ML20126H236
| ML20126H236 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon, Humboldt Bay |
| Issue date: | 02/19/1981 |
| From: | PACIFIC GAS & ELECTRIC CO. |
| To: | |
| Shared Package | |
| ML20126H234 | List: |
| References | |
| NUDOCS 8104070506 | |
| Download: ML20126H236 (47) | |
Text
_ ,.
FINANCIAL HI2HLIEHTS '
Percent g- 1980 1979 Change Operating Revenues S 5,258,899,000 $ 4,364,469,000 20%
Netincome S 524,770,000 $ ' .458,234,000 15%
Earnings Available for Common S 415,601,000 $ 365,943,000 14%
Earnings Per Common Share 63.60 $3.55 1%
Dividends Declared Per Common Share 62.60 $2 38 9%
Total Assets $11,295,203,000 $10,310,703,000 10%
Construction Expenditures S 1,221,758,000 $ 1,149,308,000 6%
Sales of Electricity to Customers (KWH) 58,291,655,000 59,728,452,000 -2%
Sales of Gas to Customers (MCF) 558,E92,000 600,180,000 -7%
TotalCustomers 6,316,244 6,181,714 2%
Numberof Stockholders 402,985 394,252 2%
Numberof Employees 27,582 26,877 3%
a f
$10 4 07 0 60 6>
99M70 1
TO OUR STOCKHOLDERS The decade was ushered in by unprecedented Energy has become the focalpoint of a inflationary forces which impacted every aspect nurnber of ideological struggles. Arguments of our business. Nevertheless, we were able to involve questions of renewable versus non-achieve a modest increase in our earnings per renswable energy resources, protection of scenic share of five cents to $3.60.This was possible resources versus achievement of energy inde-only because of a general rate increase granted pendence, low consumer prices versus decontrol -
by the Cahfomia Public Utihties Commission ~ of priccs,greaterenvironmentalcontrotsversus (NUC) at the beginning of 1980. Iow-cost energy production, state polcies versus The positive impact o! this rate increase, federal policies-jest to name a few.
hcwever, was diminished, first, by a decline in Accordingly,we have taken a pragmate '
electric sans he to a growing conservation ethic approach in proposing plans to regulatory au and reaction to hgher energy costs on the part :horities for approval. We have proposed of our customers, and secondly, by the rapidly plans whch strike the best balance wa can rising costs of labor, rr aterials, and money between #at we perceive to be society's desires, For tnese reasons, PG&E's return on stock- on the one handand the economic and engi<
hciders' common equity investment was only ' neering feasibility of providing energy supplies 11.7 percent-well below the 14.1 percent return on the other.
determined to be fair and reasonable by the Doing this, car currentlong-term CPUCinits rate decison a year ago. r6 source planning calls for PG&E to continue to .
To counter the inflationary forces and to expend substantial 2ums to increase energy .
improve our financial position, the Company filed conservation, recognizing that saved energy is for, and recently received, an interim increase in actually a source of energy that can be its non-fuehrelated rates for 1981, in addition, provided in many instances at less cost than can the Company apphed for a general rate increase new supphes.
to brome effective in January 1982, and hear-Looking head, after giving eff6;l to energy ings on this apphciton are about to begin. conservaton, we foresee a need to add 6,500,000 in the expectation tha! Cahfomia regulation kilowatts of generating capacity to the PG&E-will be responsive to the Company's financial area in the 1980s. N are planning to have 54 -
needs, and in recognition of the increased invest.
percent of thete additions come from so-called ment by our common stockholders through re.
" preferred" and renewatJe energy sources.
tained earnings, the Board of Directors recently Specifcally, more than 1,500,000 kilowatts are increased the common stock dividend by three planned to come from hydroelectric power.
cents per share quarterly effective with the Apnl 15, Mother 1, s00,000 kilowatts are planned to 1981 dividend payment The new annual drve c me from plants powered bygeothermalsteam.
dend rate becomes 52.72 per share.
Cogeneration, along with plants fueled by sohd ,
waste and bious,is Wg counted upon to Sales to Customers contnbute over 500,000 kilowatts, and we plan Kilowatt hour sales of electricity in 1980 were to have wind-powered generation furnish 82,000 down two percent from sales in 1979, but peak
- demand was up 1.7 DercentVolumes of gas Mowans.
sold were down seven percent, The remainir:g add:tions are planned to be These decknes were due, in part, to short-term 33 percent nuclear and 13 percent coahfueled factors of lower economic growth, a warmer. resources- specifcally, 2,190,000 kilowatts from then-r ormal cold season and cooler-than-normal the Diablo Canyon Nuclear Power Plant, now warm season, and reduced agricultural awaiting licensing, and about 1,000,000 kilowatts '
pumping loads. from out-of-stato coaLfueled plants Weare plan- ,
Over the longer range, we forecast continuing ning no new oih or gas-fueled olants, except for growth in demand through the 1980s avetaging cogonera!cn which involves the effcient joint about two percent a year for electricity and use of other industrial heat processes which use 1.3 percent for natural gas. these fuels.
For future gas supplies, our plans include the Resource Plans development of three new sources of supply, To meet this growth, the Company must make namely gas from the Alaska.9 North Slope,licue- +
plans tnat will accommodate an even greater ted natural gas from South Alaska, and synthetc vanety of environments, regulatory pohtbal, and gas frorn coal. Addmonal supplies from the financial considerations than in the past. Rocky Mountain area also are planned.
O
Ccpital Requirements '
4 Although our resource plans have been moder- ,
ated because of lower growth forecasts, these a plans still will require billions of dollars of new investment during the 1980s. Even conservation i measures and the so-called " soft technologies" -
f '
y require large amounts of capital, particularly ~
- while they remain in the research and develop- -
ment stage. -
The underpinning for this financing program
- P:. ,
I is the issuancG of additional shares of common '..
stock equity. Unfortunately, so long as the market I price of our stock remains below book value, as k. .
has been prevalent in our industry for many years, m this financing requirement holds the prospect of ,
future dilution of stockhoHers' interests as has . .
occurred in the past.
The management of the Companyis con-
)' s i cerned about the short-run consequences of '
selling common stock below book value. How- M^ Y_ J ever we are also dedicated to maintaining the b' i integrity of our shareholders' investment over the
{ long-term.The achievement of this broader Barton W. Shackelford Frederick W. Mielke, Jr.
i goal may necessitate the sale of common stock
! belove book value.
I
! California Regulation the Company's Management Committee was Our ability to aise the large amounts of capital expanded. These new appointments, and some that will be required in the 1980s and our success related changes in organizational structure j in achieving a higher market value for our described on page 19, will add significantly to common stock will depend, in large measure, the strength of the Company's management.
l on the financial community's assessment of the outlook for the Company's financial condition Our Employees in the ensuing years. It is always a pleasure to acknow! edge the dedi-The key to this assessment, of course, will be cation and loyal performance of our employees.
i the anticipated direction of California rate As we contemplate the economic, technical, i regulation. regulatory and political uncertainties of the 1980s, l As stated earlier, we are optimistic that such our optimism in meeting the cha%Us ahead
, regulation will be responsive to the financial needs reflects the high regard we hold for the men ard of the Company The timely granting in 1981 of women of PG&E. ,
our request for an interim rate increase and :
recent general rate decisions by the CPUC involv- ,
)
j ing other utilities support our expectations. / ^ uf M j l Our pending request for a general rate / !
i increase in 1982 is designed to improve sub. Freoerick W. Mielke, Jr. )
' stantially the Company's cash flow ard its overall Chairman of the Board and !
financialintegrity Chief Executive Officer i i
A realistic and responsive decision by the j
' CPUC in this case willimprove opportunities for / ^ M,, / '
l our stockholders to earn an adequate return L #
1 on their investment and permit the Company to l maintain reliable service to its customers. Barton W. Shackelford
- President and
- CrCeniz=tional Changes Chief Operating Officer
' A number of new senior officers and vice presi-
' dents were elected effective April 1,1981, and February 19,1981 I
j l 3
l l
Revenue- $201 million to cover ra 8
/7 Fin nce l OnS be operating revenues na a tee nionernon-'oei-reiated costs, sucn as those a for1980 increased 20 operating revenues for labor, materials, RGWOW oer e"t ver'979.
while operating ex-penses rose 22 per-
- ere 55 26 b"o"i" 1980, up approxi-mately $900 million a"e ret"r" oo invested capital, contributed only cent over the prior from the $4.36 billion about $130 million As PG&E moves to lessen .ts i year. recorded in 1979. when combined with Theseincreases The increase was due reduced electric sales.
dependence on petroleum fuels, .
In revenues and ex- entirely to the effect The general rate alternative energy resources are penses reflect higher of higher rates, since increase wasin-rates charged cus- lesser volumes of gas tended to give the gaining greater importenCe. iomersendnigner end eieciricity were Compeny en oppor.
ts t the Nmpany sold in 1980. tunh to eam a SuCCessfulConservation and load for naturalgas, fuel The higher rates return of 13.6 percent oiland virtuaily all resulted from the net on common stock management programs are per- other costs of doing effect of eight rate equityinvestment mitting the Company to defer large, business. increases and one over the two year Netincome for the ratedecreaseordered period,1980-1981.
Capital-intensive projects under an yearcameto$sas bytne C eiifornie Howeve,; infie1 ion.
milli n, nin re se Public Utilities Com- induced cost in-innovative enerOY resource plan' of $67 million over mission e ./arious creases, and lower 1979 After preferred times during 1980. than anticipated sales More geothermal, hydro, Coal, dividend requirements Most of these rate rendered the general Co-ger' Oration, wind and nuclear of $109 million,5416 adjustments were rateincrease totally million was available " offsets" designed to inadequate to permit energy, to9 ether with gas from a for common stock- passalong to custom- realization of the holders, equivalent ers dollar-for-dollar aimed-for 13.6 Variety of new sources-aiiCombine to $3.60 per share. the costs incurred by percent return.
This was an increase the Company for the Accordingly, the to provide one of the most diversi- Company applied for of five cents over the purchase of fueloil, fled energy systems anywhere. $3.55 per share of a natural gas, and elec- an interim general year ago. tric power produced rate increase in 1981.
The Company's by others. This was granted by financing prograrn These so-called the CPUC in February
, during 1960 totaled " fuel-related" costs 1981 in the amount
! $867 million and was comprise thelargest of approximately the largest and most single category of $155 million.
expensivein PG&E s expense in the Com- For 1982, PG&E history Details of this pany's operations. has requested a gen-l program, plus further and required 63 per- eral rate increase of description of 1980 cent of all revenue approxirrately $1.3
.,. . . . . , r. r. ~, -..s.-...,, ,
operating revenues, collected from our billion. This case is
+ i Earnings Pet Shate 1!T L,tT!1n :: 7; customers in 1980, designed to improve
+ and Dividends Declared e :-** H operating expenses, the Company's cash
.p. .os.i ,s... ;L;l
. o..-
. .. R.1ilil !-,
' W~ 117.
- M .'Mal and net income The net additional mvenues realized flow and requests a areincluded in our Management Dis- from the "offse" type 17 percent return on
' " M ;2n!;;*I iT* Q.4J H;:i1E[f ir.: it4;Mit ijd cussion on Pages adjustments during common equity
- u did.
-,- .;M j
- 4 g m. 25 through 27. 1980 amounted to Heanngs willcom-qf _ ._ . -
" v31++ approximately $770 mencein March and ,
l a decision is expected
% 7:21.2 million.
- 4
- A general rate by year-end.
g
, JUT. increase authorized
.p. -
y . . .
L;f?
..,u_...
in the amount of 4
tlj .
,1 . . <
.iilh .:'}l;;76;7p7,7;jy7,87+j7,9 ;8o fj ' o
A View Frem PGGE la the world's Isadsr in da estsping gesthsrmal ansrgy. Richcrd A. Dresger, Manzger, Nerth Day Divician (San Rafast) l Tlio Divicicris l The unusual diversity ["'t"~7"]'"M @ gy ' =
'm y(
! cf ths PGAE service N w. / <
. p l area has opened the 6V~ ?- %
M '( 4 wa) fer the Company ,i - S 1 to employ a variety 3 . . o k 3 . of onsrgy sourues, 2' <* . . . t - including geothermal # ' '
. j ' ,
steem.
- g ^
The Geysers is the - nation's fitst commer- I M} . cizi cacthermal power % . f
.Q i pisnt. Its 15 generat-Ing units make it the { Ju.
9 I,i.
~
k h* l'fg h ~ '\ world's largest.
~
,i {. .. ~j k4 Hsre stop a cooling [*#/U
\ .\
- towsr,Is Division Man- ...
c- 1 \-
' agtr Dick Ormeger. His f'.4
- L j; .
( o
}j staff oversees the pro-ducticn of more than '
O~ n
.- ~ ,;
(
~ ,
' {(i '
1 COO,000 kilowatts of -
'gfJ" l. ,
e q f [ elsctricity-more than l
'[
fivs psrcent of the PGAE area's generat-
' // r ,
j [ ; (- g.
,i 4,. c. ,? , ,
Ing capscity.
'. 3
_/ Whsu expanded to - 1
' ~ Uy,' ' 7 2 almost two million '
kilowatts by 1990, the . .MEDE . projsct will produce as
~
~'
0.* ..
,[/!
i much alsctricity as the Q .. - J , $7 l burning of about 20 *
. 4' A ' %.9p?
] million barrels of oil i a yearin conventional . h
.- 4 4
'9(fj
,4 j e' .j i
.L steam powered gen- -
,s
. , W; 'g.
eroting plants. .
?.j l
Elactiric and save our cus- the world's largest . Opsrutions torners hundreds of geothermal plant. , :E>ctnc Peak and . . . . . , . ,tHobditys:' millions of dollars Nine PG&E units , foove Peak Capabi,lity; ; ;;; : > pm p , Nuclear each yearin lower now planned or ."'"*'"*"*
, l,,;.!b !' , '
Our applica6cn to electric rates. under construction , ,
,.,.,,,+4 g the federal Nuclear willincrease the plant's < -
ii + +
>4:
' ' D "q ~'id:!
Regulatory Commis- Geothermal capacity by 1990 to - ,4 4 - + 4:.
* 'M sion for permission to Two geothermal 1,789,000 kilowatts.
+ **
load fuel and proceed units, including the 4 i15; l ! to low-power testing world's largest. Hydroelectric a; ;** of Unit 1 of our The 1,120.000- 4,' were added to The _ _ l Diablo Canyon Geysers during the kilowatt Helms + to 4 Nuclear Power Plant year. Pumped Storage - 4 ,4 t-is still pending. The totalelectric Projectis now :+ 3:, Once in full opera- 7 generating capacity 54 percent complete. t. 3 i tion, the two-urit from PG&E's 15 units During 1980, :: T;;; Diablo plant will at The Geyser:' now turbine-generators ; h>;. ; reduce greatly our stands at 909,000 and other majoritems ,, ,,y,
-78+4 19-+. + 80 0~,; !
use of fossilfuels kilowatts, making this of equipment were ++ '- - i i 1 9
Westharization training cantar teachas pacpla conservatten skills. The Company,in an C. Rcbart Martin, Managsr, Stockton Division unusual businsss-lecal governmentjoint venture,is helping low-income, elderly and disabled persons to conserve energy and to ; reduce the strain on i limited budgets caused by today's energy prices.
. Here, at PGSE's
' ~
training center in
., Stockton, persons em-
'T played locally under I the, federal Comprehen-g sive Employment and l
Training Act(CETA)are V trained to install attic l
',k,y
- * ~
' - and other insulation,
~.
. +
perform weather-Y;& . ... . stripping and make F g ~ f.h T . f( 'v.
- minor household repairs.
, t'-s ' ^'.y @ 'M.4@ 's This center in Divl-
'. sion Manager Bob
<' g ' %gQQ Martin's division turned ,i e out 648 trainees during S3 f-1980 and class reser-4- vations were booked 3 -
s
, .f#
s . '.
'., wellinto 1981.
s[ x New classes,includ-I ing a solar training y :. - y 1 3, ,
,, . program, are being
' 3' ~
offered, also, to PG&E
.- 4 C. ' : employees, other
~
. n. f .
Ma utilities, private con-g [j h ' tractors and govern-ment agencies,
.m , . . .
~ af't -
l i* , , t .C y
" f N . . ,
'l . w.M
'~
W hx w.m . : i ce moved to the site Small hydro facilities
. , .: . g - p r; .7 7. again have become whereinstallation q " Yu.,4l#y[A
~
k?
.t, A r . . , . ' %f
< w$WcW j"vh ' g >%g } NhMMb 4 m presentlyis under way in a large under-practical and cost-effective as the cost of
' ,,, ^ ground powerhouse. fossilfuel to generate
~ '.D i. - W T
"~ .
~
Work began in electricity keeps rising. During the past two 1980 on another i
^
hydroelectric facility years,four small
>[g#
i N.~'
~
- the 140,000- PG&E hydroelecte
., 4 '
g -
; '. kilowattKerckhoff 2 plants on Battle 4 ' *.; .[' .
" Creek, near Red Bluff,
. = t 4 i- -
Powerhouse on the ! San Joaquin River. were modernized
" l Ax %' ,
] , and their capacity
+4m
~
s s t 1 increased. Eight other
/ C I ..
The Dahlo Canyort small hydro units d h ; .y,s -.%1 . L- ' Nuclear Power Plant. now are in the planning being roadred for opera. k ;&% u. .m ' ,y Iron. will reduce fueloil stage. W x. .g. . & 5 n y 'e , q re00!rernente cut energy Tbe Company buys
,n.
me ~ costs and provide needed 9,g7 g79m 9;99 yp r . [, , new generating caDactly __jn -
Locking chsad, ths Ctrcng interconnectisns with cthsr utilities cid systsm relichility. Comp:ny is laying the J. Lewis Kirkogeard, Mzneger, Cel; cts Divisisn (Marysvills) Crcundwork to etrengthen its intercon-nscticns with the hydroelsctric capacity y_.,- .
,e , , ,
w ,
. afty in ths Pccific North- ,
j wont, es well as with * , l Navada, Utah and by' ., - m '
, gg,j '
j l idaho, cnd southward < i j to South 3rn California 7 W and Arizona. ' 4 r 4, 4 Ctrena links with "p ,pb othsr utliltles increase pd? - ei 4iN .systsm rollability, help ,00 msst summer peaks r?? a, v s ( Wi_dfNOj.N
- g *M S
,h My
= Nse V, ond psrmit cost saving .,
e:g , - - 4- "it Oxchanges of energy 4 ~~ Mg [" '$+: ,0h:t further reduce Kmge:-Ng mk" ;,;. A g g4 . D?GSE's dependence on ",. y ph? %y- s ' @Wg g ,$ pn%m.esms 3b "a ,,K Ocraign cII. .. , m-ge uh vg; w 4 p - gpg- ygpjg.. j At right, Lou Kirke-f)mard follows a path
.p
,p p 7[q peg , e Chrough his division 4 A N 4 J!6 i . .
T'
'*'i
- chsre the 500,000-volt , f ,
facific Scuthwszt Nerthwest-Intertie links y i~ W c. @y$ r a grest hydroelectric M T N lento of the Columbia
- lysr Dasin with the rCs thsrmal generat-
$ 4 ug facilities of lifornia.
lydroelectric gener- y - .. ,., . _ ... ... .. u . ...a. .......+. .~...... . ... . .-,. .. ating facilities ;; t980;9ectric:::::;;y ::::n;!T:;d . h Prplepted.199QElectric :1::.. ::;i :: mlonging to public +4 +. F.B,esourc,e. M..ix ". 4 .+ .t *t. ". .* *:.m. . u. . s. ,w. .s.t + n..R,e.s,ource ~ M. .ix. - +. e . +4
. 4- 4.- .m + t +g. H 4, +- u+ -- t 9ge.ncies, such as ,rn.- i .+"i -.+1, i 4 m~oww - *-* *4
,, .. a g .+ m . +.. ~e y, an' w" " " ewm 4 abon and water ~~+~ .~ '
+ ~~~~
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+ , h ~,+ ~' ~,~ .' . m,mLw w.
- nuw ~4...a4 . ~.
. /.~,- c.u. u. w. - + .
%u. - . h. r. .r./f. ,a mmco 4tr t.:ricts. Negotiations *
..o,e w m . ~.
4 4 4, e.m...,,.
.e+
e,... et* . u u .. re underway to ., ... . fq;. 3..- . L ., e v. o. . , 44 uy the outpyt of 12 !!$71' -- y
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e @pph.4s
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'he PGSE Area tesource 3%YJ ' '.+1u .A;. . . + . - -
Flot S,WStDght. AnC/ Odes { f[; [f.f f]j *
;j i L+31 he PG8E System plus the + ~-4 e a + 4 g- + a.v+
iacramento Muncpal ITf1 .; y L % y$ **::& . t. l <y::;^;.
. +rr . ;::
JttittyOstnct and other
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u H4 #b. . . V., mle 4 -. t .* ' 4 . 4,~*4 +-". *, 4 3 , T' **
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ternsin Northern and -+ + 4 w ,4 ' :4 4 4 -4 4 +; +4 NF*444++. ^ hs, +R +4 -k .-4-' ntralCa!rtbrnsa allof hhh [N
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7tegrated with PGSE ** " ' ~ ** " " " ^ " * ""' "~**~** # " " * * '"-*~'*** ** "*********^* 7
l Oli fisld cagsnsrctlan: alsctric gsnsrctisn cambinsd with snhsncsd cil recevsry. In C:llfernim, cilm:n Grant N. Radferd, Msnsgar, San Josquin Division (Freens) pump storm into cil wells to recover the al-most tar like petroleum common to the state. While this expensive rwypvp m~' : wpg(:: m(( ' .l \ technique is not new, {[M.(h/'/w $[y.w: gr9fk , %.y ., ' ' coupling it with an
- g. ..
J- electric generating
~
y;. ': '
, 1y, .
)
, , ' jnF w .
sourcels. 7 gg u: 4;g
+
,1 On sites like this, 0 (
' ~
, { g ( s 7 visited by DNison Man-Y ager Grant Radford,11
>,s$g
'q Ag>. < g J
b yb i , FJs w turbine-generators v 4 .a y. y 1 x .r. - powered by natural gas y, ,. g m -
" 3 or residual fuel oil
(; . p t (.; , tx < .- ,y, . y will produce power for
- ' 3 - , :-
..b PG&E. Hot turbina p 3 g ; - . t G .' , .. m J) exhaust will generate
~%
f '. . ' . % ;;*j , steam forinjection 1 : A.
'. # Into the oil producers'
.- - . .- + : : e ' -- , ;i . wells.
l j . 4- e fyg .. . .
~
- This PGRE division, A r* W p . .
covering most of the 3,,,,w, ]< . pp
, . , , 1 2OO mile-long San Joaquin Valley, serves 4 3 .. c. .. -
6 W j. ' g
, 1 ' . 7-
- ..j much of the state's rich agricultural area.
its 17,000 square mile electric service
~
~ '
- p. . .,, .% '
't area makes it geo-
*- graphically larger than
.. f '~
7 ,
. most U.S. energy
~ ~ ,' ...c, utilities,
. , , .g h? hag I
. ), . .
u * , e 1 . . , . . l l m pmp,, struction or planned. of 14 cogeneration
.~
y ,~
-.yt ~~ T+ ~ and solid waste elec-
,g. ,
x "% ' Cogeneration / tric generation
'4 Wind projects with a total p . ~ ,
At the end of 1980, capacityof about q #.y ' s the Company had 200,000 kilowat's.
& I h Negotiations aro contracts or other
~~
l 4 s m - ' NM ' f *v ~ 5 ' commitments from industnalcustomers underway for 31 more such projects.
% agMp . Mh to acquire the output During the past I" e4 .N year, the Company connected to the i*6 . ?
k;/J Q g,p gy,_ ,y ,ycyg,gg. , PG&E system five small wind-powered Nz" instwction chairinan
?* rredencA w uretae Jr at generators owned by g 9 ett rerewedthemator customers. And a
..pm actions taken to E nhanct? gyggggggyl wjpg,
"@(
safety systems and
.e
. orerator trarning at Drablo monitoring prograrn
'~
canyon led to a Company jQ a
. _ _ _ _ . . - . _ - .- - . .. . -_. . . - . - -_ - - - . -. - ~_ -
l Energy conservation Mere thzn svar, spensering community programs is a PGAE hallmark. and community spirit Rebsrt D. Mullikin, Managsr, Da Sabla Division (Chico) i are at the heart of a i two-year electricity l management program , sponsored by PG&E in . i Davis, Merced and .i 4 l Chico. f , Each community I 6 competed to reduce j k . summar peak electric P
~
'4 -
use and win Company gM
'. . I awards of energy con-
. \
J-
*- [
servation goods and
's .
[i. ' ., services for use in 4 r - - , -Ivic projects. Y~*' s , 3 .. a Reductions during e< ' s" the summer of 1980 = ranged from 13 to 22 , 7
~
percent. - Shown at right, . , Dhdslon Manager Bob - , ' Mullikin co-hosts a f ' park fullof young ., people, senior citizens, I and other residents of d the greater Chico area, M '.) I i allof whomjoined g in this unique pilot .. program to increase WijgIQ8 ... l i energy conservation. , ,
.k ,. !
l
/
? l 4 4 t
~
R. h
- r. .. .
,yb . :-
y '
; , ~-- . .
l decision to installa , . .
.pg,a: San Francisco, were pany expects will be a 2,500-kilowatt wind . : 'Uses of1 6;uwsa: deferred. source of power turbine-generator :Ek3ctro t nergy . in6sa: The Companyis within two years for in Solano County ggSi,,. . ' nesiderti+(acornrnet,pt:a ; proceeding on a such things as data delayed basis with recording equipment en.
Coal / Combined plans for joint devel-
+. at remote meteorr e
+ + 4 '-
Cycis , , ,
. opment with other logical sites. By 1984 Because of lower Z - im -. utikties of an out-of- solar cells may be forecasts of growth, ; -
'@ state coal-fueled put to a variety of ,
plans to seek :. generation project. other uses, including ! approvals for a coal- _,4 power for agricultural l fueled generating Solar Cell
- 40
- irrigabon pumps.
plant at the Com- , Test Program PG&E is helping to pany's Montezuma w , At year's end tests fund a Westinghouse site on the Sacro- . . po, were under way at facihty that will mento P ver, and for a >
; PG&Es engineering mass produce photo-combined-cycle oil or .
research laboratory voltaic cells and lower t. gas-fueled plant at 4 - i on photovoltaic solar their costs, the Potrero site in . 4 .. :70: 77; - ;78 ;7g * ;eo- ,i cells which the Com-9
_ _ . _ _ _ _ . _ . _ . . . . _ _ . _ . _ . - _ _ . . __ __ ~ __. . . . . _ ._. - Nucisar fusion-one cf m.sny areas of research whsre PGaE la activa. Limitisss ensrgy on Georgs F. Clifton, Jr., Managsr, East Day Division (Oakland) certh using lactopss of hydrogen - that's the potential seen by proponents of nuclear fusion. Fusion has been
,? .-
J
- called the most difficult
\ /- -
scientific technological
* . . . ,' ' project ever under-taken by mankind.
p ,
. ~
Nevertheless, govern-ment and industry-Including Individual
.L \ -
~( .
utilities such as
'? := '
POSE - are making
~
~l progren in research.
f; ,
.g Division Manager M / yc p George Clifton talks Ykg . j
, ', to PGAE Engineer A.C.
th, D " Chip" Smith, who z.e i '- s 1 . has been assigned
.. . by the Company to a l .
A magnetic fusion experi-ment at the Lawrence Livermore Laboratory.
.% Based on power I' .
' sales, revenues and
*- g . .& .
, number of customers ,
g served, the East Bay l - g g . Division-scene of busy port, rail, mill and a-
' t. "
I -
- oil refining activity- t g N. would rank among the
~
% top 50 electric utilities .!
. In the U.S. lf it were a !
& ',&y W;, .,
l s 9< , ~h4sb$ g. Mk - y v . on. - :- , k I p ,l ;- _ ~
.. 1 T{" Power Sharing Utilities Commission.
m A statewide contin- The plan was placed under the g) Q y ,' gency plan for power sharing to protect direction of PG&E Cakfornians from President Barton W. electnc shortages Shackelford. He is 4< g 0 -h-;'%( ' during peak use also the coordinator of a three-stage 4;1.s, p '% g. periods was approved Yk g i in May by the emergency plan to A4 *r pr " California Public reduce customers' 4 ' 3, L j -
*- loads should the a new sophisticated
- Y*#%
computer tank w,tn neign. reserves available to
- ~.- u.!
&p"P - t>onog power systems Cahfornia power
-: ,
- l -
instantly tells operators in systems fall belOw Power Controlthe acceptable levels.
$. avadatslity and best once n, for t'uving or selling j >
a
-'
- _ i_ . eimtncity la meet
.d,ib d, . : .. .,
j l 10
Eff:rts to reduos ths Hydro powa , guld mining expansion undsrway in Callfernia. uso cf expenciva cil Rabsrt E. Mstzker, Mansgsr, Drum Division (Auburn) cnd n:turclces to genersta electricity insluds plans by this and severalother POSE divlelens to build and - v/ '~I'~
~
epercts emell hydro- ..y .... .. 1.' l ciectric power plants, ' "- [ f
g[p i J ,
- cr to buy power from f
- cimilzr units owned g,
. , - j
!, by othsrs. Tha Ccmpany's ser- .h*-
~
i f
- vics crom otso contains fp .
d g
-(
. ths irrgest remaining -
~
'. ] ..
.MD c Id dspositsin the 1 i.i ,y 3 , . .
Unitcd States, accord- ' -- ( 'I .' g' O+ j in;l) to ths U.S. Bureau h- '
- cf Minas. 1 'y L 4 3
As gcid prices in-creassd, many old [h: ,' .
~
, minos wsre reopened y and a nsw California k} ' ,0 Id rush was under < s "ky j g f .. I4 ! way.Ons of the areas . ' cttracting a new breed j!ly e ' lcf proepsetors and 4.0y ' y i. . . 0 '.- )
,incronssd mining il'c' ?
A ; ' activity is near Nevada -' - 2 - ( City. Hzro Division *
*? \ #
- Menzgsr Bob Metzker, '
4
- vluits thslocal mint .
~
- whsre g
- Id nuggets .;-
- g r .'
- are bsing weighed. ~
~
i .. .
.d . ",.7 .
~
, .[ . . Rx .
. . . > l l
i l 1
)
Gas System which will Operations bring Alaska gas to l thelower 48 states. i Alaska Gas The Western Leg Construction began will be built by the in December on the Company and its Western Leg of the subsidiary. Pacific l proposed 4,800-mile, Gas Transmission Alaska NaturalGas Company, by parallel-3 Transportation ing the existing pipeline which brings l Canadian gas ! j to PG&E. i j' Ettorts to reduce the use Untilthe Alaska l of expensive oilandgas to pipe lineis completed, l; generate electncity include the Westem Leg wiII installing sinallhydro plants and buying power trorn tranSpord^in3dian l- ;) similar units ownedby gas for delivery by gy others PG&E to Southern
.whe; %
11
Another new PGAE energy source-gas from garbags in sanitary landfills. Mathans gas tappad Vernon H. Lind, Manager, San Jose Division from a sanitary landfill i in Mountain View, south of San Francisco, l is now being mixed with traditional gas in the Company's pipelines.
' - lt's a useful supple-j-
ment to the average of a 2.1 billion cubic feet of { natural pas a day
~
g ,
.J presently supplied to p ,
g , PG&E customers. n: M . 4 ].a Now sn its third year, 6" the project being in. [' [ - 7 - spected here by Division Manager Vern Lind is p . 4" 9 ?]; proving the commercial '
. d feasibility of this alter-
'f r g- g nate energy source.
% : .- k @4,1 Additional wells at
. }g7
% this site and at 13 other
< M Bay Area sanitary
[- " i landfills could provide a combined methane i l r ig e 7 .
. gas output equivalent l 9 y
,. 4 , to about 12 million l
=a P.'- - cubic feet a day of I
- g." % ~,
J
- h. ' ;Y l
- 7 - ,% natural gas, enough to serve about 58,000 e h s g%
# y s , ; average homes.
n - *p.,
- c ,J The San Jose Divi-
~
.- T ni sion-center of
=
.t. booming aerospace 7
[ J and electronic indus- , hj$ j .9 tries-would rank 37th
'< among the top 100 U.S.
..~ .. a
-@ gym Od electric utilities based .
d[ l W on the number of cus-5Q,;.)h i S.
' " " *** "*d' I th.y dm$$$& .17m . A ,O , ."i~ .
WMid@ l s ., Cahfornia Gas Company's subsid- California Gas crasa Company com- iary PGT. has joined in 1980 the Company's Sources of. NaturalGas 'ome, sms a mencing in 1982. with El Paso Natural subsidiary Natural mos os cot,c t.s cauna a Gas Company Gas Corporation of Rocky Mountain Southern Cakfornia Cahfornia (NGC),
*00' Gas Gas Company and added ,ew Cahfornia -
The Company b Northwest Pipeline gas r .ves to the
. _ _ . _ engaged, through Corporation in a PG&E system as a 750 its subsidiaries in gas partnership to result of drilling nearly exploration in the constrtet a 583-mile 20 percent of all the Rocky Mountain pipeline from this exploratory wells drilled 50c area, including the area to Cahforns in the Sacramento Overthrust Belt. Authonzation tc No- Valley-the main gas-l 4gA producing area of pu ]j d., g3 3 j A.]y } qj As a result of gas ceed with this $515 I
Q yMg $j .!q N y 250 discovenes from this million project is the state. N3*.y) l { 4 1 7 program and antici- pending before the A major function pated purchase or Federal Energy Reg- of Cakfornia gas l reserves is to protect l development of ulatory Commission j
'76 77 78 79 80' additional gas. the high prionty residential l ll 12 }
_ _ . ~
Growers and cattis- Cpscisily design d concorvatlan proCrams hsip Califernia agributinssa, msn gansrats S14 Floyd C. Marks, Mznacsr, Cosat Vallsys Divialan (Sallnzs) billicn a year in nsw wealth and create one cut of every fourjobs in Callfernia. " A major share of tha state's crop produc. ,
"""M[T7,]'
/~'* . s,f"d- 7 ]M ',7' WTg
- .g py ?&jgNty'?5 ,"
tien comes from nine " '1 'L' tr jJ 4 ! million acres where,
- each year, water pumps G . . , T i :M
.' consums five bilhon yi ' , kilowatt hours of elec- jg , <1 ,~
- tricity to irrigate ; a4-
?g
- ths land.
Since 1923, Company i, f ,/I;9
, agricultural specialists i WM
. and pump testers have g @if 'jy 9 JS ' }.y .g
' hsipsd farmers use i
ensrgy more efficiently. /y i Today, there's a new , f; l dims: 31sn to this utility- %.' ' customer partnership. Hare, Division Manager Floyd Marks explains Innovative programs ( to hsIp agribusiness cut i energy costs by con- ' serving and by taking l advantage of lower l rates charged for use ' during off peak hours. l 1 I
'm;
- p. 4 customers during Coal Gasification 4 .
y% ._ timesof peakdemand.
-.P y ,. ,
.>=e i
In view of rising costs PG&E's current resource plan antici-u ,-m - ' 9 n _s -ww7 - W g- .. f of Canadian gas and the record of success pates receiving 60 rnillion cubic feet of achieved by NGC in synthetic natural
.. ,, 3
(- ..4y , exploration, the gas (SNG) a day by
'%- g i
- Company will con- 1986 and double j ,
,NffT tinue to seek regula- this amount by 1991.
I , 9 "1" g tory approvals for the in November, the d financing of further Company signed a s California exploration. letter of intent with
- Panhandle Eastern
,f 5 . j, I- t ", Pipe Line Company Two years of priotplant operation Indicate that and Ruhrgas Aktien-gesellschaft of Essen, rnerharie gas produma g trorn cattle tentlot waste West Germany, to
" ,, ^ could decorno another pursue joint develop-
' ~
""'N o' """W ' ' ment of SNG from
^ , ,
- *. PGM gas customers I 13
- Birthplace and headquartsrs of PGSE is the City of San Francisco. Cpenningenscf ths J. Art Fairchild, Manager, San Francisco Division werld's grect hcrbors,
) ths cight mils Ocy l Bridge links San Fran-l cisco with more than ' i 20 cities along the
, ,, M$:f ~4 . eastern shore that con- I tribute vitality to this 1 j
i /- .is e ' s < unique metropolls.
/ But bridge and dis-tant skyline, shown x - .
y l here from mid-bay
, - ]. . '9e6@
r i '
Yerba Buena Island,
? "* t -j can only hint at the
}9
~
1 w.,._.,' e matchless physical
~
~-
g% , sett:ng, mix of cultures i ,- '[ . , ~ t ' and bustling com-mercial activity of l .O _ 3 .. i I pj. , this POSE division
, headed by Manager !
( I.:. g'
, ? ' S .
Art Fairchild. , While high rise towers speak of San Francisco as the finan-
#
- ciel center of the west
~
and gateway to the
- v. . Pacific Basin, other i i
attractions-the l 3 delights of Nob Hill, , f .- '] .p . cool summer fog, cable cars, hotels preserving past splendors, shops
' ~ 8
'[- -
and restaurants of i
..- '/ .
E . overy kind-all have 3 . / made the city a magnet , for tourists from J: - l
' everywhere.
Y .-. ,
?i It was here that gas p .
's and electricity first came to Californla
.4 _l' 3 ,
. soon after the 49ers.
- e. .. s 1 .
l coal near Douglas. prove economically Liquefied l Wyoming The output feasible, it would . Uses of: . : Eenc Geremias chr B : Natural Gas (LNO) of this project could become the largest .Natura.1 Gas. . . neacus : Because of escalating cogeneration facihty r+micut>< rem ...Resioe= 6 c-e.t. u - costs, regulatory reach 300 milhon cubic feet a day of in Cahfarnia - -- - - - - delays, and the need
' '000 ~
SNG by 1993 Us ng the synthetic to allocate available PG& E, toge".er gas as fuel, turbine- capital resources with Texaco, Inc. in generators would pro- ~. . _ - _ . .- among a number of December received vide up to 210,000
-750: projects, PG&E is a federal Department kilowatts of electnc ty seeking additional for the PG&E system partners to share of Energy grant of more than $4 mahon Exhaust heat would
._, g
. E '
-3 ps s #j
'"4 , t ~500 ownershipin a gas partially to fund a be captured to fj M '- liquefication plant in feas:bthty study of a produce steam for Alaska and in tankers cal g asification - injection into wells
~
to bring Alaska no. cogeneration project to facilitate Texacos LNG to California. at San Ardoin recovery of heavy PG&E's partner in Monterey Coune/ crude oil this project, Pacific Should this project T ~77 ~78 7R 80: Lighting Corporation, 14 l
As the cost of new Madernizing aidsr hydroelsctric plants can add 25 parcant more capacity. electric ganarating R. J. La Rus Jr., Managsr, Shasta Divialen (Rad Ciuff) facilities soars, modernizing and up-grading existing power plants of ten makes economic sense. Typicalls the 70 year. * - ' old insklp hydro-elsctric powerhouse, now reconstructed to I ganarate as much as . l 25 parcent more ' electric power from the i same water facilities. l inskip is but one of . I three picturesque, '
- stone powerhouses I A .
( l built between 1901 and ~ .~ I 1910. improvements , l to our Battle Creek ,.g , 3 i hydro system added ,I - -
~
7,600 more kilowatts >. " 'r r' ' ' - ' , ~ . i . ; in this Northern - California division w . gw ' c. g '.
^
managed by Jack -. La Rue. l.- \? a .- i ' 3 ! And elsewhere ( 4 - - ' 4 throughout PG&E more .. . .
~-[- p.
] hydro is on the way,
., .s l ranging from a huge g *.
[*** pumped storage , ' project to small plants - 1 i located wherever l It is feasible to capture % ,, the force of falling d
.g .
". {
! water. c
- 7
- ,2
.,,,a ,
; :* ~
k .._
,e l -
. g .-
I l
! has joined in this study of this site is l effort. under review by the i Because a Cali- California Public j fornia LNG receiving Utilities Commission 8N j terminalis vitalfor and the Federal ', ,
1 access to gas re- Energy Regulatory 7* - l servesin the Pacific Commission as a last 7 j Basin, particularly j Alaskaandindonesia. Ten teet of snow carper a , the Company remains Sierra meadow scene of M ~ ' ' , W. ' optimistic that the one of the more unusuar ?
.?3 Little Cojo Bay termi- "hd '00 d#'*'*"'I DS '
i it
' per/ armed by PG&E .g
. mi n nal Site near Point employees Here a survey Conception on the rea<n measures the cevin 3 ^ 'j l ";/ Q.}3) i Centra l California and water content otthe .. .. + ./ A l coast will receive final 8" " P8Ck ^*D'* '"" fl C j regulatory approvals means more hydro / 'C ' 4- a,' [+ ll*f .A n
generat on less need for
, by the end of 1981. burning cosityintergn , ,,. ;
-. 4 , ;c. ~.}p' 'n' , , ..g
- A two-year 3eismic oilin thermalpower plants ! C? j l4 i l 15
i l I California watsrs yls!d mere then a billian pcunds of fish each year. Commsrcial and epcrt i Roy C. Atkins, Manager, Humbcidt Divisien (Eurska) fishing, tourism and magnificent redwoods ! - famed for their towering majesty and i _ _ _ _ _ _ - for their yield of highly . WM #
~
7 N, prized lumber and ;
~
f' wood products - ' I combine to fuel the ,
* ' economy of California's '
'% [. -
. _ i;/ / north coast.
f Much of the state's an .,- energy-dependent ,
*ishing industry pros-
- pers in close relation- *
/ ship with the Company.
f / i
) .
s' 4 Hen, Division Manager Roy Atkins observes !
. T j. ~, I newly caught salmon l
'j '
about to be processed in Eureka. I There, a number of
*- 7 Company sponsored
[ conservation programs help canners use gas
/ '
< and electricity more efficiently.
- u. ,
,p ,. , ,
Nearby lumber mills,
- + s ,, .
.P T 3b;.' -a- ,
consuming vast amounts of steam and electricity, more and more team with PGSE in cogeneration
'W
' g projects using f biomass f uel.
1 l
~ ~ " ~ ~ ~
step in determining the year- application by site acceptabihty The Department PG&E and Southern Given uncondi- of Energyin October Cahfornia Gas tionalapprovalof the announced that it will
- Company receiving terminal fund a feasibihty g.a In addition. DOE study on the cost of granted $328.900 to site. favorable resolu- , .,
fund further study tion of court appeals, designing a com- f7 .. and secunng of additional partners, mercial system to produce pipeline Gjek' N.@f zz, -
+
b ^Q. i of acattlefeedlot project of the two deliveryof LNG could quauty gas from yj';I y'Q y$p ' W N . . . ',". lf k.b,,g corppaniesin the start by 1987. sanitary landfills at c'
~
W M - '.* ImperialValley This Mountain Viewin 2 projectis testing
' ~
Mathane Santa Clara County {b %*}
~
and Calabasasin N - PG&E's effona to .,. pgy.y g,,,,,y, ,,,,g tap methane.the prin- Los Angeles County y.. .
.. ..
- gwgg y,e,ny,e sgyrces o< energy is shown in tms cipalcomponent of The $341.620 k
.1 '
i aests concept'on o!the natural gas, f rom award, subject to , - sanitary landfills final negotiation.
.:'."< "'? ..-
'H - ComD3"Y S S' "'"d advanced dunng came in response to -j ,. '
-].-. y '
j)'[,17((,' [" ' 18
In a service tsrritory Iniznd part davalepmsnt goes en dasp in the heart cf our service area. as varlsd ac Ncrthsrn Ctsnisy E. Howatt, Manzgsr, Sacramsnto Divialen and Central C. <lifornia, it is not surprising that Managsr Stan Howatt Isinvolved in the , _ expansion of a port _ , l located on a deepwater . ,_ g , ship channel 80 miles + inland from San ' L 4 Francisco.
~
Here at the Port of 5' , idh Sacramento, a new S10 ' a ;. / i mill!on bond issue will
~
J-i<
/M finance additional . .
./
cargo and storage h: f.? / . facilities to handle (.- ? ..g1;g > I exports of rice, wheat, iL *# e logs, wood chips and fertilizers worldwide, v' W- A9. j b."y -. 3 Such facilities, of aF " < 4M I course, will require . . . ,M'hi y. %, ~ M*~: ! additional dependable & , 1 energy from PG&E. Mb 7:p ' 4 es
*I Division managers
j prize the Company's '
. . f!$ i
, ability to provide on schedule new energy h +-
. ,j=
i ,, Iy/M . l
** g ,* e service to imiustrial commercial, agricul- *
- 1 tural, and residential '
customers. ] 4 l ) I l
)
I Energy
~
( the commercial feasi- .~, i bihty of using manure Conservation . - - to produce com- During 1980, PG&E mercialquankties of spent about $37 _ ,, 4 h .- . . million to help its resi- g;
~
methane, -f Preliminary studies dential, commercial, ' f 'M j4 -', show that the pro- industrial and agri- - duction of 1.8 million culturalcustomers use natural gas and elec-
.j '
7 l cubic feet of methane . l per day is possible, tricity more efficiently -
.; '7 .
. g~ f j ,
, an amount that would a ,
- n / . e
' meet the annua l ..
'..AYU * ' ".' W needs of about 7,800 '~. ' ' ' N, l'# '
l average Nortnern '"'e 'n 'e s remdentiat -
*~ 4 g p> ' ,
and Central Cahfornia '$3fj,';Na'Nr"g$sE ' 4' homes. toinstatt rarnote control gy / . / devices which can turn off - air conditionors on a rotat.- fy,, _ ", .. ing basts dunng peak load <>' ' N, *, hours .
- n ~: \
~
17
1 i Alike amount flowed into Company For developing and promoting as wellas for government facilities programs to develop alternate fuels these successful programs over the and schools. i using solid waste and biomass,co- past four years, PG&E in January About 62,000 residential home ' generation, load management, voltage received a White House award"for energy audits were made during1980. reduction and energy-saving street outstanding contribution to the Earlyin 1981, the California Public light conversion. Programs also were national energy conservation effort" Utilities Commission approved the designed to reduce the Company's Focal point of PG&E's energy initial phase of an innovative PG&E pro-own energy use. conservation programsis an Energy posalto offer zerointerest program Allin all, more than 50 separate Conservation Center, which during (ZIP) financing forinstallation of programs saved the energy equiva!ent 1980 responded to nearly 150,000 insulation, weather stripping, or other of burning an estimated eight toll-free telephoneinquiries from cost effective conservation devices million bcrels of $30 fue! oil ($240 customers seeking information on in homes. million worth) to generate electricity subjects such as insulation, weather- By far thelargest such undertaking Put another way, savings represented stripping, lighting conservation by a U.S. utility, ZIP offers home-enough energy to serve 50.000 and appliance efficiency owners and residentiallandlords the homes with electricity, or 67,000 homes More than 3,000 on-site audits chance to pay for conservation with naturalgas, over the next were performed for commercial, measures withinterest-freeloans. 10 years. industrial and agricultural customers. The first-phase of the program will start soon in 10 countiesin the Fresno-San Joaquin Valley area. Under these cost effectiveconser-N ~ vation programs, the Company f) obtains energy atless cost than
; . providing new energy supplies. This
, benefits allcustomers and benefits
. stockholders by lessening the need to k finance the development of new 4 , '9 energy supplies at high capital costs which depress earnings.
~
's .
n .
~
Another endeavor is a Solar Financing program designed to 4). . -
.: #( determine the cost effectiveness of r n . ?- '.
I - putting solar water heating systems in (, homes and rental units. The plan would i'f. be available on a first-come, first-X -- - *
..cN served basis and customers would be 9
- g. ~ , allowed to choose from a variety .
l N ' M.W jif g [ 4l Q*. g. - of financing methods. More than 800 low-incorae customers will receive
- *' h ~' ;. 74
/- ,
-t free solar water heating systems
_[ '
...g %%% :.5 . ,.
;';.' y ]$
from PG&E under a plan developed by the CPUC. l , h '
. Ys,- i During 1981, the Company k..
.i c (
. %Fip&p[+hhgNggM
$NM.A i 2'Mjg[M@g% nM plans to spend more than $115 millior i '7 ~
. , g - ~
N N4- on its overall conservation activities.
,/ d g" 7 / These will involve about 1,100 employ-bh j -f.l,2 f 4 , ' h,e, ." j Th"h Y kh %b#
ees delivering services through some w 'g i 2, 1, , < $j[#.L- .' ~# %" , 60 programs to 3.4 million electric
,s pf my q and 2.8 million gas customers.
-p i M p Experience during the past four
,y -
_ , ,1 Q p q. U
- v 9.j years makes it clear that, with a 4 J#
- "
- management committed to conserva-3 1. - g gp# . f4 tion, alorig with highly skilled and E dedicated employees working with 6
0
>#jhy '
d g n:q '
~ '
Sunset frames a drilhng rig in Wyoming - a reminder that the sun seldom sets on allthe t employees of PGM and its 14 subsidiary
? andathhatedcompanies Buyers.quahtycontrol inspectors and e'nployees seelong new '
sources of naturalgas range nationwide and l
~
often worldwide l 15
i I l customers, the people of Northern commissions or are active with Robert Ohlbach was elected to the and Central California will continue service, youth, civic and charitable new post of vice president and
- their already-serious efforts to organizations. generalattorney; and John E Taylor reduce energy waste. was elected vice president and cor-Executive Changes corate secretary George E Clifton, Jr,
! Our Employees Following eight years of service, Doris succeeded Mr. Cooper as vice presi-Some 18,500 of our more than E Leonard, internationally respected dent-customer operations, and Jcn 1
27,000 employees are represented by conservationist, retired as a director in E. Koehn succeeded Mr. MacKillop i theinternational Brotherhood of February 1981 under the Board of as vice president-governmental l Electrical Workers (AFL-CIO)and Directors' age-in-service policy relatio".s. 2,000 by the Engineers and Scientists L. W. Lane, Jr., chairman of Lane William H. Wallace succeeded Mr Publishing Company and an advisory Maneatis as vice president-computer ! of More California. than 6,800 minority personnel director, was elected to fill the vacan- systems and services. Richard K. ! are employed by PG&E- 24.5 percent cy Mr. Lane, too, has been prominent Miller, who has been vice president-
; of the total workforce. Upward mobility in areas of conservation and envi- personnel and general services, will j of minorities continues at a rate which ronmentalprotection. have the new title of vice president-
- now shows 60 percent arein the To add to the Company's organiza- generalservices. Allof theseappoint-
, journeyman levelor above. Donalstrength during these times ments are effective April 1,1981, j Approximately 750 women are ofincreasing demands upon utility Other management changes since i performing jobs in construction, management, the Board in February the Company'slast Annual Report I maintenance and other physical 1981, elected the following to new include the election in March 1980 of work. Many have advanced into such senior positions: John S. Cooper, James O. Schuyler, nuclear projects l jobs as service personnel, control senior vice president-personnel; engineer, to the new post of vice
) operaior, substation operator and Malcolm H. Furbush, senior vice president- nuclear power generation, i equipment operator. president and generalcounsel; and the election in May1980 of
- Women, too, are moving into Malcolm A. MacKillop, seniorvice Treasurer James T. Doudiet to vice
- management at an increasing rate. president-corporate relations; and president-finance and treasurer.
.I The Company's commitrnent to George A. Maneatis, senior vice Lawrence R. McDonnell, vice j provide career development oppor- president - facilities development. president - public relations, retired in ! J tunities also reached new highs during These officers also become new September 1980 following 27 years ) ) 1980in terms of specialized member. of the Company's Manage- with the Company Grant N. Horne, l training programs, workshops, home ment Committee. director of specia! projects for public ' study courses, and technicaland Elmc E Kaprielian was elected relations, was elected to replace mariagement courses at the college to the neu post of vice president- Mr. McDonnell. and university level. fuels plar.ning and acquisition; The Company carries on a strong , l recruitment program to attract top . engineering, science and business administration graduates. During the year, pension adjust-ments and improved medical ' coverages were made to help PG&E's , 5,600 retired ernployees meet the . T ; problems ofliving on a fixed income s .. { " during a period of high inflation and -
. < .e spiralling health care costs. This is '
j I the third pension adjustment for ! - retired employees since pensions ,$ 6/ were first raised in 1969. * .
% 1 -
Employees during 1980 continued 7E %' 5 j (. a long tradition of service to their
>=
communities. Many serve on local - government bodies, such as city
- councils, school boards, and planning .
4 j PG&E campus representatoves at California ' Polytechnic University San Luis Obmpo. guide .- other students. faculty and hving groups on ways to conserve energy Campus represen-
. W A - ~ !alives ottor customer services on fM3 other Northern Cahtornia campuces also s
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FINANCIAL SECTION s Contents 22 Comparative Statistics 24 Revenues and Sales 25 Management's Discussion and Analysis 28 Auditors Letter 29 Statementofincome 30 BalanceSheets 32 Statement of Funds 33 Stockholders' Equity 34 Notes to Financial Statements 21. _ . _. s
Pacdc Gasand Elecinc Company CONSOLIDATED COMPARATIVE STATISTICS For the Years Ended Decemter 31i 1980 1979 1978 197' Per Common Share Eamings S 3.60 $ 3.55 5 3.18 5 3.1 Dmdends Declared S 2.60 5 2.38 $ 2.16 5 2.0, Divedend Payout Rato 72.2% 67.1% 67.8% 6 3.73 Book Value(em d yeaq $30.09 $29.83 529 69 528 7: Market Pnce - Hgh 24% 25's 24h 255 Market Prce - Low 19X 21% 21% 22; Market Prce - Close 20% 23 22% 24 Corsstruction EmpemHtures (Trousanes) Etsctre Department S 973,785 5 943,911 5718.572 5599.12d Gas Department 247,973 205.397 140,541 122.191 Total 41,221,758 S1.149.303 5859.113 5721.32 < Electric Statistics Net System Output (uaons d KwH) 69,962 70,339 67.669 65.42 Net System Output - Percent Hydroelectre Plants 13.0% 16.8% 19 9% 9.2; Thermal Elecinc Ptants 50.5 59.1 49 5 72.4 Other Producers 30.5 24.1 30.6 18.4 Total 100.0% 100.0% 100.0% 100.0? System Capacty - KW (at annaa pea *) Hydroeiectric Plants (ac.e se comtms) 2,354,600 2,360.000 2.350,900 2.350,901 Thermal Electre Plants 8,754,000 8.612,000 8.294.000 8.294.001 Other Producers (aieme ccn:nons) 3,971,000 4.112.900 2.791.100 3,302,90l Total 15,079,600 15.084.900 13,436.000 13.947.801 Net System Feak Demand - KW 13,440,400 13.215.200 12.970.600 12,191.601 Average Annual Residenta! Consumption - KWH 6,535 6.811 6,553 6.4 01 Total Customers tend d yeaq 3,447,739 3.365.950 3 270.302 3.179.36; Cus+omers Per Moe of Dstnbuton Urva 39.1 38.9 38 5 38. Gas Statistics Gas Purchased for U S. OperatonMTrousa-ec d MOF) 779 S80 841.764 709.578 817,60 Source of Gas Purchased -- Percent From Cakfornia (Cadcma Pr cxers) 16.0% 16 9% 16 5% 16 15 From Other States (atcaem 2:ra Byes) 43.6 36 9 34 9 36 2 l i From Canada (at u s .ca,aca screed 40.4 462 48.6 47.7-l Total 100.0% 100 0% 100 0% 100 01 Average Cost of Gas Purchased - MCF (US 0:eauns) From Cakfomia (Cadyne Fio3xers) 215.9c 173 60 159 40 112.1> From Other States (at cawxna*. ena axoen 230.0 179.1 135.1 1100 From Canada (at u s canada smoeq 434.7 260 8 222.2 200.2 Average 310.4C 216 00 181.40 153 Peak Day Sendout - MCF 3,275,016 3.398.281 3,243,552 3.1862 Average Annual Resdent.at Consumption - MCF 81.6 90.4 86 9 90 Tota! Customers (e-c d read 2,858,129 2.805,471 2.738,767 2,674,8g Customers Per Mfe of Dstnbuton Main 97.0 97.2 97.4 974 l 1 22
l 1976 1975 1974 1973 1972 1971 1970
$ 2.89 $ 2.64 $ 3.24 $ 3.21 $ 3.01 $ 2,75 $ 2.47
$ 1.88 $ 1.88 $ 1.88 $ 1.78 $ 1.72 $ 1.64 $ 1.50 64.9% 71.1% 58.0% 55.4% 57.2% 59.7% 60.9%
$28.10 $27.65 $28.14 $27.78 $26.35 $24.91 $23.66 244 234 24% 32% 33% 36% 35 20 184 17 214 26% 28% 224 234 20% 204 22% 32% 32% 34%
$518,398 $540,790 $536,931 $465,422 $458,817 $379,198 $330,559 131,864 99,230 124,857 113,377 92,076 84,444 106,845
$650,262 $640,020 $661,788 $578,799 $550,893 $463.642 $437,404 66,416 63,078 60,932 60,572 59,124 54,665 51,277 12.2% 22.7% 25.6% 21.5% 19.8% 25.6% 26.9%
62.0 43.9 38.1 53.4 52.7 46.5 48.6 25.8 33.4 36.3 25.1 27.5 27.9 24.5 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100 0% 2,419,900 2,396,900 2,396,900 2,384,800 2,369,800 2,364,900 2,364,900 8,261,000 8,053,000 7,947,000 7,841,000 7,062,000 6,956,000 6,942,400 3,743,400 3,766.100 2,948,700 2,554,700 2,609,900 2,438,700 2,098,000
- 14,424,300 14,216,000 13,292,600 12.780,500 12,041,700 11,759,600 11,405.300 12.245.800 11,632,800 11,648,800 10,867,800 10,469,800 9,713,000 8,807,700 6,509 6,462 6,260 6,417 6,213 6.048 5,697 l 3,087.300 3,005,518 2.936,106 2.854,585 2,767,978 2,675,942 2,597,314 37.7 37.2 36.9 36.5 36.0 35.4 34.8 852,935 876,721 888,193 997,912 1,031,355 1,017,045 959,669 16.5% 15.9% 16.5% 23.3% 23.1% 24.5% 25.0%
37.5 40.7 43.2 37.9 39.7 40.7 43.3 46.0 43.4 40.3 38.8 37.2 34.8 31.7 100 0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 96.1 C 56.7C 42.7C 37.0C 33.7C 31.7C 30.2C l 83.0 72.7 55.8 43.0 39.4 37.5 33.9 l 175.4 123.5 55.3 35.7 28.8 25.5 23.8 127.6C 92.2C 53.4C 38.8C 34.1 C 35.7C 29.7C 3,348,909 3,352,881 3.020,215 3,423.896 3,918,844 3,798,462 3,633,341 100 8 111.1 104.5 113.4 115.7 121.7 107.7 l 2,611,551 2.555,216 2,503,203 2,443,889 2,383,609 2,317,686 2,258,285 l 96.8 96.4 96.1 95.9 95.6 95.0 04.1 l 23
Pacif c Gas and Electric Company CONSOLIDATED REVENUES AND SALES In Thousands For theYears Ended December 31, 1980 1979 1978 Electric Department Revenues Resdential S 998,130 $ 693,368 $ 720,112 Commercial 1,067,197 752,359 852.265 industrial (1000 Kw demand or over) 699,074 461,653 531,593 Agricultural Power 212,770 142,727 149,986 Public Street and Highway Lighting 38,225 30,491' 34,179 Other Electric Utihties 71,926- 67.740 69,855 Miscellaneous - 58,568- 50,111 43,584 Other 5,336 4,115 3.814 Regulatory Balancing Account Changes (223,385) 261.281 (306,455)- Total S 2,927,841- $ 2,463,845 .S 2,096,933 = = = = = = . -_ Sales- KWH Residential 19,329,190 '19.605,541 18,314,721 Commercial 18,283,154 '17,891,820 17,166,973 Industrial (1000 xw demand or over) 14,801,260 15,253,371 14,815,289 Agncultural Power .3,540,022- 3,715.026 3,120,644 Pubhc Street and Highway Lightir'g 431,564 455,445 485.725 Other Electric UtAtes 1,906,465 2,807,249 2,232,563-Total Sales to Customers 58,291,655 59,728,452 56.135,915 Ga3 Department Revenues Restdential S -799,307- $ 555,017 $ 432.865 Cornmercial 626,611 406,497 346,229 Industrial 708,259 499,242 340,546 Other Gas UtAties 148,074 85,867 18,384 Miscellaneous (6,560) 7.128 _4.315 Regulatory Ba!ancing Account Changes (133,807) 176,354 193,960 Subsidery Companies (u s and Canada) 189,174 170,519 136,141 Total S 2,331,058 $ 1,900,624 5 1,472,440
==== _ ==.. __
Sales - MCF Residential 216,184 234 295 220.076 ' Commercial 146,827 143,707 144,162 Industrial 161,060 186,165 138,975 Other Gas UtAties 34,821 36,013 9,926 5tal Sales to Customers 558,892 600,180 513,139 Company Use (eerc generaton) 202,964 216,062- 125,636 By Subsdiary Companies on u s) 153 130 120-Total 762,009 816,372 638,895
- - . = = = = = = . _ _ _ . . _
_ =__ _ . . . - b0 ,
l Pacific Gas and Electric Company MANAGEMENT'S DISCUSSION AND ANALYSIS OF G2NSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATION The following table displays data which is discJssed under the captions in the text below. Selected Financial m Tnousands Inf0TmatlOn (except percentage and per share information) 1980 1979 1978 1977 1976 Rosalts of Operations: Rateof Return Earned 8.6% 8.5% 8.1 % 8.3% 7.8% Authonzed 10.3% 95% 95% 9.2% 9.2% Return on Equity Earned 11.7% 11.5% 10 9% 10.6% 10.1%
. Authorized 14.1% 12.8% 12.8% 12.8% 12.8%
Earnings Per Common Share 63.60 $3.55 $3.18 $3.14 $2.89 Dividends Declared Per Common Share $ 2.60 $2.38 $2.16 $2.00 $1.88 Operaung Revenues S 5,258,899 $ 4.364,469 $3,569,373 $3,629,530 $3.048.546 Operating income S 573,147 $ 515.903 $ 468.088 $ 459,432 $ 421,407 Net income $ 524,770 $ 458,234 $ 400.451 $ 355.677 $ 301,465 Liquidity: Construction Expenditures 6 1,221,758 $ 1,149,308 $ 859,113 $ 721.324 5 650.262 Ratio of Construction Work in Progress to Net Uttty Plant 33.9% 31.2% 27.3% 24.6% 21.9% Net Short term Borrowings S 671,313 $ 574.775 $ 69,141 $ 121,724 $ 282,505 Net Short-term Borrow ngs as a Percentof TctalCapitalization 7.3% 69% 09% 1.7% 4.3% Capital Resources: Total Assets at Year End $11,295,203 $10,310.763 $8,665,160 $8.216.285 $7,627.834 Capitalization at Year End Common Stock Equity S 3,726,870 40.5% $ 3.389.256 40.7% $2,995.433 39 6% $2,825.650 39.5% $2.490,367 37 6% Preferred Stock Without Mandatory Redemption Provision 1,227,451 13.4 1,102.451 13.2 1.102,451 i4.6 977,451 13.7 877.451 13 2 Preferred Stock With Man %ry Redemption Provision 150,000 1.6 150.000 1.8 - - - - - - Long-term Debt 4,087,080 44.5 3.687,562 44.3 3,457,632 45.8 3,S31,680 46.8 3.264.421 49.2 Total Capitalization S 9,191,401 100% $ 8.329.269 100% $7,555.516 100% $7,154,781 100% $6.632.239 100% Depreciation Expense 8 280,710 $ 250.864 $ 230,617 $ 218,209 $ 208.660 Financng - Net Proceeds Long-term Debt S 497,834 $ 372,404 $ 249,567 $ 198.393 $ 172,804 Preferred Stock 132,306 149.383 132,429 106,223 105,894 Common Stock 23ti,746 276.564 58,758 225.638 187,770 Total Financing S 8C,i 'J6 $ 798.351 $ 440.754 $ 530.254 5 466A68
- .================.========-=====- -.=====c==-- - ;.= =:
Resulto of Operation A series of balancing accounts have been established in recent years the Company has fallen far short of earning with a view to insuring ultimate recovery of major changes its allowed rate of return principally because of inflation's in fuel costs as well as reducing the exposure of the tremendous impact on the Company It increased the cost Company's earnings to fluctuations in gas sales.The first of extending service to new customers and the cost of balancing account was the Energy Cost Adjustment Clause providing that service. Some of the effects of inflation have (ECAC), adopted April 1976, which permits the recovery of been lessened by actions of the California Public Utilitics the cost of fuei used for electric generation and purchases Commission (CPUC)in their adoption of energy related of electricity from other producers. As part of this procedure, balancing accounts, forward looking test years, more any difference between actual energy costs and actual l i timely action on general rate increases and increases in ECAC revenues is accumulated in a balancing account. allowed rates of return. 25
h This amount, with interest, is recovered from or refunded ancing accounts) within twelve months of the filing of an to customers through periodic rate adjustments.The application.This plan le designed to allow major energy allowed interest rate on balancing accounts has, since utilities in California the opportunity to receive general rate -
- January 1,1980, been the current commercial paper rate. relief every other year at the beginning of a future test year.- - Prior to that date recovery was limited to a fixed 7% rate. The combined effect of these changes in regulation in -
Similar balancing accounts have since been established California has been to insulate the Company's operating to permit recovery of the cost of gas and to permit recovery income and net income to an increasing extent from changes of the impact of gas sales fluctuations. The overall impact on in the cost of electric energy, the cost of gas sold, and gas the Company is that earnings are not affected by variations usage and from delays in general rate proceedings. The follow-in those costs and revenues which are subject to balancing ing table shows the major categories of changes in revenues account procedures provided they are ultimately authorized from the preceding year. Rate changes include rate increases ' to be recovered by the CPUC. ..
' which occurred during the year at various times.The decline .
A plan was adopted by the CPUC in 1977 to reduce in volumes resulted principally from conservation due to regulatory lag by processing general rate cases (which PG&E sponsored awareness programs, CPUC mandated - address all costs other than those handled through bal- programs, price increases, and lower economic growth. In MAons - Year Ended December 31, 1980 1979 1978 1977 1976-Electric Revenues Rate Changes General 8 88.2 $ 4.2 ' $ ' 67.0 $ 88.7- $ 146.8 - Energy , 891.5 (354.4) -21.8 630.7 52.3 Sales Volume and Other Changes (31.0) 147.4 (28.6) 53.9 79.2 Balancing Accountincreases 569.7 . 249.1 Balancing Account Decreases (484.7) (318.4) (239.1) Net increase S 464.0 $ 366.9 $(258.2) $ 534.2 $ 527.4. Ga3 Revenues Rate Changes General 6 68.0 $ 100.2 $ 22.8 $ 28.8- $ 49// < Gas Purchased 767.9 183.0 54.6 138.6 166 9 l l Sales Volume and Other Changes (95.3) 156.6 (92.8) (65.5) C1.5) l Balancing Accountincreases 213.4 35.6 Balancing Account Decreases (310.2) (17.6) (55.1) Net increase S 430.4 $ 428.2 $ 198.0 $ 46.8 $ 180.7. > ( ) Denores decrease The operation of the balancing accounts enables the relief and received an increase of $155,000,000 in Company to recover all fuel related costs as well as reduc- February 1981. This increase reduces by that amount the tions in gas usage. However, the 1980 actual costs of labor size of the previously filed general rate increase of and materials and financing costs such as interest and $1.455,000,000 to become effective in 1982. This rate case preferred stock dividends far exceeded the estimated allow- is designed to substantially imprcve cash flow. If the CPUC - ance for such costs in the 1980 general rate case. To correct decision is f esponsive, it should arrest the trend of the this deficiency the Company filed in 1980 for interim rate declining internal generation of funds. l !- CG t
)
J i .. . .- - . - . .
uguidity One of the major financial trends in the last five years has Allowance for equity f unds used during construction and been the increace in the use of various forms of short-term allowance for borrowed funds used during construction has debt relative to capitalization. The reason for this increase increased greatly in recent years as the result u higher was a change in policy to use short-term debt (primarily costs of funds and the increasing investment in construc- commercial paper) to finance the unrecovered balar.ces in tion work in progress (CWIP). Annual rates of allowance balancing accounts and fuel inventory increases during this for equity funds used during construction were 7.0% in 1980, period.The Company has a policy of maintaining bank lines 6.5% in 1979, and 6.4% in 1978. Annual rates of allowance of credit to support all sales of commercial paper. for borrowed funds used duiing construction (net of the r:lat^d income tax e""ct) were 1.7% in 1980,1.6% in 1979 Capital Resources and 1.5% in 1978. The Compary continues to extend and enlarge its facilities The ratio of CWIP to total net utility plant is an important to ensure ieliable service in its service territory to all who indicator of the Company's abihty to mt et its capital want it. It is anticipated that consolidated construction , requirements. Although allowance for equity and borrovced expenditures during 1981 wil! approximate $1,394,000,000, I fur 4ds used during construction (AFUDC)is included in net of which amount $1,031,000,000 will be attributable to income, this return is not current cash income. Only when electric facilities and $363,000,000 to gas facikties. The construction is included in utility rate base does it begin to Company has raised capital and issued debt securities, contribute to the Company's cash flow. On the other hand, preferred stock and common stock in such proportions that construction expenditures do require current cash expendi- at year-end 1980 capitalization ratios were 45%,15% and tures, both for the construction itself and for the interest 40%, respectively. anc; dividends required on the investment in CWIP. As the Because of the regulatory considerations, inflation, and ratio of construction work in progress to total net utility the greater difficulty of obtaining new sources of energy, the plant grows larger, it becomes more difficult to generate the costs of replacing and adding to the Company's energy cash needed for additional construction. supplies have increased greatly. The actual costs are larger Two large construction projects contribute heavily to the and projects are under construction for longer periods large amounts of AFUDC-Diablo Canyon nuclear gen- than in the past. This situation increases the risk the erating station and Heims pumped storage project. At year Company may have of not recovering its entire investment end the two nuclear units were substantially complete and in projects not carried to a successf ul conclusion. The CPUC were awaitirg operating licenses. Total investment in the two as a matter of policy has in the past disallowed recovecy of units at December 31,1980 was $1,789,000,000 including allowance for equity and borrowed funds used during
$647,000,000 of AFUDC.The Helms pumped storage construction on unsuccessful projects of other utilities in the project is well over half completed and at December 31,1980 state, although it has consistently allowed utilities under its had accumulated costs of $438,000,000 including jurisdiction to amortize the costs otner than AFUDC of $57,000,000of AFUDC.Becauseof thelargesizeof the abandoned projects and has established rates to cover that Diablo nuclear unit and Helms pumped storage projec: amortization. There is no reasonable way to estimato investments still under custruction, the large amount of which projects, if any, may be abandoned and therefore the CWIP relative to net utility plant is a matteruc erious concern aggregateamount of possiblelocsof AFUDCif theCPUC to the Campany. The CPUC has indicatec ihat it intends to adheres to its past policy. The Company intends to pursue treat large projects such as the Diablo nuclear units and vigorously any avenue available to it if any of its projects Helms pumped storage as special offset rate cases when must be abandoned and legitimate costs such as AFDDC they become operational. Under this procedure the become a burden of the equity holder.
Company expects that general rates will be in reased to cover the cost of depreciation, return on investment and The favorabie resolutica of the items discussed above operating expense whi!e energy rates will be reduced will aid the Company in the achievement of its financial because of thelower costs of power from nuclear and objectives. Among these objectives are the maintenance of ; pumped storage units. Since AFUDC for these projects will its long-term debt rating at AA,its prefened stock rating ; be discontinued, there should be little, if any, effect on the at A, its short-term debt rating at A-1/P-1, and the sale of its l Company's earnings, but cash flow will be greatly improved common stock at book value or above. Of these objectives, l and the ratio of CWIP to total net utility plant will be greatly holding the selling price of the Company's common stock reduced. at book value or above has not been realized in recent years. 27
CPINION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Stockholders and the Board of Directors of Pacific Gas and Electric Company We have examined the consolidated balance sheets of Pacific Gas and Electric Company and its subsidiaries as of December 31, 1980 and 1979 and the related consolidated statements of income, funds used for construction, and common stock equity and preferred stock for each of the three years in the period ended December 31,1980. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing precedures as we considered necessary in the circumstances. l 1 in our opinion, such consolidated financial statements present fairly the financial position of the Company and its subsidiaries at December 31,1980 and 1979 and the results of their operations and funds used for construction for each of the three years in the period ended December 31,1980, in conformity with generally accepted accounting p principles applied on a consistent basis. r-San Francisco, California February 17,1981 C2 _
Pacific Gas and Electric Company CTNSOLIDATED STATEMENTS OF INCOME in Thousands (Exceot per share amounts) For the Years EndeUecember 31, 1980 1979 1978 Cperating Revenues S2,927,841 $2,463,845 $2,096,933 Electric Gac 2,331,058 1,900,624 1,472,440 Total Operating Revenues 5,258,899 4,364,469 3,569,373 Cperating Expenses Operation i Cost of Electric Energy 1,465,680 1,231,169 912,873 Cost of Gas Sold 1,833,831 1,405,516 1,045,978 Transmission 105,694 102,999 91,346 j Distribution 122,720 110,227 97,610 I 150,282 122,413 101,284 Customer Accounts and Services 275,714 226,016 184,975 - Administrative and General Other 63,426 49,161 38,295 [ Total Operation 4,017,247 3,247,501 2,472,361 Maintenance 157,262 132,577 124,378 Depreciation 280,710 250,864 230,617 Gas Exploration 13,213 13,050 4,631 123,698 100,071 133,264 Taxeson income , Property and Other Taxes 93,622 104,503 136,034 Total Operating Expenses 4,685,752 3,848,566 3,101,285 , Cper; ting income 573,147 S i 6,903 468,088 Other Incomo and Income Deductions Allowance for Equity Funds Used During Construction 202,873 159,669 125,625 Interest Income 96,442 36.016 22,736 Minority Interest in Net income of Subsidiary Companies (4,991) (3,934) (2,790) 41,422 21,500 23,265 Other - Net Total Other income and income Deductions 335,746 213,251 168,836 Inc:me Before Interest Charges C98,893 729,154 636,924 Inttr ;t Charges Interest on Long-term Debt 322,344 279,912 255,296 112,609 26,137 11,201 Interest on Short-term Debt ; Less Allowance for Borrowed Funds Used During Construction (50,830) (35,129) (30,024) ; TotalInterest Charges 384,123 270,920 236,473 N tincome 524,770 458,234 400,451 Preferred Dividend Requirements 109,169 92,291 83,337 Ecrnings Available for Common S 415,601 $ 365,943 $ 317,114
= - - - - - ==== - = = = = = = = = = = = = = - - =:==
= = = = = . = = = = = = = = = - - = = = = = =
Average Common Shares Outstanding 115,600 103,225 99,580
===~========= a=====- == = ======= ===_= === = = = = ======= = === = ===
Ccrnings Per Common Share S3.60 $3.55 $3.18
= = = = = = = = = = = = - - - - = = = = = = = = = = = = = = = = = = = - _ ===== = = = = = -
Dividends Declared Per Common Share 62.60 $2.38 $2.16
= = = - = . - . = = - ==.-===.==----=--==.======_=============_== :: ==. - -
The accompanying notes to consohdated financial statements are an integral part of these statemonts 29
Pacific Gas and Electric Company 1 i l CONSOLIDATED BALANCE SHEETS in Thousands l __ i Decembe' 31 1980 .1979 Assets Utility Plant (at anginalcost) Electric S 6,804,267 $ 6,346,657 Gas 2,219,386 2,112,778 Construction Work in Progress 3,078,485 2.565,813 - Total Ut:lity Plant 12,102,138 11,025,248 Accumulated Depreciation 3,031,467 2,793,716 Utility Plant - Net 9,070,671 8,231,532 Ga3 Exploration Costs 132,094 83,106 Afvences to Gas Producers 144,190 103,493 lowestment in LNG Partnerships 145,5$9 117,459 inv stment in Alaska Natural GasTransportation System 33,383 23,718 Inv stment in Alberta Natural Gas Company Ltd 21,409 18.552 Otherinvestments 2,277 4,522 Current Asseta Cash 1,715 2,888 Short-term investments (at cost which approximatesinarkery 66,242 120,856 Accounts Receivable Customers 489,885 347,257 Other 79,185 62,724 Total Accounts Receivable 569,070 409,981 Less Allowance for Uncollectible Accounts 5,872 6,122 Accounts Receivable- Net 563,198 403,859 Regulatory Balancing Accounts-Receivable 325,360 622,142 Inventories (at average cost) Fuel Oil 453,885 207,317 Gas Stored Underground 202,887 166,552 Matenals and Supplies 96,902 71,188 ToEIInventories 753,674 445.057 Federalincome Tax Refund - 76,000 Prepayments 12,022 15,544 i TotalCurrent Assets 1,722,211 1,686,346 l _ Def rred Charges Unamortized Bond Expense 4,929 6,218 Other- Net 18,480 35.817 Total Deferred Charges 23,409 42,035 Total Assets S11,295,203 $10,310,763 The accompanying notes to consoldated financial statements are an integral part of these Statements. 30
l
-~
In Thousands , December 31, 1980 1979 Capitalization and Liabilities l Capitalization Common Stock (shares outstanding at December 31,1980 and December 31,1979 were 123,849,412 and 113,627,542, respectively) 8 1,238,494 $ 1,136,275 Add;tional Paid-in Capital 931,526 812,802 Reinvested Eamings 1,556,850 1,440,179 Common Stock Equity 3,726,870 3,389,256 Preferred Stock Without Mandatory Redemption Provis:an 1,227,451 1,102,451 Preferred Stock With Mandatory Redemption Provision 150,000 150,000 Long-term fx ht 4,087,080 3,687,562 Total Capitalization 9,191,401 8,329,269 l Current Liabilities Short-term Borrowings 737,555 695,631 Accounts Payable-trade creditors 452,~711 371,679 Accounts Payable-other 59,240 68,530 Accrued Taxes 244,935 221,563 Interest Payable 29,820 25,270 Dividends Payable 76,448 69,273 Customer Deposits 15,568 14,827 Long-term Debt - current portion 10,364 52,015 Refunds Due Customers 25,889 71,939 Other 62,391 45,316 Total Current Liabilities 1,714,921 1,636,043 Deferred Credits Customer Advances for Construction 90,667 84,189 Deferred Investment Tax Credits 36,187 76,201 Deferred Income Taxes of Subsidiaries 49,007 28,914 Deferred income Taxes on Defense Facilities 2S,703 28,647 Unamortized Gain on Reacquired Debt 88,743 58,366 Other 36,476 27,784 Total Deferred Credits 326,783 304,131 Cinority interest in Subsidiary Companies 62,098 41,320 Commitments and Contingencies (Note 7) - - Total Capitalizatien and Lieblittles S11,295,203 $10,310,763 _- -- = = = - . - = = = = = = = = = = = = = l 31
. .- __ - ~- .
Pacific Gas and Electric Company { CONSOLIDATED STATEMENTS OF FUNDS USED FOR CONSTRUCTION l in Thousands For the Years Ended December 31, 1980 1979* 1978* Funds internally Generated Netincome S 524,770 $ 458,234 $400,451 Nonfund itemsin Net income Depreciation (including charges to other accounts) 284,634 254,068 234,049 ! Allowance for Equity Funds Used Dunng Construction (202,873) (159,669) (125,625) Other-Net 8,354 23,570 3,511 l Funds from Operations 614.885 576,203 512,386 Regulatory Balancing Accounts 296,782 (523,602) 122,256 Dividends on Preferred and Common Stock (408,099) (340,358) (296,856) Funds Internally Generated 503,568 (287,757) 337,786 Fund 3 From Financing Common Stock Sold 209,296 276,564 58,758 Common Stock Sold by Subsidiary Company 27,450 - - Preferred Stock Sold 132,306 149,383 132,429 Long-term Debt Sold 497,834 372,404 249,667 Funds From Financing 866,886 798.351 440,754 Total Funds 1,370,454 510,594 778,540 Other Sources (Uses) of Funds Long-term Debt Matured (51,482) (100,628) (74,117) Long-term Debt Purchased for Sinking Fund (at cost) (51,997) (43,680) (35,108) Fuel OilInventory (246,568) (52,912) 94,556 Gas Stored Underground (36,335) (4,462) (53,384) Net Short-term Borrowings 96,538 505,634 (46,192) Accounts Receivable (159,339) 31,869 (54,878) Other Changesin Working Capital 91,935 115,399 112,844 Other- Net 5,679 27,825 11,227 i Total Other Sources (351,569) 479,045 (45,052) ' Total Funds used for Construction 1,018,885 989,639 733,488 , Allowance for Equity Funds Used During Construction 202,873 159,669 125,625 { T;tal Construction Expenditures S1,221,758 S1,149,308 $859,113
- Changed to conform to the 1980 format The accompanying notes to conschdated financial statements are an integral part of these statements.
l C2
Pacific Ges and Electric Company l l CZNSOLIDATED STATEMENTS OF COMMON STOCK EQUITY AN3 PREFERRED STOCK l In Thousands For the Years Ended Preferred Stock Preferred Stock December 31' 1980' Comrnon Additional Reinvested Common Stock Vhthout Mandatory With Mandatory 1979, and 1978 Stock Paid in Capital Earnings Equity Redemption Provision Redemption Provision Balance, January 1,1978 $ 983,901 $623,042 $1,218,708 $2,825,651 $ 977,451 - $ - Net Income - for year 400,451 400,451 Preferred Stock Sold (5,000,000 Shares) 7,429 7,429 125,000 Common Stock Sold (2,489,160 Shares) 24,892 33,866 58,758 Cash Dividends Declared Preferred Stock (81,196) (81,196) Common Stock (215,660) (215,660) Balance, December 31,1978 1,008,793 664,337 1,322,303 2,995,433 1,102,451 - Net income -for year 458,234 458,234 l Preferred Stock Sold (1,500,000 Shares) (617) (617) 150,000 l Common Stock Sold (12,748,253 Shares) 127,482 149,082 276,564 Cash Dividends Declared Preferred Stock (90,041) (90,041) Common Stock (250,317) (250,317) Balance, December 31,1979 1,136,275 812,802 1,440,179 3,389,256 1,102,451 150,000 Net income - for year 524,770 524,770 Preferred Stock Sold (5,000,000 Shares) 7,306 7,306 125,000 Common Stock Sold l (10,221,870 Shares) 102,219 107,077 209,296 l Cash Dividends Declared l Preferred Stock (106,502) (106,502) Common Stock (301,597) (301,597) Increase from Capital Transaction of l Subsidiary Company 4,341 4.341 CclInce, i Dec:mber 31,1980 S1,238,494 6931,528 S1,556,850 S3,726,870 S1,227,451 S150,000
= = = = = = = . - - _ --- -
~-----===:=====
l The accompanying riotes to conschdated financial statements are an in'egral part of these Statements. 33
Pacific Gas and Electric Company NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31,1980,1979 and 1978 Note 1 Revenues Summary of Significant Accounting PolicFes Revenues consist of billings to customers and changes in balancing accounts. Billings to customers are included in Accounting Records revenues as meters are read on a cycle basis throughout The accounting records of Pacific Gas and Electric each month. In accordance with orders of the CPUC, the Company (PG&E) are maintained in accordance with the Company has established balancing accounts for electric Uniform System of Accounts prescribed by the Federal energy costs, gas costs and gas sales. Operating revenues Energy Regulatory Commission (FERC) and adopted by the include changes in these balancing accounts. These changes represent amounts authorized by the CPUC to be California Public Utilities Commission (CPUC). recovered from or refunded to customers. The effect of using these balancing accounts is that changes in costs Principles of Consolidation to the Company of electric energy and gas, and fluctuations The consolidated financial statements include the in gas sales do not affect the Company's eamings. accounts of PG&E and its wholly owned and majorW owned subsidiaries for all periods presented. In consolidation all Utility Plant significant intercompany trancactions and accounts have The cost of additions to utility plant and replacements been climinated. af retirement units of property is capitalized. Cost includes PG&E's major subsidiaries are Pacific Gas Transmission labor, material and similar items and indirect charges Company (PGT), which transports and sells natural gas for such items as engineering, supervision and transportation. outside California; Alberta and Southern Gas Co. Ltd. (A&S), Cost also includes allowance for funds used during con-whose principal functions are the acquisition of gas in struction, at rates calculated in conformity with FERC regu-Canada and arranging for its transportation to the U.S. lations, for the imputed cost of equity investment and a net border; and Natural Gas Corporation of California (NGC), after-tax amount for borrowed funds. The equity component which is a natural gas exploration and producing company of allowance for funds used during construction is included Gubsidiaries of PG&E engaged in projects that are still in in other income and the borrowed funds component , net the development stages include four subsidiaries formed to of federal and state income taxes, is recorded as a reduction engage in the delivery of liquified natural gas by ship to ofinterestchargee Costsof depreciable unitsof plant California; Eureka Energy Company, primai ly a coal- retired are eliminated from utility plant accounts and such owning and producing company; and Cc ,ka Energy costs plus removal expenses less salvage are charged to Company, a member of the partnership t'> construct the accumulated depreciation. Costs of repairing property and Alaskan portion of the Alaska Natural CasTransportation replacementof minoritemsof propertyareincludedin the Sptem for the transportation of nah5al gas from Alaska to Consohdated Statements of Income as rnaintenance. the corninental United States. Thanvestmentin Alberta Natural Gas Company Ltd (a 45% owned subsidiary of Depreciation Pacific Gas Transmission Company), whose principal For financial statement purposes, depreciation of utility function is to transport gas for A&S to the Canadian-U.S. plant is computed on a straight line remaining life basis at border, is accounted for in accordance with the equity rates based on the estimated usefullives of properties. method of accounting. The annual provisions for depreciation expressed as a per-The financial statements of Alberta and Southern Gas Co. centage of the average balances of depreciable plant were Ltd. and the equity in Alberta Natural Gas Company Ltd 3.4% for 1980 and 3.1% for 1979 and 1978. For federal are translated from Canadian dollars into United States income tax purposes, depreciation is generally computed dollars in accordance with pronouncements of the Financial using the most liberalized methods allowed by the Internal Accounting Standards Board. Revenue Code. l l 34
- . ._-.- -. ... _ . -.- , -~ . -. .
l l 1 1 l locome Taxes . Gas Exploration Costs The CPUC requires that deferred taxes not be provided on Gas exploration costs are capitalized under a modified " full certain timing differences in connection with depreciation cost" method of accounting as authorized bv the CPUC. ,! and cverhead costs of construction.The CPUC also requires - Unsuccecsful project costs, current operating costs and the ~ that investment tax credits be applied as a reduction of financing costs of the gas exploration program are ' federalincome tax through the use of a two-year moving - recovered through gas exploration development balancing .
. average method in 1980 and a five-year moving averags account procedures. The success, or lack of success of the . ;
method in 1978-1979. Customer rates authorized by the Company's gas exploration program does not affect the .
- CPUC reflect these requirements. Deferred taxes are Company'sincomebecauseof theoperationof theGas - !
. provided primarily on changes in regulatory balancing Exploration and Development balancing account. [
accounts and gas exploration costs.
' Note 2 ,
BondPremium DiscountandRelatedExpenses. Common steek . '1 Bond issuance premium or discount and related expenses Common stock, par value 510 per share, authorized are amortized over the lives of the issues to which they 200,000,000 shares, outstanding at December 31,1980 pertain. The gain or loss on reacquisition of bonds to satisfy and December 31,1979 wer,li123,849,412 and 113,627,542 { sinking fund requirements is amortized over the remaining respectively. life of the reacquired issues; The federal income Iax on such } gain is recognized over the life of the remaining property Note 3 Preferred stook - . Earnings PerCommon Share The redeemable preferred stock ($25 par) outstanding, ! Earnings per common share are computed by dividing earn- with no mandatory redemption provision, is subject to s ings available for common stock by the weighted average redemption, in whole or in part, solely at the option of the number of common shares outstanding.The weighted Company upon payment of the redemption price plus . y average number of common shares outstanding is com- accumulated and unpaid dividends to the date fixed for . '
- puted by dividing the aggregate of the number of common redsmption.The redemption premium per share declines i shares outstanding at the beginning of each month in the in accordance with terms of the specific issue.The involun- i period by the number of months in the period. tary liquidation preference of the preferred stock is par value($25) plus accrued dividends. [
Research andDevelooment The redeemable preferred stock ($100 par) outstanding, j l ' Research and development (R&D) costs related to specific with a mandatory redemption provision, is subject to ! construction projects and a portion of general engineering redemption through the operation of a sinking fund at the
- i t
! research costs are capitalized. Total research and devel- sinking fund redemption price of $100 per share, or at the :!' I opment costs incurred during the years 1980,1979 and 1978 optionof theCompanyuponpaymentof theredemption were approximately $79,000,000, $76,000,000 and price of $100 per share plus a premium, plus in either event
$60.000,000 respectively, of which $61,000,000, accumulated and unpaid dividends to the date fixed for [
$60,000,000, and $47,000,000 were capitalized as part of redemption. The redemption premium per share declines ,
the cost of construction projects. Other R&D costs are annually. For the purposes cf the sinking fund the Company { charged to expense asincurred. must set aside in cash, annurally, commencing with f 7 v i
?
i i
-i 4
^1.
k as '}
q November 15,1985, and ending on November 15,2004, 75,000 additional shares.This right is not cut nulative. an amount sufficient to redeem 75,000 shares at the sinking Optional redemptions at the sinking fund redempton price fund redemption price. This provision is cumulative.There are limited to an aggregate of 562.000 shares.The invol-are no redemption requirements for the years 1981 through untary liquidation preference of this stock is par value ($100) 4 1984. The Company has the nght, at its option, to redeem plus accrued dividends. at the sinking fund redemption price, on November 15, Dividends on preferred stc:x are cumulatrve. Total 1985 and on any November 15 thereafter, not more than preferred stock outstanding at December 31,1980 was: in Thousands l Shares issued and Outstand:ng included Under ' Cap'takzeon" D njend Redempton Shares in Bala te Sheet Per Share Prce Per Sha<e Authonzed N um oer Amount Preferred Without Mandatory Redemption Provision Par Value 325 Per Share Non-Redeemable 6% $1.50 4,212 4,212 $105,292 5.50% 1.375 1,173 1,173 29,329 5% 1.25 400 400 10.000 Total Non-Redeemable 5.785 5.785 $144.621 Redeemable 12.80% $3.20 $30.70 5,000 5,000 $125.G00 10 46% 2.615 30.10 3.500 3.500 87,500 10.28% 2.57 30.00 5,000 5.000 125,000 10.18% 2.545 30.00 4,000 4,000 100,000 9.48% 2.37 29.50 3,000 3,000 75,000 9.30% 2.325 29.80 4,000 4,000 100 000 9 28% 2.32 27.25 707 707 17,674 , 9% 2.25 29.25 881 881 22.027 8 20% 2.05 29 375 2,000 2,000 50,000 8 16% 2.04 28.875 3,000 3.000 75.000 8% 2.00 29.375 2,000 2,000 50,000 l 7.84% 1.96 29.00 2,000 2.000 50,000 5% 1.25 26.75 2.861 2.861 71,524 5%-Senes A 1.25 26.75 1,750 1,719 42.985 4.80% 1.20 27.25 1,517 1.517 37.934 4.50% 1.125 26.00 1,128 1,128 28,186 4 36% 1.09 25.75 1,000 1,000 25.000 Unclassified in Senes - - 25,871 - - Total Redeemable 69.215 43,313 $1.082.830 TotAi Preferred Stock Without Mandatory Redemption Provision 75,000 49,098 S1,227,451
= = . = = = = = = = - - = - - .=
Preferred With Mandatory Redemption Provision Par Value S100 Per Share Redeemable 9% $9.00 $100.00 1,500 1.500 $ 150.000 Unclassified in Series 8.500 - - Total P[oferred Utock With Mandatory Redamption Prowlsion 10,000 1,500 S150,000
= = = = . = = = = = = = = = . = = = = = = = = . _ - . - - . = = _ - = - - . . - -
36
Note o properties and substantially all personal properties are Long-term Debt subject to the lien of the mortgage. . The First and Refunding Mortgage Bonds of PG&E PG&E's securities representing investments in subsidinries are issued in series, bear annualinterest from 2%% to 1278% are pledged as collateral for PG&E bonds. The mortgage and mature from June 1,1981 to August 1,2013. bonds of PGT are issued in series, bear annualinterest from
. Subject to indenture provisions as to earnings coverage 5%% to 8% and mature from 1986 to 1990. All real properties and bondable property available for security, additional and substantially all personal properties and long-term bonds may be issued up to an outstanding aggregate amount contracts for gas purchases, gas sales and gas transporta-of $5,000,000,000. The Board of Directors of PG&E may tion of PGT are subject to the lien of the PGT mortgage.
from time to time increase the amount authorized. All real At December 31,1980,long-term debt of PG&E and subsidiaries was: InThousands 2%% to 4M% to 74% to Matunty 3%% 6%% 12k% Total Pacific Gas and Electric Company Mortgage Bonds 1981 $ 21,117 $ -
$ 21,117 1982 60,895 - 150,000 210,895 1983 55,288 -
16,700 71,988 1984 49,631 - 16,700 66,331 1985 18,083 - 200,350 218,433 1986-1995 21,005 223,293 87,500 331,798 1996-2005 - 430,590 1,112,434 1,543,024 2006-2013 - 2,870 1,594,750 1,597,020 TotaI Mortgage Bonds $226,019 $656,753 $3,178,434 4,061,206 Current Portion Net of Reacquired Bonds included in Current Liabilities (6,457) Unamortized Discount Net of Premium (24,546) PG&E Mortgage Bonds Included in Long-term Debt 4,030,203 l Pacifl3 Gas Wansmission Company l Mortgage Bonds 5%% Series. due January 1986 21,092 Mortgage Bonds 8% Series, due November 1990 (Net of Bonds Held in Treasury) 18,316 Subordinated Debentures 54% 408 I Total Long-term Debt 39,816 Unamortized Discount,8% Series (53) Current Portion included in Current Liabilities (3,907) 3GT Long-term Debt included in Long-term Debt 35,856 Alberta and Southern Gas Co. Ltd. Bank Loans - Canadian prime rate plus 4%, due 1981 17,476 Cureko Energy Company Notes Payable - 10.5% Interest, due 1982-1996 3,545 Total Long-term Debt oil PG&E and Subsidiaries $4,087,080
. == = = = = = = = = = = = - . _ _ - _ . = = = = = = = = . = = . = = =
PG&E is required, according to provisions of the First respectively. Bonds of any series may be used to satisfy and Refunding Mortgage, to make semi-annual sinking this requirement. fand payments on February 1 and August 1 of each PGT's First Mortgage Pipeline Bonds and subordinated year for the retirement of the bonds of PG&E equal to debentures, which are solely the obligation of PG1, are S of one percent of the aggregate bonded indebtedness subject to redemption, at specified redemption prices, through outstanding on the pieceding November 30 and May 31, the operation of a sinking fund or in larger increments 37
at PGTs option, depending upon the series and redemption income tax expense (credit) is included in the financial f date. The debentures are subordinated in right of payment staternents as follows: to mortgage debt and certain other indebtedness. h "S""d8 The CJmpany's combined aggregate amount of bonds 1978 l maturing and sinking fund requirements for the years 1981 1980 1979 through 1985, calculated on the basis of bonds outstanding includad in operating et December 31,1980, are $68,407,000, $257.306,000, expenses $123,698 $100,071 $133.264 $115,808.000, $109.056,000 and $260,181,000, included in otner income (51,351) 0 2,778) (24 A44) - respectively ' Total 8 72,347 $ 87,293 $108.820 Note 5 Tames on Income The components of income tax expense (credit) are: Taxes on incomo gene: ally reflect amounts current!y ,,73,,,,ng, payable with the exccption of taxes related to changes in regulatory balancing accounts, investment tax credits, 1980 1979 1978 and subsidiaries' gas exploration costs. Changes in electric current and gas balancing accounts are not included in federal and Federal 8 72,138 $(76.000) $ 108.951 state income tax returns until such changes are billed to state 50,775 - 41.249 L customers.The net unbi; led amount included in the Canadian 1,454 121 234 balancing accounts at December 31,1980 was approxi_ oeferrea Tax related io changes mately $325,000,000 which will result in an additional tax payment of $166,000,000 when billed.This amount is $a abounts included in Accrued Taxes. In addition, the Company has Federsi (35,811) 100,349 (40.207) available investment tax credits of approximately state (28,249) 20.816 (15,773) 367,000,000 to reduce federal income tax payments for inveament tax credit Federal (5,078) 24.265 17,348 years after 1980. The reasons for the differences between the reported ^]," 72y,",,js
,7,, on I income tax expense and the amount computed by defense facilities applying the federalincome tax rate of 46% for 1980 and Federal (2,694) (2.694) (2.694) 1979 and 48% for 1978 to income before taxes are: state (251) (251) (251)
Other deferred in Thousands Federal 16,382 16.303 (334) State 4,068 S.812 130 1980 1979 1978 Canadias, (387) 570 167 Computed provision 8274,674 $250,943 $244A50 Total 8 72,347 $ 87,293 $108,820 Increases (reductions) - resutting from Investment tax credits (55,669) (37,920) (29.709) State tax on income 14,225 13.165 13.125 Note 6 Allowance for Compensating Balances and Short term No# wed
- funds Borrowing Arrangements used dunno The Comoany maintains lines of credit with twenty-three c nstrucbon (116,703) (89.607) (74.712) banks, principally to support the sale of commercial paper.
Id",d*P'j,$" At December 31,1980, these lines of credit totaled e,s3 depreciation (521) (10.836) (20.692) $608 925,000. At no time during the year were the lines of - i Other overhead credit used for direct bank borrowings. ! construction costs (20,788) (18.167) (17.328) The Company also maintains a credit arrangement with I Repair allowance (11,500) (11.270) (16.656) five banks totaling $160,000,000 for the discounting of I r ! xes (5,486) (2.874) 15.028 bankers acceptances which are used to pay for Canadian i enpenses (5,520) (5.060) (5.280) natural gas. The usual terms of bankers acceptances are j other - net (365) f' 081) 594 for no more than 60 days and 10 to 90 days for commercial ; paper. Alberta & Southern also maintains a line of credit j Total 8 72,347 $ 87.293 $108 820
=s_ = = = = = - - - - _ _
totaling $10,088,000 with four banks. j i
i l q 1 1 In addition to the above lines of credit, on December 17, investment in nuclear fuel up to a maximum of $120,000,000 1980, PGT entered into a $160,000,000 financing (in addition to all the above mentioned lines of credit). . agreement with nine banks for the Western Leg Prebuild of , the Alaska Natural GasTransportation System.This Note 7 ' financing will be available either to support commercial Commitments and Contingenoies paper sales or for direct borrowing until it converts to a Construction expenditures for the year 1981 are estimated seven-year term loan after the completion of construction. to be $1,394,000,000. As of December 31.1980, none of this line of credit The Company is a member of Nuclear Mutual Limited
- was utilized. (NM L), established by the utility industry to provide insurance Tha Company compensates banks for lines of credit and coverage against property damage to members' nuclear other banking services by fee payments or by maintainirrg generating facilities whether under construction or in cadi balances.The cash balances mWntained at the banks operation. In the event of property damage to a nuclear plant are not legally restricted. of a member utility, the Ccmpany may be subject to a maxi- '
Short-term borrowings and interest rates thereon wer0 mum assessment of approximately $21,000,000 if losses as follows: exceed premiums, reserves and other NML resources. The Company advised the Nuclear Regulatory Commis-(Except r tages) Sion's Atomic Safety and Licensing Board that a final ' decision to restart the nuclear power plant unit at Humboldt . , For the Years Erided December 31, 1980 1979 1978 Bay will be deferred until retrofit requirements are defined. Balance of Short-term Borrowings The net investment in the power plant is approximately Outstanding at End of Period $52,000,000. If a decision is made not to restart the nuclear Commercial Paper $591,955 $677,882 $68235 unit, substantially all costs are expected to be recovered Bankers Acceptances $110,000 - - through future regulatory proceedings. Bank Loans 4 35,600 $ 17,749 $ 1,404 See the Capital Resources section of Management's Wmghted Average Interest Rates D scussion and Analysis of Consolidated Financial Condi-and n ten of Penod tion and Results of Operation for information relating to the Commercia1 Paper 17.9% Id% 10 2% policy of the CPUC regarding recovery of costs of unsuc-Bankers Acceptances 16.1% - - cessful projects. Bank Loans 14.1% 15.5% 11.9% The Company is required to make advance payments to gas producers if it does not take the contractual minimum On February 4,1981, the Company entered into an annual volume of natural gas during a contract year. agreement to sell and leaseback nuclear fuel for use at the Unless export licenses from Canada are extended, or large Diablo Canyon Nuclear Power Plant with Pacific Energy cales agreements are entered into, or the Company is Trust (Energy). On that date, the Company transferred to successful in negotiating the reduction in the required mini-Energy its title and interest in the current nuclear fuel mums, the Company may not have the opportunity to fully inventory, which at December 31,1980 was $216,900,000 recover the volume of natural gas not taken under these included in Construction Work in Progress. When the contracts, nuclear fuelis generating heat, the Company will make The Company has entered into various arrangements to
. Quarterly payments to Energy for the cost of fuel consumed lease automotive equipment, computer equipment, office which willinclude costs arising out of the ownership of equipment and other incidental equipment and property the nuclear fuel. The Company also has a provision with which are accounted for as opcrating leases in accordance Energy to borrow at any time an amount equal to the with CPUC ratemaking practices.The annuallease difference between $300,000,000 and Energy's expenses are not material.
l_ _ _ ._ _ __ __ - _ _ . . _ __ _ 'fD
Note 8 Segment Information in Thousand1; For the Years Erlded December 31, Electre Ga's. naIons Total - 1980 Oparating Revenues $2,927,841 82,331,058 S 5,258,899 - Intersegment Salesg3 4,549 812,833 $(817,382) - lotalOperating Revenues 2,932,390 3,143,891 (817,382) 5,258,899 D' epreciation 204,878 75,832 - 280,710 Taxes on income 23 c 65,803 . 57,895 - 123,698 Other Operating Expenses (23 2,256,563 2,842,163 (817,382) 4,281,344
~ -
Total Operating Expenses 2,527,244 2,975,890 (817,382) 4,685,752 Operating income S 405,146 8 168,001 6 - S 573,147 Construction - -., Expenditures
. -_c . 3.)__- S 973,785 6- 247,973 $ 1,221,758 Utility Assets 33 c 85,615,192 $2,601,526 8 8,216,718 Construction Work in Progress (33 2,985,187 -93,298 3,078,485 Total Assets S8,600,379' S2,694,824 $11,295,203
= = . = = . . -
~ --
1579 Operating Revenues $2,463,845 $1,900,624 $ 4,364,469 : IntersegmentSaleen) 3,440 556,354 $(559,794) -
~
~fotaiOperating Revenues 2.467,285 2,456,978 (559,794) 4,364.469 Depreciation 183,995 66,869 - 250,864 63,168 36,903 - 100,071:
laxes on income (23 Other Operating Expenses (2) 1,834,935 2,222,490 (559,794) 3,497.631
~ ~ TotalOpsrating Expenses 2,082,098 2,326,262 (559,794) 3,848,566:
dpiratirigTricome $ 385,187 $ 130,716 $ - $ '515,903-Constriictionilxpendiiures c 3) - $ 943,911 $ 205,397 $ 1,149,308
== = == -
Utility Assetsg) $5,257,874 $2,487,076 $ 7,744,950 ConstructionWork in Progress (3) 2,521,809 44,004 2,565,813 Total Assets $7,779,683 $2,531,080 $10,310,763. 1078 Uberatifighsvenues $2,096,933 $1,472,440 $ 3,569,373 ! Intersegment Saleso3 3,774 305,088 $(308,862) - Total Operating Revenues 2,100,707 1,777,528 (308,862) 3,569,373
~ ~~
Depreciation 167,014 63,603 - 230,617 104,346 28,918 - 133,264 ~ Taxes on income 23 r Other Operating Expenses (2) 1,461,448 1,584,818 (308,862) 2,737,404 TotalOperating Expenses 1,732,808 1,677,339 (308,862) 3,101,285-l ' Operating income $ 367,899 $ 100,189 $ - 5 468,088 Construction ExpendittAk3[- . - . - . _ . - - -~ - _N. _718,572 $ 140,5k b
~'
.-_ $ 859,113 1 l _ . . -
Utility Assets (3t $4,605,656 $2,025,286 $ 6,630,942 ConstructionWorkin Progressa3 2,008,144 26,074 2,034,218 Total Assets $6p3J800_ $2,051,360 $ 8,665,160
-, _ = = = ,
==== _
0)Intersegment sales for 1980,1979 and 1976 represent 26%. 23% and 17%, respectively of Total Gas Revenues and less than 1% of Total Electro Revenues Intersegment Electr,c and Gas Sales are accounted for at tanff rates prescribed by the CPUC.
- 2) x n income and general corporate expenses are allocated to departments in accordance with the Undorm System of Accounts and requirements (311ncludes aHocation of Common UtAty Plant.
.?
i y i Note 9 . The assumed rate of return used in determining the actuarial '
- Retirement Man .
present value of accumulated plan benefits was 7 percent The Company provides retirement plans covering substan- in 1980 and 1979. The actuarial present values are based on - -l tially all employees. The cost of these plans charged to historic pay as g.rescribed by the Financial Accounting i expense and utility plant for 1980,1979 and 1978 was Standards Board. i
$75,000,000, $69,000,000, and $63,000,000, respectively.
These amounts include amortization of past service cost. . Costs of the retirement plans are accrued in accordance with Note 10
- an actuarial cost method (entry age normal method). Guarterly Finanolai Data (unaudited) t
. The Company makes contributions to the plans equal to the Quarterly financial data for the four quarters of 1980 and !
amounts accrued for pension expense. A comparison of 1979 are shown in the table below. Due to the seasonal l accumulated plan benefits and plan net assets for the nature of the utility business, operating revenues, operating Company's defined benefit plans is presented below; income, and net income are not generated evenly by in Thousands Quarter during the year.The Company's common stock is Eriuary 1' 1980 1979 traded on the New York and Pacific Stock Exchanges. , The approximate number of common stockholders of Ac aria r sentvalueof accurnulated record as of December 31,1980 was 261,000. Dividends - [ vested $693.000 $606.000 are paid on a quarterly basis and there are no restrictions f Nonvested 53,000 48.000 on present or future ability to pay dividends.- , Total present value of accurnulated f pian benefits $746,000 $654.000 Not assets available for benefits $797.000 $652.000 - ; r in Thousarids (except per share amounts) 4th- 3rd 2nd 1st 1t80 j Operating Revenues $1,485,740 $1,280,296 - $1,163,692 - $1,329.171
- Operating income $ 133,125 $ 140,193 $ 146,103 $ 153,726 -
Net income $ 123,377 $ 145,133 $ 124,705 $ 131,555 l Earnings Per . . Common Share $ .80 $ 1.00 = $ .86 - $- .93 ; Dividend Declared $ .65 $ .65 $ .65 $ .65 ' Common Stock Price . High $ 2'd8 $ 24% $ 24% $ 23M Low $ 19% $ 21% $ 20% $ 19% 3 1D73 ~ Operating Revenues $1,243,282 $1,086,595 $ 980,513 $1,054,079
' Operating income $ 117,006 $ 140.538 $ 129,540 $ 128,819.
I Netincome $ 101,264 $ 123,312 $ 118,000 $ 115,658 l Earnings Per i Common Share $ .71 $ .98 $ .94 $ .92 l Dividend Declared $ .61 $ .61 $ .58 $ .58 i Common Stock Price
- j. High $ 23% $ 24% $- 244 $ 25%
l Low $ -21% $ 22% $ 21 % $ 224 i l- { i 41
, - . , . ._ - - - . - - ~ _ _ _ . - _ . _ . . _ - _ . . - _ . . . _ . ~ , - _ . - - . _ .
Supplemental Information Required by constructed, there is no reasonable way for the Company to , ' Financial Accounting Standards Board estimate the cost of replacing its assets. Therefore, for Statement No. 33 (ursaudited) purposes of the current cost calculation, the Handy-Whitman Index of Public Utility Construction Costs , For many years the purchasing power of the dollar, for the Prific Coast Division was applied to historical cost of measured ty consumer and wholesale price indices. has surviving plant in developing the required current cost. declined each ycar.This decline in purchasing power of This results in current cost calculations being computed the dollar is commonly called " inflation'.' from a construction index whereas constant dollar calcula-Many complex theories have been proposed in an tions are computed from an overallindex. attempt to eliminate the inflation component from reported Following FASB No. 33 requirements, the only amounts net income, but no solution has emerged that commands adjusted in arriving at the net income amounts adjusted for general acceptance. In 1979 the F,nancial Accounting changing prices were net utility plant and depreciation Standards Board (FASB) issued Staternent of Financial expenses. As prescribed in Statement No. 33, income taxes Accounting Standards No. 33 requiring that certain were not adjusted. supplemental financial information be printed showing The current year's provisions for depreciation on the historical information converted to two bases - constant constant dollar and current cost amounts of utility plant dollars and current costs-using specified techniques. wers determined by applying the Company's depreciation Constant dollar amounts so required and as reported rates to the constant do!!ar and current costs. herein represent historical amounts conver*ed to dollars The Company has serious reservations as to whether the having approximately the same purchasing power as the real required supplemental financial information is appropriate dollar had in mid-1980 as measured by the Consumer for measuring the impact of inflation on a utility regulated, Price index for All Urban Consumers. as PG&E is, on a cost-of-service basis. This information is Current cost dollars as required by FASB No. 33 purports presented solely because it is required to be presented. to represent the price in current dollars the Company It should be clearly understood that the required information would expect to pay for its assets if it could obtain them at is complicated, difficult to understand and because of the today's prices. Because of siting, environmental and other perrnitted subjectivity inherent in developing this prescribed problems involved in constructing property today that were information unwarranted comparisons and inferences not present when the Companys plant was originally may result. Consolidated Statement of income from Continuing Operations Adjusted for Changing Prices A3 Required By FASB Statement No. 33 in Thousands ~ _ . _ , . _ Convenbonal Constant Current For the Year Ended December 31,1980 . _ _ Histoncal Cost Dollar Cost Operating Revenues $5,259,000 C$5,259,000 C$5,259.000 Operation. Maintenance and Other 4,453,000 4,453,000 4,453,000 Depreciation 281.000 632,000 856,000 Total 4,734,000 5,085,000 5,309.000 Income from continuing operations (excluding adjustment to net recoverable cost) $ 525,000 C$ 174,000* C$ (50,000)
. = == _ = = = = = = = = = = = = = = = = = = = = = = = = = = = - = = = = = = =
Increase during the year in specific prices of utility plant" C$1,543,000 Adjustment to net recoverable cost C$ (666,000) 215,000 Effect of increase in general price level (2,200,000) Excess of increase in general price level over increase in specific pnces after adjustment to net recoverable cost (442,000) Roduction of purchasing powerloss through debt financing 656,000 656,000 '
. --- .-.--.- . - ---_. ..._~.- ._. - ~ . . - .--. - -
= .:=- ~ ~ .. . =: = . = = - = == == - -m - C$ - Dollars having approximately the same purchasing power as the real dollar had en med 1980
- including the adtustment to ret recoverable cost. the loss from continurng operations on a constant dollar basis would have been C$492.000.000
- Al Jocember 3i,1980. cu rent cost oi utihty plant not of accumulated depreciation was C$19 566.000,000 while histoncat cost or not cost recoverable through depreciation was $9.071,000.000.
O
l l l 1 I I Five-Year Comparison of Selected Supplementary Consolidated Financial Data Adjusted for Effects of Changing Prices As Required by FASB Statement No. 33 in Thousands (Except per share amounts)
,For thears Ended December 31, 1980 1979 1978 1977 1976 Operating Revenues CS5,259,000 C$4,954,000 C$4,508,000 C$4,036,000 C$4,414,000 Hl;toricalCostInformation Adjusted for Generalinflation income from continuing operations (excluding adjustment to net recoverable cost) CS 174,000 C$ 244,000 Incorne per common share (after dividend requirements on preferred stock and excluding adjustment to net recoverable cost) CS .56 C$ 1.35 Not assets at year-end at net recoverable cost CS3,559,000 C$3,640,000 Current Cast Information Income from continuing operations (excluding adjustment to net recoverable cost) CS (50,000) CS 11,000 Loss per common share (after dividend requirements on preferred stock) CS (1.38) C$ (.90)
Excess of increase in general price level over increase in specific prices after adjustment to net recoverable cost CS (442,000) C$ (651,000) Net assets at year-end at net recoverable cost CS3,559,000 C$3,640,000 Generalinformation Reduction of purchasing power loss through debt financing CS 656,000 C$ 720,000 Cash dividends declared per common share CS 2.60 C$ 2.70 C$ 2.73 C$ 2.72 C$ 2.72 Market price per common share at year-end CS 19.58 C$ 24.70 C$ 27.06 C5 31.82 C$ 32.75 s - Doll rs having approximately the same purchasing power as the real dollar had in mid 1980. Average consumer priceindex 246.8 217.4 195.4 181.5 170.5 Base year 1967-100
== ~ ====_--_ -
_ = - - - . = = - -- l 43
1 EIRECTOR3 AND OFFICGRDL
' Leslie L. Luttgens a Omoors George E Clifton,JrJ James 0, Schuyler Derooters .
San Francisco . . . . Vice President . Vice President Bay Area ' Frederick W. Mielke, Jr. Customer Operations - Nuclear Power John E Bonner Executive Consultant Community Leader Chairmanof the Generation , and Former President - . Board and Chief - ~ Nolan H= Daines ( and Chief Executive Richard B. Madden 2 ' Executive Officer l Vice President John E Taylor 1 .. ( Officer, Pacific Gas = Chairman of the . .. . .,. ' Planning and Vice President and : and Electric Company. Board and Chief . Barton W. Shackelford Research Corporate Secretary - Executive Officer, President and Chief Richard R Cooley t 4 Potlatch Corporation. Operating Officer ' Joseph Y DeYoung . . William H. Wallace Chairman of the- (diversified forest :Vice President Vice President products) . Stanley T. Skinner Division Operations . Computer Systems Board and Chief Executive Offcer,Wellt Executive Vice and Services Fargo Bank, N.A. Frederick W. Mielke, Jr.t4 President James T. Doudiet Chairman of the - . Vice President . Mason Willrich Board and Chief John A.Sproul Finance and Treasurer . Vice President :
- Charles de Bretteville a.4 -
Executive Officer, Executive Vice , Corporate Planning Former Chairman of . the Board,The Bank ' Pacific Gas and - President William M.Gallavan . of California,N.A.' Electric Company Vice President - - David BL Allison
- John S. Cooper .
Rates and Valuation. Assistant Secretary Myron Du Dain t 3 - Mervin G. Morrisa Senior Vice President Chairmanof the President, Morris Personnel Grant N. Horne . Brian L McGrath ' Board, President and Management Vice President - AssistantSecretary Chief Executive Company Malcolm H. Furbush Public Relations L = Officer, Fireman's Senior Vice President - Anthony J. Duffy Fund Insurance Richard H Peterson and GeneralCounsel Elmer E Kaprielian AssistantTreasurer . Companies Former Chairman of Vice President the Board, Pacific Ellis 6. Langley, Jr. Fuels Planning and Gary E. Lavering - Alfred W Eames,Jr. t2 Gas and Electric Senior Vice President Acquisition Assistant Treasurer Former Chairman of Company Operations John E, Koehn Gordon R. Smith the Board. Del Monte Corporation (food Wilson C. Riles 2 . Malcolm A. MacKillop Vice President ' Assistant Treasurer products and related - California State Senior Vice President . Governmental services) . Superintendent of Corporate Relations- Relations , s Public Instruction George A. Maneatis Howard M. McKinley Lewis S. Eaton a Chairmanof the Barton W. Shaketford i Senior Vice President Vice President - Board and President, President and Chief Facilities Development Gas Operations Guarantee Savings Operating Officer, and Loan Association Pacific Gas and G. Stanley Bates Richard K. Miller Electric Company Vice President Vice President Robert B. Hoover s GeneralConstruction GeneralServices Chairmanof the Emmett G. Solomon i4 Board and Chief Former Chairman of Donald A. Brand Robert Ohlbach Executive Officer, The the Board, Crocker Vice President Vice President and Pacific Lumber National Bank Engineering General Attorney Company John Lyons Sullivan 2.4 Howard R Braun Frank A. Peter L. W. Lane, Jr. 4 Rancher and Vice President Vice President and Chairmanof the Chairman Emeritus, Electric Operations Comptroller Board, Lane California Canners Publishing Company ano Growers Robert W. Brooks (cooperative canner of Vice President Doris E L onard* fruits and vegetables) Gas Planning and Secretary-Treasurer Acquisition and PartnerE
. Conservation Richard A. Clarke j Associates (park and Vice President and q land acquisition) Assistantto the ,j Chairman ]
1 Memter Esecubve Committee
? Memte Audit Commmee e N: bard Et Madden Ctwman 3 Memtwr Compensanon and Manageraent Devek>pment commmee Chark,debreitevdie Chairman 4 Member Adesory Nominatmg Committee .I Fredettch W Melke Jr,chuman
*ftehren from the Ehrd in February.1981 5
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