ML19322C505
| ML19322C505 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon, Crane  |
| Issue date: | 02/28/1979 |
| From: | Mowrey T CALIFORNIA, STATE OF |
| To: | |
| References | |
| TASK-TF, TASK-TMR NUDOCS 8001170834 | |
| Download: ML19322C505 (44) | |
Text
f 1
Applications Nos. 58%5 and 58%6 Exhibit No.
Witness T. ii. M%TeV Co:rmissioner
- c.. D. Gravelle Adn Law Judge M. J. Ga. mon a
CAI,IFCRNIA PGLIC UTILITIES COMMISSION O
Fir.ance Division STUDY OfF, COST E CAPITAL AND RATE E RETURN 2
PACIFIC GAS,Ajg LLECTRIC COMPANY t.pplication Nc. 58%5 - Electric Departeent
^ '-
Applica^. ion No. 585L6 - Gas Department o
,.p n @' \\y 'i} ',{?O
.s o
\\n
[h0 'h '
San Francisco, California February 28, 1977 8001170f3 l
h
~
j
EEE9EAEEEE e
This report was prepared by Terry R. Mowrey, Financial Examiner III, under the general supervision of James D. Pretti, Principal Financial Examiner, in connection with the request of Pacific Gas and Electric Company for authority to increase rates for gas and electric services as set forth in Application No. 58545 and Application No. 58546, respectively.
The rate of return recommended for the applicant is 9.94% for 1980 and 10.03% for 1981 which equates to an allowance of 13.40% on coanon stock equity for both years.
i D
e to i
INDEX TO TABLES Table No.
Title 1
Prime Rate - Discount Rate.
2 Yields on Public Utility Bonds - Newly-Issued vs.
Distributed.
3 Trends in Interest Rates.
4 Nominal Interest Rates - Major California Utilities, 1968 - 1977.
5 Pacific Gas and Electric Company - Effective Interest Rate on Debt at December 31, 1980 and 1981.
6 Times Long-Tem Debt Interest Earned - Applicant and Selected Utility Groups, 1973 - 1977 7
Pacific Gas and Electric Company - Effective Dividend Rate on Preferred Stock at December 31, 1980 and 1981.
8 Pacific Gas and Electric Company - Common Stock Book Value, Dividends and Earnings, 1968 - 1977 9
Average Common Equity Ratio - Applicant and Selected Utility Groups, 1973 - 1977 10 Earnings Rate on Average Comon Equity - Applicant and Selected Utility Groups, 1973 - 1977 11 Dividend Payout Ratios - Applicant and Selected Utility Groups, 1973 - 1977 12 Pacific Gas and Electric Company - Flow of Funds, 1973 - 1977 13 Pacific Gas and Electric Company - Capital Structure, 1968 - 1977, 14 Earnings Rate on Average Total Capital - Applicant and Selected Utility Groups, 1973 - 1977 15 Average Net Plant Investment - Applicant and Selected Utility Groups, 1973 - 1977 16 Operating Revenues - Applicant and Selected Utility Groups, 1973 - 1977.
17 Operating Expenses - Applicant and Selected Utility Groups,
~
1973 - 1977.
o Q b&o\\0b.
w-11
i INDEX TO TABLES
~
Table Title No.
18 Operating Ratios - Applicant and Selected Utility Groups, 1973 - 1977 19 Net Operating Income - Applicant and Selected Utility Groups, 1973 - 1977 20 Ratio-Operating Revenues to Average Net Plant Investment -
Applicant and Selected Utility Groups, 1973 - 1977 21 Ratio - Net Operating Income to Average Net Plant Investment -
Applicant and Selected Utility Groups, 1973 - 1977 22 Determination of Rates of Return Required to Recover Imbedded Costs of Long-Tem Debt and Preferred Stock at Various Assumed Rates of Return on Common Equity - Average Years.
1980 and 1981.
23 Recomended Rate of Return.
Appendix List of Companies Used in Study O
9 Uf 1
)
Ik j
Q. 1.
Please state your name and business address.
A. 1.
My name is Terry R. Mowrey. My business address is State Building 107 S. Broadway, los Angeles, California 90012.
Q. 2.
By whom are you employed and in what capacity?
A. 2.
I am employed by the California Public Utilities Comission as a Financial Examiner in the Finance Division.
Q. 3 Please describe briefly your educational background and work experience.
'A. 3
.I am a graduate of California Polytechnic University at Pomona with a Bachelor of Science Degree in accounting. I have been employed by the Comission for approximately five years. During this period I have participated in the financial audits of numerous public utilities in connection with rate applications, certification matters and Comission-instituted investigations.
Prior to my being assigned to the Rate of Return Section of the Finance Division in the early part of 1978, I was a member of the Liquified Natural Gas Task Force and analyzed the proposed financing of.that pmject. My most recent assignment was the preparation of the study of cost of capital and recommended rate of return for The Pacific Telephone and Telegraph Company in Application No. 58223 I have prepared reports and have testified before this Comission on accounting and financial matters in numerous formal proceedings.
Q. 4 What are your responsibilities in this proceeding?
A. 4 My responsibilities are to prepare a study of Pacific Gas and Electric Company's (PGandE) Cost of Capital and to recommend a rate of return.
4 Q. 5.
What is your recommendation in this proceeding?
A. 5.
In my opinion, a rate of return on comon equity of 13 40% is fair and reasonable to both Applicant and its ratepayers. I am recomending that in order to achieve this return on common equity, a rate of return of 9 92$ in 1980 and 10.03% in 1981 be applied to PGandE's intrastate rate base.
Q. 6.
What is the basis for your recomendation?
A. 6 My recommendation is consistent with this Comission's stated policy to set rates so that major utilities can reasonably go at least two years without general rate relief. This policy was set forth in Decision No. 87710, i
dated December 12, 1978 in Application No. 57639 of Southern California Gas Company and Decision No. 87711, dated December 12, 1978 in Application No. 57602 of Southern California Edison Company. !
Q. 7.
Why are you recemending two rates of return, one for the test year 1980 and one for the year 19817 A. 7 If I were to recomend one rate of return to cover both years, PGandE would have no opportunity to earn my recommended return on common equity in the second year because of the financial attrition which will occur in that year.
Q. 8.
Would you explain what you mean by financial attrition.
A. 8 Yes, financial attrition is the change which occurs in a company's embedded cost of debt, effective dividend rate on preferred stock and capital structure due to the issuance and retirements of debt issues, preferred stock and comon equity. Under today's economic conditions new debt and preferred stock are being issued at rates higher than a company's embedded cost thus driving the embedded cost up even further. PGandE will experience increases in its embedded costs in 1981 with the issuance of additional debt and preferred stock and it is these increases which necessitate my 1981 rate of return recomendation of 10.03%. Failing to recognise these cost increases in 1981 results in PGandE's return on comon equity falling below my recom-mendation of 13 40%. Tables No. 5 and No. 7 show my estimates of additional debt and preferred stock and their respective rates.
Q. 9.
Could you not recomend an equity return and a corresponding rate of return for 1980 test year which gives recognition to the 1981 financial attrition and which would, over the two year period, average out to the 13 40% return on common equity you are recommending?
A. 9.
Yes, that would be one method of setting rates; however, i believe that such a method produces undesirable results. First of all, it would cause fluctuations in a utility company's earnings in that the first year would result in unreasonably high earnings and the second year would result in unreasonably low earnings. If this pattern were to continue for a number of l
years, it would appear to financial analysts and investors that the company's earnings were somewhat unstable. It could also have an unfavorable effect on a company's bond ratings. The bond rating agencies would not be favorably l
impressed with a company's earnings record which fluctuated from year to year, rather they would be more impressed with a stable eamings record. Secondly, such a method would be unfair to the ratepayers in that they would be required to pay higher than reasonable rates in the first year.
_2_
I believe that my recomendation of two rates of return, one for the test year 1980 and one for the year 1981 meets the objectives of setting rates so that a utility can reasonably go at least two years without general rate relief, provides the company with a reasonable opportunity to earn the authorized return on equity, avoids the undesirable effects of setting an artificially high rate of retum for the test year to produce a reasonable two-year average, and provides protection to the ratepayers in that r'ates will nore accurately reflect PGandE's actual capital costs.
Q.10 Did you base your recomended return on equity and the corresponding rates of return on estimated year-end or average year capital structure?
A.lO.
My recomendation is based on my estimate of PGandE's average year capital structure and related costs for the test year 1980 and the year 1981.
My use of an average year capital structure and costs is consistent with my recognition of financial attrition in that it more accurately reflects PGandE's actual costs during the year than does a year-end capital structure.
An average year capital structure is also consistent with the Comission's ratemaking policy of applying the authorized rate of return to average year rate base. Previously, the rate of return recommendations were based pon capital ratios developed for the end of the test year after considering financing anticipated during the test year and the costs associated with such financing. Year-end ratios were used in the recognition that rates would remain in effect beyond the test year period. However, with rate increases being filed on a two-year cycle under the regulatory lag plan, rates remain in effect only during that two-year period. Therefore, it is my opinion that capital costs should be recognized which equate only to the period that the rates are in effect and this requires use of average year capital ratios.
Q.11.
Would you please compare your recommended rate of return with that requesteu by PGandE.
A.ll. ' The following tabulation compares PGandE's estimated capital and requested rate of return at year-end 1980 with my estimated capital structure and rate of return for the two years.
. l
PGandE Requested Rate of Return Year End 1980
- Capitalization
- Weighted :
Comoonent Ratios Cost Cost
~
Long-Tem Debt 45 99%
7.83%
3.60%
Preferred Stock 13 99 7 92 1.11 Cocnon Equity 40.02 15 00 6.00 100.00%
10 71%
Staff's Recommended Rate of Return Average Year 1980 Long-Tem Debt 46.02%
7.63%
3 51%
Preferred. Stock 14.47 7 87 1.14 Common Equity 39.51 13.40 5.29 100.00%
9 94%
Average Year 1981 Long-Tem Debt 45 74%
7.77%
3 55%
Preferred Stock 14 58 7 96 1.16 Commen Equity 39.68 13.40 5.32 100.00%
10.03%
Effect on Revenue Requirement ($000) 1980 Staff's Estimated Rate Base
$5,969,681 X 1980 Difference
.77 Difference Net Operating Revenues 45,967 X Net-to-Gross Multiplier 2.05 Difference - Gross Operating Revenues 1980 94.23_2_
1981 Staff'sEstimated Rate Base 5,969,681
.09 1981 Increase Rate of Return Net Operating Revenues 5,373 X Net-to-Gross Multiplier 2.05 Additional Gross Operating Revenue 1981 11,016 Difference Gross Operating Revenues 1981 83,218
The staff's estimated capital ratios shown on the preceding table for average years 1980 and 1981 were arrived at using the staff's estimated year-end capital shown below.
1979 Amount Ratio kng-Tem Debt
$ 3,860,734 46.12%
Preferred Stock 1,202,451 14 37 Common Equity 3,307,162
- 39. 51 Total
$ 8,370,3h7 g
1980 kng-Term Debt
$ 4,263,398 45.92%
Preferred Stock 1,352,451 14 57 Comon Equity 3,668,102 39.51_
Total
$ 9,283,951 100.00%
1981 kng-Term Debt
$ 4,691,485 45.57/o Preferred Stock 1,502,451 14.59 Common Equity h,102,0h2 39.8h Tota 1
$10,295,978 100.00,-
+t
[ h h d"d @ U S U W N N d i,
i l
Q.12.
Would you explain the differences between your projected capital etructure and related costs to that of PGandE at year-end 1980.
A.12.
The first difference is that I have used average year capital structures whereas applicant has used year end. My estimated capital structure uses as its starting point recorded data at December 31, 1978, whereas PGandE utilized recorded data through June 30, 1978 and projected the remainder of 1978. The applicant's projections for 1979 and 1980 were compiled in mid-year 1978, whereas my projections are based upon more recent estimates of capital requirements and financing needs.
The dollar differences are:
Iong-Term Debt My estimate of long-term debt financing through 1980 is approximately $75 million less than that projected by applicant.
Preferred Stock My estimate of applicant's preferred stock issuances through 1980 exceeds applicant's by approxircately $15 millien.
Common Equity My total connon equity outstanding at year-end 1980 is approximately $150 million less than that estimated by PGandE.
These differences incorporate revisions in projected capital require-ments through 1980 as well as recorded changes in 1978.
The question of issuing long-tem debt, preferred stock or common stock to meet external capital requirements is, of course, a management decision. My projections were made with the objective of maintaining the company's stated goal of a capital structure approximating 46% debt, 14% preferred and 40% common equity.
Q.13.
In your opinion, are the capital ratios presented in your exhibit for IUandE reasonable?
A.13 Yes, I believe the capital ratios shown in Tele No. 22 closely approximate the company's stated goals of 46% debt,14% preferred and 40%
equity, a goal with which I agree. A debt ratio in the range of 46% allows the company to maintain reasonable interest coverage and sufficient flexi-bility to attract future external financing.
6-
Q.14.
Would you briefly describe how you arrived at 13 40% on comon equity as being fair and reasonable for PGandE.
A.14.
'Ihe determination of a fair and reasonable rate of return is not subject to preciae mathematical calculations and cannot be arrived at by any specific formula. It is of necessity a judgment detemination which results fmm the consideration of many factors both tangible and intangible.
'Ihe U. S. Supreme Court expressed this principle in Federal Power Commission v Hope Natural Gas (1943) 320 US 591, wherein it stated, "It is not theory but the impact of the rate onier which counts." And, "it is the result reached not the method employed which is controlling."
In arriving at my recommendation, I was guided by the standards set forth by U. S. Supreme Court decisions in various landmark cases and by prior decisions of this Comission and other regulatory bodies.
In addition, I gave consideration to other factors in arriving at my recommendation, some of which are presented in the tables included in this report and others which are listed in Answer No.17 Q.15. How did you evaluate the comparison of earnings and related data shown in your report for PGandE and the selected groups of utilities?
A.15.
The various comparisons shown in the tables for the years 1973 thmugh 1977 served as additional guides in arriving at my recommendation.
'Ihe figures in the pertinent tables are based on recorded information and do not consider any adjustments which.could be considered in the process of setting rates. Some of the companies within each group could possibly have experienced earnings above or below a reasonable norm during the period. In addition, other differences exist between the companies with regani to such things as income from other sources, source of supply, types of services provided, regulatory environment, and the economic situation in their respective territories.
Q.16.
Why have you confined your study to the 30 utilities shown?
A.16.
It is my opinion that the 30 companies shown are large regulated public utilities having business and financial risks similar to those of PGandE and present a valid sampling for comparative purposes..__
Q.17. Wat are some of the additional factors you considered in arriving at your allowance of 13 40fo on common equity?
A.17.
Some of the additional factors which I considered in arriving at my recomendation are as follows:
a.
PGandE is a regulated public utility engaged in a
~
business which affects the public interest and it must provide its services at reasonable rates.
- b. PGandE flows through to its customers certain tax benefits in the form of lower rates which acts to reduce the internal cash flow as compared to a utility which normalizes tax benefits.
- c. That rates must give consideration to both consumer and investor interests.
- d. Economic conditions - the effects cf continued inflation aniincreases in interest rates.
- e. PGandE's recorded earnings experience.
- f. Interest coverage requirements.
- g. 'Ihe Commission's Regulatory Lag Plan and stated policy that rates be set so that a utility can reasonably go at least two years without general rate relief.
- h. The essentiality of PGandE's product to the public,
- i. PGandE's capital requirements, capital structure and financial history.
- j. The various balancing account adjustments granted PGandE.
_8
Q.18. Do you have any further comments?
A.18. Yes. It is my opinion that the return on common equity that I am recomending is both fair and reasonable and balances the interests of PGandE's investors and ratepayers. I believe my method of considering financial attrition corresponds with the Commission's statement of policy expressed in D.89710 of Southern California Gas Company and D.89711 of Southern Califomia Edison Company, both dated December 12, 1978. In these decisions, the Commission expressed a desire to set rates so that major utilities can reason' ably go at least two years without general rate relief. My study, in developing data for both the test year and the subsequent year, gives adequate consideration to financial attrition which will occur during the two-year period. An equity allowance of 13 40% will allow the utility to service its fixed charges and provide the opportunity to pay a suitable dividend as well as provide moderate additions to earned surplus while maintaining adequate service to its customers.
Q.19. Ibes this conclude your testimony?
A.19. Yes it does.
O
-9_
EEEEEEE11SESEIEEEEE This study contains 23 tables developed in the course of arriving at the 13.40% return on common equity and the corresponding rate of return recommendations of 9.94% for 1980 and 10.03% for 1981 for Pacific Gas and Electric Company.
Many of the tables present trends and five-year averages for the years 1973 through 1977 in a form which compares applicant's operating results with averages for 10 combination and electric utilities, 10 electric utilities and 10 gas utilities.
Other tables set forth trends in interest rates, ten-year summaries of PGandE's capitalization, book value, earnings and sources of financing.
Table No. 1 shows the fluctuations which have occurred in the bank prime interest rates and the Federal Reserve discount rates for the period July 1975 through December 1978.
Interest rates in both categories declined steadily from the September 1975 level to early 1977 when the bank prime interest rate and the Federal Reserve discount rates reached 6-1/4% and 5-1/4%, respectively.
Since mid-1977, both the prime rate and discount rate have experienced a gradual upward trend to their present levels.
Table No. 2 compares yields on newly-issued public utility bonds with yields on seasoned issues, grouped by Moody's Rating Service, Aaa to Baa, which is shown by month beginning in July 1976 and ending in December 1978.
This table shows that the yiel in all categories generally followed the decline experienced by short-term interest rates through early 1977 and the gradual increase thereafter.
l i l
~.-
Table No. 3 shows interest rate trends in bond and preferred stock yields and interest rate variations for prime commercial paper and government bills on an average annual basis for the years 1973 through 1977.
Monthly fluctuations for all categories are shown beginning in January 1977 and ending in November 1978.
The trends shown are generally consistent with the patterns exhibited in Tables Nos. 1 and 2 which show a decrease through 1976 with a gradual increase in rates thereafter.
Table No. 4 is a ten-year summary of noninal interest rates developed for PGandE and seven other large California utilities.
Increases registered over the years reflect (a) periodic sales of new bonds at rates exceeding the average cost of debt outstanding, (b) refunding of low-coupon bonds at maturity, and (c) bond retire-ments in accordance with sinking fund requirements.
PGandE experi-enced an increase over the ten-year period approximating the average increase of the other seven utilities.
Over the last five years, PGandE experienced the second highest rate of increase in its nominal interest rate.
Table No. 5 presents the staff's development of PGandE's effec-tive interest rate on long-term debt as of December 31, 1980 and 1981.
Unamortized gains of approximately $55 million in 1980 and $64 million in 1981 have been added to the net proceeds of outstanding bonds in i
~
calculating the cost of 7.72% and 7.82% for the respective years.
This treatment is in accordance with previous Commission practice and acts to lower the embedded cost of debt.
11 -
Table No. 6 presents PGandE's after-tax interest coverage for the period 1973 to 1977 compared with the other groups of selected companies.
PGandE's 1977 interest coverage of 2.45 times compared favorably with that experienced by the other selected companies and exceeded the group averages over the five-year period.
The interest coverage would be 2.83 x in 1980 and 2.82 x in 1981 based upon the staff's recommendation.
Allowance for funds used during construction and income from other non-utility sources would also be available to further improve interest coverage.
For the calendar year ended December 31, 1978, applicant's reported earnings provided an interest coverage of 2.62 times.
Table No. 7 shows the effective dividend rate for the company's preferred stock at December 31, 1980 and 1981.
Projections of additional preferred stock issuances and their respective dividend rates are shown for 1980 and 1981.
l Table No. 8 summarizes data related to PGandE's common stock book value, dividends and earnings for the years 1968 through 1977.
During the period book value increased approximately $1.6 billion.
Earnings available for common totaled approximately $1.9 billion of which $1.2 billion was paid out in dividends.
Book value per share increased annually through 1974, decreased slightly in 1975,
)
~
then continued to increase in 1976 and 1977.
l 1 !
The table shows the strong reliance placed on common stock issuances by the company beginning in 1973 in an effort to strengthen its capital structure with less reliance on de't financing.
During the entire period, the company has maintained moderate growth in total earnings and book value.
Table No. 9 presents PGandE's average common equity ratio com-pared with the other selected companies.
PGandE has consistently maintained a common equity ratio higher than the selected combination and electric utilities and presently anticipates increasing its common equity ratio to approximately 40%.
This strong equity position allows additional financial flexibility in the face of increasing construction expenditures and tends to reduce the risk to the equity
~
holder.
Table No. 10 shows PGandE's earnings rate an average common equity for the five-year period.
PGandE's earnings rate is below that of the other companies, however, since 1974 it has shown continual improvement in conjunction with the strengthening of its equity position.
This is a positive trend which under the staff's recommended rate of return will continue.
l Table No. 11 compares applicant's dividend payout ratio with l
that of the othe" selected companies.
PGandE's payout ratio over the five-year period has been more conservative than the other com-l panies, mitigating to a certain extent the amount of external financ-ing needed to meet its construction expenditures. - -.
Table No. 12 presents PGandE's flow of funds for the years 1973 through 1977.
The primary sources of funds generated during this period were net income, 31%; depreciation, 21%; issuance of long term debt, 29% and issuance of common stock, 17%.
Applicant expended 69% for plant construction and returned 22%
to investors in the form of cash dividends.
Table No. 13 contains a summary of PGandE's capital structure for the years 1968 through 1977.
The company, by placing greater emphasis on equity financing since 1973, has reduced its debt com-ponent in 1977 to 47.07% from 53.06% in 1972.
During the same period, the common equity component in its capital structure increased from 34.75% to 39.3fi%.
PGandE has stated that it has as a goal a capital structure of 46% debt, 14% preferred, and 40% common equity.
Staff's estimated capital structure in 1980 and 1981 closely approximates these ratios.
Table No. 14 presents the earnings rate an average total capital.
All groups showed improvement over the period, however, PGandE's earning rate over the last three years has been below the other com-panies with 1977 being the first year since 1974 that its earnings rate is comparable with the combination utilities.
f Table No. 15 shows the average net plant investment of pGandE, and the selected utility groups.
Net plant investment consists of gross utility plant, less depreciation and amortization reserves, advances for construction, contributions in aid of construction and deferred income taxes.
Applicant's average net 71 ant investment increased by 35% during the period as compared to average increments ranging from 19% to 49% for the other groups.
Applicant's average growth rate was comparable to that experienced by the selected combination utilities.
Table No. 16 shows PGandE's revenues have increased at a com-parable rate with the other groups of selected companies; however, in the last three years, beginning in 1975, PGandE's revenue growth far exceeded that experienced by the other companies.
Also subse-quent to 1975, applicant's revenue growth has surpassed the growth tre-d experienced in its net plant investment.
Table No. 17 shows applicant's expenses increasing at a rate over the five-year period comparable with its increase in revenues, however, in the last two years expenses have been exceeding revenue increases.
The other selected groups have experienced expense increases comparable with revenue trend increases.
Table No. 18 brings together the results illustrated in Tables
~
No. 16 and No. 17.
This table shows the operating ratios of PGandE, and the other selected companies and indicates that all groups have.
~
- l shown a continually increasing operating ratio; however, PGandE ' s has increased at a greater rate.
Table No. 19 shows that applicant's trend of net operating scome is comparable with the gas utilities but has lagged behind that experienced by the combination and electric utilities.
Table No. 20 compares ratios of operating revenues to average net plant investment for PGandE and the other selected companies.
Applicant's growth rate over the period exceeded that experienced by the combination and electric groups to the point where its average is now comparable to the combination companies and larger than the electric utilities group.
Table No. 21 presents the ratio of net operating income shown in Table No. 19 to average net plant investment presented in Table No. 15 and shows that applicant's total return over the five-year period averaged 6.58% compared to 6.95% for the combination companies, 6.93% for the electric utilities and 8.49% for the gas utilities.
It should be noted that applicant'a trend in the last three years has been comparable to the other groups, however, still lagging bahind.
These rates are considerably less than the earnings rates on total capital shown in Table No. 14 which includes earnings derived from other income, primarily allowances for funds used during construction.
Applicant's trend of net operating income to average net plant investment is comparable to the trend shown for earnings on average capital.
Table No. 22 shows various earnings rates on common equity ranging from 12.80% to 14.00% and combines them with the embedded cost of PGandE's debt and preferred stock to produce various rates of return based upon the projected average capital structures for 1980 and 1981.
The resulting rates of return range from 9.71% to 10.18% in 1980 and 9.79% to 10. 27 % in 1981.
The financial attrition occurring between 1980 and 1981 at the assumed common equity returns indicates an attrition of.09% in rate of return.
Table No. 23 contains my rate of return recommendation of 13.40%
on common equity which equates to a rate of return on rate base of 9.94% in 1980 and 10.03% in 1981.
W 9
I
TAbi" "J.
1 PACIFIC GA3 AND ELECTRIC COMPANY Prime Rate - Discount Rate
- Year :
Month Prime Rate
- Discount Rate :
1221 July 7-7-1/4-7-1/2%
6 August 7-1/2-7-3/4 September 7-3/4-8 October 8-7-3/4 November 7-1/2 December 7-1/4 1976 January 7-1/4-7-6-3/4 5-1/2 February March April May 6-3/4 - 7 June 7-1/4 July August 7
September October 6-3/4 November 6-1/2 5-1/4 December 6-1/2-6-1/4 1977 January 6-1/4 February March April May 6-1/2-6-3/4 June 6-3/4 July August 6-3/4 - 7 September 7-1/4 5-3/4 October 7-1/2-7-3/4 6
November December 1978 January 7-3/4-8 6-1/2 February March April May 8-1/4-8-1/2 7
June 8-3/4-9 7-1/4 July August 9-1/4 7-3/4 September 9-1/4-9-1/2-9-3/4 8
October 9-3/4-10-10-1/4 8-1/2-9-1/2 November 10-1/2-10-3/4-11-11-1/2 9-1/2 December 11-1/2-11-3/4 SOGCE:
Irving Trust Company Weekly Interest Rates Listings.
m{hhi uu t oma
TABLE NO. 2 PACIFIC GAS AND ELECTRIC COMPANY Yields on Public Utility Bonds - Newly-Issued vs. Distributed Aaa Securities Aa L._ arities A Securities Haa Securities Newly-Issued Distributed:
Newly-Issued : Distributed:
Newly-Issued
- Distributed :
Newly-Issued : Distributal:
- Month : Millions : Yield: Yield
- Millions : Yield:
Yield
- Millions : Yield:
Yield
- Millions : Yield: Yield (a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(1) 1976 Jul 878%
$210 8.70%
9 02%
$160 9 56%
9.37%
$155 10.10%
9.88%
Aug 175 8.25 8.64 8.83 160 8.94 9 13 9.67 Sep 100 8.00 8.57 270 8 43 8.69 305 8.68 8.90 70 9.45 9 47 Oct 175 8.26 8.50 260 8.41 8.60 310 8.59 8.79 115 9.00 9 41 Nov 100 8.30 8.39 385 8.30 8.61 210 8.40 8.76 110 9.10 9.34 Dec 150 7.90 8.15 180 8.22 8.45 110 8.41 8.62 90 8.61 9.21 1977 Jan 280 8.18 8.14 280 8.08 8.41 100 8.38 8.61 9.17 Feb 280 8.24 8.21 45 8.24 8.46 42 8.39 8.65 9 19 Mar 590 8.29 8.27 55 8 40 8.49 655 8 51 8.70 50 8.85 9.20 Apr 275.
8.17 8.21 330 8.44 8 51 140 8.67 8 71 40 8.85 9.17 May 100 8.15 8.22 8.49 80 8.68 8 71 205 8.94 9.13 Jun 500 8.05 8.12 260 8.19 8.37 130 8.34 8.58 162 8 78 9.02 8.10 242 5 8.29 8.32 75 8.60 8 51 245 8.25 8 97 Jul 8.49 65 8.59 8.91 8.13 75 8.17 8.36 Aug Sep 315 8.04 8.07 365 8.24 8.32 198 8.35 8.46 8.85 Oct 8.18 85 8.25 8.44 330 8 52 8.61 325 8.98 9 01 Nov 400 8.27 8.23 280 8.40 8.48 137 8.56 8.64 26 9.15 9.06
'8.34 180 8 57 8.55 110 8.64 8.64 115 9 08 9 08 Dec 1978 g i Jan 8 52 315 8 97 8.76 125 8 90 8.92 150 93.1 9 27 8.57 35 8.80 8.79 30 8.90 8.97 100 9.45 9.29 Feb IM Mar 225 8.72 8 57 45 8.75 8.79 255 9 02 8.98 138 9 53 9.37 8.69 175 9.04 8.86 365 9.08 9.09 25 9.42 9.54 TED Apr 8.83 145 9.01 9.02 170 9 35 9 22 220 9.69 9 70 T @ May Jun 250 8.90 8.92 275 9 41 9.19 195 9.42 9.40 70 10.00 9 78 9 Jul 10 9 10 9 02 300 9.57 9 26 375 9 53 9 51 200 9.88 9.73 450 8.75 8.86 300 8.86 9.11 60 8.90 9.32 9 53 Ekj Aug Sep 150 8.625 8.84 245 8.95 9.09 205 9 04 9.28 9 47 g g Oct 525 9.12 9 04 275 9 55 9.28 15 9 50 9.46 235 9 75 9.69 i Nov 100 9.16 9.19 400 9.54 9 46 20 9.625 9.68 9.99 y-j Dec 150 9 27 9 34 110 9 31 9 56 10 9.32 9 70 10.08 c
L5' l 6:~ S-L H SOURCE: Moody's Bond Survey.
. TABLE NO. 3 PACIFIC GAS AND ELECTRIC COMPANY Trends in Interest Rates Bond Yields U.S.
U.S.
U.S.
- State :
- Preferred:
Prime
- Government: Government:
- Government: and :
- Public Stock : Commercial: 3 Months :3-5 Years :
- Long-Term : Local : Industrials: Rails: Utilities : Yield : Paper Bills :
Issues :
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i) 1973 Average 6.30%
5 22%
7.60%
8.12%
7.83%
7 23 %
8.15%
7.03%
6.92%
1974 Average 6.99 6.19 8.78 8 98 9.22 8.23 9.87 7 84 7 81 1975 Average 6.98 7.05 9.25 9 39 9.88 8.38 6.33 5.80 7.55 1976 Average 6.78 6.64 8.84 8.85 9.17 7 97 5 35 4 98 6.94 1977 Average 7 06 5.68 8.28 8.13 8.58 7 60 5.60 5 27 6.85 1977 Jan 6.68 5 87 8.24 8.26
. 59 7 54 4 74 4.62 6.49 Feb 7 15 5.89 8.33 8.31 8.63 7 55 4.82 4.67 6.69 Mar 7 20 5.89 8.36 8.31 8.66 7 56 4.87 4.60 6.73 Apr 7 14 5.73 8.32 8.28 8.65 7.60 4.87 4.54 6.58 May 7 17 5.75 8.30 8.26 8.64 7 63 5 35 4.96 6.76
- {
Jun 6.99 5.62 8.23 8.06 8.53 7.62 5.49 5.02 6.58 Jul 6.97 5.63 8.18 8.02 8.48 7 51 5.41 5 19 6.67 Aug 7.00 5.62 8.21 8.05 8.47 7 55 5.84 5 49 6.90 Sep 6.94 5.51 8.19 8.03 8.43 7 58 6.17 5.81 6.92 Oct 7 08 5.64 8.27 8.07 8.56 7 60 6.55 6.16 7 23 Nov 7 14 5.49 8.36 8.10 8.61 7.67 6.59 6.10 7.28 Dec 7 23 5 57 8.42 8.10 8.65 7.85 6.64 6.07 7 40 1978 Jan 7 50 5 71 8.60 8.20 8.87 7 93 6.79 6.44 7 71 Feb 7.60 5.62 8.65 8.32 8 90 7.99 6.80 6.45 7.76 T,
Mar 7.63 5.61 8.66 8.41 8.93 8.07 6.80 6.29 7 76 (55 Apr 7.74 5 80 8.72 8.49 9 05 8.06 6.86 6.29 7 90 V
May 7 87 6.03 8.84 8.60 9 19 8.11 7 11 6.41 8.10 cit ='
Jun 7 94 6.22 8.92 8.68 9.33 8 31 7.63 6.73 8 31 Jul 8.09 6.28 9.05 8 70 9 38 8.42 7 91 7.01 8 54 Aug 7.87 6.12 8.95 8 72 9 21 8.26 7 90 7 08 8.31 Sep 7.82 6.09 8.90.
8.68 9 17 8.24 8.44 7.85 8.38 E_
oct 8.07 6.13 9.03 8.74 9.37 8.29 9 03 7 99 8.61 Nov 8.16 6.19 9.21 9 01 9 58 8.43 10.23 8.64 8.97 N
SOURCES: Federal Reserve Bulletins.
M Moody's Bond Survey.
_ _d
TABLE NO. 4 PACIFIC GAS AND ELECTRIC CO FANY Nominal Interest Rates v jor California Utilities i
1968 - 1977
- Increase : Increase :
Company
- 1968 : 1969 : 1970 : 1971 : 1972 : 1973 : 1974 : 1975 : 17,6 : 1977 : 68 - 77 : 72 - 77 :
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(1)
San Diego Gas & Electric 4 22%
4.60% 5 30% 5 32% 5 94% 6.65% 7 13% 7. 5% 7.23% 7.65%
81%
29%
Pacific Telephone 4 51 4 75 5.39 5 92 5 95 6.10 6.59 6.64 6.68 6.79 51 14 General Telephone 4.86 5 21 5 76 5.81 6.00 6.13 6.24 6.20 6.15 6.39 31 7
Southern California Edison 4.60 4 75 5.06 5.10 5.29 5 41 6.00 6.14 6.34 6.46 40 22 Pacific Ltg. Utility System 4.33 4.48 4.80 5 40 5.61 5.86 5 96 6.16 6.43 6.43 48 15 California Water Service 4.05 4.19 4 79 5.07 5.07 5 30 5.55 7.05 7 74 7.87 94 55 I
Southern Caln.cnia Water 4.43 4 59 4.95 5 04 5 04 5 36 5 33 5 43 6.57 6.55 48 30 Pacific Gas and Electric 4 22 4.46 4 93 5.25 5.44 5.60 6.03 6.61 6.70 7 18 70 32 Nominal rate developed by dividing interest charges for the year by the average of beginning and end-of-year long-term debt and short-term debt for capital purposes.
@,G
%{
f t
l
TABLE NO. 5 PACIFIC GAS AND FLECTRIC COMPANY Effective Interest Rate on Debt December 31, 1980 Par Net
- Annual
- Effective :
Value Proceeds : Charge Rate Outstanding Issue
$3,288,398
$3,259,259
$237,680 7 29%
Bonds Sold in 1979 Series 79 A - T, 9.375%
100,000 99,940 9,377 9 38 79Al-T1,'9.375%
75,000 74,940 7,034 9 39 Issues Planned 1979 9 25%
300,000 300,000 27,750 9 25 1980 9.00%
255,000 255,000 22,950 9 00 9.00%
245,000 245,000 22.050 9 00 Totals
$4,263,398
$4,234,139
$326,841 7 72%
December 31, 1981 Y
$3,216,485
$3,187,914
$230,701 7 24%
Outstanding Issues Bonds Sold in 1979
~
Series 79A - T, 9.375%
100,000 99,940 9,377 9.38 79Al-T1,9.375%
75,000 74,940 7,034 9.39 Issues Planned 1979 9 25%
300,000 300,000 27,750 9 25 1980 9.00%
255,000 255,0cc 22,950 9.00 9 00%
245,0C0 245,000 22,050 9 00 1981 900%
250,000 250,000 22,500 9 00 900%
250,000 250,000 22,500 9 00 l
Totals
$4,691,485
$4,662,794
$364,862 7 82%
I Total, December 31, 1979
$3,860,734
$3,830,569
$288,651 7 54%
1/ Bonds outstanding on December 31,1978 ad.1usted for sinking fund provisions, gains on reacquired bonds and retirements at maturity through December 31,1980 and 1981, respectively.
Dollars in Thousands.
l
TABLE 6
F AC IFIC G AS AND ELECTRIC COMP ANY
~
TINES LONG-TERM DEST INTEREST EARNE0=
TRENO AND 5-YEAR AVERAGES 1973 - 1977 1
IPACIFIC GAS 11C COM3INATION I I
I I
YEAR LAND ELECTRICIGAS 1 ELECTRIC 11G ELECTRIC i 13 G AS I
I I
COMPANY l
UTILITIES I UTILITIES 1 UTILITIES I 1973 2.77 2.40 2.44 2.37 1974
.2.54 2.19 2.22 2.19 1975 2.23 2.25 2.13 2.21 1976 2.35 2.45 2.28 2.3J 1977 2.45 2.46 2.37 2.42 5-YR AVERAGE 2.47 2.35 2.29 2.30 INDEX-1973 100 100 100 103 1974 92 91 91 92 1975 81 94 87 93 1976 65 1C2 93 97 1977 88 102 97 132 5-YP AV ER AGE 89 98 94 97 AFTER INCOME TAXES SOURCES: 5-YEAR STUDIES, RA TE OF RE T URN UNIT.
MOC0Y'S PUBLIC UTILITY MANUAL.
AANUAL REPORTS TO STOC.< FOLDERS.
AhhuAL REPDFTS TO CALIFORNIA PUBLIC UT ILITIES COMMISSION.
g p h@ flf3 h wH
TAE2 NO. 7 PACIFIC GAS AND ELECTRIC COMPANY
~
Effective Dividend Rate on Preferred Stock December 31, 1980 Par Net
- Annual
- Effective :
Value Proceeds : Charge Rate Outstanding Issues
$1,102,451
$1,150,021
$ 88,690 7 1%
Issues Planned 1979 - 9 50% Series 100,000 105,960 9,500 8.97 1980 - 9 25% Series 150.000 158.940
. 13.875 8.73 Total
$1.352.451
$1.414.921
$112.065 7 92%
December 31, 1981 Outstanding Issues
$ 1,102,451
$1,150,021
$ 88,690 7 71%
Issues Planned 1979 - 9 50% Series 100,000 105,960 9,500 8.97 Ueb - 9 25% Series 150,000 158,940 13,875 8.73 1981-9.25% Series 150,000 158,940 13,875 8.73 Total
$1.502.651
$1.573,861
$125,940 8.00%
f Total, December 31, 1979
$1.202,451
$1,255,981
$ 98.190 7.82%
~
g As of December 31, 1978.
Dollars in Thousands.
TAB 1E NO. 8 PACIFIC GAS AND ELECTRIC COMPANY Conrnon Stock Book Value, Dividends, Earnings 1968 - 1977 Net Earnings: Dividends:
- Dividends:
- Annual :
After on
- Earnings To: to Book : Dividend: Shams Book Value Earnings: Dividend :
Book Value : Preferred : Common Book Value : Value
- Payout : Outstanding :Per Share : Per Rate
- Year : December 31: Dividends : Stock :
Percent : Percent : Ratio : December 31 : December 31: Share : Per Share:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j) 1968 $1,275,195
$149,488
$ 85,168 11 72%
6.68%
56.97%
58,737
$21 71 82 55
$1.45 1969 1,338,502 151,413 88,106 11.31 6.58 58.19 58,737 22 79 2 58 1 50 1970 1,445,542 147,660 89,868 10.22 6.22 60.86 61,086
. 23. 66 2.42 1 50 1971 1,521,527 167,715 100,181 11.02 6.58 59 73 61,086 24 91 2 75 1.64 1972 1,610,025 184,235 105,068 11.44 6.53 57 03 61,086 26.36 3 02 1 72 1973 1,811,467 206,925 114,171 11 42 6.30 55.18 65,159 27 80 3 18 1 78 1974 2,002,850 215,984 125,282 10 78 6.26 58.01 71,082 28.18 3 04 1.88 1975 2,215,890 203,278 146,162 9 17 6.60 71 90 79,967 27 71 2.54 1.88 1976 2,495,383 238,299 154,599 9 55 6.20 64.88 88,611 28.16 2.69 1.88 1977 2,831,287 282,395 179,903 9 97 6.35 63 71 98,390 28.78 2.87 2.00
=@
Columns a, b, c and g in thousands.
g Column a consists of year-end par value of common stock, premium on capital stock and earned surplus.
Column d represents the relationship of not earnings after preferred dividends to year-end book value of Q
common stock equity.
M Column e represents the relationship of common stock dividends to year-end book value of common stock equity.
c=m b SOURCES: Annual Reports to Stockholders.
c; Company Financial and Statistical Report.
C2:a M='
e=
s
TABLE 9
PACIFIC GAS AND ELECTRIC COMPANY AVERAGE COMMON EQUITY RATIO TRENO ANO 5-YEAR AVERAGES 1973 - 1977 i "-"-"i 15iriE 5Is Ti5 55 sisIiicN i-~"-"""i-"""""i I
YEAR LAND ELECTRICtGAS 1 ELECTRIC 110 ELECTPIC i 1J GAS I
I l
COMPANY I
UTILITIES I UTILITIES I UTILITIES I 1973 35.12%
33.71%
33.71%
39.16%
1974 35.38 32.13 32.66 38.49 1975 35.45 33.40 32.08 37.96 1976 36.07 35.35 33.31 38.94 1977 37.91 37.07 35.00 40.1) 5-YP AVERAGE 35.99 34.53 33.35 11.93 INOE(- 1973 100 100 100 100 1974-101 98 97 98 1975 101 99 95 97 1976 103 135 99 99 19TF 108 110 1C 4 102 5-Y9 AVERAGE 102 102 99 99 SOURCES: 5-YEAR STUDIES, RATE OF RETURN UNIT.
NGODY'S PUBLIC UTILITY MANUAL.
AhNUAL REPORTS TO STOCKHOLDERS.
AhNUAL REPORTS TO CALIFCRNIA PUBLIC UTILITIES COMMIS3 ION.
n) 1
'i
TABLE 10 PACIFIC GAS AND ELECTRIC CGMPANY EARhlNGS RATE ON AVERAGE COMPCN EQUITY TRENO AND 5-YEAR AVERAGES 1973 - 1977 l ~~~~" "iPibifib~5iS ~iis C5iesisiii3E i"-""--"i"-~~~~"i I
YEAR LAND.ELECTRIClGAS & ELECTRIC 110 ELECTRIC 1 10 GAS 1
1 1
COMPANY I
UTILITIES 1 UTILITIES I UTILITIES I v
1973 12.161 10.73%
11.64%
10.89%
1974 11.39 13.30 10.91 10.51 1975 9.69 10.83 10.76 1J.94 1976 19.21 11.84 11.72 11.44 1977 10.66 11.23 12.07 11.96 5-YR AVERAGE 10.82 10.93 11.42 11.15 INDEx-1973 100 100 130 100 1974 94 93 94 97 1975 80 101 92 131 1976 64 11C 10 1 115 1977 88 105 134 113 5-YR AVERAGE 89 1J2 93 102 l
l SOURCES: 5-YEA 9 STUDIES, RATE OF RETURN UNIT.
MOODY'S PUBLIC UTILITY MANUAL.
ANNUAL CEPORTS TO STOCXh0LDERS.
ANNUAL REPORTS TO CALIFORNIA PUBLIC UTILITIES COMMISSION.
T A B L E 11 PACIFIC GAS ASD ELECTRIC COMPANY
..n...............................................
DIVIDEND PAYCUT RA TIC TREND AND 5-YEAR AVEPAGES 1973 1977 I
IPACIFIC GAS 110 COMBINATICN I I
i 1
YEAR LAND ELECTRICIGAS & ELECTRIC 110 ELECTRIC i 10 GAS I
i 1
COMPANY I
UTILITIES I UTILITIES I UTILITIES I 1973 54.87%
70.57%
62.64%
67.31%
1974 57.69 70.7U 68.89 68.81 1975 71.52 67.59 71.31 66.92 19.76 64.30 64.59 65.02 62.84 1977 63.36 69.03 64.51 60.87 5-YR AVERAGE 62.35 68.56 66.47 65.35 INDEX-1973 100 100 ids 100 1974 105 100 119 102 1975 130 96 114 9) 1976 117 92 104 93 1977 115 98 103 9J 5-YR AVERAGE 114 97 Ivo 97 SOURCES: 5-YEAR Sit 0IES, RATE CF RETURN UNIT.
MC00Y'S PUGLIC UTILITY MANUAL.
AANUAL REPORTS TO STOCKMOLDERS.
AhNUAL RE P O R T S TO CALIFORNI A PUBLIC UT ILITIES C3MMISSION.
O i
i I
i TABIE NO. 12 PACTFIC CAS AND FJ ECT.NC COMPANY Flow of Funds 1973 - 1977
$(000)
- 5 Year Percent :
1973 1974 1975 1976 1 777
- Total
- cf Total :
Sources of Funds From Operations Net Income C243,6W
$ 261,237
$251,579 $ 301.984
$ 356,298 $1,414,705 31.10%
Depreciation 168,074 177,031 189,325 203,865 212,751 951,046 20.90 Gain on Bonds Purchased for For Sinking Fund (10,100)
(20,039)
(15.106)
(45,245)
(1.00)
Allowance For Funds Used Other (Net)
(44,646))
((57,598)
(70,351?
(60,559)
(75,827)
(308,4681 (6.80)
During Construction 133 (3,
5.625)
(2.052 1
(12.107)
(12.609)
(36.119
(,00)
Total Funds From Operations 353.802 355.006 353.395 433.183 Am.533 1.975.919 43,40 From Finaneira Common Stock Sold-Net Proceeds 102,991 92.592 149,348 187,770 225,638 758,339 16.70 Preferred Stock Sold-Net Proceeds 54,535 81,904 92,983 105,894 106,223 441,539 9.70 Mortgage Honds Sold-Net Peuceeds 295,762 462,745 172,394 172,804 198,393 1,302,098 28.60 Utility Plant Sold and Salvaged 12,110 16,641 3,647 32,398
.70 Advance Collection of Energy Corts 11,432 11,432
.30 Other Chan6as - Net (491) 5.667 7.656 (718) 12.675 24.789 A
Total Funds From f._.]
Financitig 464,90r7 659.549 06.028 465.750 554.361 2.570 A9s 56.6 0
{p Total Source of Funds
$818,709
$1,014.555
$779,423
$898.933
$1,034,894 h 100.00(
I Arolication of Funds Capital Expenditures
$565,539
$645,660
$630,589 $599,278 690,32t.
3,131,390 68.90%
g
( Q;n r Allowance For Furkis Used During Construction (44,133)
(57,598)
(70,351)
(60 559)
(75,827)
(308,468) 6.80 Kh Funds Used For Capital c-f]~ ~3 Expenditures
$21,406 588,062 560,238 538,719 614,497 2,822,922 62.10 Q;
Wrtgage Bonds Purchased
&;a For Sinking Fund 21,618 32,728 30,293 37,446 33,261 155,346 3.40 cg:,p Nortgage Bonds Retired 109,101 2,000 38,387 47,156 196,644 4.30 r_
=3 Dividends-Preferred and
$_3 Cannon 149,691 169,350 193,370 216,155 252,255 980,821 21.fo ply ~
Fuel 011 Inventory Change 59,108 (26,704) 36,909 69,313 1.50 Energy Costs Recoverable 275,.855 9.375 285,230 6.30 Changes in other Working Capital Items 125.994 115.314 (65.586) (180.925) 41.4f.1 36.238
.m Total Application of Funds
$818,709_
$1,014,555
$779,423
$898,933
$1.034,894
$4. 546.514 100.004
TABLE NO. 13 PACIFIC GAS AND ELECTRIC CCifPANY Capital Structure 1968 - 1977 Debt Preferred Stock Comon Equity Total Capital
- Year :
Amount Percent Amount Percent Amount Percent :
Amount
- Percent :
1968 $1,855,573 53.31%
$350,250 10.06 %
$1,775,195 36.63%
$3,481,018 100.00%
1969 1,980,750 53 98 350,250 9 55 1,338,502 36.47 3,669,502 100.00 1970 2,157,611 54.33 367,924 9.27 1,445,542 36.40 3,971,077 100.00 1971 2,315,048 53.82 464,951 10.81 1,521,527 35 37 4,301,526 100.00 1972 2,458,693 53.06 564,951 12.19 1,610,025 34 75 4,633,669 100.00 1973 2,669,193 52.38 614,951 12.07 1,811,467 35 55 5,095,611 100.00 1974 2,971,021 52.46 689,951 12.18 2,002,850 35 36 5,663,822 100.00 1975 3,213,831 51 78 777,451 12 52 2,215,890 35 70 6,207,172 100.00 1976 3,448,980 50 56 877,451 12.86 2,495,383 36.58 6,821,814 100.00 1977 3,386,130 47 06 977,451 13.59 2,831,287 39.35 7,194,868 100.00 10-Year Average 52.27 11 51 36.22 100.00 Dollars in Thousands.
1] Includes currently maturing long-tem debt and snort-tem dabt for capital purposes.
SOURCES: Moody's Public Utility Manual.
Annual Reports to the Commission.
TABLE 14 PACIFIC GAS AND ELECTRIC COMPANY
~
EARNINGS FA TE CN AVERAGE TOTAL CAPITAL TPENO AND 5-YEAR AVERAGES 1973 1977 I
IPACIFIC GAS 110 CCMBINATION I I
I I
YEAR IAh0 ELECTRICIGAS & ELECTRIC 110 E LE C T R IC 1 10 GAS I
1 I
COMPANY I
UTILITIES I UTILITIES I UTILITIES I 1973 7.83%
7.61%
8.09%
7.94%
1974 7.99 7.71 8.19 S.11 1975 7.66 8.16 S.!4 S.42 1976 8.C4 8.66 6.80 8.83 1977 8.56 3.65 9.11 9.25 5-YP AVERAGE 8.02 8.16 8.50 8.51 INDEX-1973 10) 103 to0 100 1974 102 101' 101 102 1975 98 lo7 10 3 106 1976 103 114 l') 9 111 1977 1U9 114 113 116 5-YR AVERAGE 102 107 1)5 137 SOURCES: 5-YEAR STUDIES, RATE OF RETURN UNIT.
MOODY'S PUBLIC UTILITY MANUAL.
ANNUAL REPORTS TO STOCKHOLDERS.
ANNUAL REPORTS TO CALIFORNIA FUBLIC UTILITIES COMMISSION.
.,, q N^,. '
{
~
\\
b
TABLE 15 PACIFIC GAS AND ELECTRIC COMPANY x /ERAGE NET PLANT INVESTMENT TRENO AND 5-YEAR AVERAGES 1973 1977
~
~
~ ~~
~ ~~~
l ~~~~~~~~if 555EiC 5IS I13"C555555iiON~i"~~
i l
YEAR IAND ELECTRICIGAS & ELECTRIC 110 ELECTRIC i 13 GAS I
I i
COMPANY I
UTILITIES I UTILITIES I UTILITIES i 1973 4,752,811 2,150,708 2,C69,198 615,54) 1974 5,170,284 2,353,358 2,324,954 645,774 1975 5,615,863 2,478,045 2,582,663 669,406 1976 6,011,538 2,570,764 2,825,257 697,172 1977 6,412,509 2,703,502 3,086,289 (730,035 5-YR AVERAGE 5,592,601 2,452,275 2,577,672 671,586 INDEx-1973 100 100 103 10')
1974 109 109 112 105 1975 118 115 125 100 1976 126 120 137 113 1977 135 126 149 119 5-YR AVEFAGE 118 114 125 109 DOLLARS IN THOUSANDS SOU RCE S: 5-YEAR STLDIES, RATE OF RETURN UNIT.
PGODY'S PU9LIC UTILITY MANUAL.
AANUAL REPGRTS TO STOCKHGLDERS.
AhkUAL REPORTS TO CALIFORh!A PUB L IC UTILITIE S COMMISSION.
g o
T A G L E 16 PACIFIC GAS AND ELECTRIC C3MPANY CPERATING REVENUES TRENO AND 5-YEAR AVERAGES 1973 1977 0
1 IPACIFIC GAS 110 COMBINATION I I
I i
YEAR IAND ELECTRICIGAS & ELECTRIC 110 ELECTRIC i 10 GAS I
l l
COPPANY l
UTILITIES I UTILITIES I UTILITIES I 1973 1,490,156 726,C27 625,457 412,S47 1974 1,726,755 946,370 797,556 474,8C7 1975 2,233,371 1,081,682 946,862 574,336 1976 2,646,728 1,209,290 1,066,621 675,770 1977 3,505,541 1,328,764 1,242,582 e16,584 5-YR AVERAGE 2,320,510 1,059,427 935,856 593,869 INDEX-1973 100 1Cu 109 100 1974 116 131 129 115 1975 150 149 151 139 1976 178 167 171 164 1977 235 183 199 198 5-YD AVERAGE 156 146 150 143 OCLLAR3 IN THOUSANDS S3URCES: 5-YEAR STLDIES, RATE OF RETURN UNIT.
MCODY'S PUSLIC UTILITY PANUAL.
ANNUAL REPCRTS TO STCCdhCLDERS.
AANUAL REPCRTS TO CALIFCRAIA PUBLIC UTILITIE S CC9 MISSION.
I m
r3 i '
Q /: -
TA2LE 17 PACIFIC GAS AND ELECTRIC COMPANY OPERATING EXPENSES TREND AND 5-YEAR AVERAGES 1973 - 1977 I ~~~~~~~~iP56[F[C 555 ii[~db585555[05"i"~~~~~~~~~~~i"~~~~~~~~~~l
~
I YEAR IAND ELECTRICIGAS & ELECTRIC 110 ELECTRIC 1 10 GAS 1
1 I
CCHPANY l
UTILITIES I UTILITIES I UTILITIES 1 1973 1,172,636 599,643 490,288 363,283 1974 1,396,146 801,059 643,263 421,004 1975 1,886,118 905,585 772,433 515,768 1976 2,242,858 1,014,276 8 71,1'J 8 609,21S 1977 3,061,328 1,123,096 1,019,993 747,819 5-Y9 AVERAGE 1,951,817 888,731 759,416 531,458 INDEX-1973 103 100 103 100 1974 119 134 131 116 1975 161 151 158 142 1976 191 169 178 168 1977 261 137 2'33 2 16 5-YR AVERAGE 166 148 155 146 OCLLARS IN THOUSANDS SOURCES: 5-YEAR STLOIES, RATE CF RETURN UNIT.
M000Y'S PUGLIC UTILITY FANUAL.
AhNUAL REPORTS TO STOCKHOLDERS.
AhNUAL REPORTS TO CALIFCSNIA PUBLIC UTILITIES COMMISSION.
O i
i i >
TABLE 18 PACIFIC GAS AND ELECTRIC CouPANY OPERATING RATI05 TREND AND 5-YEAR AVERAGES 1973 - 1977 I
IPACIFIC GAS 110 COMBINATION I 1
l I
YEAR LAND ELECTRICIGAS & ELECTRIC 110 ELECTRIC I 17 GAS I
I I
COMPANY I
UTILITIES I UTILITIES I UTILITIES I 1973 78.69%
S2.12%
77.49%
68.83%
1974 80.85 84.13 80.15 39.37 1975 84.45 83.34 80.84 90.41 1976 S 4. 7 i.
63.43 80.75
- 91. M 1977 87.33 84.24 81.24 92.13 5-YR AVERAGE 93.21 e3.45 80.09 90.34 INDEX-1973 100 100 100 100 1974 103 102 133 101 101 1C 4 102
.975 107 1976 108 122 iv4 1C2 1977 111 103 105 104 5-Yo AVERAGE luo 102 103 102 SCURCES: 5-YEAR STLDIES, RATE CF RETURN UNIT.
MOODY'S PUBLIC UTILITY HANUAL.
ANNUAL REPORTS TO STCCXHOLDERS.
ANNUAL REPORTS TO C ALIFORNI A PUSLIC UTILITIES COMMISSION.
D l
TABLE 19 PACIFIC GAS ANO ELECTRIC COMPAAY
~
AET CPERATING INCOME TREND AND 5-YE AF A VER AGES 1973 - 1977 I ~~~~~~~~iP56[f[5~555~i[0 5U555N555b5"i~~~~~~~~~~~~i~~~~~~~[~~~l
~
I YEAR LAND ELECTRIClGAS & ELEC TRIC 110 E LE C TR IC i 10 GAS I
1 l
COMPANY l
UTILITIES I UTILITIES I UTILITIES I 1973 317,520 126,384 135,168 49,564 1974 330,609 145,311 154,293 53,803 1975 347,253 176 C97 174,429 58,368 1976 403,870 195,014 195,712 66,552 1977 444,213 205,668 222,592 68,764 5-YR AVERAGE 368,693 169,695 176,439 59,413 INDEx-1973 100 100 10e 100 1974 104 115 114 139 1975 109 139 129 118 1976 127 154 145 134 1977 14 ']
163
'165 139 5-YR AVERAGE 116 134 131 12)
DCLLARS IN THCUSAN05 SCURCES: 5-YEAR STLOIES, RATE CF RETUPN UNIT.
MOODY' S PUBLIC UTILITY MANUAL.
AhSUAL REPORTS TO STOCKH0LDERS.
thNUAL REPORTS TO C ALIFORNI A PUBLIC UTILITIES COMMISSION.
O j
- g
TABLE 20 PACIFIC GAS AND ELECTRIC COMPANY RATIC: OPERATING REVENUES TO AVERAGE NPI TRENO AND 5-YEAR AVERAGES 1973 - 1977 1
IPACIFIC GAS 113 CGNBINATIch l I
I I
YEAR LAND ELECTRIClGAS & ELECTRIC 110 ELECTRIC i 10 GAS I
I I
COPPANY I
UTILITIES I UTILITIES 1 UTILITIES I 1973 31.35%
34.71%
'.79%
73.13%
1974 33.40 39.82 33.57 78.11 1975 39.77 43.33 35.79 92.55 1976 44.03 46.78 37.14 102.99 1977 54.67 49.41 40.19' 122.98 5-YR AVERAGE 40.64 42.31 35.29 93.95 INDEX-1973 100 100 10) 100 1974 107 115 113' 107 1975 127 125 120 127 1976 140 135 125 141 1977 174 142 135 16S 5-YR AVERAGE 130 123 119 128 SOURCES: 5-YEAP Sit 01ES, RATE OF RETURN UNIT.
P000Y'S PUBLIC UTILITY MANUAL.
AhNUAL REPORTS TO STOCKHGLDE95.
AhNUAL REPORTS TO CALIFORNIA PUBLIC UTILITIES COMMISSIGN.
p@@
t,
~
TABLE 21 PACIFIC GAS AND ELECTRIC COMPANY RATIC: OF NET OPR. I NC OME TO AVERAGE NPI TREND AND 5-YEAR AVERAGES 1973 - 1977
~
l IPACIFIC GAS 110 COMSINATION I I
I i
YEAR LAND ELECTRICIGAS 1 ELECTRIC 110 ELECTRIC i 10 GAS I
I l
COMPANY I
UTILITIES I UTILITIES I UTILITIES I 1973 6.68%
6.17%
6.69%
7.92%
1974 6.39 6 26 6.66 7.98 1975 6.18 7.11 6.79 d.56 1976 6.72 7.60 7.06 S.91 1977 6.93 7.64 7.45 9.20 5-YD AVERAGE 6.58 6.95 6.93 8.49 INDEX-1973 100 100 100 10) 1974 96 101 10) 112 1975 93 115 1' 2 109 1975 101 123 10 6 114 1977 104 124 111 118 5-YR AVERAGE 99 113 104 109 SOURCES: 5-YEAR STUDIES, RATE OF PETURN UNIT.
PC00Y'S PUBLIC UTILITY MANUAL.
ANNUAL REPORTS TG STCCKdOLDERS.
i AhMUAL REPORTS TO CALIFORNIA PUBLIC UT ILIT IES COMMISSION.
e
TABLE NO. 22 PACIFIC GAS AND ELECTRIC COMPANY Deternd. nation of Rates of Return Required to Recover Imbedded Costs of Long-Term Debt and Preferred Stock at Various Assumed Rates of Return on Cocmon Equity - Average Years 1980 and 1981 Assumed Earnings Rates on Common Ecuity Co st g: 12. 80%: 13.00%: 13. 20%: 1340%: 1350%: 13. 60%: 13. 80%: 14. 0c4:
~
- Capitag: Factors:
Weighted Cost Totals 1980
- Ratio.
Long-Term Debt 46.02% 7.63%
3 51 3 51 3 51 3 51 3 51 3 51 3 51 3 51 Preferred Stock 14.47 7 87 1.14 1.14 1.14 1.14 1.14 1.14 1.14 1.14 Comon Equity 39.51 5.06 5.14 5.22 5.29 1.)] _f.17, 5.h5 _1.jl Total 100.00 9.71 9.79 9.87 9.94 9.98 10.02 10.10 10.18 1981 Long-Term Debt 45 74 7 77 3.55 3 55 3 55 3 55 3 55 3 55 3.55 3 55 Preferred Stock 14 58 7 96 1.16 1.16 1.16 1.16 1.16 1.16 1.16 1.16 Comen Equity 39.68 5.08 5.16 5.26
-5.32 5.36 5.40 5.48 5.56 Total 100.00 9.79 9.87 9.95 10.03 10.07 10.11 12 lj, 10.27 lj Capital Ratios Estimated on an Average Year Basis.
g Average Year Cost Factors. Table No. 5 and Table No. 7 Develop Respective Year-End Cost Factors.
Vb rL a a L
le,
TABLE NO. 23 PACIFIC GAS AND ELECTRIC COMPANY Recomended Rate of Return Average Year 1980
- Capital Cost Weighted Components
- Ratios
- Factors Cost (a)
(b)
(c)
Long-Tem Debt 46.02%
- 7. 63 %
3 51%
Preferred Stock 14.47 7 87 1.14 Common Equity 39.51 13.40 5.29 Total 100.00%
9.94%
Average Year 1981 Long-Tem Debt 4574%
7 77%
3.55%
Preferred Stock 14 58 7 96 1.16 Comon Equity 39.68_
13.40 5.32 Total 100.004 10.03%
8 l
i f.PPEIDII PACIFIC GAS MID ELECTRIC COMPANY List of Cocpsnies Used in Study CombinationCompanies(10)
Gas and Electric Electric Utilities (10)
Baltimore Gas & Electric Company Carolina Power and Light Cocpany Consolidated Edison Co. of New York, Inc.
Commonwealth Edison Company Consumers Power Company Detroit Edison Company Long Island Lighting Company Duk3 Power Company Niagara Mohawk Power Corporation Florida Power & Light Company Northern Indiana Public Service Company Houston Industries, Incorporated Northern States Power Company Ohio Edison Company Philadelphia Electric Company Pennsylvania Power & Light Company Public Service Electric & Gas Company Potomac Electric Power Comparc Wisconsin Electric Power Company Southern California Edison Company Gas Utilities (10)
Atlanta Gas Light Company Brooklyn Union Gas Company Columbia Gas System, Incorporated Consolidated Natural Gas Company The Gas Service Company Laclede Gas Company National Fuel Gas Company
.NICOR Inc.
Pacific Lighting Corporation 2
Washington Gas Light Company I
.