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)
Fourth Quarter and Year-to-Date, 2008 vs. 2007
(in millions, except per share amounts)
 


    
  
Three months ended December 31,
    
Twelve months ended December 31,
  
    
  
 
 
 
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)
   $ 260     $ 203     $ 0.70     $ 0.56     $ 1,081     $ 1,006     $ 2.95     $ 2.78  
Items Impacting Comparability (2)
                                                                
    Tax settlement
     257       -       0.67       -       257       -       0.68       -  
PG&E Corporation Earnings on a GAAP basis
   $ 517     $ 203     $ 1.37     $ 0.56     $ 1,338     $ 1,006     $ 3.63     $ 2.78  


 

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 twelve months ended December 31, 2008, PG&E Corporation recognized $257 million of net income resulting from a settlement of tax audits for tax years 2001 through 2004.  Of this amount, $154 million was related to PG&E Corporation’s former subsidiary, National Energy & Gas Transmission, Inc., and was recorded as income from discontinued operations.
     




















 
 
 


 

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

    
  
Three months ended December 31,
    
Twelve months ended December 31,
  
    
  
Earnings
    
Earnings
  
    
  
2008
    
2007
    
2008
    
2007
  
                         
                         
Pacific Gas and Electric Company Earnings from Operations (1)
   $ 265     $ 203     $ 1,125     $ 1,010  
Items Impacting Comparability (2)
                                
    Tax settlement
     60       -       60       -  
Pacific Gas and Electric Company Earnings on a GAAP basis
   $ 325     $ 203     $ 1,185     $ 1,010  

 
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 twelve months ended December 31, 2008, Pacific Gas and Electric Company recognized net income of $60 million, a portion of the $257 million in net income recognized by PG&E Corporation resulting from a settlement of tax audits for tax years 2001 through 2004.
 
  
       

 


















 

 



 
 
 


 

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

Q4 2007 EPS from Operations (1)
   $ 0.56  
Increase in rate base revenues
     0.07  
Energy efficiency incentive revenues
     0.07  
Recovery of storm and outage expenses
     0.02  
Miscellaneous items
     0.02  
         
Increase in shares outstanding
     (0.02 )
Operating and maintenance – gas system
     (0.01 )
Expenses for statewide and local initiatives
     (0.01 )
 
Q4 2008 EPS from Operations (1)
   $ 0.70  


2007 YTD EPS from Operations (1)
   $ 2.78  
Increase in rate base revenues
     0.27  
Energy efficiency incentive revenues
     0.07  
Recovery of storm and outage expenses
     0.02  
Billing OII (2)
     0.02  
Gas transmission revenues
     0.01  
Miscellaneous items
     0.03  
         
Storm and outage expenses
     (0.08 )
Operating and maintenance – gas system
     (0.06 )
Increase in shares outstanding
     (0.05 )
Expenses for statewide and local initiatives
     (0.04 )
Nuclear refueling outage (3)
     (0.02 )
 
2008 YTD EPS from Operations (1)
   $ 2.95  


 

1.
See Table 2 for a reconciliation of EPS from operations to EPS on a GAAP basis.
   
2.
Charge for customer refunds related to a delayed billing investigation that was incurred in 2007.  There was no similar charge in 2008.
   
3.
There were no refueling outages during the three months ended December 31, 2008 and 2007.  During the twelve months ended December 31, 2008, the refueling outage to replace the steam generators lasted for 69 days compared to the same period in 2007 when the outage lasted only 30 days.





 
  
 


 

Table 5: PG&E Corporation Share Statistics
Year-to-Date 2008 vs. Year-to-Date 2007
(shares in millions, except per share amounts)
 


    
  
Year-to-Date
 2008
    
Year-to-Date
 2007
    
% Change
  
                   
Common Stock Data
                  
                   
Book Value per share – end of period (1)
   $ 24.64     $ 22.91       7.55 %
                         
Weighted average common shares outstanding, basic
     357       351       1.71 %
    Employee share-based compensation
     1       2       (50.00 )%
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 Consolidated Financial Statements and the Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 2008.



 














 









 
 
 


 

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

             
2008
  
 
      
Percentage Weight (1)
    
YTD Actual
    
YTD Target
  
                       
  1.  
Earnings from Operations (in millions)
     40 %   $ 1,081    
See note (2)
  
                             
  2.  
Customer Satisfaction & Brand Health Index
     20 %     76.1       77.0  
                               
  3.  
Reliable Energy Delivery Index
     20 %     1.443       1.000  
                               
  4.  
Employee Engagement Premier Survey
     10 %     68.6 %     66.0 %
                               
  5.  
Safety Performance
     10 %     3.241       3.483  

 
 
 
1.
  
Represents weighting used in calculating performance under the PG&E Corporation Short-Term Incentive Plan 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.
 

 

 
    














 






 
 
 


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 in accordance with GAAP.  For a reconciliation of earnings from operations to consolidated net income in accordance with GAAP, see Tables 2 and 3.
 
The 2008 target for earnings from operations is based on the Utility’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 has 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 images, 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 Index:
 
 
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 all 40 core survey items (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
Fourth Quarter and Year-to-Date, 2008 vs. 2007
 

   
Three Months Ended December 31,
    
Twelve Months Ended December 31,
  
                         
   
2008
    
2007
    
2008
    
2007
  
Electric Sales (in millions kWh)
                        
    Residential
     7,421       7,216       31,454       30,796  
    Commercial
     8,360       8,389       34,053       33,986  
    Industrial
     4,126       3,874       16,148       15,159  
    Agricultural
     1,222       1,150       5,594       5,402  
    BART, public street and highway lighting
     213       217       877       833  
    Other electric utilities
     1       -       1       3  
Sales from Energy Deliveries
     21,343       20,846       88,127       86,179  
     
                                
Total Electric Customers at December 31
                     5,134,423       5,118,593  
     
                                
Bundled Gas Sales (in millions MCF)
                                
    Residential
     46       48       199       197  
    Commercial
     15       15       64       67  
Total Bundled Gas Sales
     61       63       263       264  
Transportation Only
     133       151       570       605  
Total Gas Sales
     194       214       833       869  
                                 
Total Gas Customers at December 31
                     4,271,214       4,270,270  
     
                                
Sources of Electric Energy (in millions kWh)
                                
Utility Generation
                                
    Nuclear
     4,846       4,870       17,096       18,588  
    Hydro (net)
     1,645       1,874       7,865       7,652  
    Fossil
     125       135       518       483  
    Total Utility Generation
     6,616       6,879       25,479       26,723  
Purchased Power
                                
    Qualifying Facilities
     3,579       3,962       15,758       16,579  
    Irrigation Districts
     285       302       2,094       2,497  
    Other Purchased Power
     500       204       2,562       2,390  
    Spot Market Purchases/Sales, net
     6,751       3,752       27,254       14,691  
    Total Purchased Power (1)
     11,115       8,220       47,668       36,157  
Delivery from DWR
     3,220       5,504       13,344       21,193  
     
                                
Delivery to Direct Access Customers
     1,505       1,610       6,191       6,724  
     
                                
Other (includes energy loss)
     (1,113 )     (1,367 )     (4,555 )     (4,618 )
     
                                
Total Electric Energy Delivered
     21,343       20,846       88,127       86,179  
     
                                
Diablo Canyon Performance
                                
Overall capacity factor (including refuelings)
     98 %     99 %     87 %     95 %
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 December 31, 2008 and 2007, Total Purchased Power is net of Spot Market Sales of 608 million kWh and 633 million kWh, respectively.  For the twelve months ended December 31, 2008 and 2007, Total Purchased Power is net of Spot Market Sales of 3,432 million kWh and 2,671 million kWh, respectively.

 
 
 
 



 

Table 8: PG&E Corporation EPS Guidance

 

2009 EPS Guidance   
  
Low
    
High
  
 
EPS Guidance on an Earnings from Operations Basis
   $ 3.15     $ 3.25  
                 
Estimated Items Impacting Comparability
                
   Tax refunds (1)
     0.13       0.16  
   Recovery of hydro divestiture costs (2)
     0.07       0.07  
   Accelerated work on gas system (3)
     (0.15 )      (0.12 ) 
                 
Estimated EPS on a GAAP Basis
   $ 3.20     $ 3.36  
                 
 
 
1.
  Tentative agreement to resolve federal tax refund claims related to tax years 1998 and 1999.
   
 2.
  Anticipated recovery of costs incurred in connection with efforts to determine the market value of hydroelectric generation facilities.
 
 3.
  Forecasted costs to accelerate the performance of system-wide gas integrity surveys and remedial work.
 

 
 

Management's statements regarding 2009 guidance for earnings from operations per common share for PG&E Corporation, estimated rate base for 2009, and general sensitivities for 2009 earnings, constitute forward-looking statements that are based on current expectations and assumptions which management believes are reasonable, including that the Utility 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:

·
 the Utility’s ability to manage capital expenditures and its operating and maintenance expenses within authorized levels;
   
·
 the outcome of pending and future regulatory proceedings  and whether the  Utility is able to timely recover its costs through rates;
   
·
 the adequacy and price of electricity and natural gas supplies, and the ability of the Utility to manage and respond to the volatility of the electricity and natural gas markets, including the ability of the Utility and its counterparties to post or return collateral;
   
·
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 the Utility’s facilities and operations, its customers, and third parties on which the Utility relies;
   
·
the potential impacts of climate change on the Utility’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 Diablo Canyon, the availability of nuclear fuel, the occurrence of unplanned outages at Diablo Canyon, or the temporary or permanent cessation of operations at Diablo Canyon;
   
·
whether the Utility 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 the Utility incurs substantial expense to improve the safety and reliability of its electric and natural gas systems;
   

 
 
 


 

Table 8 (continued): PG&E Corporation Earnings per Common Share Guidance

 

·
 whether the Utility achieves the CPUC’s energy efficiency targets and recognizes any incentives the Utility 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 (“CAISO”) to restructure the California wholesale electricity market;
   
·
how the CPUC administers the conditions imposed on PG&E Corporation when it became the Utility’s holding company;
   
·
the extent to which PG&E Corporation or the Utility 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, the Utility, 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 2008 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
 
 
 
   
2008
    
2009
  
   
Recorded
    
Estimated
  
Total Weighted Average Rate Base (in billions)
   $ 18.2     $ 20.1  
                 


 

 
 
  The estimate of rate base for 2009 and the forecast of capital expenditures that the estimate is based on are forward-looking statements that are subject to various risks and uncertainties, including whether the amount and timing of actual expenditures are consistent with the forecasted amount and timing.  Actual results may differ materially.  For a discussion of the factors that may affect future results, see the factors listed in Table 8 and the discussion of risk factors in PG&E Corporation and Pacific Gas and Electric Company's Annual Report on Form 10-K for the year ended December 31, 2008.

 
 





































 
 
 


 

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

 
Variable
Description of Change
Estimated 2009
Earnings Impact
     
Rate base
+/- $100 million change in rate base (1)
+/- $6 million
     
Return on equity (ROE)
+/- 0.1% change in earned ROE
+/- $10 million
     
Share count
+/- 1% change in average shares outstanding
-/+ $0.03 per share
     
Revenues
+/- $7 million change in revenues (pre-tax), including Electric Transmission and California Gas Transmission
+/- $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 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
   $ 2,749  
    Net proceeds from sale of assets
     26  
    Decrease in restricted cash
     36  
    Net proceeds from issuance of long-term debt
     2,185  
    Borrowings under credit facilities
     533  
    Borrowings of commercial paper, net
     6  
    Common stock issued
     225  
    
   $ 5,760  
    
        
Uses of Cash
        
    Capital expenditures
   $ (3,628 )
    Investments in and proceeds from nuclear decommissioning trust, net
     (49 )
    Repayments under credit facilities
     (783 )
    Long-term debt repurchased
     (454 )
    Energy recovery bonds matured
     (354 )
    Common stock dividends paid
     (546 )
    Other
     (72 )
    
   $ (5,886 )
    
        
Cash and Cash Equivalents, December 31, 2008
   $ 219  


 

Source:  PG&E Corporation’s Consolidated Statement of Cash Flows included in PG&E Corporation and Pacific Gas and Electric Company’s combined Annual Report on Form 10-K for the year ended December 31, 2008.









 






 
 
 


 

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



    
  
2008
    
2007
    
Change
  
    
                  
Cash Flow from Operating Activities (YTD December 31)
                  
     PG&E Corporation
   $ (17 )   $ 5     $ (22 )
     Pacific Gas and Electric Company
     2,766       2,541       225  
    $ 2,749     $ 2,546     $ 203  
                         
Consolidated Cash Balance (at December 31)
                        
     PG&E Corporation
   $ 167     $ 204     $ (37 )
     Pacific Gas and Electric Company
     52       141       (89 )
    $ 219     $ 345     $ (126 )
                         
Consolidated Restricted Cash Balance (at December 31)
                        
     PG&E Corporation
   $ -     $ -     $ -  
     Pacific Gas and Electric Company(1)
     1,309       1,315       (6 )
    $ 1,309     $ 1,315     $ (6 )

 

1.
 Includes $19 million and $18 million of restricted cash classified as Other Noncurrent Assets – Other in 2008 and 2007, respectively.
 
 
Source:
 
 
 
PG&E Corporation and Pacific Gas and Electric Company’s Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company’s combined Annual Report on Form 10-K for the year ended December 31, 2008.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 

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


   
Balance at
December 31,
  
   
2008
    
2007
  
PG&E Corporation
            
Convertible subordinated notes, 9.50%, due 2010
   $ 280     $ 280  
Utility
                
Senior notes:
                
3.60% due 2009
     600       600  
4.20% due 2011
     500       500  
6.25% due 2013
     400       -  
4.80% due 2014
     1,000       1,000  
5.625% due 2017
     700       500  
8.25% due 2018
     800       -  
6.05% due 2034
     3,000       3,000  
5.80% due 2037
     700       700  
6.35% due 2038
     400       -  
Less: current portion
     (600 )     -  
Unamortized discount, net of premium
     (22 )     (22 )
Total senior notes
     7,478       6,278  
Pollution control bonds:
                
Series 1996 C, E, F, 1997 B, variable rates(1), due 2026(2)
     614       614  
Series 1996 A, 5.35%, due 2016
     200       200  
Series 2004 A-D, 4.75%, due 2023
     345       345  
Series 2005 A-G, variable rates, due 2016 and 2026(3)
     -       454  
Series 2008 A-D, variable rates(4), due 2016 and 2026(5)
     309       -  
Series 2008 F and G, 3.75%(6), due 2018 and 2026
     95       -  
Total pollution control bonds
     1,563       1,613  
Total Utility long-term debt, net of current portion
     9,041       7,891  
Total consolidated long-term debt, net of current portion
   $ 9,321     $ 8,171  
                 
 
 
  
(1) At December 31, 2008, interest rates on these bonds and the related loans ranged from 0.75% to 1.20%.
  
(2) Each series of these bonds is supported by a separate letter of credit which expires on February 24, 2012. Although the stated maturity date is 2026, each series will remain outstanding only if the Utility extends or replaces the letter of credit related to the series or otherwise obtains a consent from the issuer to the continuation of the series without a credit facility.
  
(3) During 2008, the credit rating of the insurer of these bonds was downgraded or put on review for possible downgrade by several credit agencies, resulting in increased interest rates. To reduce interest expense, the Utility repurchased $300 million of the 2005 bonds in March 2008 and the remaining $154 million in April 2008. In September and October 2008, all of these series, except for the Series 2005 E bonds, were refunded through the issuance of the Series 2008 A-D and F and G bonds. See footnotes 4 and 5.
  
(4) At December 31, 2008, interest rates on these bonds and the related loans ranged from 0.57% to 0.85%.
  
(5) Each series of these bonds is supported by a separate direct-pay letter of credit which expires on October 29, 2011. The Utility may choose to provide a substitute letter of credit for any series of these bonds, subject to a rating requirement.
  
(6) These bonds bear interest at 3.75% per year through September 19, 2010, are subject to mandatory tender on September 10, 2010, and may be remarketed in a fixed or variable rate mode.
  
 
 

Source:  PG&E Corporation and Pacific Gas and Electric Company’s Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 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 December 31, 2008
(in millions, except interest rates)
 


   
2009
    
2010
    
2011
    
2012
    
2013
    
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 %     3.75 %     4.20 %     -       6.25 %     5.99 %     5.71 %
Fixed rate obligations
   $ 600     $ 95     $ 500       -     $ 400     $ 7,145     $ 8,740  
Variable interest rate as of December 31, 2008
     -       -       0.75 %     0.92 %     -       -       0.87 %
Variable rate obligations
     -       -     $ 309 (1)   $ 614 (2)     -       -     $ 923  
Total consolidated long-term debt
   $ 600     $ 375     $ 809     $ 614     $ 400     $ 7,145     $ 9,943  
                                                         
                                                         
(1) These bonds, due in 2016-2026, are backed by a direct-pay letter of credit which expires on October 29, 2011. The bonds will be subject to a mandatory redemption unless the letter of credit is extended or replaced or the issuer consents to the continuation of these series without a credit facility. Accordingly, the bonds have been classified for repayment purposes in 2011.
  
(2) The $614 million pollution control bonds, due in 2026, are backed by 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 (3):
2009
  
2010
  
2011
  
2012
  
Total
  
Utility
    
 
              
Average fixed interest rate
     4.36 %     4.49 %     4.59 %     4.66 %    
4.53
 %
Energy recovery bonds
   $ 370     $ 386     $ 404     $ 423     $ 1,583  
                                         
 
                                       
 
 
 
 
(3) 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 Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 2008.

 

 




 
 
 


 

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

 

Name
Brief Description
    
Docket Number
  
           
Request for New Generation Offers and Potential New Utility-Owned Generation
Pacific Gas and Electric Company has developed a shortlist of participants who responded to the Utility’s request for offers (“RFO”) solicitation for 800 to 1,200 megawatts of dispatchable and operationally flexible new generation resources to be on-line no later than May 2015.  The Utility anticipates executing contracts and requesting CPUC approval of the executed contracts in the first half of 2009.
 
     R.06-02-013  
           
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.09-01-019
D.07-09-043
D.08-01-042
D.08-12-059
R.06-04-010
D.07-10-032
  
           
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%.
 
    
A.07-05-008
 D.07-12-049
  
           
Three-Year Cost of Capital Mechanism
On May 29, 2008, the CPUC adopted a uniform three-year cost of capital mechanism to replace the annual cost of capital proceeding.  The Utility’s capital structure, including an equity component of 52%, and its cost of capital, including an 11.35% ROE, is set until 2011 and will only be changed before 2011 if the annual automatic adjustment mechanism established by the CPUC is triggered.
 
    
D.08-05-035
  
           
Transmission Owner 10 Rate Case
On October 22, 2008, the FERC approved an all-party settlement in the Utility’s TO rate case that sets an annual wholesale base transmission revenue requirement of $706 million and a retail base transmission revenue requirement of $718 million, effective March 1, 2008.
 
    
ER07-1213-000
  
           
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
  
           
Catastrophic Event Memorandum Account Application
The CPUC approved a settlement on November 21, 2008 that permits the Utility to collect approximately $15 million through 2010 to recover costs to restore service and repair facilities following the January 2008 winter storm.
 
    
A.08-03-017
D.08-11-045
  
           


 
 
 


 

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

 


         
Application to Recover Hydroelectric Generation Facility Divestiture Costs
Pacific Gas and Electric Company has requested CPUC authorization to recover approximately $47 million of hydroelectric generation facility divestiture costs.
 
    
A.08-04-022
  
           
Proposed Electric Distribution Reliability Program (Cornerstone Improvement Program)
Pacific Gas and Electric Company has requested CPUC authorization to recover $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
  
           
SmartGrid OIR
Order Instituting Rulemaking to consider Smart Grid technologies pursuant to federal legislation and the CPUC’s motion to actively guide policy in California's development of a Smart Grid system.
 
    
R.08-12-009
  

 


 

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






 
 
 
 

 
 
 
 
 
 
 
 
 

 





 
 
 


 

Table 16: PG&E Corporation
Consolidated Statements of Income (Unaudited)
(in millions, except per share amounts)
 

   
Year ended December 31,
  
   
2008
    
2007
    
2006
  
Operating Revenues 
                  
Electric
   $ 10,738     $ 9,480     $ 8,752  
Natural gas
     3,890       3,757       3,787  
Total operating revenues
     14,628       13,237       12,539  
Operating Expenses 
                        
Cost of electricity
     4,425       3,437       2,922  
Cost of natural gas
     2,090       2,035       2,097  
Operating and maintenance
     4,201       3,881       3,703  
Depreciation, amortization, and decommissioning
     1,651       1,770       1,709  
Total operating expenses
     12,367       11,123       10,431  
Operating Income
     2,261       2,114       2,108  
Interest income
     94       164       188  
Interest expense
     (728 )     (762 )     (738 )
Other income (expense), net
     (18 )     29       (13 )
Income Before Income Taxes
     1,609       1,545       1,545  
Income tax provision
     425       539       554  
Income From Continuing Operations
     1,184       1,006       991  
Discontinued Operations 
                        
NEGT income tax benefit
     154       -       -  
Net Income
   $ 1,338     $ 1,006     $ 991  
                         
Weighted Average Common Shares Outstanding, Basic
     357       351       346  
Weighted Average Common Shares Outstanding, Diluted
     358       353       349  
Earnings Per Common Share from Continuing Operations, Basic
   $ 3.23     $ 2.79     $ 2.78  
Net Earnings Per Common Share, Basic
   $ 3.64     $ 2.79     $ 2.78  
Earnings Per Common Share from Continuing Operations, Diluted
   $ 3.22     $ 2.78     $ 2.76  
Net Earnings Per Common Share, Diluted
   $ 3.63     $ 2.78     $ 2.76  
Dividends Declared Per Common Share
   $ 1.56     $ 1.44     $ 1.32  


 

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



 
 
 


 

Table 17: PG&E Corporation
Consolidated Balance Sheets (Unaudited)
(in millions)
 


   
Balance at December 31,
  
   
2008
    
2007
  
ASSETS
            
Current Assets 
            
Cash and cash equivalents
   $ 219     $ 345  
Restricted cash
     1,290       1,297  
Accounts receivable:
                
Customers (net of allowance for doubtful accounts of $76 million in 2008 and $58 million in 2007)
     1,751       1,599  
Accrued unbilled revenue
     685       750  
Regulatory balancing accounts
     1,197       771  
Inventories:
                
Gas stored underground and fuel oil
     232       205  
Materials and supplies
     191       166  
Income taxes receivable
     120       61  
Prepaid expenses and other
     718       255  
Total current assets
     6,403       5,449  
Property, Plant, and Equipment 
                
Electric
     27,638       25,599  
Gas
     10,155       9,620  
Construction work in progress
     2,023       1,348  
Other
     17       17  
Total property, plant, and equipment
     39,833       36,584  
Accumulated depreciation
     (13,572 )     (12,928 )
Net property, plant, and equipment
     26,261       23,656  
Other Noncurrent Assets 
                
Regulatory assets
     5,996       4,459  
Nuclear decommissioning funds
     1,718       1,979  
Other
     482       1,089  
Total other noncurrent assets
     8,196       7,527  
TOTAL ASSETS
   $ 40,860     $ 36,632  

 


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
















 
 
 


 

Table 17 (continued): PG&E Corporation
Consolidated Balance Sheets (Unaudited)
(in millions, except share amounts)
 

   
Balance at December 31,
  
   
2008
    
2007
  
LIABILITIES AND SHAREHOLDERS' EQUITY
            
Current Liabilities 
            
Short-term borrowings
   $ 287     $ 519  
Long-term debt, classified as current
     600       -  
Energy recovery bonds, classified as current
     370       354  
Accounts payable:
                
Trade creditors
     1,096       1,067  
Disputed claims and customer refunds
     1,580       1,629  
Regulatory balancing accounts
     730       673  
Other
     343       394  
Interest payable
     802       697  
Deferred income taxes
     251       -  
Other
     1,567       1,374  
Total current liabilities
     7,626       6,707  
Noncurrent Liabilities 
                
Long-term debt
     9,321       8,171  
Energy recovery bonds
     1,213       1,582  
Regulatory liabilities
     3,657       4,448  
Pension and other postretirement benefits
     2,088       -  
Asset retirement obligations
     1,684       1,579  
Income taxes payable
     35       234  
Deferred income taxes
     3,397       3,053  
Deferred tax credits
     94       99  
Other
     2,116       1,954  
Total noncurrent liabilities
     23,605       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 361,059,116 common and 1,287,569 restricted shares in 2008 and issued 378,385,151 common and 1,261,125 restricted shares in 2007
     5,984      
         6,110 
  
Common stock held by subsidiary, at cost, 24,665,500 shares in 2007
     -      
(718
 )
Reinvested earnings
     3,614       3,151  
Accumulated other comprehensive income (loss)
     (221 )     10  
Total common shareholders' equity
     9,377       8,553  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
   $ 40,860     $ 36,632  

 


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






 
 
 


 

Table 18: PG&E Corporation
Consolidated Statements of Cash Flows (Unaudited)
(in millions)
 
 
   
Year ended December 31,
  
   
2008
  
2007
  
2006
  
Cash Flows From Operating Activities
              
Net income
  
$
1,338 
  
$
1,006 
  
$
991 
  
Adjustments to reconcile net income to net cash provided by operating activities:
                    
Depreciation, amortization, and decommissioning
    
1,863 
    
1,959 
    
1,803 
  
Allowance for equity funds used during construction
    
(70)
    
(64)
    
(47)
  
Gain on sale of assets
    
(1)
    
(1)
    
(11)
  
Deferred income taxes and tax credits, net
    
590 
    
55 
    
(285)
  
Other changes in noncurrent assets and liabilities
    
(126)
    
192 
    
151 
  
Effect of changes in operating assets and liabilities:
                    
Accounts receivable
    
(87)
    
(6)
    
130 
  
Inventories
    
(59)
    
(41)
    
32 
  
Accounts payable
    
(140)
    
(178)
    
17 
  
Income taxes receivable/payable
    
(59)
    
56 
    
124 
  
Regulatory balancing accounts, net
    
(394)
    
(567)
    
329 
  
Other current assets
    
(221)
    
172 
    
(273)
  
Other current liabilities
    
120 
    
8 
    
(233)
  
Other
    
(5)
    
(45)
    
(14)
  
Net cash provided by operating activities
    
2,749 
    
2,546 
    
2,714 
  
Cash Flows From Investing Activities
                    
Capital expenditures
    
(3,628)
    
(2,769)
    
(2,402)
  
Net proceeds from sale of assets
    
26 
    
21 
    
17 
  
Decrease in restricted cash
    
36 
    
185 
    
115 
  
Proceeds from nuclear decommissioning trust sales
    
1,635 
    
830 
    
1,087 
  
Purchases of nuclear decommissioning trust investments
    
(1,684)
    
(933)
    
(1,244)
  
Other
    
(37)
    
- 
    
- 
  
Net cash used in investing activities
    
(3,652)
    
(2,666)
    
(2,427)
  
Cash Flows From Financing Activities
                    
Borrowings under accounts receivable facility and revolving credit facility
    
533 
    
850 
    
350 
  
Repayments under accounts receivable facility and revolving credit facility
    
(783)
    
(900)
    
(310)
  
Net issuance (repayments) of commercial paper, net of discount of $11 million in 2008, $1 million in 2007 and $2 million in 2006
    
6 
    
(209)
    
458 
  
Proceeds from issuance of long-term debt, net of discount, premium and issuance costs of $19 million in 2008 and $16 million in 2007
    
2,185 
    
1,184 
    
- 
  
Long-term debt repurchased
    
(454)
    
- 
    
- 
  
Rate reduction bonds matured
    
- 
    
(290)
    
(290)
  
Energy recovery bonds matured
    
(354)
    
(340)
    
(316)
  
Common stock issued
    
225 
    
175 
    
131 
  
Common stock repurchased
    
- 
    
- 
    
(114)
  
Common stock dividends paid
    
(546)
    
(496)
    
(456)
  
Other
    
(35)
    
35 
    
3 
  
Net cash provided by (used in) financing activities
    
777 
    
9 
    
(544)
  
Net change in cash and cash equivalents
    
(126)
    
(111)
    
(257)
  
Cash and cash equivalents at January 1
    
345 
    
456 
    
713 
  
Cash and cash equivalents at December 31
  
$
219 
  
$
345 
  
$
456 
  
Supplemental disclosures of cash flow information
              
Cash paid (received) for:
                    
Interest (net of amounts capitalized)
  
$
523 
  
$
514 
  
$
503 
  
Income taxes, net
    
(112)
    
537 
    
736 
  
Supplemental disclosures of noncash investing and financing activities
                    
Common stock dividends declared but not yet paid
  
$
143 
  
$
129 
  
$
117 
  
Capital expenditures financed through accounts payable
    
348 
    
279 
    
215 
  
Stock issued in lieu of dividend
    
20 
    
5 
    
- 
  
Assumption of capital lease obligation
    
- 
    
- 
    
408 
  
Transfer of Gateway Generating Station asset
    
- 
    
- 
    
69 
  
 
 
Source:  PG&E Corporation and Pacific Gas and Electric Company’s Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 2008.


 
 

Table 19: PG&E Corporation
Consolidated Statements of Shareholders’ Equity (Unaudited)
 (in millions, except share amounts)
 
 
   
Common Stock Shares
    
Common Stock Amount
    
Common Stock Held by
Subsidiary
    
Unearned
Compensation
    
Reinvested Earnings
    
Accumulated Other Comprehensive Income (Loss)
    
Total Common Share-holders' Equity
    
Comprehensive Income
  
Balance at December 31, 2005
     368,268,502     $ 5,827     $ (718 )   $ (22 )   $ 2,139     $ (8 )   $ 7,218        
Net income
     -       -       -       -       991       -       991     $ 991  
Comprehensive income
                                                           $ 991  
                                                                 
Common stock issued
     5,399,707       110       -       -       -       -       110          
Accelerated share repurchase settlement of stock repurchased in 2005
     -       (114 )     -       -       -       -       (114 )        
Common stock warrants exercised
     51,890       -       -       -       -       -       -          
Common restricted stock, unearned compensation reversed in accordance with SFAS No. 123R
     -       (22 )     -       22       -       -       -          
Common restricted stock issued
     566,255       21       -       -       -       -       21          
Common restricted stock cancelled
     (105,295 )     (1 )     -       -       -       -       (1 )        
Common restricted stock amortization
     -       20       -       -       -       -       20          
Common stock dividends declared and paid
     -       -       -       -       (342 )     -       (342 )        
Common stock dividends declared but not yet paid
     -       -       -       -       (117 )     -       (117 )        
Tax benefit from employee stock plans
     -       35       -       -       -       -       35          
Adoption of SFAS No. 158 (net of income tax benefit of $8 million)
     -       -       -       -       -       (11 )     (11 )        
Other
     -       1       -       -       -       -       1          
Balance at December 31, 2006
     374,181,059       5,877       (718 )     -       2,671       (19 )     7,811          
Net income
     -       -       -       -       1,006       -       1,006     $ 1,006  
Employee benefit plan adjustment in accordance with SFAS No. 158 (net of income tax expense of $17 million)
               -                 -                 -                 -                 -                 29                 29                 29  
Comprehensive income
                                                           $ 1,035  
                                                                 
Common stock issued, net
     5,465,217       175       -       -       -       -       175          
Stock-based compensation amortization
     -       31       -       -       -       -       31          
Common stock dividends declared and paid
     -       -       -       -       (379 )     -       (379 )        
Common stock dividends declared but not yet paid
     -       -       -       -       (129 )     -       (129 )        
Tax benefit from employee stock plans
     -       27       -       -       -       -       27          
Adoption of FIN 48
     -       -       -       -       (18 )     -       (18 )        
Balance at  December 31, 2007
     379,646,276       6,110       (718 )     -       3,151       10       8,553          
Net income
     -       -       -       -       1,338       -       1,338     $ 1,338  
Employee benefit plan adjustment in accordance with SFAS No. 158 (net of income tax benefit of $156 million)
                                             (231 )     (231 )     (231 )
Comprehensive income
     -       -       -       -       -       -       -     $ 1,107  
Common stock issued, net
     7,365,909       247       -       -       -       -       247          
Common stock cancelled
     (24,665,500 )     (403 )     718       -       (315 )     -       -          
Stock-based compensation amortization
     -       24       -       -       -       -       24          
Common stock dividends declared and paid
     -       -       -       -       (417 )     -       (417 )        
Common stock dividends declared but not yet paid
     -       -       -       -       (143 )     -       (143 )        
Tax benefit from employee stock plans
     -       6       -       -       -       -       6          
Balance at December 31, 2008
     362,346,685     $ 5,984     $ -     $ -     $ 3,614     $ (221 )   $ 9,377          

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

Table 20: Pacific Gas and Electric Company
Consolidated Statements of Income (Unaudited)
(in millions)
 

 
   
Year ended December 31,
  
   
2008
    
2007
    
2006
  
Operating Revenues 
                  
Electric
   $ 10,738     $ 9,481     $ 8,752  
Natural gas
     3,890       3,757       3,787  
Total operating revenues
     14,628       13,238       12,539  
Operating Expenses 
                        
Cost of electricity
     4,425       3,437       2,922  
Cost of natural gas
     2,090       2,035       2,097  
Operating and maintenance
     4,197       3,872       3,697  
Depreciation, amortization and decommissioning
     1,650       1,769       1,708  
Total operating expenses
     12,362       11,113       10,424  
Operating Income
     2,266       2,125       2,115  
Interest income
     91       150       175  
Interest expense
     (698 )     (732 )     (710 )
Other income, net
     28       52       7  
Income Before Income Taxes
     1,687       1,595       1,587  
Income tax provision
     488       571       602  
Net Income
     1,199       1,024       985  
Preferred stock dividend requirement
     14       14       14  
Income Available for Common Stock
   $ 1,185     $ 1,010     $ 971  


 

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



 




 







 
 
 


 

Table 21: Pacific Gas and Electric Company
Consolidated Balance Sheets (Unaudited)
(in millions)
 


   
Balance at December 31,
  
   
2008
    
2007
  
ASSETS
            
Current Assets 
            
Cash and cash equivalents
   $ 52     $ 141  
Restricted cash
     1,290       1,297  
Accounts receivable:
                
Customers (net of allowance for doubtful accounts of $76 million in 2008 and $58 million in 2007)
     1,751       1,599  
Accrued unbilled revenue
     685       750  
Related parties
     2       6  
Regulatory balancing accounts
     1,197       771  
Inventories:
                
Gas stored underground and fuel oil
     232       205  
Materials and supplies
     191       166  
Income taxes receivable
     25       15  
Prepaid expenses and other
     705       252  
Total current assets
     6,130       5,202  
Property, Plant, and Equipment 
                
Electric
     27,638       25,599  
Gas
     10,155       9,620  
Construction work in progress
     2,023       1,348  
Total property, plant, and equipment
     39,816       36,567  
Accumulated depreciation
     (13,557 )     (12,913 )
Net property, plant, and equipment
     26,259       23,654  
Other Noncurrent Assets 
                
Regulatory assets
     5,996       4,459  
Nuclear decommissioning funds
     1,718       1,979  
Related parties receivable
     27       23  
Other
     407       993  
Total other noncurrent assets
     8,148       7,454  
TOTAL ASSETS
   $ 40,537     $ 36,310  



 

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





 




 
 
 


 

Table 21 (continued): Pacific Gas and Electric Company
Consolidated Balance Sheets (Unaudited)
(in millions, except share amounts)
 


   
Balance at December 31,
  
   
2008
    
2007
  
LIABILITIES AND SHAREHOLDERS' EQUITY
            
Current Liabilities 
            
Short-term borrowings
   $ 287     $ 519  
Long-term debt, classified as current
     600       -  
Energy recovery bonds, classified as current
     370       354  
Accounts payable:
                
Trade creditors
     1,096       1,067  
Disputed claims and customer refunds
     1,580       1,629  
Related parties
     25       28  
Regulatory balancing accounts
     730       673  
Other
     325       370  
Interest payable
     802       697  
Income tax payable
     53       -  
Deferred income taxes
     257       4  
Other
     1,371       1,200  
Total current liabilities
     7,496       6,541  
Noncurrent Liabilities 
                
Long-term debt
     9,041       7,891  
Energy recovery bonds
     1,213       1,582  
Regulatory liabilities
     3,657       4,448  
Pension and postretirement benefits
     2,040       -  
Asset retirement obligations
     1,684       1,579  
Income taxes payable
     12       103  
Deferred income taxes
     3,449       3,104  
Deferred tax credits
     94       99  
Other
     2,064       1,838  
Total noncurrent liabilities
     23,254       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
     2,331       2,220  
Reinvested earnings
     6,092       5,694  
Accumulated other comprehensive income (loss)
     (216 )     13  
Total shareholders' equity
     9,787       9,125  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
   $ 40,537     $ 36,310  


 

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






 
 
 

 

Table 22: Pacific Gas and Electric Company
Consolidated Statements of Cash Flows (Unaudited)
(in millions)
 
 
   
Year ended December 31,
  
   
2008
    
2007
    
2006
  
Cash Flows From Operating Activities 
                  
Net income
   $ 1,199     $ 1,024     $ 985  
Adjustments to reconcile net income to net cash provided by operating activities:
                        
Depreciation, amortization, and decommissioning
     1,838       1,956       1,802  
Allowance for equity funds used during construction
     (70 )     (64 )     (47 )
Gain on sale of assets
     (1 )     (1 )     (11 )
Deferred income taxes and tax credits, net
     593       43       (287 )
Other changes in noncurrent assets and liabilities
     (25 )     188       116  
Effect of changes in operating assets and liabilities:
                        
Accounts receivable
     (83 )     (6 )     128  
Inventories
     (59 )     (41 )     34  
Accounts payable
     (137 )     (196 )     21  
Income taxes receivable/payable
     43       56       28  
Regulatory balancing accounts, net
     (394 )     (567 )     329  
Other current assets
     (223 )     170       (273 )
Other current liabilities
     90       24       (235 )
Other
     (5 )     (45 )     (13 )
Net cash provided by operating activities
     2,766       2,541       2,577  
Cash Flows From Investing Activities 
                        
Capital expenditures
     (3,628 )     (2,768 )     (2,402 )
Net proceeds from sale of assets
     26       21       17  
Decrease in restricted cash
     36       185       115  
Proceeds from nuclear decommissioning trust sales
     1,635       830       1,087  
Purchases of nuclear decommissioning trust investments
     (1,684 )     (933 )     (1,244 )
Other
     (25 )     -       1  
Net cash used in investing activities
     (3,640 )     (2,665 )     (2,426 )
Cash Flows From Financing Activities 
                        
Borrowings under accounts receivable facility and revolving credit facility
     533       850       350  
Repayments under accounts receivable facility and revolving credit facility
     (783 )     (900 )     (310 )
Net issuance (repayments) of commercial paper, net of discount of $11 million in 2008, $1 million in 2007 and $2 million in 2006
     6       (209 )     458  
Proceeds from issuance of long-term debt, net of discount, premium and issuance costs of $19 million in 2008 and $16 million in 2007
     2,185       1,184       -  
Long-term debt repurchased
     (454 )     -       -  
Rate reduction bonds matured
     -       (290 )     (290 )
Energy recovery bonds matured
     (354 )     (340 )     (316 )
Preferred stock dividends paid
     (14 )     (14 )     (14 )
Common stock dividends paid
     (568 )     (509 )     (460 )
Equity contribution
     270       400       -  
Other
     (36 )     23       38  
Net cash provided by (used in) financing activities
     785       195       (544 )
Net change in cash and cash equivalents
     (89 )     71       (393 )
Cash and cash equivalents at January 1
     141       70       463  
Cash and cash equivalents at December 31
   $ 52     $ 141     $ 70  
Supplemental disclosures of cash flow information 
                        
Cash paid (received) for:
                        
Interest (net of amounts capitalized)
   $ 496     $ 474     $ 476  
Income taxes, net
     (95 )     594       897  
Supplemental disclosures of noncash investing and financing activities 
                        
Capital expenditures financed through accounts payable
   $ 348     $ 279     $ 215  
Assumption of capital lease obligation
     -       -       408  
Transfer of Gateway Generating Station asset
     -       -       69  
 
 

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

Table 23: Pacific Gas and Electric Company
Consolidated Statements of Shareholders’ Equity (Unaudited)
 (in millions)
 

   
Preferred Stock Without Mandatory Redemption Provisions
    
Common Stock
    
Additional Paid-in Capital
    
Common Stock Held by Subsidiary
    
Reinvested Earnings
    
Accumulated Other Comprehensive Income (Loss)
    
Total Share- holders' Equity
    
Comprehensive Income
  
Balance at December 31, 2005
   $ 258     $ 1,398     $ 1,776     $ (475 )   $ 4,702     $ (9 )   $ 7,650        
Net income
     -       -       -       -       985       -       985     $ 985  
Minimum pension liability adjustment (net of income tax expense of $2 million)
     -       -       -       -       -       3       3       3  
Comprehensive income
                                                           $ 988  
                                                                 
Tax benefit from employee stock plans
     -       -       46       -       -       -       46          
Common stock dividend
     -       -       -       -       (460 )     -       (460 )        
Preferred stock dividend
     -       -       -       -       (14 )     -       (14 )        
Adoption of SFAS No. 158 (net of income tax benefit of $7 million)
     -       -       -       -       -       (10 )     (10 )        
Balance at December 31, 2006
     258       1,398       1,822       (475 )     5,213       (16 )     8,200          
Net income
     -       -       -       -       1,024       -       1,024     $ 1,024  
Employee benefit plan adjustment in accordance with SFAS No. 158 (net of income tax expense of $17 million)
     -       -       -       -       -       29       29       29  
Comprehensive income
                                                           $ 1,053  
                                                                 
Equity contribution
     -       17       383       -       -       -       400          
Tax benefit from employee stock plans
     -       -       15       -       -       -       15          
Common stock dividend
     -       -       -       -       (509 )     -       (509 )        
Preferred stock dividend
     -       -       -       -       (14 )     -       (14 )        
Adoption of FIN 48
     -       -       -       -       (20 )     -       (20 )        
Balance at December 31, 2007
     258       1,415       2,220       (475 )     5,694       13       9,125          
Net income
     -       -       -       -       1,199       -       1,199     $ 1,199  
Employee benefit plan adjustment in accordance with SFAS No. 158 (net of income tax expense of $159 million)
                 -                   -                   -                   -                   -       (229 )     (229 )     (229 )
Comprehensive income
     -       -       -       -       -       -       -     $ 970  
Equity contribution
     -       4       266       -       -       -       270          
Tax benefit from employee stock plans
     -       -       4       -       -       -       4          
Common stock dividend
     -       -       -       -       (568 )     -       (568 )        
Common stock cancelled
     -       (97 )     (159 )     475       (219 )     -       -          
Preferred stock dividend
     -       -       -       -       (14 )     -       (14 )        
Balance at December 31, 2008
   $ 258     $ 1,322     $ 2,331     $ -     $ 6,092     $ (216 )   $ 9,787          
 
 
Source:  PG&E Corporation and Pacific Gas and Electric Company’s Consolidated Financial Statements and Notes thereto included in PG&E Corporation and Pacific Gas and Electric Company's combined Annual Report on Form 10-K for the year ended December 31, 2008.