTrans.

On November 30, 2001, the Utility also filed applications with the NRC for approval to transfer the NRC operating licenses for the Diablo Canyon Nuclear Power Plant, Units 1 and 2 to Gen and one its subsidiaries and for the indirect transfer of the Humboldt Bay nuclear power plant (which is in the early stages of decommissioning) to the reorganized Utility.

In addition, before the Plan can become effective, other regulatory approvals will be required, including approval from the Securities and Exchange Commission (SEC) for PG&E Corporation, a holding company exempt from registration under Section 3(a)(1) of the Public Utility Holding Company Act of 1935 (PUHCA) and Newco, which also will be a holding company exempt from registration under Section 3(a)(1) of PUHCA, to hold more than one public utility as of the date on which the Utility's assets are transferred to Gen and ETrans. This application is currently scheduled to be filed with the SEC in late December 2001.

Some of the applications filed at the FERC included revised financial projections for each of the disaggregated entities for the period 2003 through 2005. These financial projections reflect updated assumptions and therefore differ from the financial projections and assumptions that were filed, along with the Plan and Disclosure Statement, with the Bankruptcy Court on September 20, 2001, and with the Securities and Exchange Commission as exhibits to the Current Report on Form 8-K filed by PG&E Corporation and the Utility on September 20, 2001. These revised financial projections and underlying assumptions are attached to this report as Exhibit 99.1. Copies of the voluminous filings are available through the Utility's website at http://apps.pge.com/regulation.

It is anticipated that the FERC and NRC approvals will be obtained by August 1, 2002, assuming that evidentiary hearings are either limited in scope or not required. There can be no assurance that the regulatory approvals discussed will be obtained within the time anticipated or at all. If any of the required approvals are not obtained, PG&E Corporation and the Utility will be compelled to consider alternatives and the Plan, as currently contemplated, would not be consummated. In addition to the required regulatory approvals discussed above, the Bankruptcy Court must confirm the Plan and certain other conditions must be satisfied.

Objections to Disclosure Statement

Pursuant to the Bankruptcy Court's October 9, 2001 order, objections to the form of Disclosure Statement that was filed with the Bankruptcy Court on September 20, 2001, were due November 27, 2001. Approximately 70 objections to the Disclosure Statement have been filed, including objections seeking clarification of the proposed treatment of various claims and contractual relationships under the Plan (including with respect to environmental liabilities, tort claims, generator claims, certain water agency and irrigation district contracts and mainline extension contracts), the claims resolution process, the long-term debt proposed to be issued to creditors under the Plan, the assets and liabilities proposed to be transferred pursuant to the Plan and preemption issues. Some creditors have also complained about the proposed treatment of their claims under the Plan. Further, various counties and cities have filed objections regarding a variety of issues relating to payment of property taxes, franchise fees, undergrounding fees, and the impact on their police and regulatory power, among other issues. The U.S. Trustee, among other things, has objected to the level of debt proposed to be issued by the reorganized Utility in light of the proposed asset transfers by the reorganized Utility, requested more valuation information to assess the fairness of the proposed asset transfers and debt issuances, requested more information regarding potential claims against PG&E Corporation, and questioned why the right to any benefits that may result from the Utility's pending federal lawsuit against the CPUC Commissioners for the recovery of the Utility's past wholesale power purchase costs from ratepayers would be transferred to PG&E Corporation.

Both the State of California and the California Public Utilities Commission (CPUC), among others, have filed objections arguing that the Disclosure Statement contains inaccurate and/or inadequate information in numerous respects, and that the Plan is not confirmable as a matter of law on various grounds. The State, the CPUC and other parties also raise similar arguments as those raised in their respective adversary objections discussed below. The Utility Reform Network ("TURN") has also filed a lengthy objection arguing, among other things, that there is inadequate disclosure regarding the effect of the Plan on rates and treatment of gain on sale, and also requesting that amortization schedules for Gen debt after expiration of the 12-year bilateral power sales contract be provided.

The Bankruptcy Court will consider the objections to the form of Disclosure Statement at the hearing scheduled to be held on December 19, 2001.

Adversary Objections

On November 6, 2001, the California Attorney General, on behalf of various state and local agencies, including the California Department of Water Resources (DWR), filed a brief with the Bankruptcy Court arguing that the Utility should be required to initiate adversary proceedings in the Bankruptcy Court in order to obtain the relief sought in the proposed Plan. The CPUC also filed a brief requesting that the Utility initiate such adversary proceedings, as did numerous other governmental entities and other entities. (Pursuant to the Bankruptcy Court's October 9, 2001 order with respect to the Disclosure Statement regarding the Plan, all briefs in support of an adversary proceeding were due November 6, 2001.)

The Attorney General and the CPUC argue that, because the proposed Plan "would completely change the State of California's regulatory scheme governing energy generation, procurement and delivery and thwart State and local governments' respective exercise of their police and regulatory powers," an adversary proceeding is required to protect the State's due process rights and to provide the Bankruptcy Court a more informed proceeding in which to determine whether preemption of State and local laws as proposed in the Plan is permissible as a matter of law.

On November 27, 2001, the Utility filed a brief in opposition to these adversary objections, arguing that none of the declaratory relief requested in the Plan (for example, that certain CPUC and local regulatory approvals are not required to consummate the transactions contemplated by the Plan) falls within the list of matters for which an adversary proceeding is required under the U.S. Bankruptcy Code. The Utility also argues that the Bankruptcy Code permits the injunctive relief requested in the Plan (for example, that officials of the CPUC and the State be prohibited from taking any action related to allocation or other treatment of any "gain on sale" related to assets transferred or disposed of under the Plan) to be granted without an adversary proceeding.

It is not certain when the Bankruptcy Court will consider the adversary objections.

Monthly Operating Report

On November 30, 2001, Pacific Gas and Electric Company (Utility), a subsidiary of PG&E Corporation, filed its monthly operating report for the month ended October 31, 2001, with the U.S. Bankruptcy Court for the Northern District of California. The Utility's monthly operating report includes an unaudited income statement for the month and an unaudited balance sheet dated as of the end of the month. These unaudited financial statements are attached as Exhibit 99.2 to this report. The monthly operating report also includes a statement of receipts and disbursements, as well as other information. The preliminary financial statements were prepared using certain assumptions and estimates that are subject to revision. Any adjustments for these estimates (based upon changes in facts and circumstances, further analysis, and other factors) will be reflected in the financial statements in the period during which such adjustments are made. These adjustments could have a material impact on reported results i n the future.

B. Amendment of PG&E Corporation Credit Facility

On November 19, 2001, PG&E Corporation signed an agreement to amend its current $1 billion aggregate term loan credit facility. The original credit facility, which was entered into with General Electric Capital Corporation and Lehman Commercial Paper Inc. on March 2, 2001, permitted PG&E Corporation to extend the term of the credit facility, which would otherwise expire on March 2, 2003, for an additional one year. The amendment gives PG&E Corporation the right to extend the term of the credit facility for two additional one-year periods so that the termination date could be extended to March 2, 2006. As a condition to exercise of each of the new extensions, PG&E Corporation will pay a fee of 3% of the then-outstanding balance of the loans under the facility, and also will issue to the lenders additional options equal to approximately 1% of the common stock of PG&E Corporation's indirect subsidiary, PG&E National Energy Group, Inc.

C. Exposure to Enron Corporation

As recently reported, Enron Corporation (Enron) currently owes the Utility damages as a result of an energy contract termination. The market value of the contract to be paid to the Utility upon termination is in dispute, but the Utility presented draws on letters of credit of approximately $100 million. One of the letter of credit banks has refused to honor draws in the approximate amount of $58 million. The Utility and the letter of credit bank are currently discussing the situation. Enron has submitted claims in the Utility's bankruptcy case for a gross amount of approximately $604 million, which amount is in dispute.

Cautionary Statement Regarding Forward Looking Statements

This report and Exhibit 99.1 hereto contain forward looking statements about the proposed Plan, projected financial information relating to the disaggregated entities and the various assumptions underlying such projections. These statements, financial projections and underlying assumptions, are necessarily subject to various risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward looking statements, financial projections, and summary of proposed terms of long-term debt. Although PG&E Corporation and the Utility are not able to predict all of the factors that may affect whether the Plan will be confirmed, or whether, if confirmed, it will become effective, some of the factors that could affect the outcome materially include: the pace of the Bankruptcy Court proceedings; the extent to which the Plan is amended or modified; legislative and regulatory initiatives regarding deregulation and restructuring of the electric and natural gas industrie s in the United States, particularly in California; whether the Utility is able to obtain timely regulatory approvals or whether the Utility is able to obtain regulatory approvals at all; risks relating to the issuance of new debt securities by each of the disaggregated entities, including higher interest rates than are assumed in the financial projections which could affect the amount of cash raised to satisfy allowed claims, and the inability to successfully market the debt securities due to, among other reasons, an adverse change in market conditions or in the condition of the disaggregated entities before completion of the offerings; whether the Bankruptcy Court exercises its authority to pre-empt relevant non-bankruptcy law and if so, whether and the extent to which such assertion of jurisdiction is successfully challenged; whether a favorable tax ruling or opinion is obtained regarding the tax-free nature of the Internal Restructurings and the Spin Off; and the ability of the Utility to successfully di saggregate its businesses.

In particular, the financial projections, attached as Exhibit 99.1, have been prepared based upon certain assumptions that PG&E Corporation and the Utility believes to be reasonable under the circumstances, taking into account the purpose for which they were prepared. Those assumptions considered to be significant are described in the financial projections, which are also included in Exhibit 99.1. However, the financial projections were not prepared with a view toward compliance with the published guidelines of the SEC or the American Institute of Certified Public Accountants regarding projections or forecasts. In addition, the financial projections have not been examined or compiled by the independent accountants of the Utility or PG&E Corporation. Neither the Utility nor PG&E Corporation makes any representation as to the accuracy of the projections or the ability of the disaggregated entities to achieve the projected results. Many of the assumptions on which the projections are based are subject to significant uncertainties. Inevitably, some assumptions will not materialize and unanticipated events and circumstances may affect the actual financial results. Therefore, the actual results achieved may vary from the projected results and the variations may be material.

Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits

Exhibit 99.1 - Financial Projections and Underlying Assumptions related to proposed Plan of Reorganization

Exhibit 99.2 - Pacific Gas and Electric Company Income Statement for the month ended October 31, 2001, and Balance Sheet dated October 31, 2001.

SIGNATURE

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.

PG&E CORPORATION

By:
        CHRISTOPHER P. JOHNS

     ________________________________________

     CHRISTOPHER P. JOHNS
     Senior Vice President and Controller

PACIFIC GAS AND ELECTRIC COMPANY

By:
        DINYAR B. MISTRY

     ________________________________________

     DINYAR B. MISTRY
     Vice President and Controller

Dated: December 3, 2001

EX-99.1

Exhibit 99.1

Assumptions - Nature and Limitations of Projections

The financial projections included in the Disclosure Statement are dependent

upon the successful implementation of the business plans of the Reorganized Debtor, ETrans, GTrans and Gen and the validity of the other assumptions contained therein. These projections reflect numerous assumptions, including confirmation and consummation of the Plan in accordance with its terms, continued access by the Reorganized Debtor, ETrans, GTrans and Gen to debt and equity markets, the continued availability of the working capital facilities contemplated by the Disclosure Statement, the anticipated future performance of the Reorganized Debtor, ETrans, GTrans and Gen, certain assumptions with respect to competitors of ETrans, GTrans and Gen, general business and economic conditions and other matters, many of which are beyond the control of the Reorganized Debtor, ETrans, GTrans and Gen. In addition, the risk factors outlined in the Disclosure Statement and unanticipated events and circumstances occurring subsequent to the preparation of the projections may affect the actual financial results of the Reorganized Debtor, ETrans, GTrans and/or Gen. Although the Proponents believe that the projections are reasonably attainable, variations between the actual financial results and those projected may occur and may be material.|

Significant Assumptions Regarding Plan Consummation

The Debtor is assuming that the Plan shall be confirmed by the Bankruptcy Court for the purposes of these projections. The assumption of Plan confirmation incorporates the following significant assumptions:

1. the holders of Classes 3a, 3b, 4a, 4b, 4c, 4d, 4e, 4f, 5, 6, 7, 9, 11, 12, and 13 claims shall have voted to accept the Plan by the requisite statutory majority or majorities as provided in section 1126(c) of the Bankruptcy Code;
2. no material adverse effect on the business, assets, operations, property, condition (financial or otherwise) of the Debtor or any of its subsidiaries (other than inactive subsidiaries) shall have occurred and be continuing;
3. no material unanticipated claims shall have been filed or asserted in the Chapter 11 Case;
4. all necessary regulatory and governmental approvals shall have been received within the contemplated timeline; and
5. the Bankruptcy Court shall have confirmed the Plan.

Significant Assumptions Regarding the Pre-Consummation Projections

Cash Balance At December 31, 2002

The Debtor expects to have cash available to reimburse creditors at year-end 2002 of about $3.9 billion. This amount is estimated based on the current cash balances, and taking into account various cash impacts through 2002. These impacts include reductions for restricted funds, outstanding checks and all operating receipts and disbursements. Capital expenditures included in the forecast total $1.3 billion in 2001 and $1.6 billion in 2002.

Earnings For 2001 -2002

Earnings over the period 2001 - 2002 reflect both earnings from ongoing utility operations, as well as non-recurring items such as the impact of FERC-ordered refunds and reversal of charges for costs the Debtor believes are invalid. Starting common equity balances in 2003 incorporate these earnings.

The Distribution Company (Reorganized Debtor)

1. Structure of the Reorganized Debtor

1. The Reorganized Debtor will be a local electric and gas distribution company serving retail customers in Northern and Central California. The Reorganized Debtor will retain substantially all distribution assets, comprised of the current assets that are not transferred to ETrans, GTrans or Gen or transferred or sold as contemplated under Section VI.H. of the Disclosure Statement. In general, the Reorganized Debtor's assets will be electric facilities at voltages below 60 kilovolts and gas facilities at pressures below 60 psig.
2. The Reorganized Debtor will provide distribution customer services and revenue cycle services, and will provide and administer public purpose programs for retail electric and gas customers.
3. The Reorganized Debtor will retain the obligation to procure gas on behalf of its retail gas customers and will accept the obligation to procure power on behalf of its retail electric customers once certain financial conditions are achieved.
4. The Reorganized Debtor will assume and retain the bilateral energy purchase agreements with (a) third party gas suppliers, and (b) QFs and other third party power suppliers. Gen will assume Irrigation District contracts.
5. The Reorganized Debtor and Gen will enter into an agreement during which the Reorganized Debtor will purchase output generated by Gen's facilities and produced under Gen's power purchase agreements.
6. The Reorganized Debtor will contract with GTrans for a combination of firm and as-available storage and pipeline capacity rights based on its continuing obligation to serve core gas customers.
7. The Hunters Point Power Plant and Humboldt Bay Power Plant assets will remain with the Reorganized Debtor.

B. Significant Assumptions Regarding the Projections for the Reorganized Debtor

Income Statement

Total Operating Revenues

Revenues include customer payments for electric and gas distribution services, electric transmission and gas transmission services, electric and gas energy procurement purchases (excluding DWR sources of electricity), public purpose programs and Rate Reduction Bonds.

1. Electric and Gas Distribution Revenues include base revenue increases from general rate case and attrition proceedings intended to enable the Reorganized Debtor to recover increased costs due to inflation, customer growth and ratebase growth. The authorized rate of return on common equity (ROE) remains at 11.2%. Electric annual load growth approximates 2%/year, and gas annual load growth ranges between 1.5% and 3%/year. The total energy demand incorporates forecast impacts of conservation programs in 2001 and 2002. Electric Direct Access retail load approximates 10,000 GWh annually.
2. Electric and gas procurement revenues match electric and gas procurement expenses. Excluded are revenues collected for electric energy procured by DWR on behalf of the Reorganized Debtor's customers. Cash revenues (receipts) lag expenses (disbursements) by the average working capital lag of 16 days.
3. Electric and Gas Public Purpose Program Revenue, excluding CARE, remains relatively constant at about $230 million/year (about $200 million electric, $30 million gas). Identical M&O expenses offset these revenues so there is no impact on distribution earnings.

Operating Expenses

1. Total Cost of Energy includes all electric and gas commodity procured on behalf of retail electric and gas customers, and the costs of electric transmission and gas transmission services. Electric commodity costs include QF contracts, bilateral contracts with Gen, natural gas fuel for the Hunters Point and Humboldt power plants and other commodity procurement and grid management costs. Excluded are remittances to DWR for power it procures on behalf of the Reorganized Debtor's customers.
2. M&O and A&G Costs include direct M&O Expenses for electric and gas distribution, M&O expenses for the Hunters Point and Humboldt facilities, distribution A&G costs, public purpose programs and franchise and uncollectibles expenses.
3. Depreciation is calculated using depreciation rates currently authorized by the California Public Utilities Commission.
4. Property Tax is estimated at about 1% of net plant. Franchise Fees and Uncollectable expenses are estimated at about 1% of revenue.

Interest Expense

1. Interest Expense (excluding Rate Reduction Bonds) consists mainly of interest on long-term debt. Interest expense is based on an interest rate of about 7.75% for new long-term debt and 4.7% for retained Pollution Control bonds. Borrowing costs are based on the all-in, effective costs to the Reorganized Debtor. Corresponding debt balances are net of issuance expenses. Accordingly, the par value of debt issued will be approximately 1.0 percent higher than the net balances shown.

Other Income

1. Other Income is comprised of "below-the-line" income and expenses, including AFUDC, operating costs not recoverable in retail rates, and non-recurring items.

Income Taxes

1. Income Taxes are calculated using a 35% federal tax rate and an 8.84% state tax rate, with a combined tax rate of 40.746%. The book income tax provision reflects existing regulatory practices for recognizing the timing of income tax expenses.

Dividends

1. Preferred Dividend arrearages are paid upon plan consummation. Preferred dividends are based on an embedded cost of preferred stock of about 6.5%.

Balance Sheet

Starting balances are based on separation of the assets into the lines of business as described in the POR and Disclosure Statement. Generally, balances of assets and liabilities are either held constant at their starting level, or are taken as a percentage of a revenue or expense. Plant in service, construction work in progress, common stock and long-term debt are dynamic balances, changing as a function of cash from operations and capital expenditures. Cash balances are assumed to be zero, since any excess cash is either netted against short-term borrowings or is used to buy back long-term debt and equity in order to meet the assumed capital structure targets for each year. For the Distribution Business, the targeted debt/capital ratio is less than 50%, declining from an initial debt/capital ratio of 51%.

Cash Flow Statement

Cash from operations is estimated by adding back depreciation and deferred taxes to net income, plus changes in working capital. Seasonal variations in receipts and reimbursements will cause these average requirements to fluctuate within a range of approximately +/- $250 million.

The Generation Company (Gen)

1. Structure of Gen

1. Gen produces electricity, ancillary services and reliability-must run services. Initially all of the output of Gen will be sold to the Reorganized Debtor through a long-term bilateral contract. Beyond the term of the contract, Gen expects to sell into the open market at market rates.
2. Gen will own and operate the conventional hydroelectric facilities, Helms Pumped Storage facility and Diablo Canyon Power Plant. In addition, Gen will own and administer the Irrigation District contracts. Table 1 lists the capacity and energy output of Gen's assets.
3. Gen will own and maintain the generation tie lines that connect the generating assets to the transmission system.

Table 1. Gen Capability

	Capacity (MW)
Hydro (incl. Helms)	3,896
Diablo Canyon	2,174
Irrigation Districts	1,048
Total	7,118

1. Significant Assumptions Regarding the Projections for Gen

Income Statement

Total Operating Revenues

1. Under the terms of the bilateral contract with the Reorganized Debtor, Gen will receive separate capacity and energy payments. The capacity payments will be subject to availability criteria and the energy payments will be based on the actual electrical output of the assets. Both the capacity price and the energy price will escalate with inflation. The capacity payment is expected to result in Gen revenue of approximately $1.22 billion per year, while the energy payment is expected to be approximately $0.26 billion. Actual revenue will vary with hydrological conditions, unit outages, and other factors affecting energy production and capacity ratings under the contract.

Operating Expenses

1. Total Cost of Energy represents the cost of nuclear fuel for Diablo Canyon, as well as the spent fuel storage fee imposed by the Department of Energy.

2. M&O and A&G Costs - - Hydro and Helms

1. Hydro operations and maintenance expenses are similar to the expenses contained in PG&E's proposed Revenue Sharing Agreement settlement, dated August 11, 2000.
2. Normal expenses are based on the Company's historic level of spending prior to the passage of AB1890.
3. Mandated expenses are any expenses incurred as a result of an order from a government agency or regulatory body. Such expenses include the cost of complying with license conditions and fees payable to FERC, among other costs.
4. Transmission fees are estimated at $5.5 million per year escalating with inflation, based on a Company forecast.
5. In recent history, the hydro system has experienced one major storm causing approximately $20 million of damage every ten years. Consequently the operating expenses include $2 million per year escalating at inflation to reflect this cost.

3. M&O and A&G Costs - - Diablo Canyon

1. Diablo Canyon's normal operating expenses are about $230 million escalating at inflation. O&M includes the cost of dry cask storage for spent nuclear fuel. Each unit runs approximately 20 months between refueling outages, resulting in one unit outage per year and 2 unit outages in the same year once every 5 years. Each refueling outage costs $35 million and requires 35 days to complete.
2. Income on the Diablo decommissioning trust assets flow through Other Income with an offsetting expense. All trust income and assets remain restricted for the sole purpose of nuclear decommissioning.

4. M&O and A&G Costs - - Irrigation District Contracts

1. Irrigation district expenses consists of debt service payments, O&M, and water and energy payments, initially totaling $70 million/year.

5. Depreciation and Decommissioning - - Depreciation expense is almost entirely for PG&E conventional hydro. Depreciation expense on hydro assumes a 35 year remaining life on gross plant. Diablo Canyon, Helms, and one conventional hydro project (South Yuba) have previously been expensed for financial reporting purposes.

Total Interest Income

1. Gen is assumed to not carry a cash balance.

Interest Expense

1. Interest Expense (excluding Rate Reduction Bonds) is modeled assuming an 8.2% cost of long term debt. Borrowing costs are based on the all-in, effective costs to Gen. Corresponding debt balances are net of issuance expenses. Accordingly, the par value of debt issued will be approximately 1.0 percent higher than the net balances shown.

Income Taxes

1. Income taxes are calculated using a 35% federal tax rate and an 8.84% state tax rate, with a combined tax rate of 40.746%.

Balance Sheet

Assets

Net Plant

1. Net plant is essentially PG&E conventional hydro plus undepreciated capital additions at Diablo Canyon, Helms and South Yuba.

Other Noncurrent Assets

1. Approximately $1.2 billion of this is the Diablo decommissioning trust fund. This fund is projected to grow at 6.34% per year from investment income reinvestments. The remaining $170 million is nuclear fuel inventory.

Short-term Investments (Net)

1. Short-term Investments reflects cash held in a debt service reserve fund.

Current Assets

Accounts Receivable - Customers

1. Accounts receivable is estimated at 45 days revenue.

Other Current Assets

1. $66 million of materials and supplies inventory is listed as Other Current Assets.

Capitalization

Common Stock Equity

1. Gen is borrowing against the market value of its assets and the book value is artificially low due to previous accounting write-downs. As a result, common stock equity is negative.

Other Long Term Debt

1. Gen consists of a mix of finite lived assets (Diablo Canyon, and the Irrigation District Contracts) as well as near-perpetual assets (Hydro and Helms). Because of this mix of assets as well as the security of the bilateral contract, Gen's near-term borrowing capacity is greater than its long term borrowing capacity. Gen is assumed to borrow $2.4 billion initially. $2.0 billion of this debt amortizes straight-line over 21 years.

Current Liabilities

Accounts Payable - Creditors

1. Accounts payable is estimated at 45 days of cash operating expenses.

Deferred Credits and Other NC Liabilities

Deferred Income Taxes

1. Deferred income taxes are the difference between book and cash income taxes.

Other Noncurrent Liab.

1. This item is the liability associated with decommissioning Diablo Canyon.

Cash Flow Statement

Cash Flows From Operations

1. Cash from operations is estimated by adding back depreciation and deferred taxes to net income, plus any change in working capital.

Investing Activities

Capital Expenditures

Hydro and Helms

1. Capital spending is divided into normal capital and mandated capital costs. The normal capital spending forecast is the same as that contained in the Revenue Sharing Agreement.

2. Mandated capital costs, like mandated expenses, are capital costs incurred as a result of an order from a government agency or regulatory body. Mandated capital costs are based on a Company forecast and average $16 million (2001$) over the first 10 years.

Diablo Canyon

1. Diablo's capital spending is divided into 2 categories: base and major projects. Base capital spending is approximately $20 million per year. Major projects consist of turbine rotor replacement ($93 million over 2003-2005) and steam generator replacement ($415 million over 2006-2009).

Irrigation District Contracts

2. There are no capital expenditures associated with the Irrigation District Contracts.

Financing Activities

1. Other Net Financing activities show deposits to the debt service reserve fund.

The Electric Transmission Company (ETrans)

1. Structure of ETrans

1. ETrans will operate as an independent electric transmission company, selling transmission services to wholesale customers (other utilities), and to electric generators. ETrans will not procure electricity or ancillary services, except to the extent already required under existing transmission contracts to be assumed by ETrans and to meet any obligations under an ISO or RTO. ETrans' transmission network capacity will be controlled by the ISO/RTO.

2. ETrans will own electric facilities at voltages 60 kilovolts and above, including substations and telecommunications infrastructure.

2. Significant Assumptions Regarding the Financial Projections for ETrans

Income Statement

Total Operating Revenues

1. Operating revenues are estimated by assuming that ETrans' transmission rates are set annually by FERC. Authorized returns on common equity are 12.5% in 2003-2004, and 12.0% in 2005.

2. Authorized revenues are assumed to be increased each year to reflect additions of new transmission plant, and the effects of inflation on operating costs.

Operating Expenses

1. Grid Services - - The amounts on this line include the expenses of reliability-must-run (RMR) contracts. RMR costs are assumed to total about $250 million/year.

2. M&O and A&G Costs are the costs of operating and maintaining ETrans' electric infrastructure for delivering energy. These expenses are for the portion of costs that are not capitalized, and include employee compensation and benefits, payroll taxes, materials and supplies, contract labor, franchise fees paid to the cities and counties ETrans serves, and other costs and fees.

3. Depreciation & Decommissioning - - Depreciation expense is estimated as a function of investment in plant, and computed using currently approved depreciation rates.

4. Property & Other Taxes - - Property Tax is estimated at about 1% of net plant.

5. Total Interest Income - - ETrans is assumed to not carry a cash balance, and not to have any balancing account interest income.

Interest Expense

1. Interest expense on long-term debt is estimated using a 7.73% cost of debt. Borrowing costs are based on the all-in, effective costs to ETrans. Corresponding debt balances are net of issuance expenses. Accordingly, the par value of debt issued will be approximately 1.0 percent higher than the net balances shown.

Other Income

1. This line includes amounts for AFUDC (Allowance for Funds Used During Construction).

Income Taxes

1. Income taxes are calculated using a 35% federal tax rate and an 8.84% state tax rate, with a combined tax rate of 40.746%.

Preferred Dividend Req

1. ETrans is assumed to be financed only with common equity and long-term debt. Therefore, there are no preferred dividends.

Balance Sheet

Starting balances are based on separation of the assets into the lines of business as described in the POR and Disclosure Statement. Generally, balances of assets and liabilities are either held constant at their starting level, or are taken as a percentage of a revenue or expense. Plant in service, construction work in progress, common stock and long-term debt are dynamic balances, changing as a function of cash from operations and capital expenditures. Cash balances are shown as zero, since any excess cash is offset against short-term debt, or is used to buy back debt and equity in order to meet the assumed capital structure targets for each year.

Plant in Service

Changes in Plant in Service are based on business unit forecasts of annual capital expenditures during the forecast period, which in turn are based on current business plans and projections. Significant capital expenditures for capacity additions, including Path 15, are included in the forecast.

Cash Flow Statement

1. Cash from operations is estimated by adding back depreciation and deferred taxes to net income, plus any change in working capital. Cash from operations over the forecast period is insufficient to fund ETrans' capital spending program over this period. As result, external financing, both equity and debt, is required. Equity infusions are assumed to be funded by the parent company, either through internally generated funds from other businesses or from stock issuance.

2. Working capital is estimated based on year-end recorded balances.

The Gas Transmission Company (GTrans)

1. Structure of GTrans

1. GTrans will operate as an independent, FERC-regulated interstate gas transmission company, and will provide open access, non-discriminatory gas transportation, storage and related services to local gas and electric distribution companies, gas marketers, electric generators and other credit-worthy parties. GTrans will focus on providing open access transportation and related services, and, at least initially, will not buy and sell natural gas or other commodities.

2. GTrans will own gas transmission lines above 60 psig, including approximately 6,300 miles of pipelines, three underground storage facilities, eight compressor stations and certain end-use customer service lines. In addition, GTrans will receive all other assets currently used primarily to support the gas transmission business, except the Reorganized Debtor will retain gas gathering facilities and operations.

2. Significant Assumptions Regarding the Financial Projections for GTrans

Income Statement

Total Operating Revenues

1. Forecast operating revenues for 2003 are based on forecast 2002 revenues (fully normalized for weather and hydro conditions) for PG&E's California Gas Transmission business unit, and include an assumed 1% increase in total throughput due to system load growth. For the period 2004-2005, revenues are calculated as those necessary to achieve the full FERC-authorized return on common equity, which is assumed to be 13.0% for 2004 and 2005.

Operating Expenses

1. Total Cost of Energy - - The amounts on this line are zero, since GTrans has no plans to market natural gas commodity sales to its customers. Natural gas used to operate GTrans' compressor stations and to reflect other line losses will be collected from shippers through an "in-kind" shrinkage adjustment.

2. M&O and A&G Costs - - Maintenance and Operation (M&O) costs are based on GTrans' current forecast for 2002, and are escalated thereafter. These are the costs of operating and maintaining GTrans' infrastructure for delivering and storing natural gas. These expenses are for the portion of costs that are not capitalized, and include employee compensation and benefits, payroll taxes, materials and supplies, contract labor, franchise fees paid to cities and counties, and other costs and fees. Activities covered by these costs include pipeline, underground storage, and right-of-way maintenance. Administrative and General (A&G) costs represent the administrative costs of running the business. These costs also are forecast based on 2002 estimates.

3. Depreciation & Decommissioning expense is estimated as a function of investment in plant, and computed using currently-approved depreciation rates.

4. Property and Other taxes, such as Franchise Fees, are estimated based on the sum of 1% of net plant and 1% of revenues.

Total Interest Income

1. GTrans is assumed not to carry a cash balance, and not to have any balancing account interest income.

Interest Expense

1. Interest expense on long-term debt is estimated using a 7.73% cost of debt. Borrowing costs are based on the all-in, effective costs to GTrans. Corresponding debt balances are net of issuance expenses. Accordingly, the par value of debt issued will be approximately 1.0 percent higher than the net balances shown.

Other Income

1. These amounts are based primarily on an estimate of AFUDC (Allowance for Funds Used During Construction.)

Income Taxes

1. Income taxes are calculated using a 35% federal tax rate and an 8.84% state tax rate, with a combined tax rate of 40.746%.

Preferred Dividend Req

1. GTrans will be financed only with common equity and long-term debt. Therefore, there are no preferred dividends.

Balance Sheet

Starting balances are based on separation of the assets into the lines of business as described in the POR and Disclosure Statement. Generally, balances of assets and liabilities are either held constant at their starting level, or are taken as a percentage of a revenue or expense. Plant in service, construction work in progress, common stock and long-term debt are dynamic balances, changing as a function of cash from operations and capital expenditures. Cash balances are assumed to be zero, since any excess cash is used to offset short-term debt or is used to buy back debt and equity in order to meet the assumed capital structure targets for each year.

Plant in Service

Changes in Plant in Service are based GTrans' expected annual capital expenditures during the forecast period, which in turn are based on current business plans and projections. These forecasts reflect the forecasted timing of plant additions. Significant capital expenditures for pipeline and storage capacity additions are included in the forecast.

Cash Flow Statement

Cash from operations is estimated by adding back depreciation and deferred taxes to net income, plus any change in working capital.

Reorganized Debtor	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
INCOME STATEMENT
Total Operating Revenues*		9461.6	9445.2	9712.7
Operating Expenses:
Total Cost of Energy*		5400.4	5230.7	5364.7
M&O and A&G Costs		1843.0	1878.0	1893.4
Depreciation & Decommissioning		731.7	738.1	752.7
Property & Other Taxes		109.3	110.8	112.1
RRB Asset Amortization		290.1	290.1	290.1
Total Operating Expenses		8374.4	8247.8	8413.0
Operating Income		1087.2	1197.4	1299.7
Total Interest Income		16.0	9.9	9.4
Interest Expense (Excl RRBs)		372.5	354.4	364.4
RRB Interest		87.9	68.9	50.3
Total Interest Expense		460.4	423.3	414.7
Other Income		(36.3)	(42.7)	(45.8)
Pretax Income		606.5	741.3	848.6
Total Booked Income Taxes		196.3	255.5	298.5
Preferred Dividend Req		22.6	23.0	23.9
Total Earnings Avail for Common		387.7	462.8	526.3
* Excludes Receipts and Disbursements for CDWR Procurement.

Reorganized Debtor	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
BALANCE SHEET
Assets:
Plant in Service	19743.0	20795.2	21544.3	22282.6
Accumulated Depr	(9169.4)	(9901.1)	(10495.3)	(11058.7)
Net Plant	10573.5	10894.1	11049.1	11223.9
Construction Work In Progress	140.5	142.0	143.5	145.4
Other Noncurrent Assets	64.4	64.4	64.4	64.4
Total Long-term Assets	10778.5	11100.6	11257.0	11433.7
Current Assets:
Short-term Investments (Net)	0.0	0.0	0.0	0.0
Accounts Receivable	1692.5	1731.4	1770.3	1801.7
Balancing Accts Receivable	0.0	0.0	0.0	0.0
Inventory - Fuels	168.7	165.8	163.0	163.4
Inventory - M&S	64.2	65.9	67.6	69.2
Total Current Assets	1925.4	1963.1	2000.9	2034.3
Deferred Charges:
Expense Deferral (Reg Assets)	1545.0	1254.9	964.8	674.7
Other Deferred Charges	1418.3	1418.3	1418.3	1418.3
Total Deferred Charges	2963.3	2673.2	2383.1	2093.0
TOTAL ASSETS	15667.1	15736.9	15641.0	15561.0

Reorganized Debtor	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
Capitalization:
Common Stock Equity	4221.5	4631.7	4837.9	4985.7
Preferred Stock (incl QUIDS)	423.5	419.7	434.9	448.0
RRBs Outstanding	1160.4	870.3	580.2	290.1
Other Long-term Debt	4700.2	4689.1	4814.1	4962.3
Total Capitalization	10505.6	10610.8	10667.1	10686.2
Current Liabilities:
Short-Term Borrowings	164.8	164.2	161.4	161.8
Accounts Payable - Creditors			1050.5	1082.3
Accounts Payable - Affiliates			0.0	0.0
Balancing Accounts Payable	29.3	29.1	28.9	28.6
Accrued Taxes Payable	567.8	567.8	540.7	543.8
Current Portion of RRBs	290.1	290.1	290.1	290.1
Long-Term Debt - Current	0.0	0.0	0.0	0.0
Interest Payable	41.9	37.2	32.4	33.4
Dividends Payable	0.0	0.0	0.0	0.0
Other Current Liabilities	610.4	610.4	610.4	610.4
Total Current Liabilities	2677.8	2710.8	2714.3	2750.4
Deferred Credits and Other NC Liabilities:
Deferred Income Taxes	821.8	729.7	637.6	557.0
Deferred ITC	108.3	103.8	99.4	94.9
Noncurrent Balancing Acct Liab	0.0	0.0	0.0	0.0
Customer Advances for Construction			123.9	126.8
Other Deferred Credits	1301.9	1301.9	1301.9	1301.9
Other Noncurrent Liab.	134.6	158.1	96.7	43.7
Total Deferred Credits & NC Liab	2483.7	2415.3	2259.6	2124.4
TOTAL CAPITAL & LIABILITIES	15667.1	15736.9	15641.0	15561.0

Reorganized Debtor	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
CASH FLOW STATEMENT
Cash Flows From Operations:
Net Income		410.3	485.7	550.2
Depreciation		717.0	738.1	752.7
Change in Deferred Taxes		(92.1)	(96.5)	(85.1)
Change in Accts Receivable		(38.9)	(38.9)	(31.4)
Change in Inventories		1.2	1.2	(2.0)
Change in Accts Payable		38.5	38.5	31.8
Change in Accrued Taxes Payable		0.0	(27.2)	3.1
Change in Bal Accts & Reg Asset Amort				289.8
Change in Other Working Capital		0.0	(4.8)	1.0
Other Net Cash from Operations		56.5	1.6	2.0
Net Cash from Operations		1382.4	1387.6	1512.2
Investing Activities:
Capital Expenditures		(1053.8)	(955.4)	(981.7)
Other Net Investing Activities		0.0	0.0	0.0
Net Cash Used In Investing		(1053.8)	(955.4)	(981.7)
Financing Activities:
Common Stock Issued (Repurchased)				(378.5)
Preferred Stock Issued		0.0	22.0	20.0
Preferred Stock redeemed		(3.8)	(6.9)	(6.9)
Long-term Debt issued		(11.1)	125.1	148.2
Long-term Debt matured/redeemed		(0.0)	0.0	0.0
Long-term Debt purch/sinking		0.0	0.0	0.0
RRB Principal Repayments		(290.1)	(290.1)	(290.1)
Change in Short-term Position		(0.6)	(2.8)	0.4
Dividends Disbursed		(22.9)	(22.9)	(23.7)
Other Net Financing Activities		0.0	0.0	0.0
Net Cash Used In Financing		(328.5)	(432.2)	(530.5)
Net Change in Cash		0.0	0.0	0.0

ETrans	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
INCOME STATEMENT
Total Operating Revenues		751.6	813.7	863.9
Operating Expenses:
Grid Services		263.0	260.9	258.9
M&O and A&G Costs		166.3	169.4	172.6
Depreciation		99.9	112.7	125.4
Property & Other Taxes		20.9	24.1	27.3
Total Operating Expenses		550.0	567.2	584.2
Operating Income		201.6	246.6	279.7
Total Interest Income		0.0	0.0	0.0
Total Interest Expense		81.2	85.4	95.5
Other Income		11.8	7.9	6.5
Pretax Income		132.2	169.1	190.7
Total Booked Income Taxes		53.9	68.9	77.7
Preferred Dividend Req		0.0	0.0	0.0
Total Earnings Avail for Common		78.3	100.2	113.0

ETrans	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
BALANCE SHEET
Assets:
Plant in Service	2866.9	3288.6	3625.7	3961.8
Accumulated Depr	(1163.5)	(1263.4)	(1320.3)	(1385.2)
Net Plant	1703.3	2025.2	2305.4	2576.6
Construction Work In Progress	204.5	130.7	56.9	57.9
Other Noncurrent Assets	0.0	0.0	0.0	0.0
Total Long-term Assets	1907.9	2155.9	2362.3	2634.5
Current Assets:
Short-term Investments (Net)	0.0	0.0	0.0	0.0
Accounts Receivable	73.7	80.3	86.9	92.3
Other Current Assets	5.8	5.9	6.1	6.1
Total Current Assets	79.5	86.3	93.0	98.5
Deferred Charges	204.3	204.3	204.3	204.3
TOTAL ASSETS	2191.6	2446.4	2659.6	2937.2

ETrans	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
Capitalization:
Common Stock Equity	536.6	790.6	890.7	1008.4
Preferred Stock (incl QUIDS)	0.0	0.0	0.0	0.0
Other Long-term Debt	1050.0	1050.0	1158.7	1311.7
Total Capitalization	1586.6	1840.6	2049.4	2320.1
Current Liabilities:
Short-Term Borrowings (Net)	0.0	0.0	0.0	0.0
Accounts Payable	42.2	42.3	42.4	42.6
Balancing Accounts Payable	0.0	0.0	0.0	0.0
Accrued Taxes Payable	45.0	45.5	45.9	46.6
Long-Term Debt - Current	0.0	0.0	0.0	0.0
Interest Payable	0.0	0.0	0.0	0.0
Dividends Payable	0.0	0.0	0.0	0.0
Other Current Liabilities	42.4	42.4	42.4	42.4
Total Current Liabilities	129.6	130.2	130.7	131.5
Deferred Credits and Other NC Liabilities:
Deferred Income Taxes	303.2	307.3	311.4	318.0
Deferred ITC	14.2	13.6	13.1	12.6
Noncurrent Balancing Acct Liab	0.0	0.0	0.0	0.0
Customer Advances for Construction	0.0	0.0	0.0	0.0
Other Deferred Credits	154.0	154.4	154.9	155.0
Other Noncurrent Liab.	4.1	0.3	0.0	(0.0)
Total Deferred Credits & NC Liab	475.5	475.7	479.4	485.5
TOTAL CAPITAL & LIABILITIES	2191.6	2446.4	2659.6	2937.2

ETrans	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
CASH FLOW STATEMENT
Cash Flows From Operations:
Net Income		78.3	100.2	113.0
Depreciation		99.9	112.7	125.4
Change in Deferred Taxes		3.6	3.6	6.1
Change in Accts Receivable		(6.6)	(6.6)	(5.4)
Change in Inventories		0.0	0.0	0.0
Change in Accts Payable		0.1	0.1	0.1
Change in Accrued Taxes Payable				0.7
Change in Other Working Capital				0.0
Other Net Cash from Operations		(1.4)	0.0	0.0
Net Cash from Operations		174.3	210.4	239.9
Investing Activities:
Capital Expenditures		(347.9)	(319.1)	(397.6)
Other Net Investing Activities		(2.9)	0.0	0.0
Net Cash Used In Investing		(350.9)	(319.1)	(397.6)
Financing Activities:
Common Stock Issued (Repurchased)				4.7
Preferred Stock Issued		0.0	0.0	0.0
Preferred Stock redeemed		0.0	0.0	0.0
Long-term Debt issued		0.0	108.7	153.0
Long-term Debt matured/redeemed				0.0
Long-term Debt purch/sinking		0.0	0.0	0.0
Change in Short-term Position		0.0	0.0	0.0
Dividends Disbursed		0.0	0.0	0.0
Other Net Financing Activities		0.0	0.0	0.0
Net Cash Used In Financing		176.5	108.7	157.7
Net Change in Cash		0.0	0.0	0.0

GTrans	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
INCOME STATEMENT
Total Operating Revenues		430.5	433.0	456.3
Operating Expenses:
Total Cost of Energy		0.0	0.0	0.0
M&O and A&G Costs		130.2	134.1	138.3
Depreciation		77.2	81.4	83.8
Property & Other Taxes		19.7	21.7	22.4
Total Operating Expenses		227.0	237.1	244.5
Operating Income		203.5	195.9	211.7
Total Interest Income		0.0	0.0	0.0
Total Interest Expense		70.1	71.5	70.0
Other Income		2.6	3.2	1.9
Pretax Income		135.9	127.5	143.6
Total Booked Income Taxes		55.4	52.0	58.5
Preferred Dividend Req		0.0	0.0	0.0
Total Earnings Avail for Common		80.5	75.6	85.1

GTrans	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
BALANCE SHEET
Assets:
Plant in Service	2794.7	2886.0	3062.2	3108.9
Accumulated Depr	(1110.3)	(1187.5)	(1214.9)	(1272.0)
Net Plant	1684.3	1698.5	1847.2	1836.9
Construction Work In Progress	10.0	37.8	9.9	28.5
Other Noncurrent Assets	0.0	0.0	0.0	0.0
Total Long-term Assets	1694.3	1736.2	1857.1	1865.4
Current Assets:
Short-term Investments (Net)	0.0	0.0	0.0	0.0
Accounts Receivable	45.7	46.0	46.3	48.8
Other Current Assets	6.5	6.7	6.9	7.0
Total Current Assets	52.2	52.7	53.1	55.8
Deferred Charges	104.7	104.7	104.7	104.7
TOTAL ASSETS	1851.3	1893.6	2014.9	2025.8

GTrans	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
Capitalization:
Common Stock Equity	485.9	544.9	617.3	692.8
Preferred Stock (incl QUIDS)	0.0	0.0	0.0	0.0
Other Long-term Debt	900.0	900.0	938.7	861.7
Total Capitalization	1385.9	1444.9	1556.0	1554.5
Current Liabilities:
Short-Term Borrowings	0.0	0.0	0.0	0.0
Accounts Payable	12.5	12.8	13.2	13.6
Balancing Accounts Payable	0.0	0.0	0.0	0.0
Accrued Taxes Payable	(16.9)	(16.8)	(16.6)	(16.5)
Long-Term Debt - Current	0.0	0.0	0.0	0.0
Interest Payable	0.0	0.0	0.0	0.0
Dividends Payable	0.0	0.0	0.0	0.0
Other Current Liabilities	34.5	34.5	34.5	34.5
Total Current Liabilities	30.0	30.6	31.1	31.6
Deferred Credits and Other NC Liabilities:
Deferred Income Taxes	278.2	288.3	298.3	310.5
Deferred ITC	10.2	9.7	9.3	8.8
Noncurrent Balancing Acct Liab	0.0	0.0	0.0	0.0
Customer Advances for Construction			0.0	0.0
Other Deferred Credits	120.4	120.1	119.8	121.8
Other Noncurrent Liab.	26.6	0.0	0.4	(1.4)
Total Deferred Credits & NC Liab	435.4	418.1	427.8	439.7
TOTAL CAPITAL & LIABILITIES	1851.3	1893.6	2014.9	2025.8

GTrans	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
CASH FLOW STATEMENT
Cash Flows From Operations:
Net Income		80.5	75.6	85.1
Depreciation		77.2	81.4	83.8
Change in Deferred Taxes		10.1	9.6	11.7
Change in Accts Receivable		0.3	(0.3)	(2.5)
Change in Inventories		0.0	0.0	0.0
Change in Accts Payable		0.3	0.4	0.4
Change in Accrued Taxes Payable				0.1
Change in Other Working Capital				0.0
Other Net Cash from Operations		(27.8)	1.3	(0.2)
Net Cash from Operations		140.6	168.1	178.4
Investing Activities:
Capital Expenditures		(119.1)	(203.6)	(91.8)
Other Net Investing Activities		(0.0)	0.0	0.0
Net Cash Used In Investing		(119.1)	(203.6)	(91.8)
Financing Activities:
Common Stock Issued (Repurchased)				(9.6)
Preferred Stock Issued		0.0	0.0	0.0
Preferred Stock redeemed		0.0	0.0	0.0
Long-term Debt issued		0.0	38.7	(77.0)
Long-term Debt matured/redeemed				0.0
Change in Short-term Position		0.0	0.0	0.0
Dividends Disbursed		0.0	0.0	0.0
Other Net Financing Activities		0.0	0.0	0.0
Net Cash Used In Financing		(21.4)	35.5	(86.6)
Net Change in Cash		0.0	0.0	0.0

Gen	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
INCOME STATEMENT
Total Operating Revenues		1472.5	1492.4	1509.7
Operating Expenses:
Total Cost of Energy		95.7	89.5	93.8
M&O and A&G Costs		533.2	570.2	519.4
Depreciation		49.4	52.7	62.5
Property & Other Taxes		66.1	66.8	68.3
Total Operating Expenses		744.4	779.3	743.9
Operating Income		728.1	713.1	765.8
Total Interest Income		0.0	0.0	0.0
Total Interest Expense		196.8	196.8	193.2
Other Income		79.4	88.5	95.9
Pretax Income		610.7	604.8	668.4
Total Booked Income Taxes		247.4	245.0	271.0
Preferred Dividend Req		0.0	0.0	0.0
Total Earnings Avail for Common		363.3	359.8	397.5

Gen	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
BALANCE SHEET
Assets:
Plant in Service	9513.9	9603.5	9703.4	9912.0
Accumulated Depr	(8640.3)	(8689.8)	(8742.5)	(8804.9)
Net Plant	873.6	913.8	960.9	1107.0
Construction Work In Progress	1.0	25.3	66.5	0.0
Other Noncurrent Assets	1389.3	1466.6	1548.8	1636.2
Total Long-term Assets	2263.9	2405.7	2576.2	2743.3
Current Assets:
Short-term Investments (Net)	0.0	168.2	339.0	344.0
Accounts Receivable	200.3	181.5	184.0	186.1
Inventory - M&S	66.0	66.0	66.0	66.0
Other Current Assets	0.0	0.0	0.0	0.0
Total Current Assets	266.3	415.8	589.0	596.1
Deferred Charges	0.0	0.0	0.0	0.0
TOTAL ASSETS	2530.1	2821.5	3165.2	3339.4

Gen	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
Capitalization:
Common Stock Equity	(1183.2)	(996.4)	(755.8)	(590.0)
Preferred Stock (incl QUIDS)	0.0	0.0	0.0	0.0
Other Long-term Debt	2400.0	2400.0	2400.0	2226.7
Total Capitalization	1216.8	1403.6	1644.2	1636.7
Current Liabilities:
Short-Term Borrowings	0.0	0.0	0.0	0.0
Accounts Payable	72.9	76.2	79.4	73.2
Long-Term Debt - Current	0.0	0.0	0.0	86.6
Interest Payable	0.0	0.0	0.0	0.0
Dividends Payable	0.0	0.0	0.0	0.0
Other Current Liabilities	0.0	0.0	0.0	0.0
Total Current Liabilities	72.9	76.2	79.4	159.9
Deferred Credits and Other NC Liabilities:
Deferred Income Taxes	5.9	30.0	48.9	64.2
Deferred ITC	0.0	0.0	0.0	0.0
Other Deferred Credits	0.0	0.0	0.0	0.0
Other Noncurrent Liab.	1234.6	1311.8	1392.6	1478.6
Total Deferred Credits & NC Liab	1240.5	1341.8	1441.5	1542.8
TOTAL CAPITAL & LIABILITIES	2530.1	2821.5	3165.2	3339.4

Gen	($Millions)
	12/31/02	12/31/03	12/31/04	12/31/05
CASH FLOW STATEMENT
Cash Flows From Operations:
Net Income		363.3	359.8	397.5
Depreciation		49.4	52.7	62.5
Change in Deferred Taxes		24.1	18.9	15.3
Change in Accts Receivable		18.7	(2.4)	(2.1)
Change in Inventories		0.0	0.0	0.0
Change in Accts Payable		3.3	3.3	(6.2)
Change in Accrued Taxes Payable				0.0
Change in Other Working Capital				0.0
Other Net Cash from Operations		(0.1)	(1.4)	(1.4)
Net Cash from Operations		458.7	430.8	465.5
Investing Activities:
Capital Expenditures		(113.9)	(141.0)	(142.1)
Other Net Investing Activities		0.0	0.0	0.0
Net Cash Used In Investing		(113.9)	(141.0)	(142.1)
Financing Activities:
Common Stock Issued (Repurchased)				(231.8)
Preferred Stock Issued		0.0	0.0	0.0
Preferred Stock redeemed		0.0	0.0	0.0
Long-term Debt issued		0.0	0.0	0.0
Long-term Debt matured/redeemed				(86.6)
Long-term Debt purch/sinking		0.0	0.0	0.0
Change in Short-term Position		0.0	0.0	0.0
Dividends Disbursed		0.0	0.0	0.0
Other Net Financing Activities		(168.2)	(170.7)	(5.0)
Net Cash Used In Financing		(344.8)	(289.8)	(323.4)
Net Change in Cash		0.0	0.0	0.0

EX-99.2

Exhibit 99.2

PACIFIC GAS AND ELECTRIC COMPANY
U.S. TRUSTEE BALANCE SHEET
AS OF OCTOBER 31, 2001
(in millions, except share amounts)
	October, 2001
ASSETS
Current Assets
Cash and cash equivalents	$ (12)
Short-term investments	4,780
Accounts receivable:
Customers (net of allowance for doubtful accounts of $49 million)	1,583
Related parties	35
Regulatory balancing accounts	132
Inventories:
Gas stored underground and fuel oil	294
Materials and supplies	128
Prepaid expenses and other	105
Total current assets	7,045
Property, Plant, and Equipment
Electric	17,135
Gas	7,619
Construction work in progress	256
Total property, plant, and equipment (at original cost)	25,010
Accumulated depreciation and decommissioning	(11,728)
Net property, plant, and equipment	13,282
Other Noncurrent Assets
Regulatory assets	1,934
Nuclear decommissioning trust funds	1,281
Other	2,139
Total noncurrent assets	5,354
TOTAL ASSETS	$         25,681
LIABILITIES AND EQUITY
Liabilities
Accounts payable
Trade creditors	$ 269
Related parties	40
Regulatory Balancing Accounts	268
Other	191
Accrued taxes	570
Rate reduction bonds	1,767
Deferred income taxes	1,187
Deferred tax credits	160
Pre-petition secured debt	3,450
Pre-petition liabilities	5,709
Pre-petition financing debt	5,864
Other liabilities	3,453
Total liabilities	22,928
Preferred Stock With Mandatory Redemption Provisions	137
Stockholders' Equity
Preferred stock without mandatory redemption provisions
Nonredeemable--5% to 6%, outstanding 5,784,825 shares	145
Redeemable--4.36% to 7.04%, outstanding 5,973,456 shares	149
Common stock, $5 par value, authorized 800,000,000 shares;
issued 321,314,760 shares	1,606
Additional paid in capital	1,964
Accumulated deficit	(1,246)
Accumulated other comprehensive loss	(2)
Total stockholders' equity	2,616
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$        25,681

PACIFIC GAS AND ELECTRIC COMPANY
U.S. TRUSTEE BALANCE SHEET AS OF OCTOBER 31, 2001
Notes
1	These preliminary financial statements were prepared using certain assumptions and estimates. These assumptions and estimates are subject to revision and actual results could differ materially from the information provided in this statement. Further, the amounts shown in this statement, when reported on a quarterly basis, may differ materially due to adjustments in accruals, changes in facts and circumstances, changes in estimates, further analysis, and other factors.
2	These unaudited statements are prepared for the U.S. Trustee and differ from the requirements of generally accepted accounting principles in that they exclude certain financial statements (statements of cash flows, stockholders equity, and other comprehensive income), relevant footnotes and certain reclassifications.
3	Cash and cash equivalents have been reduced for uncleared checks. On the balance sheet included with the Utility's 10-Q, uncleared checks are treated as an accounts payable liability.

		Case to date
	Month	seven months
	ended	ended
	October 31, 2001	October 31, 2001
OPERATING REVENUES	$ 964	$ 6,211
OPERATING EXPENSES:
Cost of Electric Energy	132	204
Cost of Gas	43	735
Operating and Maintenance	147	1,411
Depreciation, Decommissioning, and Amortization	74	520
Total Operating Expenses	396	2,870
OPERATING INCOME (LOSS)	568	3,341
Interest Income (Expense)	(60)	(474)
Professional Fees	(1)	(9)
Other Income and (Expense)	(2)	(10)
PRE-TAX INCOME (LOSS)	505	2,848
Income Taxes	189	1,085
EARNINGS (LOSS)	316	1,763
Preferred Dividend Requirement	2	15
EARNINGS (LOSS) AVAILABLE FOR (ALLOCATED TO) COMMON STOCK	$ 314	$ 1,748

PACIFIC GAS AND ELECTRIC COMPANY U.S. TRUSTEE INCOME STATEMENT FOR THE MONTH ENDED OCTOBER 31, 2001 AND THE SEVEN MONTHS ENDED OCTOBER 31, 2001
Notes
1	These preliminary financial statements were prepared using certain assumptions and estimates. These assumptions and estimates are subject to revision and actual results could differ materially from the information provided in this statement. Further, the amounts shown in this statement, when reported on a quarterly basis, may differ materially due to adjustments in accruals, changes in facts and circumstances, changes in estimates, further analysis, and other factors.
2	These financial statements were prepared using certain assumptions and estimates, including the estimated amount payable to the California Department of Water Resources (DWR) for the estimated amount of power purchased by the DWR on behalf of retail customers based on approximately 10 cents per kilowatt hour (kWh). The Utility acts solely as a billing agent for the DWR. While the rate freeze is in effect, to the extent revenue is allocable to the DWR, there will be a corresponding reduction in the Utility's revenues. Therefore, the amounts paid to the DWR for deliveries are not recorded as expense and the revenue billed by the Utility to its customers associated with this energy is excluded from revenues. These assumptions and estimates are subject to revision and actual results could differ materially from the information provided in this statement.
	The results for the month of October 2001 are not i ndicative of future earnings. While the rate freeze is in effect, earnings could differ materially as a result of the implementation of the DWR's revenue requirements when and if adopted by the California Public Utilities Commission (CPUC). On October 19, 2001, the DWR issued a draft revised revenue requirement which reduces its overall revenue requirement statewide from $12.6 billion to $10.2 billion for the two year period 2001-2002. On November 5, 2001, the DWR formally submitted its revised revenue requirement to the CPUC. The revised DWR revenue requirement does not resolve issues relating to: (1) allocation of DWR's costs among the three utilities, which are pending before the CPUC in a separate proceeding, (2) how the DWR request would be reconciled with PG&E's existing rates, including those for its retained generation facilities, and (3) the dispute between DWR and the CPUC regarding the form and substance of a rate agreement which DWR has requested for the purpose of financing its bonds.
	Further, the income statement does not reflect the DWR revised revenue requirement dated November 5, 2001, nor does it reflect the CPUC's Proposed Decision issued on September 4, 2001, to increase the amount of the allocation of the DWR revenue requirement to be collected from the Utility's customers compared to the amount contained in its earlier request submitted to the CPUC on August 7, 2001.
3	Items impacting comparability for the month ended October 31, 2001, (net of taxes):
		(in millions of dollars)
		After-Tax
	Generation Regulatory Asset Valuation Reserve	(231)
	Interest Expense	12
	Other	1
	Total	$ (218)
4	Case to date results reflect the entire seven month period ended October 31, 2001. The bankruptcy petition date is April 6, 2001.