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PG&E COMMENTS ON DWR REVENUE DEMAND

SAN FRANCISCO - Pacific Gas and Electric Company today issued the following statement on the state Department of Water Resources' (DWR) thrice-revised Revenue Requirement, which it filed last week with the California Public Utilities Commission (CPUC):

"Based on the limited information provided by DWR, Pacific Gas and Electric Company believes DWR has substantially overestimated the forecast cost of spot power purchases, and substantially overestimated the forecast cost of natural gas. These overestimates combine to make DWR's 2001-02 revenue requirement more than $3.1 billion higher than it would be if estimates which reflect the current market realities, rather than financial or political considerations, were used. More than $1 billion of this apparent 'padding' of the revenue requirement has been assigned to PG&E's customers; the other two utilities' customers are assigned the remaining $2 billion.

"Despite repeated requests for information as to how DWR came up with its numbers, department officials continue to refuse to give the public the information needed to understand and analyze its revenue demand.

"Pacific Gas and Electric Company and others have asked DWR to host public evidentiary hearings, as required under state law. The department recently refused to hold its own public hearing, claiming the CPUC regulatory proceeding is addressing public concerns over its revenue demand. Yet in that very same CPUC regulatory proceeding, DWR has rejected requests for any type of CPUC-sponsored public hearings, claiming it is exempt from any further review by the public or the CPUC regarding the basis or reasonableness of its request or costs.

"Due to the lack of information submitted by DWR, PG&E is able to make only limited estimates of how DWR developed its revenue requirement, and can only guess as to whether it is accurate.

"The continuing difficulties in understanding DWR's revenue requirement estimate reinforces the need for the revenue requirement to be developed in an open forum which has process rights for the participants, including full access to the information DWR is using to develop its estimates. At issue are up to $68 billion dollars of costs to utility consumers for years to come, $13 billion in 2001 and 2002 alone. This works out to an average of $6,800 for each of the 10 million electric customers within the service areas of PG&E, Edison and SDG&E. Pacific Gas and Electric Company continues to urge that DWR's revenue requirement receive the appropriate level of public comment and review prior to adoption and inclusion in rates. DWR has refused PG&E's request for hearings, and the current CPUC 'rush to judgment' does not provide for such hearings or public comment."