FOR IMMEDIATE RELEASE
                  September 10, 2001
                  Contact: News Department (415) 973-5930
                  EDITORS: Please do not use "Pacific Gas and Electric" or "PG&E" when referring to PG&E Corporation or its National Energy Group. The PG&E National Energy Group is not the same company as Pacific Gas and Electric Company, the utility, and is not regulated by the California Public Utilities Commission. Customers of Pacific Gas and Electric Company do not have to buy products or services from the National Energy Group in order to continue to receive quality regulated services from Pacific Gas and Electric Company.


                  SAN FRANCISCO - Pacific Gas and Electric Company has asked the California Supreme Court to overturn the California Public Utilities Commission's (CPUC) March 27, 2001 decision requiring the utility to pay the Department of Water Resources (DWR) 9.471 cents per kWh on an interim basis prior to the implementation of DWR's revenue requirement. The company had asked the CPUC for a rehearing of its decision on April 30, 2001 and was denied the request on August 8, 2001.

                  In its Court filing the company argued, "In order to ensure that the recovery of DWR's power costs is fair and equitable to both electricity consumers and the State's electric utilities, AB 1X establishes two mechanisms, and two mechanisms only, for DWR to obtain funds from consumers and the utilities to pay for its power purchases. The first is the Fixed Department of Water Resources Set-Aside, which is defined by AB 1X as 'the amount of the California Procurement Adjustment that is allocable to the power sold by the [DWR]' after reviewing and taking into account the portion of the utilities' existing rates needed to cover their own costs of service.

                  "The second is DWR's 'revenue requirement,' which DWR is required to submit to the CPUC and which is recoverable in customers' bills only if it has been determined to be 'just and reasonable' under the Public Utilities Code and if it has been determined by the CPUC to be in compliance with other requirements of the Public Utilities Code. Nothing in AB 1X permits the CPUC to order the utilities to send funds to DWR outside these two statutory mechanisms or without complying with the specific substantive criteria applied under these mechanisms.

                  "In Decisions 01-03-081 and 01-08-024, the CPUC violated AB 1X by ordering PG&E to remit funds to DWR prior to establishment of either the Fixed Department of Water Resources Set-Aside or the DWR revenue requirement in accordance with the statutory criteria under Public Utilities Code Section 360.5 and Water Code Section 80110. The CPUC has exceeded the scope of its authority, failed to proceed in the manner prescribed by AB 1X, and abused its discretion, and therefore this Court should grant review of and annul the DWR Decisions."


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