(SAN FRANCISCO) – Pacific Gas and Electric
Company today announced the successful marketing and
sale of approximately $1.9 billion in Energy Recovery
Bonds (ERBs) to refinance a portion of its balance
sheet, delivering significant savings to its customers,
just as promised by the utility and consumer group
The Utility Reform Network (TURN) when they reached
a compromise plan to help resolve the utility’s
emergence from Chapter 11.
TURN originally proposed this refinancing structure
during the summer of 2003, during the public hearing
process on the settlement agreement among the California
Public Utilities Commission (CPUC), PG&E Corporation,
and Pacific Gas and Electric Company. TURN and Pacific
Gas and Electric Company reached a compromise in December
2003, under which the utility agreed to the refinancing
structure, with the savings being used to lower customer
costs. The CPUC authorized this refinancing effort
when it approved the final December 2003 settlement
agreement, and specifically approved going forward
with this ERB sale in a decision issued November 19,
2004. Over the past several months, the utility has
worked alongside the CPUC financing team, comprised
of CPUC staff and their outside advisors, to approve
and monitor the terms of this ERB transaction.
“The sale of the ERBs provides ratepayers some
of the best news they’ve received since the energy
crisis,” said TURN Senior Attorney Mike Florio. “We
appreciate PG&E’s effort to conclude this
very successful transaction.”
The proceeds from this ERB sale are being used to
refinance the regulatory asset created under the settlement
agreement. The total dollar savings to customers as
a result of refinancing the regulatory asset will be
approximately $1 billion, over the remaining eight-year
life of the settlement agreement, assuming that as
planned, a second ERB series is issued in November
2005. The customer savings are the result of reduced
taxes and finance costs associated with the ERBs compared
to conventional utility financing of the regulatory
asset.
On Monday, February 7, 2005, Pacific Gas and Electric
Company filed a request with the CPUC to begin applying
the customer savings in retail rates, starting March
1, 2005, and continuing over the remaining eight years
of the agreement.
Under the terms of the CPUC authorizing decision, the
ERBs will be paid off through a nonbypassable Dedicated
Rate Component charge (a charge per kilowatt hour of
electricity consumed in PG&E’s service territory).
The ERBs were issued by PG&E Energy Recovery Funding
LLC (PERF), a limited liability company which is wholly
owned and consolidated by the utility. PERF is legally
separate from the utility. The utility is a subsidiary
of PG&E Corporation.
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