2010 FERC Form 1 - Pacific Gas and Electric Company

Name of Respondent
PACIFIC GAS AND ELECTRIC COMPANY
This Report is:
(1) X An Original
(2) A Resubmission
Date of Report
(Mo, Da, Yr)
04/08/2011
Year/Period of Report
2010/Q4
NOTES TO FINANCIAL STATEMENTS (Continued)
administrative agent’s announced base rate, (ii) 0.5% above the federal funds rate, or (iii) the one-month LIBOR plus an applicable
margin. Interest is payable quarterly in arrears, or earlier for loans with shorter interest periods. The Utility also will pay a facility fee
on the total commitments of the lenders under the credit agreement. The applicable margin for LIBOR loans and the facility fee will
be based on the Utility’s senior unsecured, non-credit enhanced debt ratings issued by S&P and Moody’s. Facility fees are payable
quarterly in arrears.
The Utility treats the amount of its outstanding commercial paper as a reduction to the amount available under its revolving
credit facilities so that liquidity from the revolving credit facility is available to repay outstanding commercial paper.
The revolving credit facilities include usual and customary covenants for credit facilities of this type, including covenants
limiting liens to those permitted under the senior note indenture, mergers, sales of all or substantially all of the Utility’s assets, and
other fundamental changes. Both the $750 million and $1.9 billion revolving credit facilities require that the Utility maintain a ratio of
total consolidated debt to total consolidated capitalization of, at most, 65% as of the end of each fiscal quarter. At December 31,
2010, the Utility met this ratio test.
Commercial Paper Program
The Utility has a $1.75 billion commercial paper program, the borrowings from which are used primarily to cover fluctuations
in cash flow requirements. Liquidity support for these borrowings is provided by available capacity under the Utility’s revolving credit
facilities, as described above. The commercial paper may have maturities up to 365 days and ranks equally with the Utility’s other
unsubordinated and unsecured indebtedness. Commercial paper notes are sold at an interest rate dictated by the market at the time of
issuance. At December 31, 2010, the average yield was 0.51%.
Other Short-term Borrowings
On October 12, 2010, the Utility issued $250 million principal amount of Floating Rate Senior Notes due October 11, 2011.
The interest rate for the Floating Rate Senior Notes is equal to the three-month LIBOR plus 0.58% and will reset quarterly beginning
on January 11, 2011. At December 31, 2010, the interest rate on the Floating Rate Senior Notes was 0.87%. On January 11, 2011, the
interest rate was reset to 0.88%.
NOTE 5: ENERGY RECOVERY BONDS
In 2005, PERF issued two separate series of ERBs in the aggregate amount of $2.7 billion to refinance a regulatory asset that
the Utility recorded in connection with the Chapter 11 Settlement Agreement. The proceeds of the ERBs were used by PERF to
purchase from the Utility the right, known as “recovery property,” to be paid a specified amount from a dedicated rate component
(“DRC”) to be collected from the Utility’s electricity customers. DRC charges are authorized by the CPUC under state legislation and
will be paid by the Utility’s electricity customers until the ERBs are fully retired. Under the terms of a recovery property servicing
agreement, DRC charges are collected by the Utility and remitted to PERF for payment of principal, interest, and miscellaneous
expenses associated with the bonds.
The first series of ERBs issued on February 10, 2005 included five classes aggregating to a $1.9 billion principal amount with
scheduled maturities ranging from September 25, 2006 to December 25, 2012. Interest rates on the remaining two outstanding classes
are 4.37% for the earlier maturing class and 4.47% for the later maturing class. The proceeds of the first series of ERBs were paid by
PERF to the Utility and were used by the Utility to refinance the remaining unamortized after-tax balance of the settlement regulatory
asset. The second series of ERBs, issued on November 9, 2005, included three classes aggregating to an $844 million principal
amount, with scheduled maturities ranging from June 25, 2009 to December 25, 2012. Interest rates on the remaining two classes are
5.03% for the earlier maturing class and 5.12% for the later maturing class. The proceeds of the second series of ERBs were paid by
PERF to the Utility to pre-fund the Utility’s tax liability that will be due as the Utility collects the DRC charges from customers.
The total amount of ERB principal outstanding was $827 million at December 31, 2010 and $1.2 billion at December 31,
2009. The scheduled principal repayments for ERBs are reflected in the table below:
FERC FORM NO. 1 (ED. 12-88) Page 123.17