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: July 30, 2001
Exact Name of
Commission Registrant State or other IRS Employer
File as specified Jurisdiction of Identification
Number in its charter Incorporation Number
---------- -------------- --------------- --------------
1-12609 PG&E Corporation California 94-3234914
1-2348 Pacific Gas and California 94-0742640
Electric Company
Pacific Gas and Electric Company PG&E Corporation
77 Beale Street, P.O. Box 770000 One Market, Spear Tower, Suite 2400
San Francisco, California 94177 San Francisco, California 94105
(Address of principal executive offices) (Zip Code)
Pacific Gas and Electric Company PG&E Corporation
(415) 973-7000 (415) 267-7000
(Registrant's telephone number, including area code)
Item 5. Other Events.
On July 30, 2001, PG&E Corporation announced that for the second
quarter ended June 30, 2001, its net income is expected to include
approximately $500 million to $600 million of non-operating income at Pacific
Gas and Electric Company (Utility), its California utility subsidiary,
offsetting a small portion of the substantial charges taken in the preceding
two quarters. The previous charges were recorded to account for the
Utility's unrecovered wholesale power costs and electric restructuring
transition costs totaling $5.2 billion after taxes at March 31, 2001, which
the Utility concluded were not probable of recovery under applicable
accounting rules. The estimated non-operating income for the second quarter
is expected to reflect lower than previously estimated charges from the
California Independent System Operator (ISO) for power purchases during March
2001, and estimated income as a result of the termination of certain of the
Utility's bilateral power purchase contracts by the counterparties. Due to
the write-off of the Utility's regulatory balancing accounts related to
unrecovered wholesale power and transition costs, the total amount of these
offsets will flow through to the Utility's income statement for the second
quarter. PG&E Corporation's second-quarter financial results are scheduled
to be reported August 1, 2001.
During the second quarter, the Utility received new data from the ISO
reflecting actual charges for power purchased by the ISO in March 2001 which
were lower than the estimated amount recorded in the first quarter 2001. The
difference between the estimated charges and the actual charges will be
reflected as non-operating income for the second quarter. While PG&E
Corporation believes it is not responsible for ISO purchases made during the
first quarter, it was required by applicable accounting rules to estimate and
record those charges in its first quarter results, pending resolution of the
issue. (The Utility has failed to meet the ISO's creditworthiness standards
for scheduling third party transactions since early January 2001. On
February 14, 2001, the Federal Energy Regulatory Commission (FERC) rejected
the ISO's proposed tariff amendment to lower the ISO's creditworthiness
standards in order to permit the ISO to continue charging the Utility.
Despite the FERC's February 14, 2001 order, the ISO continued to bill the
Utility. On April 6, 2001, the FERC reaffirmed its earlier order. In light
of the April 6, 2001 order, the Utility has not recorded any estimated ISO
charges after April 6, 2001, except for the ISO's grid management charge.)
In addition to the revised ISO charges, the Utility is expected to
recognize estimated income as a result of the termination of certain
bilateral power purchase contracts by the counterparties, who were entitled
to do so in the event of a decline in the Utility's credit quality.
Provisions in the agreements require that the market value of the contracts
be settled upon termination. The estimated value of the contracts will be
reflected as a non-operating item.
Notwithstanding the impacts discussed above, as of June 30, 2001, the
Utility's net undercollection of transition costs and past power purchase
costs is expected to remain at approximately $4.6 billion to $4.7 billion
after-tax, as a result of the charges taken in the fourth quarter of 2000 and
the first quarter of 2001.
The information in this Current Report on Form 8-K includes forward-
looking statements regarding the expected financial results for the quarter
ended June 30, 2001. These forward-looking statements are subject to various
risks and uncertainties. These statements are based on current expectations
and assumptions which management believes are reasonable and on information
currently available to management. Actual results may differ materially from
those expressed or implied in the forward-looking statements as a result of
various factors, including the extent to which more information is revealed
about the recently released California Department of Water Resources' revenue
requirements and the impact such revenue requirements may have on the
Utility's financial condition and results of operation; the outcome of the
Utility's regulatory proceedings; whether and to what extent the Utility is
determined to be responsible for the ISO's charges billed to the Utility; any
regulatory, judicial, or legislative actions that may be taken to meet future
power needs in California, mitigate the higher wholesale power prices,
provide refunds for prior power costs, or address the Utility's financial
condition; and the other risk factors discussed in PG&E Corporation's reports
filed with the Securities and Exchange Commission.
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
Vice President and Controller
PACIFIC GAS AND ELECTRIC COMPANY
By: DINYAR B. MISTRY
-----------------------------
DINYAR B. MISTRY
Vice President and Controller
Dated: July 30, 2001