Customers Could Potentially Save Up to $1 Billion Over the Next 10 Years SAN FRANCISCO, June 7 /PRNewswire-FirstCall/ -- California Governor Arnold Schwarzenegger has signed Senate Bill 772, which
authorizes a dedicated rate component to securitize Pacific Gas and Electric
Company's $2.21 billion after-tax regulatory asset. "The Governor's signature on SB 772 brings us another step closer to
being able to provide a significant savings opportunity for our electric
customers -- potentially up to $1 billion over the next 10 years," said
Gordon R. Smith, Pacific Gas and Electric Company's president and chief
executive officer. "We appreciate the efforts of the Legislature, The
Utility Reform Network (TURN), and the California Public Utilities Commission (CPUC)
to pass this important legislation directly benefiting our customers." The potential customer savings is a result of the lower financing and tax
costs associated with the securitized dedicated rate component. In December
2003, PG&E agreed to adopt TURN's proposal to use a dedicated rate component
to refinance the regulatory asset. The regulatory asset was established as part
of the CPUC-approved settlement agreement to resolve the company's Chapter 11
case. In addition to authorizing legislation, the following other conditions must
be met before a refinancing can occur: -- The CPUC determines the refinancing would save customers money over the
Shortly, the utility will be filing an application for a financing order with the Commission.
-- The refinancing will not adversely affect the utility's issuer or debt credit ratings.
-- The utility obtains a private letter ruling from the Internal Revenue Service confirming that neither the refinancing nor the issuance of the securitized debt is a taxable event.
Assuming these conditions are met, the utility is permitted to complete the refinancing in up to two tranches up to one year apart. Whether there would be one or two tranches, and the amount of each tranche, will be determined in part by the amount and timing of any energy supplier refunds that are determined to be due to the utility in the ongoing proceeding at the Federal Energy Regulatory Commission.
NOTE: The timing of a successful refinancing depends on many factors, including when and if the remaining conditions are satisfied. The up to $1 billion in savings is an estimate based on current financial conditions. SOURCE Pacific Gas and Electric Company
Visit http://www.powermarketers.com/index.shtml for excellent coverage on your energy news front.