UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report: May 3, 2007
(Date
of
earliest event reported)
PG&E
CORPORATION
(Exact
Name of Registrant as specified in Charter)
|
California
|
1-12609
|
94-3234914
|
|
(State
or other jurisdiction of
incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
One
Market, Spear Tower, Suite 2400, San Francisco, California
94105
(Address
of principal executive offices, zip code)
415-267-7000
(Registrant’s
Telephone Number, Including Area Code)
N/A
(Former
Name or Former Address, if Changed Since Last Report)
PACIFIC
GAS AND ELECTRIC COMPANY
(Exact
Name of Registrant as specified in Charter)
|
California
|
1-2348
|
94-0742640
|
|
(State
or other jurisdiction of
incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
77
Beale Street, P. O. Box 770000, San Francisco, California
94177
(Address
of principal executive offices, zip code)
(415)
973-7000
(Registrant’s
Telephone Number, Including Area Code)
N/A
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨ Soliciting
Material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
8.01. Other Events
Energy
Efficiency Rulemaking
On
May 3,
2007, Pacific Gas and Electric Company (“Utility”) filed testimony with the
California Public Utilities Commission (“CPUC”) in the energy efficiency
rulemaking proceeding in response to the assigned commissioner’s March 26, 2007
order to re-open the record and hold evidentiary hearings on limited
issues. The March 26, 2007 order reversed a previous ruling to close
the record. The evidentiary hearings will primarily address the
appropriate benchmark and methodologies to be used in establishing incentive
mechanisms to reward or penalize the investor-owned utilities (“IOUs”) depending
on the extent to which the IOUs successfully implement their 2006-2008 energy
efficiency programs and meet the CPUC’s targets for reducing customers’ demand
for electricity and natural gas. In a new development, a new party,
the California Large Energy Consumers Association representing industrial
customers, filed testimony supporting the proposal of a party representing
small
consumers, The Utility Reform Network (“TURN”).
Under
the
incentive mechanisms proposed by the IOUs, the benchmark to establish the
level
of potential incentive earnings would be supply-side comparability, i.e.,
a
level of incentives based on the earnings that could be expected from investment
in new power and transmission projects. Under the Utility’s proposed
incentive mechanism, if the Utility achieved 80% to 100% of the CPUC’s demand
reduction targets, 80% of the net present value of energy efficiency programs
(i.e., the net benefits) would accrue to customers and 20% of the net benefits
would accrue to shareholders. If the Utility achieves savings in
excess of 100% of the CPUC’s targets, the Utility’s shareholders would receive
30% of the additional net benefits attributable to the portion of demand
reduction that exceeds 100% of the CPUC’s targets and the Utility’s customers
would receive the remaining 70%. The Utility would not receive any additional
incentive earnings for achieving more than 110% of the CPUC’s
target. Under this proposal, if the Utility achieved savings at 80%
of the CPUC’s targets, the cumulative amount of potential pre-tax incentive
earnings covering the three-year period would be approximately $141.2
million. If the Utility achieved savings at 100% of the CPUC’s
targets, the cumulative amount of potential pre-tax incentive earnings covering
the three-year period would be approximately $222.5 million. If the
Utility achieved savings at 110% or more of the CPUC’s targets, the cumulative
amount of potential pre-tax incentive earnings covering the three-year period
would be a maximum of approximately $283.4 million.
Other
parties have proposed that the IOUs begin earning incentives only when an
IOU
achieves between 85% and 100% of the CPUC’s energy savings targets set for that
IOU. Under the non-IOU proposals, incentive earnings range from only
1.5% to 6% of the net benefits, if the IOUs achieved 100% of their savings
target. Of the various proposals submitted, TURN proposes a mechanism
that would result in the lowest earnings. TURN proposes that the IOUs receive
2%
of the net benefits only if they achieved 100% of their savings
target. The IOUs would not receive any rewards for achieving savings
below 100% of the target. Under TURN’s proposal, if the Utility
achieves 100% of the CPUC’s savings targets, the Utility would receive $21
million in cumulative pre-tax incentive earnings covering the three-year
period. TURN would allow the IOUs to retain 2.5% of the net benefits
if they achieved 120% of their target.
All
parties have proposed penalties for poor performance in achieving the CPUC’s
targets. The Utility has proposed that if it achieves less than 40%
of the CPUC’s targets, the Utility would provide customers any shortfall between
the revenues received in rates for energy efficiency and benefits obtained
through the energy efficiency programs. Other parties have proposed
that penalties be imposed if the IOUs achieve less than 50% to less than
85% of
the CPUC’s targets. TURN has proposed that penalties would be
incurred if the IOUs failed to achieve 85% of the CPUC’s targets.
Depending
upon the ratemaking method adopted by the CPUC, actual shareholder incentives
or
penalties may not be realized for several years. The Utility has
proposed a process for earnings assessments and progress payments whereby
75% of
earnings payments would be made in 2008 (for 2006 program activities), 75%
in
2009 (for 2007 program activities) and 75% in 2010 (for 2008 program
activities), with a final “true-up” relating to the remainder of payments that
would also begin in 2010.
It
is
anticipated that the CPUC will issue a final decision on the adoption of
a
shareholder incentive and penalty mechanism in the second half of
2007. PG&E Corporation and the Utility are unable to predict what
incentive mechanism the CPUC may ultimately adopt and what impact the adopted
mechanism may have on their financial condition and results of
operations.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrants
have
duly caused this report to be signed on their behalf by the undersigned hereunto
duly authorized.
| |
|
|
|
|
|
|
|
PG&E
CORPORATION
|
| |
|
|
|
Dated:
May 4, 2007
|
|
By:
|
|
|
| |
|
|
|
LINDA
Y.H. CHENG
Vice
President, Corporate Governance and Corporate
Secretary
|
| |
|
|
|
|
|
|
|
PACIFIC
GAS AND ELECTRIC COMPANY
|
| |
|
|
|
Dated:
May 4, 2007
|
|
By:
|
|
|
| |
|
|
|
LINDA
Y.H. CHENG
Vice
President, Corporate Governance and Corporate
Secretary
|