Oct 14 - PRNewswire-FirstCall

Pacific Gas and Electric Company today alerted the California Public Utilities Commission (CPUC) that the skyrocketing cost of natural gas across the nation is causing wholesale electric generators to charge PG&E higher prices for the electricity the company buys for its customers. Starting in January 2006, these increases are expected to increase electric costs in rates to PG&E customers by $243 million, or approximately 2.5 percent. Under PG&E's rate structure, the company does not earn a profit on energy it procures for customers; the energy is sold to customers at the same price at which PG&E buys it from wholesale sellers.

The country is facing what are expected to be record-high natural gas prices this winter and beyond, caused by a very tight supply-demand balance in the national market and made worse by the damage to vital natural gas infrastructure caused by Hurricanes Katrina and Rita. Because much of the nation's electric supply is generated by plants using natural gas, the increased gas costs are also affecting electric prices.

"The skyrocketing natural gas prices across the country not only impact our customers' gas bills, but we are seeing a significant impact on the cost of electricity purchases as well," said Tom Bottorff, PG&E's senior vice president of customer service. "PG&E has taken concrete actions, such as hedging a significant portion of its electric portfolio, to help protect customers from any further increases in the commodity prices this winter."

Price impacts for PG&E customers are mitigated significantly by the company's extremely diverse mix of electricity supply sources: 43% natural gas; 23% nuclear power; and 31% renewable resources -- including hydroelectric. Without this diversity of energy sources, electric costs would have been increased much more dramatically.

PG&E's notification of the CPUC came in a filing to update its 2006 forecast revenue requirements for the Energy Resources Recovery Account (ERRA), a balancing account established by the Commission to track the difference between the utility's energy-related revenues and its electricity procurement costs. Included in the ERRA are power purchase contracts, market purchases, fuel costs for PG&E's generation facilities, and related costs associated with procurement necessary to meet PG&E's customers' energy needs.

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Pacific Gas and Electric Company

CONTACT: PG&E News Department, +1-415-973-5930

Web site: http://www.pge.com/