(New York, NY) - In remarks today at the Morgan
Stanley Global Electricity & Energy Conference,
Robert D. Glynn, Jr., Chairman, CEO and President of
PG&E Corporation (NYSE: PCG) said the company is
on course to enter a period that is more stable and
more certain than at any time since the onset of the
California energy crisis in 2000, as its core business,
Pacific Gas and Electric Company, prepares to exit Chapter
11 next month.
"In a few weeks, PG&E Corporation and Pacific Gas
and Electric Company will conclude PG&E's Chapter
11 process and turn the corner to a period of significant
stability," he said.
Glynn said that he believes the terms and assurances
contained in the nine-year settlement agreement with
the California Public Utilities Commission (CPUC) to
resolve Pacific Gas and Electric Company's Chapter 11
case, establish a strong foundation of financial and
regulatory stability as the company moves forward. Further,
he said if the CPUC approves the settlement agreement
the utility reached with consumer groups in its 2003
general rate case (GRC) to set the utility's base gas
and electric rates through 2006, the foundation will
be even stronger.
Pacific Gas and Electric Company is now in the process
of completing the final steps required for its plan
of reorganization to become effective. A significant
requirement was the completion of a $6.7 billion bond
offering, the proceeds of which will be used to pay
creditors on the effective date.
Both Standard & Poor's and Moody's Investors Service
announced investment grade credit ratings for the bonds.
In addition, Moody's upgraded the utility's issuer rating
to investment grade and S&P announced a prospective
investment grade corporate credit rating for the utility
to be effective upon its exit from Chapter 11.
Other components of the financing include $2.1 billion
in new fully committed credit facilities of which approximately
$335 million will be initially drawn, and $799 million
in a bridge loan to facilitate the re-issue of pollution
control bonds. Proceeds of the bond sale, bank borrowings,
and approximately $2.6 billion of cash on hand and $1.2
billion of reinstated debt and preferred equity, will
be used to satisfy roughly $11.7 billion in claims.
Glynn said that, under the terms of the plan of reorganization,
the plan will become effective 11 business days after
all conditions have been met. The company expects to
officially exit Chapter 11 during the week of April
Upon exit from Chapter 11, the company will have met
the goals it said must be accomplished by any reorganization
plan for the utility: emerging as an investment grade
company, satisfying all valid creditor claims, and doing
so without raising customers' rates. In fact, the utility
was recently able to lower customers' electric rates
by approximately $800 million in 2004 alone, with the
average bundled rate decreasing by 8 percent.
Glynn also outlined the utility's previously announced
settlement agreement to resolve its 2003 GRC reached
with the CPUC's Office of Ratepayer Advocates and other
parties in September 2003. The settlement agreement,
which still must be approved by the CPUC to become effective,
contemplates a revenue increase of $326 million for
the utility's electric and gas distribution and electric
generation operations. This amount is already accounted
for in 2004 rates, which reflect the 8 percent rate
reduction approved by the CPUC last month. The settlement
agreement also provides for timely revenue increases
to cover the utility's rate base growth and inflation
starting this year through 2006.
"The GRC settlement agreement provides a level of predictability
on allowed costs that we've not had in the past, and
as a result, it provides significant advantages for
us in our ability to plan and manage the utility over
the next few years," said Glynn.
Although the CPUC has not yet issued a final decision
in the utility's 2003 GRC, Glynn said the company anticipates
the settlement agreement will provide the basis for
a final decision.
Glynn said the foundation created by the imminent resolution
of the utility's Chapter 11 case and the anticipated
resolution of the utility's 2003 GRC will allow the
company to focus its efforts on delivering increased
value to customers and shareholders.
"Our company is exiting a period that has been uniquely
uncertain and challenging, and we're entering an era
that we expect will be uniquely stable," he said. "We
intend to realize fully the opportunities this creates
for us to deliver increased value to customers and shareholders."
Specifically, he said the company and the utility have
agreed to pursue securitization of the regulatory asset
created under the settlement agreement with the CPUC
to resolve the utility's Chapter 11 case to provide
further rate reductions to customers, and he restated
the company's aspiration to declare common stock dividends
for shareholders by the second half of 2005.
A webcast replay of Glynn's presentation is available
on the PG&E Corporation web site, www.1linli.icu.
This release and Mr. Glynn's presentation contain forward-looking
statements about the anticipated implementation of the
utility's confirmed plan of reorganization, the expected
benefits to be received under the settlement agreement
PG&E Corporation and the utility entered into with
the CPUC in December 2003 which agreement is incorporated
into the utility's plan of reorganization, PG&E
Corporation's future financial performance and future
dividends. These statements are subject to a number
of risks and uncertainties and actual results could
differ materially depending on many factors, including:
the timing and resolution of any appeals that may be
filed with respect to the CPUC's denial of the applications
for rehearing of the CPUC's decision approving the December
2003 settlement agreement, the timing and resolution
of the pending appeals of the Bankruptcy Court's confirmation
order; whether the remaining conditions required to
implement the utility's plan of reorganization are satisfied;
the impact of future legislative or regulatory action,
the outcome of pending litigation and regulatory proceedings,
including the utility's 2003 general rate case, and
other factors discussed in PG&E Corporation's reports
filed with the Securities and Exchange Commission.