ML20141M047

Pge Annual Rept - 1991

ML20141M047
Person / Time
Site:	Diablo Canyon, Humboldt Bay
Issue date:	12/31/1991
From:	Locke R PACIFIC GAS & ELECTRIC CO.
To:	Office of Nuclear Reactor Regulation
References
NUDOCS 9203310246
Download: ML20141M047 (49)

Text

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..a Pacific Cas andDectric C:ppsy 'If Beale Red ik u df tcLke S.yJrancuo.CA A m oc,ati u =.. cs;gnem Imecocier UL!51]103 . lelN tpa 05!9739?'1 e.,n +m., PO 0a4 T44 Eanfiam&o CA91?0 March 25,-1992

y Director Omce of Nuclear P.eactor Regulation U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Re:

Docket No. 50133 4g Docket No. 50 275 - D.orket No. 50023

Dear Sir:

'y Enclosed arb ten copies of Pacific Gasand Electric Company's annual report for P

the calendar year 1991..

.#j' Ve i Yours, f.-): ,8 RICil ARD F. LOCKE e-1RFL.itm - Enclosure w. cc (w/ enclosure): p THarry Rood-4 Jerome D. Saltzman, NRC o 5 kk 6.~ f 920331624f 911231 3 ADOCK030Gyl DR. m s.; .. _ = _ . w.m.

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• Mand slecni4 utility', serving 12 million people in Northern and Central California. '

~ g. o $v,f x ( Dur Alectricity comes from widely dismifled resources-fossil-fuel plants, hydro c,- j g7 f electric pleits, a major pumped storry;e plant, a geothermal complex, the Dhado s y% T Cinyon Nuclear Power Plant and from such alternative technologies as wind power, - =- 1Y m Jshhir yiower and biomass. Our natural gas comes from Canada, the U.S. Southwest rj h - M'P'(,. Mnd Cailfornia.; .. %, c;)); p p ,Ef f [ [N',, rc; kf (6 ~ l-Y fh g;.y n Q ', ,k

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$ 9,7711,119,000. S 9.470,W2,0m :

3j. y Operating income ' $. I,713,079,000 $ 1,700,136 O(0 -1 . Net income. $ 1,026,392.000 $ W7,170,0W 4l-Eanthe available for common &L $ 936,797,003 - $ fr,169,ue 5 >, Far sing per common share 2.21 $ 2.10 7 4 hvidemh declared per conunon share 5 1.68 $ 1.52 8 Construction espeaditue t including MiiDC) - 5 1,795.726,000 $ 1,MI,774,0tu 16 ; Total electric wies to customers ( Lwh ). 71,195,1190Jmo 74,05(036Ai0 - . Total ganale$ to customer (mcf) 1211.393.000 472,516.u6 (9). At year-ced

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Total awets $22,900,670,000. $21,038,397An 4 Total etstomers 7.757,000 7M7,0lO I s i Numl t r of sharehoklers 330,000 319,(K10 ( 5 )+, + t Numler of common siures outstarwiing il7,57 tJt26 420.219,0!! (1); 26,700 26.2m i a L_ Numlerofemployen(PG&Eonly) i +4 t e e 'T mememw;!y, h, mmm y m #g,%. j..-amam flp[ ' g 49gggg g /g f a ' GPWIMW4m.J Q. E eft OWMlles 3V08R$$n i 5 useamusurgyg;g m.hamuseds pg&g 4j. s.wr J7 mm y 24j 7 m: AA y314 4 c. ea.wown m dsggg A kWgn ,wwkm@W u uwasna s w 3 Rtt au dr/WW d NxF:eguiwvfWt30p-u_N$.mpm 1* u n3RRla.m;m-,ow.irra, erg, r o t.c ma>r 3 - o.e,. 3 c: W Rynew:N.w. ce-Om M g -. ia uw m 4 $l -= .w .. -...:..u- . ;. -.a a.a., .......-.....m.a.,,-

05 AMAN'S 'LtfYER f((SHARENGLDEh '. ~ r Out leadership is demonstrated by: a llnancial results that jirogide sup:rios returns to ' t'hareholders, e a basic utilit' husinew that is streng, effk.ent and j technolagically adtanced, s senice that proudes eietilent talue to customerk a initiatives that are improving Cahfornia's environment, a a nurIcar power plant that consl3tently achieves outsiandinglevels of safety and rrformanee, i OUR INDUSTRY

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.,,,_,m u _,1,_ t h_. tain PG&D leadership paition throughout the decade. AMEllICA'S ENERGY U'IILITY INDUSTRY [ sin. or naeaciaif.evormann.1 g has entered a new and challenging era, an era ofincreaved During the put two sears, PGd E has prosidni share. holders a total rett.rn on conunon stock imestment sf 62.11 competition, rapid advances in technoiogy, new customer lercent, ranking us num!vr one among t he nationi 30 largest electric and combined electric and gas utilities. expectations and fundamental changes in legulation. L.coutm.un! to increa4e earnings in lW1. L.arnmgs f"< the 3 e" *ere 82 2 5 " ' hare, up c rcent mer PG&E's performance in 1991 elcarly establishes the com; any P r ihe 52.10 per share rn'orJ-d in 19'XI. The earnings in 1991 - as a leader in this transformed utility indlistry, sub;tantially excenhl the com;unyi hadgeted earnings for the year. The Iwo primary reason, for these strong earnings were the continuing cuellent op rations in our hade i utility businew and the tafe, record +etIing performance of the Diablo Canton N :lar Power Plant. Despite an - refuehng outages during lWL the plant pnadured above-budget ravenue'e and contributN] significantly to merail corpitate carnings in January 1991, we increacd the diudend on common ihrk b 7.9 sreent. Thi> increase, combined 3 1 with market confidence in PG&D ability to coutinue bulkhng earnings, resaltnhn a higher price for our stock. The stock price began 1991 at $25 per share, and closed the year at an all. time high of $32% on Daember 31-an ncrease of 31 p rcent. The performance of PGd Ei suick price signifwantly outpacal both t.m Dow Jons Utilities index, which rose <diout 8 percent over the year, and the general marLet. The combination ofdividend< and stock prite appre-ciation tra:Blate6 to u total return of alamt 37 percent in 1991. Since 1989, PG& E he provided 3hareholderun rneraae tuts! annual return of hetter than 30 percent, q 3 -- m

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We believe PC& E can conunue to bleild on the sohd l v: o 'y :.; x 3,,.. e. 'y '. 7- ,j '.[','. s... ~ r Y. ' " i ';;. -l. N* ? l., ^ I4 o

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.s a., ?l.S.E / L %, J.',.f. Q f,}4 f, $;.C'.( ,.,... ' J. e ~ ' ' $j.Mh.M[a..... ~. l j the lloard of Directors on,lanuary li, lW1 rahed the ,~ . g.4 9.y y /y4.'- Q y. . ] J.'. i jp.,,. $ ~,. i ..s qurterly emnmon stock diddend to 41 cents }rr share, . ;'f.'g.{'j.. g.j{' 3 y.p[. Thh was the tlard dividend increase la three yean. It broeght the new annuahed rate to $L% }ct share, an Qi g'.i ?g J K l3 g < . g.'] 7 :. inc ea.e of!.3 ercent os er the former annualimi rate W D i N..- 3,M.Ml.f.. ' i.$p '

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.p... a% e, ..c n of $l.M per share. N ',$,0;,[h..M. h,h ,,y'. ,b:.j d. ... a i;, ; .s 4 .. a. f. m.' ': si. p%,N ' Y. . ?' k h' 'A ? ~ ,\\ A l $trong Perf ormance in Our Utillty Busine4s] pgl % vi W 4 V1

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s..,. y ,.*Q W '. j, hngement focu3 on improurig pe rformance,increeing h[i( - R',,.M%' # ~ h 1, O etliciency und applying adcanced technohp~ h evential p.s .c / to thntrength of our utihty bu iness. A key n.casure of f.W. 4 . L *.w: 5 ' v s ; -[. o es hh',. 3 -.,s that strength is the ability to ram the full return o*1 =) .g e I k.. [: ;i k - I ~ eqaity Irwsted in our utlhty busineu authorient by Ihe

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'O '~ Cddornia Public Utihties Commi sion, h.bd[' bg.1 in lW1. we urhiesed this fundamental goal for the cighth consecuthe ye.1r through rigorous budgrting, h,,c.- ..,k..< { ~ constant attention to controlling costs and productivity y/,,, g .,, '.,.f E y ;A .a ....Y ". ' ', y. j,c # Improvement % r. 914..a y' r.. "+E Throughout she companw' we contieue to mi h, tier, S C:. O. ' i"(y3 ;'?. ' " *

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g q more cost-eficctise ways to do the job. for example, M , 5 ', ~ j. i,s g r. 4, a $mp> [G,j,@n[. one of the compmy's major costs ia constructing diMri-

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'h. .hh$'Mk' j bution facihties to protide eles tric sersice to new MMk, ' ~ w residentlal customers liy adopting new design standard 3 and constructnon Stanley 7, Skinner, President er:d Chief Ogerating Officer. and fuchard A Clarke, Chairman of the Board and Chief techniques. and other meeures, PGS Ei ambitiou po *1 tucuthe otticer, is tr. rnlace the3e emts by as much as 25 percent in ' the neX1 three ) cars. That Value includo a wtWng tradition o[fapid, PG&E is a leader in the u+e of adsanced technologiet etlerthe and couraceous action during hfe threatenine that add to our efficiency and support our environmental emergenetc3. v initiatives, These ranse from state-of the art comp tier When one of the nation's wor >t urban wildilres desa+ systems that monitor operations at Diablo C; myon and tated the Eut thy h% on Octoher 20. lWL some 130 ~ car Energy Control Center, to re-ean h and nevelopment PG& E emploges retmded to remore scruce afely projects on *olar energy and fuel cell power pbnts. and quickh Their ntraordmary work mirrored the care, We are at hirving productivity gaita while ul+ main-concern and extra effort to re&a e utlering that PG&E taining safety, ieliabibty and ibe quauty of service we people demonstrated !bliowing the NN Inma Prieta provide. We s ecognize that outstanding customer sen ice earthquake. it essential to PG6 E't. bioinew su(ccH. Winter,veather irrhed *.hortly after the fire storm, and many residents needed he p. PGA E peoph handed l [astomer Service The Provides Excellent Valuo] out blankets and portable heaters to those w ho had bot year, customers eave us the highest grades for senice electricity but were still without pas senit e. In udshtion, tilal we h ne ner received. We earned thme marks by th compny con *nhutnl $1f0W to tunous Emt Itay pnniding excellent value, tailormg our service to meet apencies to help the detim, of thk dheter. I the energy rtreds of our customer % __J 3

(Improvlrsg the EnvironmEtj auclear power phtnts, virthaHy frtmt tlw das it lqan C"*"#

1. "PW D" bby, PCd E is a nation:dly recognlied leader among busines-es working to unprme the quahty of tne in lWl, we continual lradership in rmdear smer ennironment, generation b; retaining 3trtmg ratings from the Nudear On October 31,1%), the company neceised the Hegulatory Onnmi* ion and the in titute of Nuclear nationi highest aw ard for c'n ironment:d excellence: the Power Operation

• while continuine to set p rformarwe l Pres,denti Environment and Con ~en ation ChaHenge nwrds. Prior to June lwl, Unit 1 of Dubh. Canyon i

Au ard. hdd t he national a ecord for continuou s day of operation Ihinnd numermo other award we received m lWI for a reactor ofits type, sy nd olize the succm PG& E is achin ing in its em lion. Uni: 2 edipwd that mark and, in Augu-t, completed mental initiatiges, e peciall) in mercading customer / W Mp of rontinuous operation, eetting a new world's eflicient use ofenergy, record for a reactor ofits t)pe. Through Cu-temer Energy Emciency iCEE); n,. During the year Diablo Ccn>on generatal more than grams, we ah able to earn a profit for awisting ratomers M hillion kilowatthours of elect ricity and,miduced $1.5 to con crie gas and e lertricity. In this way, PG& E is n in rewnues ohndecommisioning revenues. .ble to hu:Id earnine, benefit customers and help to II"th units completed refuehng outages in record create a cleaner, healthier environment in Californ.c. times, Fuluding ihew outages, the - - achieved a For nany years, PC& E has combined ogeratmg"equcity far!or'

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pmidd dectncity from a wide actual performance against the theoretical maximum 7 q. _,. =,.,,,. _. %commCW 870CK) Ti array of renewable rnergy PTf"I*d"'" ~ of 93 percent. comptred to an industry MARtWT PRtCE f resources, meluding hydroeler-awm of M p'rcent for the la,t cycle of *imilar plants. f AT MAR-FJtD ; 1 4 t ric, pothermal, wind and 3clar Throuah 19N, the price per kilowat! hour for Dnblo I I'1 tm. power. Today, through our Canyon power increm annuaHy. In 1972, for enunple, i fn :M ,t 3 h} ~n c renewable and ch an fueh. initi. Ihi meant carh unit at DiabloCanyon niH pnkluce about m M. 4 / 1 j M[ 1 <j ativeN we are leaders in the mdhon in resenues each day it operates at full power. j k ] dewlopment of the nett genera. We wiH need to refuel only one Diablo Canyon

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c[ tion of cost effective, renewahle unit in PN2 and one in PN1 This refueling schedule, i t 3 y(td : as J w@ f1 energy technologies combined with the price escalation, should resuh in j The company ab.o is prornot-wukstantial growtb ;n Diablo Canyon's contributions to m ing the use of nat u ral pas in fleet our earningh solong 34 we continue to op> rate the plant vehklM In aute this fuelis as weH as we base in the out. more economic and cleaner huming ihan gasoline or [ leadership fEthe Future > dineh And we support thedrwlopment 3f electric cars ~ j g w hich produce no direct emimons. PC& Ei leadership indudes innovatim pohcies that Our Initiatives include extensise programs to pre-prmidc a model for nationalenergy strategy in the Ph s electric supply plan streers reduced uw of sene the environmental quaht3 of the land and water resource + we manage, and protect the animal habita!> peatn cuMoma enngy e$'ieng, renew aMe energy these resources supprt. Employees actnel pirticipate """"" d 8 ""mpmw huh pown uph market 3 in a s atlety of recycling programc, and the compmy "#"'#'indy, Ihe e are being recocrhed av necessary " *P""""" "fd ""'I ""I """'87 *trytegy that can pro-purchnes environmentaHy preferred materials to the de mn3umns ennpy at leet co-t and, at the same time, peated extent pmible. improve t he ensironment, r-L0utstand ng Nuclear Puwer Pierit Parforrnance } While pro-pects for PG& Ei husiness remain strong, Diablo Canyon ha,Iren one of the nationi outstan<hng "e nrogniec :he need to manace recubtory and other chanv+ to so tain our 1-adership Among t hese manage. 4

i i ( u __m_ s mer i challenges are significant chariges to our OseraE., the eqansion will tran port 7M mdlion ps hunnent cubic feet I tumef) per day of Canadian gas to Cahfornla, PG&Ehubsidiaries built and own a gat purchagng and 148 mmef ger day to tt:e Pacific Noithwest. and interstate pipeline system to bring Canadian ps to Preliminary construction op the expansion began in California. ThiS system was buih io eg yure CE!forpia Dtcf;nber 109), and the projc(t h scheduled to Ic customer, access to reliable and competithcly piced completed in late 100. pas supplies. Ilment regulatory decisions aimni at ghing Another major challenge h to budd an employee team customers greater choice of gas suppliers are defming for the future that h as strong, dedicatal and raiuble PGd E*a future tuote V a !!aasporter t han a inarleter ofleadership as our current work force of ps, That is why we are < riving to deselop a work place We no longer need to buy as much gas in Canada, in which employm can learn new skilli,and can centri-arn! we n9 longer turd to own ga3 pipchne and an{uisition bete their knowledge and egeriente to contmuously opetations Out-ide of Cahtornia, improse p rformance. We are (noving aggre61sely to acInct e a irsosition PGd E is prepared for the rhallenges and changes of to thh new, more competithe pas supply rnarketplace. the 19% The innesati e pihcies we are pursuing and Doing so, howeser, will require resolution of a number the excellent remh3 we are achiesing ghe me confidence of *ignilleart inues, PG& E w dl continue to br an industry leader, a rom;uns that wdl hr p shape the energy futnre in Cahfornia I These inciude the Cahfornia Public Utilities Com-mission's toiew of the reawor.ablence of our put ps and the nation, purchasing costs; htigation by seseral Canadian gas This indu3tr)deading perfortnance will tenefit our pruducers eter the Imel of gas purchase. by Alberta and shareholder % rustomers and employt es it b the catalyst Southern Gas Co. Ltd. AM~, our Canadian p, pur. for increasine shareholder salue, providing outstanding chasing subsidiary, and patential nets a*oviated with < ustomer service and continuing PGd Ei long tradition } renegotiating existing ps wppl) conttacts. of succe* I am convinced PG& E has the prvple, pilicin We are workinc with btate and federal regulator.% ps and propams to remain a leader and to achiese these producers, and the Canadun and Alberta pnermnents objecthrs in the years to come, to achieve a transition that is fair to all ronrerned. As [ ort of thh tranution PG&E is restructurin;.:its Canadian gas supply arrangements intluding pursuine the sale of A&S, Tbc company also announced plans in a2/2 M 8-1991 to sell Pacific Gas Transmmion Company ( PGT i, out wholly ouned, interstate ps pipeline subsidiary llichard A. Clarke ihat transports Canadian gas to Califorrua_ to Tran-Chairman of the ikurd Canada Pip Linn Ltd.of Calpry, Alberta. and Chief Executhe Omcer The regulatory changes in our gas bu-iness do not alter an important fact: The demand far natural gas in January 24, lo r,> Ca!ifornia < outinues to grow, and with it, Ihe p etential Io increase earning by expanding ps transmission i apacity in California. We are moving ahead wnh conetruction of the Gdifornia p>rtion of the PGT-PG&E pipeline expmsion. PGT will build the intereste portion that will parallel PCT'3 existing Canada-to-California pipchne oy tem. Then the %!e of PGT h completed Transranada will I lecome our partner in this project. 5

L gasaa m tmpat i TOWARD A CLEANER CALIFORNIA IN 1990, PG&E ESTAlli.lSilED A M AJOR CORPORATE GOAL: to improve the environment by leading efforts to increase energy ethciency, develop environmentally preferred technologies and expand the use ofclean fuels.This goal was based on the premise that the com;uny could integrate responsible environmental policy and sound business ptactice to the l 1 henefit of our share-holders, customers and a the communities we serve. Today-less than two years later-the company is well on its way to meeting that goal. PG&E's programs are already producing cleaner air in California, The Padfic Enern reduced costs for customers and increased earnings for Center in $an shareholders based on the energy savings we achieve. Franusco u America's prernier ">=a5* 'ay The centerpiece of PG&E's environmental initiatives

• • • ""'""*"d is to meet much of t'-

growth in electric demand by increasing customers' etlicient use of energy. l

[ Customer EnerQEfficioneyj PG& E is aggreenely promoting the use t f energy-erfacient lighting, motors, rooling and hea!ing systems, refrig-eration, gas and electric appliances, con truction design and tiyhniques, a and insulation As an liicentise to ruttomers PG& E y. oilers rebates that significantly reduce T the payback ticaes for instalhng such i / ~ equipment and spieins By the end of the decade, we intend to reduc e grow t h in ieal elect tie demand J by 2.5lWi megawatts ; brooch Cu<tomer V Energy E91ciency (CEE) prop ams.Thb 76 S will enable PG& E to as old emitting di 7 ' thre million tons of carbon dioxide into MM# the air annuath by the year 2tW-M the equisalent of taking 375/t00 cars otY ,fg ' Cahfornia roads. gi in 1991, our CEE programs hel ed i j customer, to conserve ubstantial amounts of gas and electricity. As a result, PG& E: gp . M e redneed growth in peak electric denund b) 114 megawatt *, a sased 37 million thermt of natural M pa+. a cut air emiss;ons by 300,000 tons ~ of carbon dioude,120 tony of sulfur e n. dioxide, &. tons of nitnven oude and ,s / % gi d 15 tons of[wticulates, e and under an innovatise program kl. k,, to enwurage utility CEE programs 'M-adopted by California regulators, PG& E Y :s*gh w aettally added to its earninp for not w q a - - MF selling energy. We earned $15 mi!! ion { g .g pre-tax as a result of these energy sasinp. i I . 1 c wd $dM ? 73 To Suppor its CEE programs, the l 3e u gPthy, 1.Y tempany is taking seseral ground- { weu @Q p $? breakira actiom. Chief among these is } WV the Pacific Energy Center, w hich the l N 1 company onened in San francisco in Yh:,,. Deet maer 1991. The center is the .6 ' .a 6 y y nationi mod adsance 3 and compre-e N[,, ht nsise energvttficiene) facility. g At this center, architrets, endnreri. fW

tg pp designer

, mamd:rturers, builders and 4

f bp: building manager 3 ran conduct hand +on

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evaluations of the most energyefficient m I equipment and systems asallable on g the market tmhv. e, c b-II. y ' $l, Sasing energy in our homes, busi-y h ne"es fams and factories is sital to ,g t ~ %.O 4 rhies ing a cleann en s iromnent. .p 3 y W a 9 ib 4 __ s 't, NN, M ' v. +g ' kg t x

hu_m, ? So is tising deaner burning fud,1" 2 ; : g g "'a.,_,,, 2 :::: w + - - ,.;;2 l

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Oyt-,.;c ec3t t";;" dea viens,mm ~, de>d,8 j-d s am mm, en,,,,,, vcodun,,d,,g",= tera p,}2"yucaaa.,,dr,m,,.,, m -ud. a s ecat h.,, eau, , e n-,m,,,,', ',

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,_,gs~aeme,o,asasad d.aw773 COW. J ard 6asComp;nv ~ ,, generate dectricity, enabhng a" ofilousto' n'7"a% for $389 mill m added uubstanti ify go

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73 amount of oil jg i "' " da ne, smrw tha serve Cahr t 7 a c I Daaa Air vegses,,;

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of ollation hap io impune the swm aam ycr. P ec,y P9eline from Can.MM Pnnide eng,g thow utihties witg r ia i t a 3 rtat nud u, a mdh x ;>; - n.- n-d. 3 nd-nan-, ,a,;>;pmd-u + h $f f1 j s< ,.g),,d h, F"">hne and dind' e Pnunoting Cle nehnuon,. a d_**l for naturaj ygd# " ! unoa,er u.,an Air gas should inmase.m the year $ ahead. n.,. nen: of pGdEienu. ^~' runmental maeautn' Our god is to hw l2Q)Deetschicln m horthernandCentry Lahfornia operate on natural gas by the end of the decade, any to ensure ade,y,ye nM StWjony go O fadlitate their us. hon of 23 3ggj,;ona) n !"8 I NR!uralgas ""hons,converaana5g,pg many advantm:n go ichides and 800 custo er vehicJes to Meet operato7{ g, g " naturd as, and am y 3 r t g3e F cleaner, mow e, v" hic #h-tiornic afternWN.g

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' # "f'h'0'1 Pid u w g ancan'y Fa&dir>e or die 3d. Md' unkke the Petroleum mufacturca by cenmn m Lar. frm shich wohne a vmymntan,no,,,9,, retmca, un,,, p,, bSe of naturd Ns in h d ll'llv,ourc d r'I" I "dj y "lill'!L'ld"gl;ekit!cteU l, abundantly avandde m-l udd w_ a nP3rtation Da oceed g option in the yt 8 air 7,',"l24* r-et

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quahty Wgulati r s f*CN mre sujn-ling Stations a pgg ger,t, pc3]p "Pports the developmem

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Pmj,fenti throughout 93 wg " *"## #""#FF effici% Er****nt and m 7he ggpg utin and de P 1" t cm.n,,% Commisjon jn g b) n m mcnua,n,u,,. Ch &W Y,rt ofIhe n Chaueng,4 ?* Vrogrum that k f*a Presioont g,, Valning nationaf 7pC"F" n for the f,l, lead"rrhi,II#f emongrage, i d ~. c- ~ N g \\ xNN N

s.. ,,..,.3 , %,..... s.g j. 3D..s,(y u).,} l ,; y..f 4l[..,J[{n $ p3.,. ' g 3 ~ .e.y.. p,f 0;  ;.\\ q -.. tt.';y :.).3', y';. . %,.;.j.QMd . Y,'c.Gp)p j p-

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f LEADING THE WAY ] e m . '*;T,1. > V\\'pg, } ... [., I }.G..(*,k'. w,.,;;Nj: g)... g ' ' ;M', =*pp 1 .- id ,. gy *"MQ. i, ' r,. h in1991. PG&E achieved signifk $6 c ,y'q. ; %.;....y. W :- -.// cent " firsts"in lu vnvironmental jt ;

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y pM -A-.3..'_...- f. *M g. ?. m;c - programs. . u 7 DV!W 'L g~.' ~.:.. 9N e WORLD FIRST: PG&E began < 4. 4,k3 A- .M. mental operation of the , typw. 4 n :., ,., p. ?- woeits first motten carbonate fuel .,e., ,k. y cell Po**r Plant.The plant directly

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c converts the chemical envegy of , %, a... oxygen ami natural gas Inta elec-o - 7,, -. u.%,4. -:1. 14 city, rathor than generating power ., i 4 ' * ,9 from combustion.This h)ghly efft-1 e J . 3 - e cient electrochemicat tochwlogy m y produces virtually no pollutants, l U a- ', '[ and may ulamately trMom9 a signif-l g.' - i+,..s, j - g ! cant electric energy resource. l j s N-s a U.S.FIRST: PG&E formed a . 9 a,,. 4 1 a partraship with the Environmental ,i Protection Agency to work joint.5y { to preverit pollution in our region-g x the first public-private partnership .g ~ of its kind lo ti.a nation.The agree- '.1,. . = s. 9. g ment includes projects to increase ~ ~ f 3 energy officiency b federsi buildings, j N-encourage use of attemate fu As l }.= such as natural gas, and conduct s pollution prevention education 1 and research. m CALIFORNIA FIRST: PME I On Octobe r 31,1901, President in April 199L l George Bush pre.ented PG&E with the PG&E and Sh6! Oil f gas venteres at a sheliservice new15 ct+ated Presidenti Eminrument cornpanupeneo station in Sacramento-the first and konservation Challenae Awsrd for Cahf ornia) fnt demonstratinc that emironmenta "8 '"'*' 8" N'""c naturri gae dspenser located et l Values can be inturated into sound l serWee statien. The Callfomia.We nc a have an agree-managemen' decidum and hu-m. s en station is located ment to Install a natumi gaa dia. pract.iccx !.he company was one 01. In saceamento. penser at a CI'evron Service statfor., only nine gohl nmlal w m.ners m the and are working wt!h other oil l i nation, and the only. dustrial flrm m cc.npanles to lacrocee the number i f to renive tin.s recognition. Of suc's faclittles, i I In January lW1iiG& f received l l another national honor: the IW1 fnvironmental Achiesement Award, I l presented by the klional Wildlife i l Federation % Corpmate Con,en ation l Council These awardmand many l l others the company has won-are sohd i evidence that PG&E is meetine the i challenge of environmental leaership i I intheI N. j l l l l 1 1 e I I i y ~-,,.,,,..,...,. y,.,yn.,,,__,,_ _,, ,,._._,,.,,.-__.._,..,_.m.,, -. m.

s _-.____'_.--[.....CLi8YGOEQ SINVaCC } {~1.1T{ ([ SERVICE SEYOND DUTY } Q'l p { {L { Tf b kJ kY. _J. L .L t PGAE gas serdceman Dadd Acebo ' had planned to sperut October 20 watching the '49ers oPN,The -s l r { omima trails of black smoke over the East Bay hills c hanged allthat. They signated the orwet o' *a* *' A RECOltD-lilGli 93 PEftCENT OF 0U11 CUSTOMisilS the nation's worst urt>an fire storms. Acebo quickly reported to work reported illeY were batisfted hitl1 t}le C0!Hpanf'$ 5ervice in 1991.Tliis Inarks aM was one of the first PGSF. empiones to roach the caldecott tlw sixtli Mrai%t year ke llave received customer satisfaction ratings of Mnel, where.he fue was bla:Ing ru; i cont rol.With just a hard hat 9{} percent Or IX'tter.Tliese grades represent tlie value-oeitsianding service and cust mask for protection, he raced through buming neighbor-at fair prices-we provide etistomers. hoods shutting off high pressure l

gaslines,

.,{igh - ~ Acebu worked 12 harrowing i V " ". '. 5( hours km the wind-driven flames. H4 3. 'p M,. '7 ~ *' ' ' 7% ' 9 [! bravery and dedication were part ->7 3,. of an extraorcinary resporte by - i., - O j.ff y gg,,,y, i.. ;, ~ PG&E men and women to this life- ,.;Jg e> 4' threatening emergency. ~ - ~ Q' % S 'G Appalmatelyl,500 PGAF. ,i ),' D..{f ', j employees trom throughout the C ~.' C' ,..'l ,3 . [',f n system-inanyof themcomingin . :) Y, d.I '

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voluntarily-contributed io the -'^, Iy, I , I. O F ^ effust to safety and rapidly restore k ..,$~-?'#'k ^ 'L g gas aM electric seMee. The fire destroyed hundreds of ' ' *2 4 '., ~ utHity poles, transformers, switt hes h$, p" t ' E-s9i ~D I [M-,' ["\\.N - ~ '['. < *1 S and boxes, and miles of electric bO' %. s,,,C": - - ' '.'t wir3.Yet, Jest the days after the fire. a .. e. j 4 p F

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3 N full eeMce was testered to all = homes that survived the blaze. h . [f I On the same day as the East

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[* 4.1 . ' y e /l ~ f Bay fire, a tet.arate blaze threat- ,g* . s y eneo units at The Geysers, PG&E's e.-t i "5 "l ' goother;nalcomplex about 80 miles [ ' Q 6g ~ ' y f- ) ' , [?..,. f'" l.j.? teorth of Sett FAmcitro.Showk g '4w i'. the same skill ami bravery as their a ~ n ..N J ceworkers In Oak'.and and Berkeley, . [/,. 's PG&E the belgade successfully ([. ).. ~ 'v fought this blarc, preventing w i .. = ' * 'l

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%i-k.'; 7 damage to the units. .. " 4d }; 4 3 ' Afew dayslater,PG6E crews. 1-8' resporided to a severe rainstorm n , y e., [.. ? around Fresno. Employees from ali L? around the area reported hack to [' '[ U

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work to restore electilc service to ..J h 'h 133,000 homes arwi businesses f f ~ N

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.. pay '..C , [' 5 aneepair damege to substations. l .,L', (., -M p _sy w p,,y,. 10 ,q, g c. 4 p .-a . - m.__ ___ __._ _ ____ _ ____ _ _ _ _____ 'i

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<?9i ON LINE AND ON TOP p 49 4 m 1 gg + DI AIRO CANYON IS ItECOGNIZED AS ONE OF Tile NATION'S g ,i au premier nuclear power plants. The revenues from the power it produces y 7,i3.._'Ij -((.;lp$ e a 4' contribute signiflcantly to PG&E's overall corporate earnings.The plant }., i

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.. a has achieved outstanding levels of performance and safety largely due to an .? g',' unwavering effort to continuously improve operations, Two Ley elements in 3' A the succew of this effort M-..' ..f-4,. ..} are emIiha31s on traln-e ing and safe, ellicient .7 q y, e..4. t j('. ' ' ' g [,[$.. . i. refuehng outagea. [ No one ner grad-4 f - ,1 n.. ;. N i ! J R " uutes at thablo Omyon. 6 a J,.Ehd'S

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l.iccused operators d,.,,p%,me=#qg. c;.e 7,: ,3 sjn. d',, a standard, and Ihen %De E" M"g' g#," - train to meet exacting retrain to stay abreast ~ lf U of a complex, advancing j technohyy. I'.mployce= b are learning contin-uously in the clas, room, in the ( ontrol roona tim-ulator and on the tob. fl Even senior reactor . 6 operators must spend JNN one week out of nery five in training. The anality of The quality of this training was training at PG&E's reflected m the excellent as,eements Diablo Canyon 's of the plant's performance in 1991. In one reason the the Nuclear lhgulatory Cornmiwmn's plant consistentty Systematic he'wment ofI.arensee achieves high l\\*rfonnance rn-iew in Aug.at, the i ant d raungs for safey earned the hightst reting-Nuperior" and performance. g, g, gg in the others. iL 12 -

/ - / /,,, / p- .. ~,. n.,Y n.. bg. _s,,m. a,~ '1 The emphasina training at Diablo 1 1 c.. Cd"10Hi'8"3tCh"IbY10lemeeIIorth J jI i j $ y [- p f 7 YIc c !,' 9b ;%. } to rontinuously tmprme the plant's b jY. t .,.3 .1 c. c l*'I"""^"ee-f.'b@M bO' ~ t L ' p.. : - y. m ~- Then imprmement efforts are 1 '1 hehvily focused on t wo areas: safely

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d$pt'g'g9. ' [,. 7 ' d4 [7' h. I dh shortening he time n quired to refuel a Aili idh h~ y i((}; ' h h h; (( [ 5" 7 $ y (g Q, j [y y[ g Q [, g

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unit, and emuring that the work done QMy J A {[]m h h ),@g h)dQ Q N M k^ Ggl in the refuehng i< donc right the fint ? e fk

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( p Hme.Thie means that the unit can %gh mpWy le brought iwk to fullper and lM' k.N M R gG OK h,~, S. 3Mb [f k 4 qlqggkFjEh remain there until the next refueling. N b h W.. p % q %p yp M "$ymbp,y 97 9 yN a Manning for the leic work to le o 's d!% 6 PMd j @Q $ @l % Mll M h @" N~ N M i M l $ ' P Q p/ M 'i @ U $ h y$ V M n Wh Nh n done in refuehng outages irgins e much h Js%% N y jy jMyy% Q M' M n as five years in advance. 'll:Is work bpjy{%

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} gjg indades mandatory traintenance, njulp vw* 73 ment uwmdes and design thanges to %p ' ' W % Wj@8(N,[Wy %}O the #n>dMm tx M-4 ML During ihe outage the most critical .l ffN.[,'y.YqQ4.pc(( .. NN # g" ". @, 4; N and comi ex work is handln) by High d . t os.fW ^-Q, ,h. .L9 j>WrWd'lR*y$jr;P ^ - gy, impn Teams (lllTs).These units 4 y gn m - o WONQ. 3 h.. m@h g MT ;

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} Iwhide all >npen Imro and wor (ers w L ~ ~m retponsible for a particular refueling . 3 x ~. - s. 7%. ink Their responsibibiles include "4 L, planning, conducting and critiquing e. f 3', y x, /' sheir work esignments. j j a f, Altnet as soon as one refuehng ', ' *9% l,* outay is cornpleted, detailed planning t .[ - "T^ . % o N}. s-wwil5bk '} h ' j' (( J W 4 )} - far the next one hegtns The lcaum learned from the last refuchng rae cap T ..1, [... o ' ( I ' s ' ' i ;6 p *. ~,y - W f : p, tuW for me in future refuehngx The y ~ ^ outage staff identihes any problem % ,e , g L: Y. : ? it[a.* > f g, %[.. m f ik.,,] 1jj j' X?q b. .k~% reviews and adupts mhitions. then avures that the changed prwedum are 4. ,,, g. i implemental. 1 ,a m.. . \\'c - J. l ym M g s .c a v - 9 .s f .? This comprehenshe approach io n p .o refuehog the units at Diablo Canyon is de producing positive results.

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Since the fint unit began operselon in 1933, refueling outage times have ' ? A, 4 leen cut almost in half, Our outages are T. w - e now consistendy among the shortest / s ? in the mdustry. In 19H. Unit I com. 4* ' I) pleted its refueling outage in 62 days, 4 +> ^ g 4 , y a record for that unit. Unit 2 completed ^ - i s. s - J Its ufneling in 1991in just Mdays a record for the unit and the plant, f'1 -Q 4 %g. s e h.jually important, the time !! takes 'O 3 ,.N. .g ' ',,a to bring Ihe units up to full power following a refueling outage has been t 1 cut by two thirds in the het the years. liigh qufity training and increasing i .n e. .~g4, . i a, the time the plant wfely operate, as L 7p. 7 J + /* 'f hdl capacity are two of the best assur-4 1 ance, that Diablo Canyon will continue 4 ~ g to be a major ace: to PG&E's custom-1 a '. 1 f ers md shareholders. 4 4 1 - U , j. en Q

• 9

.p 4 A* s e ,, e # s' '4

m.. _,. a. At the ernter of the comiunyk energy program is an electric dupply plan that [t K 'u'ven fin lou r key olij f t't h eM e Cutting u e of oil, a bimiting rustomer energ3 SHAPING OUR 22-t -+ energy resourre*. EFERGY FUT ~RE

3 = "" "'" "

[h.ouinn on up.j since the Ltc 19a,i>cs E hu trimmni PG&E'S ENEliGY POLlClES AIlE A Pit 0TOTYPE F0ll ,,, u,y g,,il to pn,<iuce power from about 24 million lorreh a \\ ear to len a st! anger, rnore secure energy future.They forin the tctois for a national inan,g,,<unurns in Uni.'ihat means in lW1le s tiun 0.5 gn trent of PG&la energy strategy that reduces depe11dence on foreign oil, irnproves the p,,wer p, neration came from ml. l' sing' les oilin our iniwer plants is environment and provides consumers energy at the lowest cost. Imporiant,ilut close to half the oil the gyr 4 i rc 6 3 $alk !; -(l-HQ }. b aw v :. f l kc'A.Q$h. . Y~ e %w. m Q. dQ ) M$4 V R ".Q?.N., R Jysj q; en ). Qc k'f g w 'k. kby k' A q O-m r n. v-n, ?- l: 4 v G [ >'i hh. -{$7 d a yjr> "\\' hhh M I@hihh? fn + %e : n s g w w ( @g $@po ^ r . m%plg& +w[- 3<f A 4 a_ ~ l am p .l ( j, ".gjlgl, l. .a v a %g.,

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=. j s U.S. consumes Imla) is refined into rain and mew fall year, ahnost balf of nohigio and ena. -um cont rol% 11 has pas 6line, mo-t ofit poing to o[rrate the PG&E's power is generated by renewable completed one phnt in.\\1ontana. In n01 ton \\ cars, true and ottwr whicts. energy resources-hydroelectrii, geo-IW), a began construction of abree So another way to buihlenergy therruah wind and solar. additional;nwer projects hrated in New independence is to increase the u-e of Est economic hydroelectric and jarsey Ibnn9.mia arul.\\lawchusetic h hlternathe fuck for these whi(les - geothermahites in our ervice area luv4 These plan 9 total nmre han 550 natural gas toda) and electricity tomor. already ten fully dewloird. Today, we megaw at u row. PG&li Clean %ir Vehicle pro. are focusing un dewlopment of w ind atul In January lW2,it started ron-gram supports that objecthe.

• dar Iower, w hich are huge, largely struction on a 42.megaw att natural gw I

Natural gas schicles and c!cetric cars untapped hwrgy sources. fired cogeneration facihty located in not only can help wduce our rehance for etample,37 of the Atates haw New LL This facihty willincorporate l on foreign oil, they abo prmide the the capthdity to dewlop wind power the latest gas t urbine cmnbustion and l op}crtuniti to improw the quality of at an erwrgy source, and it has been emi sions contro! technologies. Sesen our air, ptrticularly in urh ut areas, edm2!ed that wind power could con-additional power i.nyects totaling more I Natural ga+ is cleaner burning than cao tribute as much as 10 percent of the than 1500 megaw atts are in athanced l Mine or die-eh and rhytric whirles nation's total elet tric suppl). t tanes of dewlopment. hase no dirmt em!" ions. PG& E conducts an aggresshe research l[ ? 37@@@C@N@iWh[$14I Y M4W [ Customer Energy Ef fielencyl smi development pro-y ;c y .,7 6N iM E i PG&EiCu tomer Energy EfUclency [., ram aimed at making T N N,k, hg.,...E-e l procrann are the mmt externne in the the next generation pupM s, f ..'?. - I* l nation.They already are helping of renew able tn hnolo-gjgQ%U, < @F;-4(T( J. ~ -if g 7,l to mlure customers energy bilk and gies cost rompetithe 8

.4 N[p WR*,Uk iD

? l cleaning California's air-w ith fossil fuels. l The Electric Power 1(esearch in ti-Even with these ' in" SR * 'i ".3- @h;mSN i Oc. k v).. s l tute estimates that energy efficiency chrts howewr, most ^; - * *.- X ~ dA? 1 M ' R 2 / - programs could wduce national elect ric renewable technoloers ~' con umption by G billion kilowatt-

nai!able in Cahfornia "NPO U

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• L

'I - M MW*E Ik'A.. L ' . s.' J' taouus annuajjy by tpie year 0HL Tliat today remain about 0 NN NN U:. p ; b *' is equal to saving 16 lnernt of all the 20 percent more costly e, ;. elect, ity used in the UA. in PML thsn fmsil fuel options. hb M '/,$ N Nf[ f' Ach...ing thew energy savings Extenshe support M Q. . ?3 I[.[ x 1 k% ~ M f (($.M - would by the year 2010, eut annual CO: at the natmnallew! will 4L ' e MgM.N{Q 3khk.h. '.' 's 6 ;... ' - ' ' f '. ~ 4 emkslons in the U.S. by more than be necessary to p ed ' j ; t.).. j 325 mdhon ton, Thati the equnalent hnerovement of these NN MN N[b.I -['C eJk.... - '. I c' ' of taking inore than 28 milhon can off f echnolocies m male the road-mow than one of every fiw them cod campetitne. cars regi,teml in the U.S. in IW. The et onomic unIoct would ab.o be [ competitive suiii eower suppiy] The nerve center sigailicant.These energy savings would Competitiv bu!k power >upply markets o# post's electrte j reduce American electric consumets' haw ernerged in many states as repu- .ystem t. ine annual idlh by S32 billion (in im laton require new power plant to be Ene*gv control dnHarn built by the lov.est cost bidder. center whku Using electiie power more wisely PG&E i a significant participint in coordinaten will spur pmlocthity pain, and make this market thmuch US. Generating constmetion ' h* ' * "8 " Y or,eration and American pood and setsires more fompam, an unreguhted afIiliate w hich proceeds on the "*""i'*" competitiv in world markets This bene. buihh, ow ns and manages inder cdc nt so megawatt fadutin. fit wid increaw a America demand . power projects nationwi e. It is a part. $crubgrass d for electric energy grows, with the nership of PG&E and Ucchtel Group. Po**' eiant la greater u e of robotics, telecominuni. Inc. The comany (formerly PG&E-P* a"'F' * "'* - which is being cations, elecuified mas transit and, Uechtel Gc nerating Cnmpam ) changed deteloped and Ul!Imately, electric car.( lts name in iW) to more clearly identify the natiunal scope ofI!A hu met t j @L-svelopinent of Renewablesl lib. Gerseralmg Cornpmy 13 develop-U.S. cenerating Company. The plant ' l'alifornia w unique in that renewables ing p9wer plants w hich utihte adunced is scheduled haw alw ays pl ayed a large role in the natural gm and coal comhunion tech-begin operation in stateienenzy supply lharing a normal mid 1993. 15

P l p-datan:NO IN THE WOOMPLACE [ The ame acthe use ofemployee !.nowIntn and eslerience has led to, significant imprmements at the Moss landmg Power Plant, a facihty that has tren generating electricity for 41 yem. T n r3 Controt roem operaiors ai the niani rnTT yL.J U D GrTvDTTT 3 1 L1 dedgned changes to their facihty and L 1 1 L3 operatlon llargai ing unit employee $ l 7-ON- -.E 3E_ T. T. E. R.. pmioons io gain a new per pecuse on tbrir work. Others serve on special j project teams und comraittees to miew """F " " h'"* "" 4 """4" # P ""' I IT IS ALMOST AXIOM ArlC Til AT IF YOU WANT TO out aces. ^' ' "!"I"' F' '"li"hih') ""d manage change in the 1900s, you fitwt have to change the way you manage. efficiency hase allincreased dramati- ""D "" h" P '""" ""' "? I To maintain our leadership in a changing utility industry, PG&E At Diablo Canyon, employee nnuhe-nmnh undanrntah the lhgh Impact management is striving to create a working environment in which: Teamd 111 hd. which were developed j to imprme safety and efficiency in the t. . Employen are C""(plex refueling of the plant. v W $ y % l 0. M' ~ ' e g m y N y p} g k % f.i.'.'e-s.- aetheh imohed m l hese team, made up of all person-md% g ~- 1 nndinhayoo con. nel inudved in a major task during ' ~ 3d wdg f.c 7 unuoush irnprme a refueling mtage, proule ;deas to y hir F -m imprme thdr own work p;an* and Ef ..= er Employees add 1o condutt a pnt-outage resiew of their +"**nv g o y~ their technical, busi. own w irl ,? ' > i.. L ; [ p j ' y. p.a. 4 ' [ + ness una communi. Upper management does not attend cation skills through thew meetingt Rather. the team mem-l our learning programs. bers are empowcred to c ritique their a And our empimee ow n wwk freely, and to make their own ~- V team understand and suggestions for imprmement, most o wh are adopted by management. can effecthelv serve is 1 the needs of our The results have been outstanding. ~' culturally dherse yc,,,,,,,,,L,,,,,,, customer base. in a rapidly chancine business environ-4 1-Li M [Epinee mvolvement I ment, employees need the opportunity

o. g The manager of to learn new skills in order to contribute

.;,. r.._... i. PG& E's Lrth llav to the companyhuccess. In essence, i PG&E4 Learning Division know: the salue of emplofre we are creating a "PG& E University" centerin san Harmm invokement. All 265 employees in her within the con +any to male learning provides state-of' dhi'sion a'e dimeth invohed in w niing an integral part of our work, the+i training t*' me veath businesk plan. They set the An Education Pohey 16ard, chaired "" *"# 9 *- dhision$ budgetary, service and by Chairman Dick Clarke, comp?eted a safety gmis and recommend ways the "lliueprint for f. earning"in 1991. This i dnicon's p rformance can be improvnt comprehemive plan establishes guide-Their ideas are working. In just two knes for employee learning throughout - yean, the number of customers served the rest of the decade. by each North Ilay Dniston employee The plan supports un already exten-i increaud from 380 to 426. At the same sive educational program at PG&E. Last time, the cost of sers ing each customer year, the company spent $120 tnilhon decreaml from $78 to 572. In addition, on education. More than iwo million service reliabihty to certain areas within man' woman hours were devoted to train-t he dhi* ion rose dramatically, i04 Dn any given work day, more than 1,100 ernployee3 were attending class. -16 -. ~.

lhe company ottere d m re than 1,lMO t raimnp pr oerain-in l'NI, atol e!!1jdoyee d%ef aRPd !!I worl4 day

• in training. % bde tramme tak e- }dat e at ihahh Ca ny on, Sto! kton ani! r! cw herr ni the < ornpany. IM l" major edura--

than3}(MIIll) t- !!te k raf f !IM ('t'!llel til ban }{ umin, a nud rn !?ai re 1 ampus ordf San h ralh'isco. Ih p N ), t he.1>!np iny h )U h D r -}Wnt h C IT1t N P 'il l('i t E} e!c Sin e \\}Mn-son of 4he leanant CcMer becun m l'Nh anii to comp l rte a new i. epa-in lhermote for f raun ein t ro hne i rt* w - o.< ! Serving a Diverse Customer Base : g+, I?!#l3 + y, .;w:, PtM E -tronch i chews t! at r r uitme, Vx g retairung and pr.m. tine >p.auhed !x "m mT-4 5 N p.,.ple reca nHe-- of ra. e or ern ie r i-B .( g' n.t onh the ruht l- " 3. d r t h: onk l + k ?p.,'~. J w ay w e w dli natmu, to ui 4 red. U n We nc+ d eniplos en n }ni u ghje t -!;p al l\\,.,,, '~ -j k an.1 can eftec Ech crs e 4 <h r-e g,g Y s w #)~ wg - .c s. eug, day, women and nanontu - ro j y hold unportant p-oon-tbrouebout r b-t he company '- nodd!-- arni upper- [k. g4P b manaarment rank, \\nd the i ompany q%./ I su;pirts a wi 3-urn ty ( In,auts w 4 n 4 - {- y, and cominu tar v pi nur a'n-de ter.ed to t letter prepare mioontie tor -uccc-- M-3 cp a W m pps/ c w a in tomorrow' lalur markrt. gs we% 4 MOs ^- + N % p ?dej'p' ' ' 1. s s Throach all ot o-tor - to mamta,n i; ~ " MQ [i/. lts !cader-hip -tardhna 19 4 E i-n. t i simpiy m.une to t con e an rwn i.et>rr plai e to work. h -iniuu: to becomr - N d coIDpank that works better, more ,.p i j; ,e,,nw prlhk ut lli rl). IM$r'" (bf f t!kIa!'ki - Ilt tu and m t he wa r-to come. IF

l SELECTED FINANCIAL DATA h Fank Gas nmiFurerk Cepmy 1941 li>v 1981 jy8 1987 1 in skeh neeptpnhnre amasw l Operating revnues 5 9,7711,IIC $ 9,470,092 $ 8,588,26% $ 7,6G,748 $ 7,185,701 Operating 1ncome $ 1,713,079 $ 1,"Tb,136 $ 1,621558 $ 1,297,372 $ 1,261,701 Net income 5 1,026,392 8 987,170 $ 000,628 $ 02,127 $ 688,517 i Earnings (loss) per commor. share 2.28 4 2.10 $ I A) $ (.10) $ 1.53 i Dividends declared per common share 1,61 $ 1.52 8 1.40 $ 1.66 3 1.92 l At year end ikx,k salue per common share 18.10 $ 17.86 $ 17.38 5 16.79 $ 18.68 Common stock price per share 32.63 $ 25.00 $ 22.00 $ 17.50 3 16.25 Total assets 522,900,670 $21,958,397 $21,351,970 V21.067,685 $21.733/52 l long term debt, preferred stock with mandatory redemption provision and capital l lease obligations 5 8,368.508 $ 7,929,734 5 7,978M8 $ 8,116,603 $ 8,511,nt9 { htkrs rtlahng to verlain data che are dwuwd in knagement1 Dawn vul Am:Inu ef C<vMared Results nr Operu:wru ami Ysnamul rorstw, um!in .%:es to Cauulated FuuwtalStatement in h% net wome w reduad by SC6 miliwn iII n p, r Jwej na a inuit rf the.%% Cawm % lear hmer 1%t ruw c<ue settlement and ad;wmer:0for wwus nowDeW Canyvn cosex z W -R y.. Q _: e 2 =wy e M

t w Q AN AGEUENT'S niSCUWSIOYANb AN ALYSil CF CONSCLIDATED Q,YSULTS OF OPER Afl0NS AND flN ANCI AL CONDITION l'an% Gu a ml Dwtc f%ynay W,W mtmnen and 87M customers, in 1991 and IWO, Lt.. mete et operatione ] resperthely. Pacitic Gas and Electric Com;uny 1 PG&F ) and its w holly owned Diablo Canyou rewnuc* w hich are included in the electric and majority owned subsidiaries (the Conmany) hne three revenues discusm) ahtn e. decreaml $3 m/.on in 1991 compared types of oterations: utility, Diablo Canyon Nudear Power Plant to IWO orimarily due to Iwo schniuled refudinp, compared to IDiablo Canyu)and nonregulated through PG&E Enterprises ona wheduled refueling in 1490. Diablo Canyon revenues "(Enterprises), the parent company for PG&la nonregulated increased $136 million in 19(0 mer 1539 primarily due to the - subsidiaries. For 1991 and 1990, selected financial irdormation annual increase in the price per kilowatthour (kw h ) as pronded is shown helowt in Ihe Diablo Canyon rate "ase kettlement thscumd below. f la% Gas rewnuet. decreased $25 m;llion in 1991 com}ured to 1940 I!$# L S"*?! 9 '""P M primarily due to a decrease in Ihe cost of purchawd gat Tne la mdumu, erreptrn dae nwwna decreaw in rewnun altnhutahb to hwer ps costs was partially ofbet by rate adjustments awociated with general inerenes in g - Operating eciem n 4 8,201 $1,501 $ ?3 ojerding n[cuses resulting from in0ation, and a highc.,tas rate l Net income th) OperatmoncwnH lom $ 1,231 $ M7 $(35) i hw on w hich PG& E is allowal to earn a return. Gas rewnues $ 777 G 274 5(25); increased $62 milhon in 1990 over 1080 primarily due to tI

1. t it 35 di rate inneae ac,wlated w d pnual inacases in opnaHng ex[enses resulting from in0ation, and a higher gas rate base, g m)

Whimn of gas sold to customers decrea.ed 9.3"u and 5.0% in j Operating revenues 8 7.899 Sl## 5 (d 1991 and 19(U. depite the addition of approximately 50M10 Opern9 7 mcme(lo*:) $ 1.189 3 550 f 133) > and 78M)customero resicctively. I Net income OoM $ eAa 3 318 3 19) ! { Earnhys tlo s)per common share 8 1.48 3 A7 8o 05) ! 3 Tot 41auetot year end $ 15.809 35JM $ 424 l Opernfing ex)+n n in 1991 and 140, t he Company 's operating L _. _ _ _ _ _ _ _. _ _ _. - ~ " u d @ M M M m g W m W $301 million and $"#8 milhon, respectbely, over the oreceding year, L.arnmgs In 1991, the Company,s earnm.p per common > hare TMW h m m primarily due to increa$cs in the cost were $234 comparnt to earnings of $2.10 in 19'M and $1EO in of electrie energy, administratn e and gervral, maintenance and 1989. l,atninp per common share for 1991 were higher than for o ier o crating expemes, offset partially by a decrease in cost

! 1990 primarily due to a $66 million after tax charr-to 19%

of gas. Cost of electric energy increased $M milhon in W91 utility carnings related to the resene for certah fielms Pumped pnmarily due to higher fuel and purchami eneigy costs. Admin-Storage Plent (Helms) costo mcluding hugnion settlement istrath e and general expense increated 532 milhon la 1941 costs, discussed in hote 10 of the Notes to Loraolidated financial primarily due to the tax deductible funding of the Compnv,s Statementa. In 1991, the Company earned a 12.h. return on ' - average common stock equity and an ll.3"o return on average utflity rate basec -..__.c_,_, aAesanespen!' howseenes, sect. AGES {penesensensnaan? j L ' Commim aruk diridend. In January lW2. the Company raim! common sem

• the quarterly common stock dive nd 7.37u, from an annualued p'

h '~ s N I. rate of SIM per share to 51J6 per shace, the third dividend mf ns. 4 lnerease in three 3 eais. The increase w as haul on a number of y' 4 l! ' financial considerations, including estimates Iliat fut ute Mf >;e no. l carning will be sufficient to sustain the higher dnidends while g,, p y 1 ( ?< ) ~?%Wp l prnviding udequate {'nancial lledhility, p , s.. j { ] g. 5 us vy x Lw w g 97 g', Operating rerenun in ]W1 and 1940, the Company's ,$ ad' % Wq + g' --oparating revenues increased $308 milhon and $882 milhon, ['g W@ aC % 'W ' respntively, over the preceding yen. p l Elect ric rnenues increased 8333 million and $320 milhon in 1941 and 1990, respeenvely, over the preceding year. The increases were primarily due to increased rates necessary to recover higher fuel and purchael energy costw Sales volume i- !; increased 2% and 62% reDecting the addition of approximately I ss

~ CAN AGE *JPNT'8 DISCUSION AND AN At.YSIS OF 00NSOLID ATE 3 R ESULTS OF CPER ATION S A ND FIN ANCI A7. CON DITION icoraewd1 l A> ndE% mc %pon postretirement benefits other than penstuns. # See Note " of the llegulatory rmarcr$ PG& E electric and gas enrrgy pnces are Notes to Consolidated Financial Stetements.) bintenance regulatal by the Cahfornia Pubbe Utihtin Commi-ion (CPUC) eq>en e and other operating esp ne increawd $121 milhon ard through lu e rates ar.d balancing accounts. Ila c rates compen- $55 miCion, respectively,in 1991 primarily because of t no sate PGA E for operating and maintenance costs, taxes and depre-Diablo Canyon scheduled refuehngs compired to one 1% hed-ciation and proude a return on capital. ILne rates are set in uled refueling, and to higher environmental cleanup costs. Cmt pencral rate case i GliC ) proceedinp, the most recent of w hich of gas decreased $2tE million in IW1 primarily due o redudions was for lWO. lictween rate cases, the Attrition Rate Adju3r-in demend and the price of natural gas, ment i AllA I mechanism makes annual adjustments for cntain The 1990 increa<e in operating expenses was primarily due changes in financial and oirrational expen..es. to an increase in the cost of electric energy resulting from higher llalancing accounts help stabihre PG6 B can nings. Energy-fuel and purchased energy costi. cost balancing accounts reluce the elfeet on earnings of fluctuations in most electric and core gn ener.;y costo Sales DiuMe Canyon The Diablo Canyou rate cue settlement ha:,es balancing ai counts reduce the effect on earning of fluctuations revenues for the plant primarily on the amount of electricity in sales to electric and g.s cu3tomers. For those customers generated, rather han on traditional cost based raternaklog, the CPUC sets rain tw4 d on estimated salemtdTerences hetween Under this* performance based" approach, the Company revenun authoriini by the CPUC and actual resenues are assumes a significant portion of the operating risk of the plant, accumulated in the balancing accounts for subsequent rate The extut and timing of the recovery of actual operating adjustment. costs, depreciation and a return on the investment in the plant PG& D ps customers are seloratnlinto" core"and "noncore" primarily depend on the amount of power produced and the cl asses. Core customers include residential and small commer-level of costs incurred. The Company's earning, are affected cial cust omers. Noacore coctor..ers are indust rial and larger directly by plant performance and costa. commercial customers. For noni ore customers, PG& E oilers an Diablo Canyon revenues are based primarily on a pre-array of-enices from which the customer may select, ranging established price for each kwh of electricity generated by the from full gancruce to more hmited transpc.rtution of cu*tomer-plant. ( Pricing for Diablo Canyon is discussed in Note 3 of ou ned ga. PG6 L has greater dexibihty in competing for some the Notes to Consolidated financial Statements i from the customers w ho hne energy abernatises hrough the abihty to revenues received for Diablo Canyon, the Company must recover negotiate transport rates; it abo put* PG& L ut risk for achin ing the costs of ownirm and operating the plant, includmg all future projected noncore gas transp>rtanon revenues forecasted for capital additions. If p;wer generation drops below 8pecified ratemaking purpr.cs. capacity levels, the Company may request fkior pay ments w hich Cost alkration pnreeding alhicate foreca,ted cmts bet ween ensure that the Company will receive some revenue, even if core end noncore en tumers and set a-iciatnl rates PG&E is the plant stops producing power. Howeser, payments received placed at rbk for collecting tramportation revenues from the must be refunded to customers under spec;iled conditions, noncore clan The IW1 Annual Cmt Allocation Proceeding Decommissioning and specified regulatory costs will continue decision limits thh risk b) inshtuting M balancing account to be recovered through base rates and are not subject to treatment for noncore transponation rnenues effectne May plant performance. lW1. Prior to May lWL to the extent that pas transportation The plant capacity factors for 1WI and IVM were IWo and revenues collected from noncore customers were different than 86% respectively, reflecting the scheduled refueling outage for the projected rnenurs ammated to the'e customers, PG& E both Unit I and Unit 2 in FW1 and for Unit 2 in 19% and no earnine were affectnh extended unscheduled outages. Through December 31, tWl, In May IW,if there is no further CPUC action, the % the hfetime capacity factor for the plant was 6"u. The Company balancing account w di he di-continued and a 7A balancing will report significantly lower revenues for the plant during account, establishni by the new gas purchasing rules discuwed any extended outages, induding refueling outages. Refuelinp 1rlow, w ill take effect. the lengths of w hich depend on the scope of the work, typically The regulamry framework in place has ne'pnl to neutralize l occur for each unit every eighteen months. A refueling outage the effects ofinflation on PG& D utility operations. Both the l for Unit 1 is s( heduled to begin in September lW2 and is planned AR A mechansm and the energy. cost balancing accounts hmit to last about eleven weeks. Each Diablo Canyon unit will con-the etiert ofin0ation on PG& D earnings by dosely matching l tribute approximately $2.7 million in rnenues per day at full rates with cmts. l power operation in lW2. Diablo Canyon revenun per L w h afier 19M wdl be ba4ed on a ibnnula ihat includes the prio y ear's 6n> pun huiine und rapmiry brolering r-les As dbrussed change in the consumer price index. in Note 2 of the Notes to Consolidated financial Statements, 20

+ l recent regulatory dectsions significantly aber the Compny's Harcchange. Effec. c January 1,1992abe CPUC granted j ps business. PG& E an increase in elec tric and gas rates of appresimately A new gas purchasin; prwram initiated by the CPUC went $159 million and $M millhn, resicctively, The electric and gas into effect in August 1991 The new rules authorize Ihe Com-rate increases are primarily due to general increases in olerat-pany's uoncore customers to negotiate directly with certain ing expen4es resulting frora inflation, and a higher rate lee on prcducers for gas supplies. During an interim lcriod originally w hich PG& E is allowed to carn a return, in addition, ratn in-scheduled to be in effect until August 1991,ihe noncore creased for the taedeductible funding of post retirement Irnefits ! customers' gas purchases from producers under contract with other than pensions. (See Note 7 of abe Notes to Consolidated Alberta and Southern Gas Co, Ltd. ( A&S), the Companyi financial Statements.)These amounts are lused on a 12.65"o indepndent Canadian gas purchasing sub.+idiary, will help satisfy etihty return on common stock equity authorim! by the CPUC A&Si mininmm contractual obligations. In November lWl, for 1992, a decreaw f rom the l',9?u authorimi for !WL the CPUC issued a decision in its capetty brokering proceeding in November 1991, PG&E filed its 1993 GRC apphration which established a targetni implen.ertation date of October requesting an increase in base revenues to in ome etTective 1992, or when the federal Energy Hegulatory Commhston January 1,1993 The total requested increaw, after adjusting ( FERC) allows capacity brokering on Pacifle Gas Transmission . for changes in base rates as a result of the IW2 AH A, will be Company (PGT), the Compeyi wholly owned intentate gas $595 million. This amount consists of $ 1% m!!! ion and i119 ~ ipline subsidiary, w hichever is later, milhon for electric and gas revenues, respectively. p The gas purchasing rules and capacity brokering program, when implemented, will require a decrease in the volume of fielm. As discussed in Note 10 ofihe Notes to Consolidain) Canadian gas purchased from A&S's producen and will require Financial Statementi, the Company prm idnl a reserve of approx. the restructuring of the Company i gas 1uppl= arrangements imately SM million against its imestmen* in llelms as a result to reflect the altered gas market for the Company. A&S currently of an adwrse decision in lW0in the water conduit rupture has commitments to pur(hase minimum quantities of gas und,;r !itigation. The remaining net unrecovered costs and revenues various contracts w hich extend through 2005. A&S has com-related to llelms are approximately $110 milhon. The Company menced negotiations to restructure its contracts with gas believes that it is untertain whether, and to w hat extent, any picducers to change N obligatiom. If cotupensation is paid to ofIhe remainmg costs and rewnues will be recovered t hrough picdocen as a result of restructuring, the Company would the ratemaking process, expc! to apply for rate recovery of restructuring costti. Hacmery of such costs would be subject to review through the federal Mc arrow n nnorumfards Statement of financial Accounting and state regulatory processes. In comMction with the curient Studards (SFAS) No. %, Ammntmgfor Income 7 axes, and CPUC reasonableness proceeding, ihe CPUC's Duision of SFAS No 106, Employers'Acrountingfor /btretirernent Bemfits Ratepayer Advocates has recommen that recovery of such Other Nn Pcmions, estabibbed new financial accounting d cmts not be allow ed. llowewr, t he CPUC deferred consideration standards which must be adopted by IW3. Due to expecini future . of that issue until a future reasonableness proceeding, regidatory treatment, adoption of SfAS No.%hould not hse a significant impact on the Companyi results of operations and _Other gas innifm As dBeussed abow, A&S must restructure - its commitments to purchase minimum quantities of gas from Canadian producers as a result of revised regtdations initiated by -jg j . the CPUC. A$ discumi in Note 2 of the Notes to Consohdated Jsweremanens m y M Financial Statements, three Canadian gas prmharm have filed A% MM K4 . lawsuits against the Company claiming damages in the aggregate qf o,' '[" 4 of at least $420 milhon (Canadian) for the alleged failure of A&S to meet its minimum contractual obligations in N91 and Np,s 6% the anticipated failure of A&S to meet those obligations t'. rough / h 2005, The CPUC is reviewing the reasonableness of Canadian '] $y sm 3 g ga.s costs for the test years 10% through 1990. An intcevenor

• %g $ KW@?

A% J . has asserted that the Compny overpaid for such costs by up ~ db 4 to $670 million. The Company currently is unable to estimate m- -u - the ultimate outcome of these mattets or predict whether k[N duch outcome would have a significant adverse impct on the i' 'O' i Compnyi fuiancial pmlilon or resuhs of ageratiom. _J - 21 w.

,.t,. ~ 7. ~ . ~ ~ + ...-~-n - c+ Th ) CAN ASEMENT'S DISCUSSIC!! AND AN Al.Ylls GF CONSOLID ATED QESUI.TS OF CPER ATIONS AND FIN ANCIAL CONDIY!CN fcontmard) ihr@c Cas and1:ksret Cmpany - ' addption of SFAS No, Ibhould not have a significant impet' In re*pnw to the alme iwucs related to inten. tate / intrastate on the Company's fmancial pwPion or results of operatiom. arceu, Ihe CPOC has accelerated its reexamination ofIhe (See Note 8 and Note 7, respectively, of the Notes to Consob projecti rate de$lgn and acces$ issuu. llearinp concluded in - idated Financial Statements 4 late Decemler, and r CPUC daeion h expecial in Spring 19E At December 31,1991, the Companyi inwstment in the m project was approximately $116 million. In addition, the Company ' [_Liguidity and CapNot Resources ] has a }iroject construction contract uhlch contains cancellation cost provisions. Con *truction h scheduled to le completed in Capital s c<f nitrments The Companyithree year projection late 1993 at an escalated co t of f13 bilhon. ' of rapital requirements is shoun below: Peroling sole and ar<tuisition in September 1991. the IW2 IW3

IWJ, Company signed an agreement in principle to seu all ofihe shares i a aull=

of PGT, including PGTs 49 Wt interest in Alberta Natural l F Ga* Company Ltd ( ANG) toTransCanads Pipelines !.imited of Utihtv $1,552 51.878 $ 1.413 pCTIG& E pipeltne esparoton* Mel t>t2 21 l t,algary, Alberta. Auum.mg the sale clows in the second half Diablo Canyon 125 118 12ri j of 1992, the total putchaw price for PGT. including its ANG Enterprises _ lft L t68 ht' holding and euluding debt, b estimated at bet ween $350 million Total capital expenditures 2??4 2 th - 2,3St I and $150 milhon, depending on a number of adjustments such Maturing debt and sinking funds _ 138 _ 415 2}$ ! as contingent future payments and reimbursement of expend,

j. Total capital requireinents 22.412 831'21 f2M !

itures on the PCT portion of the PGT.PG& E pi rline npansion : i u_ died h-Qdeuon of the sale loubject to wmo,nimoftIcnpwrm/*pmgreon a oilm sma im re olution of a number of outstanding inues. The Campany and ru u tnt ne ywim mle nflCTu dmwdW and ifnophtd 3 4 3, uvuld redua he rsprmlaumfan ske pipehne rzimmwnfcandy I,G&E pipeline expansion project, w hich comprises ar proxi-Utility expenditures primarily will be for replacing, modern, mately 50% of the total project inwstment. in addition, the Company is anewing its continued owner. izing and expanding the Company's facilities, Utilit y and pipeline

expansion expendiitures include the allowance for fund 3 usal Aip f A&S and h in discuyion with a company to determine its interest in purchasing A&$.

during construction. in December 1991, PG&E Resources Compans a w holly - Enterprises' actual capital expenditures may varv significantly ownni subsidiary of Enterptbes, acquired au the capital stock of

depending on the availability of attrutive investment opportu.

TEL CON Od & Gas Company, an ud and gas exploration and ._ nities.These expenditures include oil and gas exploration and

development costs and Enterprises' equity share ofgenerating P"'duenon (ompanw for 8389 million.

facilities? Common stod vepurchdseprogram PGK E has a program t repurchase its cornmon stock, on the open market or in PCT PG& Epipeline espanolun project PG&Eand PGT have "*'Hatni transactions, primarily to offset new shares haued proposed to upand PGTs Alberta California pipeline and thmugh Pp.&E's Dividend Reinwstment Plan and employec PG&Ek tranimission facilities in California to provide additional inup fund Plan In 1900, the ik>ard of Directors authorized natural gas from Canada to customers in California and the PG& E to repurchase SL25 bilhon of common stock PG& E Pacific Northwest.The CPUC has approved the Cahfornia portion of this project, and the FERC has approved the interstate portion. repuntawd $338 illion in 1991 and 5155 million in 1990. In 19% PGd E alm repurchawl approxicnately S60 million The CPUC authorization included a $736 million cmt cap. of Umunnon st d which was used in the acquisition of a for the California portion, which represents the maximum cet t nonregulated business. ' determined by the CPUC to be namnable and prudent based on an estimate of the anticipated construction costs. The CPUC aho accepted the Company's proposal to escalate these costs ^"""* "d C" p a u l internally generated cash flows and exter; to 1994. The Company currently estimates that the escalated nal f nancine will continue to supply capital. In 1991, cash ~ cost of the California portion will be $821 million and intends proceeds from long term debt and common stock imed were $3 mWion and $271 million, respect hely. Comman stock to apply for rate recovery of the increased amount. l'i"ued through PG&Ei Disidend Reirnestment Plan and The FERC approval reduced PCTs return on equity to e*P "F"' S 'i"F' I""d Pld"- I 10.13*o and will increase it to 12.5% w hen PCT can demor. strate PG& E's aut horimi utilit y capital structure for 199:? h 46J5% that neither its rates or transportation policies, nor those of common equits 5J5% preferrni stock and 47.50% long term PG&E, are unduly discriminatory with respect to interstate / intrastate access.

ss 2a

I-l l debt. Authorized return on utihty rate le,e for IW2 i310.76% environment by impising stringent control

• with regard to The Companyicapital structure helps preside unancial planning and construction, land use, air and water ydhition and flexibihty and acem to capital mar Lets at reasonable rates, hazardous wa<te marmgement acth itles. These law, and regu.

Actualconsohdated capitalization ratios for the l'ompany at lations affect future planning and est ting nierations, including December 31 we re: endronmental cleanup artisitie. The Comiumi projected expenditurn for emironmental r.- prottytjan are stdijec{ to perioche geyjew ggg{ gryjgjon jo tellpp{ ,"$t] qianging technology and nolving regulatory requirements { lenttenn tiel,t 19 M Lapital ryenditures to protect or repair tue emitonment are l Tot.d capaahnnon Itwo M, currently estimated to be approxitaatel) $70 milhon, $48 L__ milhon and $147 nullion for IW2, lW3 and lWl, respecthely, and are included in the Company's three ycar projection of PG&Eilond indenture [ermits iwuance of nmrtgage londi up capital requirements show n above. Eyienditurn during this to an amount apprmni by the lkurd of Dirn tors and the cpl-C. jenod willie primardy for nitmgen oxide ( NOx lemi ston At Decemler 31, lWl, PG& E had 56h bilhon outstanding in rniuction projects for ihe IW319G GitC tiling period, PGA E mortgage bonds and may issue, subjn t to regulatory approval, is e tirnating plant adshtions of approximately $C5 :nillion up to $34 billica more. To rednee fmancmg costs, PG& E for Nth control projects PG& Ei emironmental capital expen-reacquired $119 milhon in IW1 and $273 million in lWO of certain d torn are reemern! through luse ratn and PG&E antici atu l high-cost mortgage bonds PGA E 4o reacquired $39 milhon that this willcontinue. In lWI and $26 miluon in IWO of preferred stock. The Compny assev,es on an ongoing basis me surn that in 1991, PG& E issued !100 million of mortgage tumds and inay nent to be talen ta comply with rniuirement* relatni to $352 million cf medium-term notes Pnrents frma these hmds environmental cleanup acthitin and has nvank d a liability at and notes were applied to construction eyenditures and to the December 31, lW1 of apprmimatel> $71 milhon for ntimated redemption, repay ment or retirement ordebt or preferrnh tock. metall cleanup emts (See Ltc 10 of the Notes to Consohdatnl in January 1992, the lloard of Dirn tors authorized PS& E Financial Statement u to reacquire up to 51.3 bilhon of certain high cost mortgage To ihe exte-that environmental cleanup co>ts are r ot bonds to reduce financing cost; recmerni through insurance or by <>ther meam, the Company The Company issues short.tenn debt ( principally commercial will apply for rate reemery of such costs thrm 3 special h paper) for interim construction flnancing and for fluctuatiom environr. ental ratemaling pmcedurn ntablished by the CPUC, in peneral working capital. Short term debt also has helped fund and eyrets that mmt prudently incurred emironmental fuel olh nuclear fuel and ras inventories, adsantes to ge remoliation aw ts will be nvovernl through rates The Com;uny pnxiucers, and unrecovern! balances in lulanting accounts. The has recorded a regulatory asset at December 31,1991 of Company must use external financing w hen b dancin.: account appioximately $62 milhon repre3enting the minimum amount resenues are undercollectnh as in lWO and PN), until the of accrued enuronmental cleanup cats cyretal to be reemerni rnenues, plus internt, are received in rates. The Companyi under the current ratemaking mechanism. Due to eyierted ' ort term borrowings were $1.01 billion at December 31, lWh reguhitory treatment, the Com;uny b" lines that the lev i of i PG& E he $850 milhon in long term revolving crnht facilitie, cleanup co+ dll not hase a significant imiuct on its financial with various banks to support the sale of commercial paper inition or rnuhs of op rations and for other corporate purpo es. Thne include t no facihties totahng $100 milhon necuted by PG& E in January IW2. Pacdk Energy Fuels Compm3, a w holly ownnbubsidiary, has a !250 million.long term rnolving crnht facility with s ariom banks to support its commerc:al paper inued to finance the purchase of nuclear fuel. PGT has a $200 milhon,361 day revols ing credit facilit; with various banks to support the construction of the PCT-PG&E pigeline expm3 ton project and for other corpirate purposes. At Decemtier 31, PMI, the Company had unused credit facdities of $ L27 billion, including timse mentioned above. Duanununnd maner. The Company ioubjer to an increa-ing number oflaws and regulations designed to protect the 23

hEPOR7 OF INDEPENDENT PUOLIC ACCOUNTANTS l 84 6-mero, Gw, To the Shareholders and the Ik ard of threctors of Pacific Gas December 31,1991 in cenformity with generall> accepted and Electric Company: accounting prin^iplem At. dacuntd in Note 2 to the consolidated financial state. We ha\\e audited the accompanying consolidatal balance shcot ment s Albert a and Southern Gas Co. Ltdd A& S h a w holly ow ned - and the statemettl of consohdated capitahtation of Pacific Gas subsidiary of the Comjons has cummitments to purchase mini-and I' lect ric Conquny ( a Cahfo rnia corporation I and subudiaries mum quantities of gas from certain Canadian prmlocers. Three of as of December 31. lWl and ]S30, atid the related slatements theie producers hane filed lawsuits against the Company for of consolidated income, cash flow s, conunan stod equity and the allepl failure of Ad S to meet its minimum contractual ohll-preferred stock and the schedule of consolidated segment infor-gations in ifNh llevised regulations initiated by the Qdifornia mation for eac~n of the three ) cars in the period endnl llerenler Puldic l'tihtit+ Comminion (cpl'C) w ill require the Omyuny 31,IrNI. The e financial statements are the responsibility of to reduce its Canadian gas purcha es and to negotia.e restruc-the Com]uny's management. Our re-ponsibiht y k to express an tured gas supply arrangements. The CPL C is reviewing the opinion on the-c financial statement,levd on out audits trasaurbleness ol Canadian gas costs for test years 16 through We conducted our audits in accordance with generally IW). The Com;uny currently is unable to estimate the ultimate accepted auditing standards.Those >tandards require that we plan outcome of these natural gai matters or predict whether viuch and perform the audit to obtain reasonable awurance about outcome would haic a sigmficant adstr>c impact on the Com- % hether the financial statement

• are free of material mimate-pany's financial position or results of oirrations.

ment. An audit includes examining, on a ttst basis, esidence As discu eed in Note 10 to the consolidated financial state-supporting the amounts and dht lo ures in the fmancial state-ments, the Compan) progided a rewerte of appretimatel) $M ments. An audit al oincludes assewing the accounting principles million against its investment in llelms as a result oian adverse used and signifit ant estimatei made by manacement. as well as decidon in Ivo in ihe w ater conduit rupture htigation. The es aluating th: o\\erall financial statement [resentation. We remaining net unrecogered (osts and tegenue3 related to llelms behew that our audin prm ide a teamnable ba-is for our opinien. are appmtimately $110 nulhon. The G3mpany behnes that it is In our opmion, the consohdated finar,cial statements and uncertain whether.and to w hat estent,any of the remainingcosts x hedule of conmlidated egment information referred to above end rewnues willle recosered through the ratemaking procew. pre ent fairly,in all material ienects the financial position of Pacille Ga5 and Electric Company and subsidiaries as of ARTill'h ANDERSEN & CO. December 31, lW1 and 140, and the result of thnt operation-San Francisco, California and ca b tiows for earh of the three years in the period ended January 29, FN2 (R ESPONSIBILITY FOR FIN ANCI AL STATEM ENTS'l i hah 6% miEktwCe wy The re pm ibthty for the integrity of the fmancialinformation ac counting controls and ha\\e conducted other tests as they included in thh annual report rents w tth manacement. Such deemed neceuary to support their opinion on the conmbdated information has been prepared in accordance with generally financial statements. Their auditors' report contain* an inde-accepted accounting principles appropriate in the circumstances, pendent informed judgment as to the fairnews in all material and is b:wd on the Compan)'s Irst estimates and judgments re9ech, of the Company's reported results of ojeration* and after gh ing consideration to materiahty. financial position. PG&E maintain 4 tystem< ofinternal accountine controls in a further attempt to a3sure objecthit3 and renmvc bias, supported by formal pdicies and pmcedures w hich are t ommu-the fmancial data contained in this report haw been reviewn! nicated throughout the Company. These controb are ade pute by the Amht Committee of the Board of Directors.The Audit to pmvide rea-onable awurance that assets are safeguarded Committee t compo ed of fhe outWde director 3 who meet regu-from 6. or unauthonmi u-e and to produce the reconl4 neces. larly with management, the corporate internal aditors and sary for the preparation of financialinformation. There are Arthur Andersen & Co., jointly and separately, to rniew internal limits inhe rent in all systems ofInternal contml, based m. the accounting controls and auditing and financial reporting matters. recognition that the (osts of such sy? tem

• should not eM Ped The Computy maintains high StandarM in selecting, training the benefits to be demed. The Company behnes os sptems and dneloping personnel to ensure t hat manacement's objectnes prm ide this appropriate balance. In additon, the Company's of mamtainmg trong, etTectise internal controls and unbia ed, internal auditors perfonn audits and c\\aluate the adequacy of uniform reporting tandards are attainni.The Company beheves and Ibe adberence to the-P Contro!% pohdC5 and procedure %

its pdiciew und pmeedures prmide reasonable anurance that Arthur Amlersen & Co., the Company; independent pubhc operations are conducted in confonnity with applicable laws accountants, considered the Company's systems of internal and with it commument to a high standanl of husiness conduct. l 84

y- .E,, -l STATECENT OF CCNSOLICATE3 INCSME l ~~ lhr{c Cas ad Eiertrk Compa ny / 1'urs seded iModer 31 1991 19w twin e in thoumsis, ncept90 sinav anunts OPER ATING ftEYENUES Electrie : $7,368,6 to $7,036,071 $6,216.050 (Ls 2,109,179 2,134,021 2.372,214 7btal operating retenues 9,7711,119 9,470,092 8,588,261 OPERATING EXPENSES Cost ofelectric energy 2,311L179 2,233.1179 1,755,955 i Cost ofgas 960,208 1,168,461 1,181,772 Transmi<ston 195,612 180,157 161,996 Distribution 20!!,lilll 195,352 199,972 Customer accounts and menices 372,0!t8 315,194 329,756 Administratise and generai 875,878 791,368 608,514 hlMntenance 525,220 401,151 372,815 Depreciation and decommissioning 1,110,877 1,016,417 1,000,316 Income taxes 8 63,0119 856,401 724,718 Property and other taxes 2814010 278,231 270,573 Other-316,3611 261,339 269,259 Total operaring expenus !!,065,0 to 7,763,956 6,9(6,700 4 oPEnATING tNCOME _1,'t 23,079 1,7_00_,136 _1,6_2 _2,55_8 j ! OTHER INCOME AND(INCOME DEDUCTIONS) Allowance for equity funds used durmg construction 21,543 24,585 25,200 Interest income 98,161 127,375 131,250 Other-net (23,909) j67,023) g3,530) Total other income and (incorne deductions) 91,795 84,937 112,920 INCOME BEFORE INTEREST EXPENSE 1,807,874 1,791,073 1,735,4/8 INTEREST EXPENSE Interest on long-term debt 697,185 699,t119 733,776 Other (nterest charges 101,87 l 126,745 119,335 Allowance for borrowed funds used during construction (17,574) (22,tM11 (18,261) i Net interest expense 781,182 803,903 834,850 j NET INCOME 1,026,392 987,170 MX),628 Preferred divi 4:nd requirernent 89,595 98 001 101,079 EARNINGS AVAILABLE FOR COMMON STOCK $ 936,797 $ 889,lth 5 799.549 WElGHTED AVERACE COMMON SHARES OUTSTANDING 417,965 423,759 420,9 to, EARNINGS PER COMMON SHARE $2.25 $2.10 $193 DIV10 ENDS DECt.ARED PER COMMON SHARE $; si $1,52 81.40 W mccm;wn tng hors to CnwMated Fluvial Statemes am an mugmlpart of thu statement. 25

9' ._.f~C N 4 0 LliEib EIA L A N C E S H E[ --- --------- Ikpc Gru.mt I In n r~pe., IVul ins lhwrm'wo 31 l [irloLA2,~ ~ ~ } Asnts j I j PLAM IN TtHUCL(at origin & cm!l , Electric h nuiscar $15,197,597 Vl4,iM.016 Dstilo Canyon 5.116 0,1(41 5,756.471 Ga* 5.073,997 1,613,315 t Total plant in erg k e 2(4(32.062 2I,887,102 I l.Arcumulatol depreciation and dei c"imh*loning $9.172/ill1) ( fl.167,EO ) l Sct phant in un ire 16,939,681 lb,120. t"2 ce% 'RUCTiO'4 % ORE IN PROGRE&$ 7 l 1.509 6533C 01:.f H PiONCURHENT AbstT5 Ath ances to gas pmducer. 16,095 118,674 ! Ikcomminioning arx1 other funds held by trunee 38l,369 297,115 l Oil and uas properties (212.111 1 25's116 i I Imestments 2nd other asets 211,715 221,933 { kat other rwnruerent umts I.30 l,490 895.W41 CunRENT A$t,tTS { ! cmh and cash equivalena 97.2nd wisc-Accounts rerch able Cu$tomers 1.311,616 1,216 972 l Other 255.161l 251,053 I Allow ance for uncolkrtible account s (16,677) i16/ 61)1 llepdatory balancing accounts receiu.ble 555,455 75tl3% j inventones { l'uel oil 159,725 132/Nd j Nuclear fuel 99.170 111f.30 } Gantored underground 186.n61 IWe,922 j Materista and supplies 225,147 22M73 ; i l' repayments _39,i13 _ 62,2% ) ',913.278 3,0n5,942l a Naf rurtent asuse 1 otrtRatr> caAstats r llegulatcry awers 318.133 82,189 I Unamortimi project cmts 33.912 62,167 Workers

• compensation and thsability clahnS recoverable i10,340 1M,579 j Unsmortized tw net of gain on reurquired delit 215,772 245.133 1 Other-net 212.905 196,N35 i

kal deferred charges 1,011,812 _ 420,933, $22,900,670 X21.95fl.397 f < TOTAL A55ETS u - _a umen,~ n, n t. u a n,,,a n ns.n n ea,an u x u,..gs u n.ra e 4 i--,,_.. l __u __ _ __

f hijh]}[ 5[h CALENCE..hl.,H.E ~ %~, -~ l\\st de ban crufilert?w f%pon lk car :H int tw ).;4; ~ ' ' ~ ~ ' CA9fibilAllC*N AND %(A151LlYlES CAPRAllTAll0N Comnwn f.f ool 5 2,0117.115 9 8 2,101.9 G Adduional pakt-in capital 3.2fli,313 3.170)PJo j lietran trd earning 2.30(4152 2.231.227 l Conunon $tock riuus

• hH l.321 7Mial2 l Psefertnl sta L witimut mandater) redemption pros (sion 119 8.119 7 433,u61 (

l'referrnl stml with nottulator) rnletoption prmielon 92,010 l16.lk'Ifl i long terin debt II,2 89.31'HI 7,710.521 ! Ti,#nf rophalination 16,917,531 16.392,N'd j j NONCORRC AI LIAlllLITIC$ j Customer ash ances lar con +truction i!!5,5116 Ilio,'r86 l %rlers' comirnation and dsabuity c lairns 1 12.1100 136.300 i Other 205,200 138.0VI l Tkotalnonrunent liabilities 5;i3,5116 15l.311 CURI ENT LIAblLillL$ Short team borrowing 1,009,911 1.021,llN , Accounta ja)able j Trade erwhtors 6711,352 M7,052 l Other 325,679 291.731 i Accrunltues 109.0 0 73,0!!5 I { Deferred income lates 276.658 311,137 1 j 12:ng term debt and pecferred sten k 13tl 033 106,353 j interest payable 113,891 71,416, l Dividend

• lmyable 171,159 159)lfo !

i An.ounts Uue customer, 102.10 106.657, Other 201,113 IINI,4117 ! Toutal curre nt liabilities 3.095.55tt 2JN5,110b OLf'EWtED CREDITS ! Deferredimef tment tax credits 197,752 516,176 ! b Deferred income lasen 1,612S01 1, P)3A21 I I Other 211.239 204,l.11 ! Tinnt d,ferred rredus _ 2,353,99*, 2219.011j i COMMMMENTS AND CONilNGEhcits (Notes 2,9 and,101 l 70*AL CAPITAIJZA1104 AND LitStLrlits $22.9t K),670 $21,45fl.147 l w b s ._J 1 e 31 Y

_ _..._~._ _.-.-- (S T AT E M E N T O F C C N S @ LI D AT,E D C P S H F L OW S) Ik fw Cw u ul} in vu Mjwu i o tuominilamar 21 l%l tw l+w l In t%swsb , C ASH f1,0W5 F ftDNI OPrFt A110N5 Not ilumine $ l.026,392 $ Od7,170 $ Wl,62il i j Adjt&tnients to recoticde nrt inrotne to not cash prosidnl by ojrrating at tiuties Deprec ation and derotumi iloning 1,110,1177 1.016,117 I M O,316 i Ainottiration 31,631 31,572 83.37% ; l)tferrnt tases Illitno 101,326 84,057 Allowante for equit) futulm uur l duruig construroon (2 ),*i l3) ( 21,5ft3) (25,210) Ads ances to gas imiucers 72,579 104,WI hf/41 { Chat pe in operating aort 6 and liabillies j Ac< ount, rn'ch able (6'8,076) 3 111 115,0 tll' !!cgulatory lalant ing accounti 202,101 2,5}L'l 1128,155) Accouais pay able 172,215 9,211 141,591, At cruni tates 35,977 % 703 (0,239 if Other working rapital 29,3 iI (6,911) 117,511 l Other--nel 29,020 4,7112 69.375 Not cads prerrbled try operations 2,725,077 2,372,M12_ 2.2tl2,5{s2 l INVE$fiNG ACilv! Tit $ j Corntruction ryrnditures (1,753,fdf9) ( ',-191,5fil) ( ), $01,99)) Allowance for lorrownt funds uwd during construction (17,574' (22,691) (18,261) l'urdiawe of subsidiary (3 811, % 2) i Nontrvulataleyenditures (117,1117) 1139,624) (43,V15 )

Other-net 33,156

{b,r61) _ 118,913 Ne i rush used in inrcssing urthiries (2,211/i36) (1J63,3R2) i,1,318,251) i FINANCING AC~flVillC5 t

Common stock inuni 271.182 200,063 331,4tm i Common itnck repurchaml (337,969)

(515,0/8) f l' referred Stork redectnol (l 23,667) ( 53,(Pd ) ( 25,3u0) long term debt luun! 738,619 376,lI2 316,379 f lonp-term duht maturolor tracquirnl (196,661) (357,270) (219,357) l long-terrra debt purcha+d for sinking fund (at ont I (66,556) 151,iA5 ) (67,h.11 ) ! Short term deht inued(rnleemed)-net (14,2711) 396,f 57 1230,500); i Capitallew [d)ments (l,737) ( 1,30% ) ( 3'ib.911 ) l Dividends guid (765,513) ( 73l,003 ) ((Jm,126) - Other-net I I,ill5 _ 4,191 1,952 _ l81,8611) .1674,771) _ (461,496) (_ 3 rd rush used injinnnring n< th itics i NE1 CHANGE IN C A5H AND CASH EQUIVAMNT5 (3,927) 31,4',;9 (30,lp41)) CA$H AND CASH IsitulVARNT$ Al JANUr,RY 1 101,207 (6,778 96,966 . CA$H AND CA1H EQUlvuENTS AT MCEMMR 31 9 7,2110 3 101,207 $ (A,778 ' Supplemental disclosures of cash flow infonnation I Cash paid during the year for: Inntest $ 723,96ft $ 743,336 $ 772,492 inmnu ta4e+ $ 7(J(097 $ Mi7pl 8 535fc, l _ mu w,,p w< % :, t:r.,w.latas!I vel w mrne o,, e n,,, rot om% w.a m"a i i l 29 _____.1____________________________

d q 5f ATEMENf GF CON $0L10 ATED CCMMON $f CCK EQUl1Y AND PREFERQED. STOCK 1%tz!lr Gun n+nt fin t u C,* pas l I l'n tum! 1%6md

• t a A Alte (

e d4,wl m edi Mi.tnal Com mm rwdam m:aulatm Cmm jul to Ra m u ur,I aaL ura npom rrhmya r. m/..,. sal ryti prm a.u . pm une' uma at ou v, t /g r6elt riup s.bmi i l Ilulance, fleremher 31. JWut $2,057.2 6 $2,871.07u 31,9'ln,132 g, tan,u27 31,010,195 gluojm ; } Net inemne--1939 %.$28 900.628 t l Cornnmn ttr+L r.hl t 17,5h410 Sharn) 87.735 247,253 31 1.' @ l I i Preferred $twL redeemed 1 (252,150 5harn) 51 (l%) 1145) (25.21Ml Cash diddends declared i Preferred Sim k i101,560) (101,'i601 h 4

j. Gimtm>netock (540,1C6 )

(540.fC6) ! Foreign currency e ) trandation adjustment 2.181 2.181 I flulmur,1)crem6er 31,19#9 2,111,451 3.121,583 2,181L854 7,155.393 1.010.195 151 T'G { Net income-19a) 087,170 407,170 { Common stock *ohl j j (14,255,%7,harn ) 71.277 249,W3 321,275 j Common atock repun hand (23Z6JC2 huren (115,1541 (144,255) 1210.610) 15153r281 f Preferred simL redeemed 11.301,012 sharn) (l.136,

t178, i 1.61 l)

(26,231) ( 25.015 )l j Cnh diddendideclarn! j i Preferrni st(wk (48,321) 198,G) Comnmn stoc k (643,319) t 613,319 i ioreign currency trandation adjustment 1,166 1.161 l llulunre. Derr:nber 31,19'e# 2,10lk95 3,iho. h 2.23),227 7,5fW3,212 483. % 1 129,510 !. I Net imune-1991 1,026,392 1.026.392 l [ Common stock told ) I (10 4302 $haren 31.317 220,165 271.182 ! Commonitwk repurcha ed il2,910.687

• hare )

(68,553) (98,155) (171,961) (337,969)

Preferrnhtm L redeemnl (3 811,325 thares)

(5,287) (l.1310 (9.723) (89,06l) (21,H7h)! Caih dividends declared i Preferred statt (91,501) (91,50); Common stu n (685,311) (6tl5,3 i l } j foreign currene, { tranaation adjustmen 1,77i I.,7 7_t_ _ _ j

nRANCE DECEMBER 3L 1951

$2.0117,859 53.2fl7.313 $2.306,152 57. Nil.321 5 119 1,119 7 510'.632 I

• $IM ! ek4 t id?nt jue 'V A.

i he GWU!FlM1 F ) e y 14 V5t's bi [d!L,3hn$airr$ h i!\\ettd kJ$ $kJif!!in Nh 9ft tJtli9l leg *U$lNJVl Of thit klJk*HWM t 'I j 29

-l tTAfEi[Ekff hibAED[ C AP1TAL1I ATlC l" rwgu t;.u nJlin nu 4 m;.es I %mn. n juva u,, ! /q ihe vredt, t anpf fer e'rthfrt a%/ ds't'3 v f fonunon 81ock, gut galue $5 per shue (authorib d lWMUMWI Sharn,luued and out+t uuhtig at !Jerember 31,,*Hb j 417.571,826: 1996E 420 210,011) $ 2,087.859 $ 2.101p>5 i Adihtlonal guidan capual 3,287,113 3,170ho l , lietmnted earninn 2,l106,112 2,231,227 I t coMmo9 STocx twn 7.681.321 15 % 7, % 212 IY% { l' referred stod without mandatory redernptmn prmidon I 4 i 1% tatue $25 per share (authnrlied 75,f RhlM thharn) hnrvaleemnUr i i 5% to f/%-5,781,825 hares outstandirig 118.621 141,621 i Itcatermable 4.30% to IL2%- 13.53),959 tharen oubtatn me 3311,373 338,373 i i 9% to l'v.16"o-16,476M)2 and 20,038.612 share, outs tandmg il 1,903 5f AJ,067 I il91,Il97 9[13,961 , Preferred ttock with mandatory tedemption prmWon j l'a value elf W> ler share ( uuthorized 10,(KOM Xbharn ) t 9% and 10.17"e - 1,016,325 and 1,295,lm shain outoanding 101,632 120,510 _ TOTAL PREF f.Rrit0 STOOK 999,529 6% 1,) 13,17 j 7% l,ce s preferu ] skwh ~ current por*l,un 12,622 12.ti22 PREF t RRED &IOCH #1101AL CAPllAUZATION 48h,9(17, 1,100.819 I l%eifle Cm umiI:lecuic Company i

first and refunding mortgaueleds I

Maturity ?ntercetrain lWl-l% 4.25% io l3% 762,310 lli) 10n i j 1097 - 2016 4.625% to 8.125% 1.'1110,1 3 0 1,380,130 l 2N1 - 202 % 82% to lL875"o 2,0 09,9113 1,600,983 I PJ7-2023 9% o9.9P% 1,595,350 1,691,750 i t 20ll. 2Cr20 ltr4 to 12.75% tilo,157 8 % 588 i i Princt ulamounts ouNanding 6.5511,230 6,389.M7 [, i Unamortized diatount net of permium (92,201).__ (84,17; )

Total mortgage hands is 166,029

%3m685 Unwcured d,4cnturn,10.8P4 to 12%, due 1991-2tm 221,5311 S21,538 l lbilution control loan agtt r ments, s ariable rata, due 2(Kel-2016 925,000 4?5,(K10 hledimn-term note *,5.7.t to lo.1%, dne 1991--20ll 590.850 210,050 l Unamortiud dl$ count relatal10 medium 4erm notes (2,577) (l,O'#f) l I ! O!!.cr long term debt 2fLOO4 _, 49,916 Thrall'C&l long term debt it,22tl,lll2 7,716,121 i long term debt of oulnadiatin 115.1169 1f0,131 TOTAL LONQ TERM OLUT OF PGt.,E AND $WSt01Alut s 11,371,711 19 % 7,879,252 4R% laesa long term als bt-r urrent portion i2i,1Il 9 3,7.31 l 10NG TERM Dini m Tofu CANTAtuAimN !!,219,300 7,7M,521__l Toin cAPnAuzAn08 516.9I7,531 316.392.582 J ik a., mieyty St., to CmwuseJ haal stamn am n tn:< wasput nt tw a.am u +

j_ - S C H E D U L f',v e irtSQLIDATED SEGMENT INFORM Afl0N f - - - - - ~ ~ - 3 r t% ~ t Hvevu C,m;m I lo s.a s mat kanslad l+ 1in tw d.v man, Md t l ArEmh lwl 0;uftsting rm o $ 7,3 611,6 l0 $2,109,479 $ 9.7711,119 l , Intervpntml a nd ' 15.043 5 t l.963 $(557#06)__ t j TOTAL OPI.Mi1NG Mvt Ntit S $ 7JtLL6113 $2,951.112 $(557.006) $ 9,7711,119 i DEPMCIAtt0N AND DiCOMMissioNING $ lll3.76fl 5 297,109 5 1.110,1177 4' { CPf RAf tN0 lNCOME MFONE INCOME 1Aftt S $ 2.271371 $ 308,597 $ 2,576,1(JI I i ec%inuctioN txPtNontmts'" $ l.192,570 $ 603.156 $ 1.79'i,726 Identt0ablo ossetd' ' $ 17,259,757 $ 4,917.101 $22,206J156.f l Grgorate aucts 693)ll i t $22,400,670 { 101AL A%818 1WO t Operating revenun f 7,036,071 $2ct.ll021 $ 4,170j7t2 ! Intert,egment enem n 13 H23 ??l,271 $ P 1f t t NI) -- } heinloperutistg rrrenno i $ 7,Ol9)N1 b 3,1NL292 $ t 7111M81) $ 9.170 W2 i 1 l lief rre inflort nenl eler urn.ninioning 799.2 I i $ 217,201 $ 1,016,117 l { Upru ntsne lnroene brJhor inevene ttan s' $ 2.2P:tP65 $ 273,572 $ 2,5ta,537 i Construrrion nyernfiturn'" $ 1,079.md $ 162J41) $ 1.511,771 ' identind,le metv" $ 16336,713 $ 1,31B,511 $ 21,255.25% ! Cor] orate anets 703,113 I 7btulunarin $ 21,9MI 397 1 l1409 , l Ol rating inenues 5 6,216,0V) $ 2,372,211 $ 8,5PJI,261 Interwpnen tevenued"' 12,W? 670.011. $ (Ull,174 ). $ 7blulopernfing terenun 5 6.228,513 3 3 012,225 $ 1682,171) $ llN K261 lleprrriunion ancl dre uunmissionusy 751.lHP $ 2 kh)l2B $ lfttt.316

4 hperating income lwjbre inconse t.n n *

$ 2,UPI,Vdl1 $ 217,392 $ 2,317,276 !Corusrur: Ion npenditurn 8 i,016,707 5 431,74?. S 1,413A52 ! N ! Identi6alde acetd'l $ 16,179j%17 $ 4,182,397 $ 2Ojdd.20%. t Corporair awels Nt9,74 di ' i Totalanera $ 21,351,970 ) no > htrwrwns riass walpe rvrar.n u, xrvandf.a ur rat % w p rwd<d M thr CI'UC % lume tun <ntgrr,rmln.rpornw nin nn ore n&,taed on newJaru r u nh sheii Rt:I n&m %nm vi 4cc<,wa< ami n ptertwnn ifI w (.Tl C Cj<ratm in.vme a h hanmat af Css Juland h, ome u rwt & Dwome to en l

< s im twin an allmawn eI< vmmun pkar :n vo we ant Mt Irc 1Iwtapen me %n k. ( sna, Mand I umund.%s,vernu we an sa gudper,f t% vkrdA

.1 M

NOTES TO CONEOLIDATED FildNCI AL STATEMENTSJ 1%nfu Cc and I k e u Grotje s is sran r+Jlins&r 'rl. Iwl. Iw siIw a i [ Note 1] durirut con ttuction I Al1lDC L Al CDC i$ the < o,t of debt and

1. i"N " "

I"b" ## """'d* SUMM ARY OF SIGNIFICANT ACCOUNilNQ POLICIES I in,.ncing omt* of capital additions for the lhablo Cany on . h rounting irnod. The ucounting records of t'acific Ga. Nuclear Power Plant t Diablo Canyon )are calculated under arnt Electne Company Il'G& El are kept in acwrdance with the ptatement of1 manelal Accounting Standard @E\\S) No.3 h Uniform Sptem of Accounta prescritel by tle iederal Entrgy Coloron:ation "Untant Cmr. since Dnblo Can3nn is not liepulatory Comrnisilon i FERCi end adoptnl by the Cahfornia on a omt Loni raternahing la@ce Ltc 3.1The original Pubhc Utihtin Commi>,km (cpl!C L co t of utihty plant retired plu+ remmal cmta len *ahace are chargni to accumulated s,ireciathin. Property maintenance, lWntiph e o/ r onwhdolian The consolidated financul state-repir and minor replxemenu and dhtion an dmrged to ments indude PG& E arW tts w holly ow ned and nujority-ow nnl mainten, c e g.,,,,, $ubediann ( the Comguny L All signifaant intercom [un3 trans-actions hoe been eliminatnh then, iorion md Jn monion.nine hir hnancial repirting mjor subndiarin are: Pacifk Ga* Tran minion Company purp*n, d> ; reciation of plant in >rr ice b computed u ing a f PGT Ptransporia natutst gas in the Pacific Lrthwe t and stratht line remaininehfe methwh Ibr inbral and state income selb natural go to PG&E at the Cahfornir border: Albeita m purimo, the n.mt hberal depreciation metha abwed and Southern Gas Co I td.( A&S)-buy gu in Canada and by federal und etate in law generally are used. arranges traruport to the U.S. budert Pu.fic Energy l'uch The ntunatnhmt of decommiWoning th Companie nudrar Compny ( PEl'C0 >- finanm the purchase of nudear fud power facihtin k reanerolin base tatn through an annual through b*uance ofit* commercial ppen PGA E Entnptbn abonce dwont ti expente.1hc estinmted total obhcutione ( Enterpritn)-parent company for the mintegulated suleidt-for decomminioninpo b 3re appnnimatel SW3 milhon in 3 arin of PG& E, induding PG&E Resources Compnv ( PG& E UN1 dollar *. Tbn numMc indudn a contingency fa( tor for Hewuren ) w hici engagn in exploration, dodopment and piudde cir.ngn in regulatory requ cmer.t. and wante diymal pruluction of oll und natural gu. emt increeco i Alberta Natund Go Cmnpany Ltd( ANG h a Mbowned As of Dtrember 31,190h apprmunately $r6 million had alliliate of PGT, ow n, and 03rn.tn a pipdm in th itish Colundita, been accumulated in nternal trm t funds to be ud for the which tran*pirta natcral en for AAS to the l$. In;rdn. The dn omrmwinning of the Compmy's undear facihtiet t und. may inwstment in ANG h accounted for by the equity me thod not be rdeami from the tru*t* until authortied by the cpl lC. ofaccuuntine. In. tone su a e a PC& E l des a consolidait d [ederal Int ome tax Iteren m Hnenun are reconled primarily for ddncries of gm return that indudn domestic sub idnrin in w hh h it, ow nership and eb ctric energy to customers.1 bna revenuer giv> rbe b Wb or more. Income tu npenw includes the current and tD recebaldet from a dhersi[ led babe oIcuttumen mdudmg deferred income tax e4 pense revulling from operation $ during residentiah conanercial and industrial customeriin Lrthern he year. Deferred income tax expense b prouded on mmt and Central Californis. of the major timing differeocn hetween fmancial i.tatement and Mes adjustment balancing ac< uur.t* accumulate difference > income tax reporting, to the extent permitled for ratemaling between authorlied and actual hac revenun. Energy cut purpwet Thew timing ddTecenen are itemtred in the deferred balancing accounts an umubte differences between recorded tax welion of Lie 8. Although the tu etTects of most major cmts of gu and ciretric e nergy and the rnenue designatnt for timing ddfercru n are deferred, ethers are recorded currently, recovery of such custo Herovery of ga and chx tric energy com Timing Merenen for whk h there are no deferred tun indode through thne balancing s.ccounn b aubjn t to a cpl'C deter. certain capitalised methen, percentage repair abwanco, mination that such cmts were incurred teamnably. ;See Ltc ncess depreciation for $ tate purpan, and remmal cmn und 2d Thne babncing account, are recorded to the nient that federal tu depreclation on property acq dred prior to M81, future rate recoven) from customers, or refunds to (ustomern At Decen&r 3h IWl, the cumulathe net amount of these are probable. differenca we $1.5 bdhon for fednal yurpo n and $2 billion for > tate purposet The Compun npn is to reemer the in Plant in unice Ttw cost $ of phnt additions, including repbce-ellects of the4e timine differenE in future ratet Innstinent menn of plant re:tre h are capitahmh Costs include labor-in credin ur Merred and amamed to income owr the life material, construction owtheath und an abence for fond, used of the rdatnl pmp rty. IMa perminoo, dinow nnd n lourd op,wr Long-ter m deht premium,divount and esp nw are amortired over the hfe j 31

-~ ~ of cat h inue. Gains and hecs on reatquirnl th hi are amm tital pnring perioih udhin the current cont ract year, whlt h Irpn - over the remaining originallhet of debt remquirn), consi tent Augurt 1, lW). Iange from approtimately $1.30 per thenom! with ratemaling Gains and looes on reacquirni debt allocalnl ruhir feet ( mrf)Io approtimately $l13 per u.cf. to Diablo Canyon are in ognized in innime. A new ph purt hasing prograin, initiatiel by llie CITC, we nt into efht in Augu t 10')L The Com;uny 1* prohibited 60m fritenfurin % dear fuelin'"titon b Stated at the lower of pu tt being for noncore rustomerd ind ott rial aml returvirial <xn! or market. Amortitution of filelin the reartor is laus] on ru+tomern that meet octtain blic linillatlotu)in a partfolio llK amount of energy output. rMe from the core et.htomers. During an hilerim [w rimi. e As rtyjultnj by inlerallaw. Ihe U.S. Department of f.ncrgy originallt 6rhedulnl to le in of!n i until August pM1, noncore (DOE)is rc+pon>ible for the future storage uml dbrisal of rEtomE rne duiow to negotiate directly with pn=1ucers for spent nuclear fueh The rmt of thee arthitic.1* funded m sughc. whkh du Gimpra oli purche under exiuing through a one tenth of one cent loe on each Lilowatthour egggy.Ml ormpinents for *ersice via the Gunpanyi trans-(kw h) generated by all nudrar power planto This fee h nel midin n m m Irtm Gind an 1 uner newiv nerumi nintm ts quartedy to DOE. for wrM

• the Gim na i +,ondwrn tmnhnbslon era Other inventurie, are s alued at awrage to*t except for fuel -

lh pigmm during die h5Hm ynod h limim! N To mmef'd

oil, w hith is valued by the last in first out (lJf0) tnethal.

of Q u i n u@ edhmf dof Southwest ga*sujydy. (hl and pu properties PG& E Ilcmurces uses the surrenful The Canathan [odion of Ihe anm grn ment jm e A&S cfforts metkul of accounting for oll mjp> prop rtic*. "d"h " '4h b '"

• U l" """C"'" C"*'"*"'5 "P '" fM *'"CI d -

During diis interim period,Ihe noncore rustomers'p* pur+ ' Sintemens of coneohdured a nahfimrs Cash arn! cash equh a-chases from prmlurers under contract with Ad 5 will help utisfy lents include 6pecial deposits, working fund, and shoriderm A&Si minimum contractual obliptionw in addition, the investmente (at omt w hich approximates tuarlet ). Company h elertrie departinent may purchaw only 6h efits Noncash innc* ting actsvitie. Induda ihe nehange of PGA I; forera int p demand hom the n,rc inttfolio untilimplement-common stock saluni at apprmimately $Nirnillion for the utmn of the neo ra;ucily brokering program dkeuwnllelow. acqubition of a rmnregulated businm. In FMI. The remainder ofIhe electric dt partmenti supi y nue.t le pur-d thaml under contract

• wparate 6 om ihow for the core portfoho.

1inla4.Ifiemhm. Prior year.' amount. In the rouwlklatnl financiahtatements have tren reclauified w here nere**ary t" in Lemk r FN1, die CPUC b el a delon in Mixiy c(mforrn to the IW1 presentation, br&digredly dkb.ahMed a urgel hnplemem um def Om>W r F12 or den de FEHC dm rwm brokering on PGT. whitheier h later. The rapacity laolering [ Note 2] dernion prm iden for significant changes in the natural gas N ATUR AL G AS M ATMRS induSQ in CaMotNa. es[Mah reganng aam N CanaWan pt supplie, for nonente tuttomers and the purchasing and brurni gas parrhuw ohlignuune A&S the Company's tran pining of ga for the Com myk electrie department, inder ndent Canadim ps purchumoubsidiary, currently has Capacity hnike ring b a way of alkicating pipeline capacity commitmenn to purdaw minimum quantities of ga+ from w hereby noncore cu tomen and ether shipp'rs attain ryhn Canadian producers under sariou> contract $ which ntend to llrm interstate pipeline transpirtation capacity held 'ay tle tbrough 20fG. Under Ihew coniratis. A&S is ronunitte! to bral ge distribubon uuhties (Mder capu lty brokering, the take a minimum rontract quamity w hich 5 aries bawd on a utihtte. auign betr ethting rights to nonwre shippers for a numicr of far! Orb includirig purrbAses rnade by PGT from eirrifwd rrknl. There 1 un nhting FLHC rulemaking w hirh i A&S,ihni volume contram, sah made by AM S within Canula, w til deride whether unused interstate imnspirtethm capacity anJ 1otal supply contractalin A6 S. At present, with PGd Li viH be athw atnl by 4he local distribution utihties or the inter, current ps snarket requirement % A&%wregate minimum state pi;clinem The current Fr:l C propisal h not con *htent rentract quar'tity shghtly etreeds PG&lI6 requiremerits with the cpl'Ci approach in that the FEHC proppal prm ides even taking intoton>ideration $ ales made by A&S within that the interstate pipelin % albcate unuel capacity. Gmada. A&S h authorlied tu nport to the U.S. apprmimately The go purcha+1ng rules and capacity brokering program, = 371 billion cuble feet per 3 car, or about 1.023 milhan cuble feet when implemented, will require a dectraw in the volume of per dy I mmr '/d). The cont ract price

• are renryonatn! on an Canadian ps purchased from A&Si prnluter and uill rnpue annual k.ain The baw contract prises for the three se,nonal 33

-(NOTES TO CONSCLir ATED 1r1N ANCI AL STATEMENT 1(:mammd[- lWs n Gann.1iineu Cemym i lhe restructuritut of the Com}un)i gas supjd) arrangemerits /bsmnoblenri pro < # cehnra 1(eroery of gas arulclertrie to reflect the Cornjunyi chered pa* Imtrlet. A$ lurt of the nrw cherg) 4 o t* through the Gimtuny's regulatory lulatiring urniunt nin hanhDn b auh n I 10 a cpl'C determinittiori tlial rule 5, the Comjianyielectric departmrot will riot hair a J preference to firm interstate rajunty as comptin) to other rion-sus li ro*ls wrre incurred stuonably, l'nder the current rote customs. Iluneset, the program p.'ovides for a inmsitioti regulator) Itamewof L, annual rea oaablener phirenling* are period during wlilru the electric dejuttment will he pennitted to condiu led h) t he CITC on a hi' toric te>l )t at hasis olert core tuhveription servire for up to (ettain dectening hJuly pML t he ClTC muni a dn ision w hlch roncludnl Ptrentages ofit 6 airrage annual load 4. llegirmlny in the fifth that the clertrir sptern operatiotis of the CornFm) were year of the prograrn, the electric dep'rtment will not he allownl rea+onable in 1089, but deferred runaidoratiori of the reason-to purthee care sulmeription tervke, and instead will com}cte ahlenen of ga optem co t3 and cortain gaerelatal clertrie aith other honcore customer 6 to obtain trart+pirtation wrvi, ts, v3 'lem tmts. In an cather derbion afferHng the lWI test yrar. A& S has rominenen] negotialiorn 1o rest rurture its contract

• the CPfC delt r red ronaderation ofIhe ca*onaldenew of all with gas producers to reduce it+ oldigations. In lWl, A&S gas *ptem co n in ruling com;detion of an line tigation h) the prebrnted a pro [ mal to its Canadian prulurerti to est 9hlivil DIM rd t he Corepany '* pas inart liawirig m th t!les. Those iouce guidehne$ and a Ilme trhrdule to negotiate tritructurni pa' hate l+en corpohdated with 8he CPLC's review of the reason-Aupply arratigernentL lhe A& S prognal proiides that the rights ablenew of gJi and clef f ric *)* tem not* fol the PIda and lYM anJ oldigation$ under ihe existing Contracte are inue* to he test ) cars, nrpotiated, including cornpensation, if appropriale. The Corn}un)

Iri Arplemher IWl, the DH A telead its recomincudation would expert to apply for rate termery of rornpensation in rannn lion wit h the Compan) $ Cantuharl gas purcha+ !ng amourits paid, llermery of Durh amounts %ould he Fuhjert 'o arlhities deritig the thrac 9Pn test years. The Dll A rn'omtne:ed* reilew through the federal and state regulatory procenes. In that the Corupm) refund appr'nimately $1l0 mdlion hawd cent ertion with the cutterit CPOC reasonableness proceeding, on its contornion that the Corn}uny shouhl hage purrlmed the CPUG lboblon ofilatepaya Ahorate4 Dil Alhas MrN of its Canadian $upphes on the sp t market instead of recornmeruk'd thaf recurry ol duch armrintW not he allowed. through ahnost letally trl)inp on jong term contract.The Dil A lloweger the CPCC deferrn) Condderation of that jaue until M nWed that the Compan) pun ham electric energy when f a future reau naldenew proe eding. ii i4 theaper t han its incrom-niet fo-d generation com which it..rpunt woukt hase been lower if cheaper Canadian gu In lWl, threc diew Id been used. The Dil A indicated tliat it did iiat Saturulgar purrhuse contine D hfig.arion Gan3dian producer 9 fded lawtuits against the Com)uny claiming addrew at tho time inues related io rettain contrm1 A with damages in the aggregate of at least $120 m.lhon (Canadian )- So unn p pducers. thine a ddh rent theory than the All three pluducert beck damages m*ulting frorn the alleped R e M-mW bMmlllb th bpg @dh failure of A&S to meet its minimum and rewnably exiutnl Canadian ge in the range lietwern $T110 milhon to $MO milhon. routractual gas purchase ohhgations for the PhM EN] contract jn Ohlion, the DH A b rnonunendM a disdlonno'of ) car, and two pnxlucen. seek damages for the antici;utn! failure $37 nulhon n !ated to ga> itnentory operations. The Dli A of Mi to rnert those o'ohgations through 3073. The law suit $ ronterab : hat the Gimpan) should base withdrawn excen, gas aho wel to entrain A&S f rom pun'hasing certain of her ge in the Inim ttorm in Ihe winterid PE9140 aM Den'W r PFO PhldW2 runtrarl ) car until P minimum purcha'.e obligation' Mb b bruing fwl od wb h on un Wintly bis e are met to thrw pnducen. nmre cynsh e, The idiortfall am!atal wit h thew producerisupply contiact' The DHA h a consurner admcarv hranch ofIhe CPUC stafI, represents appmimately Wo of the toh PN04W1 Contrart ad in reconumndations do not rurh tRute a CPUC decision. l p year +hortfall resuhing from the argregate A&S go purchase The CPUC can reept dl, pu t or none of the DIMi n commen-l ohhgationutiscumi alune it a p nsible that other pu pn=lua r* dation. The Gunpuny heheves that m pu purtheing arth alc$ l will pursue claims against A&S for bdure to take minimum durbg the ihn e op n tM p wen' prMenhM wdl s igorously l~ quantitio of gas during the !*04W1 contract year. A* a rnuh muest the DH Ai mconmeMMion lleanngemhMdM ~ of the CPUG regulatory changes dnrad ahme, it b expreted Da de wroM prier of PN2. i that the purchases by A&S for the MhlW2 contract year will hdower than those in the Ph0 Phl contrari ) car since, I inu n, iot impm i M a re ult of the htigation and gas contract amorig olber rJus% lhe Compan)S elertriC derurtment rnay re-tructnnng ascuwd ahne, the company n senniin entire now purcha e only up to M"o ofin forecasted demand through $18 mdhon equity inte-tment m A&S in PNI The Gunpany the Congany's core patfolm. currently h unulde to estirnate the u!timate outcome of these !Olural g5 WJlicrh or pnd.rt wbetber Surb outcome would bave a +ignificant a< hem im; art on tl e Com;uny't. financial pmtion os re uh of operations . ~. -. -.y re

~,. lC:nb if PGS O guys the 9,velfwd inlemption prire plus arrumulath) atul unpa Sddendt to the redeniption date. Por 6 hare DIABLO CANYON infortnation in Hofe e n mHI4inent The Diablo Cangm rate cacettlement, effeethe July 19M, ba<es rewnue* for ihe plant prunanly oa _J moldn:Jr*/ , Rak ptmapr the amount of electricity generated, rathe' *han on traditional 9 j yA, n, Hfb N Mi 52 0*. W '~m. $2H m rost based tatemaking. In approving the vettleteent, the % tolo arv $2 5to32fg gn s in m 30 CPL'C ciphcitly affinned that DLdJo Carn on cost, and operatum no longer abould he suldect tu CPUC teasonablereM teucu. "# E"O O*P*" P'"*"" # The CPUC cannot bind future comminions in fixins rates for Diablo Canyoa, but to the estent ynnuted by law intena lu@nnw$ of a % and a 10.17% weic*, each entitini to a

1. F"#"M b """"' OM ""*^

P"'

• h"'" P "' 8"C"'*d 8I"d "'"i ""I#Id dh Id that Ihis dechion remain in cuect for ihe full term of the l

1 "" f 8 r.ettlernent, ending 2016, N n n .n ng an) anmnu ad and unjd "One willement proudo that certaM Dialdo Canyon regulatoN

1. F""

""b costs aggre3ating $1.056 bihlon after tax win be recourwl " " " " k ' "" " "d # " " "'" "" "' "" "*"'"' over the term of the willernent, including, a full n turn. through "' * "I base rates. The related tnenues to recowr these costs are optam for 8W er Share plus accumulatni and m i It ciudniin Diablo Canyon rsenues for repotting purposes. un; dhidena and a rnietnptton p: mium unter >pecified Other than tlwe and decormni*ioning costs, Diablo Canyou no longer meets the criteria for application of STA$ No.71, "'""I " " ""N"" ""*,"" #"" "U." P"I"""I Accoma.nefbr de QTatnf Certatn T)pcs ofRemdatton. ' "Y Concuently, apphcation ofIhis 6tatement w as dhrontinued for " " 3"A" P'"I""." k '""F"I I""" 90 '" IU Wk-Diablo Canyon cHecthe July 19M. Preferred Stoch dindends ute ruf aulathe. All charen of l'riring Om price per kw h con 6ht* of a fued component and Pf"fff'"I "I""b b8W "lual preferente in dhidend and hipadatlun ar ocalating component.1he total prices for F09 through IW3 rightt Upon liquidatton or da olutton of PCS L holders of were 8.31 centn,8.93 cents and 94 cents per k w h, ef^ective Ihe Preferred otock would receiw the tar value of such > hare. ' january 1. lbtal prict 3 for the years 19*2 through IWl, effecthe plue all as cumulaint and unpaid dividenh, auprified for ~ january 1 of em h year, are 10.31 cents,11J6 cent, and ll.lfhvnIt the elau and wries. per k wh. For IW5 through 2016, the escalating comyinent will be adju>ted by a factor relatd to inflation. During the fir >t h_" 700 houn of fulbper operation for carh unit during ihe peak L0NG.TERH DEBT period (10 a.m. to 10 p.m. on weekdaya in lune Ibrcugh September), the price is 13Ub of the statW amount to encourage Mortgace bomh The first and refunding mortgage bone the Compant to utilbe the plant during the peak period, of PG4 E are iw ued lo serin, h< ur annualintewst rain ranging Deginning in' January of each year, during toe first 700 hour, from 4.2% to lh and mature from IW2 to 2021. Additional - of fulbpower operation for each unit outdde the yol period, bona may be h3ned up to a ruasimum ti tal outstanding of the price b 7W of the stated amount, At all other timM, the $10 billion, awuming comphance with indent ure cownann price is 100'b of the Stated amou.it. for carning* cot crage and proporty asallable as wourity. The indenture requires that net earnings not includiag depreciatien l N:ta 4 ] amd interest he eqaal to or greater than 1.75 timn the annual interest chargn on PG& E's mortgage lona out*tanding. The -PREFEMtED ST0CK IM of Dim!on d PG& E may inercase t he amount authorized. Noaredeemalde preferred atocL f $25 par) conshts of a 5% a mbject to CPUC approsal, All res propernn mi sul-tantbily SSb and a f/b series, w hich ha e righu to annual dhidends per uH penonal propMn are sulge io de hen oNw indentun. iharr of $1.25, $1.375 and 51.50, respectholy. PG&E b requinxl by ibe ind uture to make nemi r nnual lledeemable preferred stock without mandatory redemptt-n unundund paynwns on Menary I and Augun 1 of mhm

>rovhion I $25 par) b subject to redemption,in w hole or in par 1, I"' 0"' n tirnnent of the hon k 1 he paynwnu njual 4 of 1% of the aggregate bonded indebirdam ountanding on the prernhng

+ Nosember 30 ur.d 31ay 31, respretnck llands of any rerics with certain neeptions, may le u nl to ausfy thb rn,uitenmnt J 36 h-

(NOTES TO CONSOLIDATED FIN ANCIAL STATEMENTS hm nh } 1%+c % m,Illech i uman I In aibhuon, holders of Scrw. BlD bonds anaturing in 2017 hase PG& E haw trio million in revohing credit farihtles with an option to si~htm their borah in PN3. sarious banks ta support the sale of conunerc lal paper and for fG&E tuiquire d $l14 million and $273 millien t Iretlain other corporate purposes. Thew include two facilices totating high.nnt mortmge bonL in 19)l al 930, regierthcl). Interest $1m million esecutnl by PG&E in January 1932. PEI CU has a ratn on the lunals rangni from 10% to 12.75%. $250 million resohing unht larilit) with ualous banks to In Apul PNI. PGd E 14ued $200 nuMion of Series CI A support its commercial [oper 1%unl to finance the purchase of mottpge laind* at MN 1o snature in hlay 202). In \\la) 19)l, nuclear fuel. PG& E guarantecs PEI C0i rInlit facility and PGd E i*mni $200 inilhon of 3 ales 910 anortgage twmds at commetrial }ujrr.These ornlit facilitin rydre in PN1; howner, 8.875%. to inature in July 2021. Proceeds from thne bonds were shev may be ettended annually for adhtlanal one year prhub apphal to construction eyenditures and to the redemption, uptm mutual agreement hetween the Com}cn) and the bankt reju) ment or retirernent of debt or preferred sin (L. The (umpany h in compt.ance with all rosenants aroc lated in Januarv FN2, the Ikard of ihnstors authorued PG& L to with the facihties. At December 31,19)1 and 14Where were teacquire up to $1.3 billmn of certain highet nortgage honds no borrowing? outstanding agalm.t the cralit facihtiet. to reduce financing nnit in July 1941 PGT entered into a $200 million reuilvnig crnht farihty agreernent with sarious banks to support the Polfurion unrralloun upermenn PG&E has loans tMaling construction of the PGT.PG&E pipehne npan lon project and $923 milhon from an agent) of the 5 tate of Cahkunla to finance im Mb r o orde p@i% PGT h in cornphance with all air and water {ollution control, and sewage Lnd solid w aste die ng,,pggg gg ggg,[gg jg [,gg g 4gpg g gg posal facihtica. Internt rab on the loans sary d"[endmg mMnd PG&f irn W july P341 At Decemler 31, on w hethet the loans are in a dady, werki), commercial paper Pall, PGT had $30 telhon oubundWg 4'Anst the facuny. or fitni rate numle. Cornerrions from one immle to another take PG& E b enruled guaranters to amme liabilHies not to place at PG&Ei optiotp Aurage annualintere t rates on these e gepg g3 >4 mdha on MS mrmmebl Mnadaedby loans for 1991 ranged f rom 1.3% to 1.5%. Thew han* a'" 14 hnnif crnin m hnamdsaw, p pv.ducers, which subject 19 rnlemption by the holder on demand under certain une M Wllion ad $H9 Mlhan at Ih r ember 31, P1)1 and circumstaneet PG&Ei obligation $ for mch demand

• are pf g gn cg 4 weural by irrevorable letters of crnlit w hich vn le drcw n or, at anytime untd Phi An) lorrowinn resul'ing from u*e of l Nota il the letters of crniit would mature in P)91 PG& E has additional R E'll Ft E M E N T P L A N A N D 01 H E R h>ans with the ar",ncy tot:dmp $123.ulillon with internt raten POSTRETIREMENT BENEFITS rangine from 6.2% to BJi7%, nnd matunt.ies from 2007 to 2018.

These baas are veured by PG&E's mortgue hona, ng,rm, nt Plan Th.. Coquny proudes a noncontrihntory dehnM bene ntrnnent plan rou ring substantially all itnliu m-rnm mno PG&E had $591 milhon of unsecurni "" P "Y", " "'urena ni benefits are insnl on years of wn ice I medium term notes outstanding at December 31,1991, with and ik eniplom, hawluy BAnnian) a fun &ng poky interesi rato rangmg from 53% to 10.Pk and maturitics from h to contGute edi par not tuon than We inadnmm amount 19W to 2011. During 1%1, PG& E hsuni $3Wullion of mnhum-dnluchble for fninal innune tax purimn and not Im than inm notn. Proceeds from these notes were apphed to ron-O"U"" M"N "" "N"F" struttion eyienditeres and to the redemption, repay nent or """ ' I """""*P "'urny An oH4, l. The rost of this ihnwas retuennt of debt or preferrr d stock chargni to eyem e and plant in service. Repy ens ac<lule for the yean.1992 through 19)h. the Net Fndon rost, u ing the projectnl unit ornlu actuarial Companyi combinal agregate amount of debt rnrturing and not method, was: sinking fund nyulrernents, at Darmler 3h 1991, b $l23 million, M' i 102 miPton, $221 milhon, $ 161 million, and $ltM milbon. j Intlw m h [NofeGl Nmc t 041 for tenef a* l w ""d S IIE4W 8 I MM2 I Oj SHORT TERM 00RROWINGS internt cet on pro;u ted 1 " N "4*"

• N 2EW !

bhort tMnt bitrowings Rre principalb commerrbl pa[rr wuh Act ual a retu rn i ton on wekhth nWrD4P ktllnn! ratn of b,It. and 0.bb at DtTemker y g,g g*q gg, { g 3gjg g g 31, Ul91 and Fr 80. rnrotiveh. The umal maturity for commn-wt nornaion and arr i n2J75 ( 292J m a193 e i cial paper is 10 m 40 days. Nt i,nsion co.i $j29.t23 i i t ua $ lo t.n~7 i + 38

The increase in net Jension nat in 1991 mmiarnt to IWO effecthe January 1W1, irnsion benefits automatically are haml 1 to due in l art !o a plan amendment made by Ihe Company at on the mmt current priy Thh change don not aff i t Ihe pro- .I _ year end19M jectal benc0t obhgatimi or pension cmt since increases in Iwy Net pnelon cost h calculated using eticcted return on phn wen anticiguted by the Gimpany. assets. The difference bet wn n actual and ex[ceted return on ^"U"M ""d E"" U* 0""Pd"Y 'l"'nsors a deGund contri-I plon assets h included in net amortization and deferral aral is 1 considend in the detennination of future lension n>st, budon plan to whidi employees with at least one year of service In N91 and M19. adual returm on plan nuets cwenhd niay nake omtributiom. Employees may contribute up io 11 j -' ex}ected returns, whereas in'lVM, the llettrernent Plan etperi-lcn:ent of their nsvered nunpenaation on a pre tas or aht+ tat j] ersted a negatht;Imestment ieturn on plan awets. bash. Pre tax crnployee contributions utd. efTecthe January The expected long trrm rate of return nn plan aywt: umlin IM after tax emplo>n mntributiom, up Io a masimum of 6 2j . ; determining lcmion cost was IN for IW1 and 19'M. and 8.5% lercent of cmered comiemation are eligible for matthing j R for lW9. Omipany contribullom at sjecihed raten. The rmt cf Osmpany i in confortnity with accounting for ratenegubini enterprie, mraribuuons was darged to es;rnw and plant in service and j regulatory adjustrnents have byn recordeA in the incone state, totaled $33 million, $29.8 million and $2118 million for 1991, i / ment and balance thNi for the differente hetween utility P Ud M IUI" TIN" I*

jemlon est determined for acamnHng parpon and Ihat for g g,g g,,g,,,,,,nt kr @ U d u p Wn Iwahh

~ atemahing, w hich is hawd on a amtribution approach un Im09 feuW q,6p eMe dWWede .The pbn's funded status was: U m I ed M a n d$1 & @ m I M 'nillion and $15 million for lWl,19W and PM, rnperihely. h w ai ____._._.i_wi. im The nat of henkh care teneDin as chared to ex;cnw and plant I in sealec. 4 A<iuartal prewn: vala of projami i The 0; minny aho providn hfe imurance tenents for retiml ' letwtit ut,ligatsuna I employees. This lei.efit h providni ibrough an imurance =; d hted betwfin. - SJ,33n.262 82.219331 c<.mpany at a emt hawd on tatal cutrent chims paid plus Lnmted benef.ta 174.113 113.613 Anu,nulated 1.enellt s.atiphon 'i,51,Iid $5,303,554 administtahye fees. A hfe imurance plan avallable to certain. { l'tlect of pnijnmi future management emphiyees uws the mune actuarial funding mr thad ungemanon incream ana.219 - 7M,311 and usumptium as the lietirement Phn.The annual conteibu-projected lenefit obhptsm _,1728.17 4 _3mi3(1 - actuarial llabilit y. The root of p*miding life insurance benefits I 3.512.624-3.117.877 tion is the nonnal ont plus ihe amortization ofIhe urifundnl phn anets at madet ulue projevcted benef. chhpuon t leu th.n ). was charged to espene and plant in ber' ice and totabil $18 in cicem.f pim auets (215.ssn) m,494 million for 1W1 and $2.6 milhon for 19W and 19W8* I,nrer umurd pior,crvke ont (M432) (82,%2). Unrecorthed net pin 507,M9 121,623 (101,723. h"'arronnHng standard -1n December 1580, the financial s J,Unrenynnni net obliption (i19,743)' s. Q) j Atcounting Standards Itnard hsued $TAS No.106, Emploprst 1 Accrunt pemion ILbihtyL =.--.a - GAir,t-- -. a Anvuntuur}be huttetuemmt Beruftts Other

• Hum nwivru, w hkh estahlkhes,veounting and reperting stardanh for such lenefits.

1 Awumptiom used to calculate the projectnl tenefit obligation The new standant miuires accrual of the expried cost of thew f to detennine the pbni fundrd Statunere: lenentuh.rirut the employees' years of service The Osm;mny 1 currently recognizes the,e cmts as they are said or funded, _.M& ..]% w hich is comistent with rurtent ratemaling. The noumptiom Weghted avnge dhcouta rate 7#4 7 5%, i and calculaHem involved in determining the SFAS No.106 Aurge rate of preNted future f accrual closely parallel;cnsion accounting requirements, { compemation intream 6#% 6h ! 7he ggg. h IM to dopt the new standard no later than P)93 and may recognize the transition obligation immali-Plan assets de c6m[ bed primarily of comm6n blocks, fited. ately or prmjecthely. The Comjony expects to adop! Ihe new - income securities and real estate investrnents. The untreognimi standard esTerthe 1993 and to amorHie the tramition obligation g Lprior service cmt h 1.cing amortimi over approximatdy 16 at that date tu extenw over 20 yearn. Ihml on a prehmmary 1 ~ years,bqrinningin 1991,The unrecognim3 net obhgationisicing valuattor: Fy actuaries in PM1, ibe accumulated benefit ebli-Q ~ amortized over apprettmately !!! yeart beginning in 1987. gation for ihe postretirement medwal and hfe imurance plam I ension benefits for mamgement employecc are based on " final three year / average juy for nonmanayement employees, 37-1 5 w

-- { N O T E S T O C O N S G_L I_D._AT E51rl N A N._CI A L S T AT E C' E I two, nu atinu cvva o at January 1, lW3, measured in accorda,cc with tiie new The ihtferenen hetwe en re}#iited tra s. ac tasn and urnount, blandant, h approsimately $1.2 bdhun. The incremental etlrnse determined on int ome before int orne las etjrnwe by appl) lug 4dioVe pa)-awyou go alnount01111W3, calculatal in at tordance-the federal stistut<, tiite cre: wah the new standard, h approsimately $161)milhon. The actual W P"' nbhgation and espeme in IW3 could difTer +1gnificantly due to changes in he.dth cart n*t in nds interest rate. and the plan <. , I d * "'h i Dut' to 44[p*f.thl futurt* rtful& tory treillinCut, adoption vllot1ld a 1,ot lme a significant imjurt on the Com[unyi financial omition m eyine at statutor3 i or roultd operatiom, r re s 69u95 s n n.398 4 m4M PCdlClitid other Califortsia uti!ities currentl) are pdf tit l}ct. Ih'! & P!d" o 4 + 1 n { i ing in an imntiption before the CPLC on the ratemaling ',"["'[y' ",["'" efkCl* of the flew accounting vtarM ard on Utlhties. !iljuly }W!, Ifor6tr,ient and *. her the CPUC authorized rate recm ery of tas.deductib!c funding ta u redc. 0 8,82 o el,im ai.sta, ' tate income tn i nei of for lW1 and lW. In December ]Wl, PG& E hegan funding }kat.

• 20 9,/['$llj,gn,a

] re'f rement medical lrnefits wit h a 572.7 milhon contribution to Iwo indepen erll trd4!$. lie utillIy lb)rtlon of ille."Et wa4 lnti,Irtg dailrfens ce l'ut charged to eyens and plant in # ervice. The CPLC', decision oriened tole 9a neca 89, * ; llelna re cne C"'IUM II U29I I UI UC U S*"5M with regert to ratemalng for postreHrenwnt Irnefi mlher than t 17,10a [rmiom in lW3 and tryond is espected in lW2. o g,,,_ n,, g,y,2

y,y 4 in yng j htJil the Offte (91 i

[,Nate 8J r y.r n w s RM Vil

• 88 U.17 t fa g.

I"r""" I"+'e inun# INC0METAXE$ t2.scycine s l.H7 7,92t. f f AIAHl? ) 1.*.7n3 M The curren, and deferred components ofincorne las extrnic f.nn the m rare t t, ial Ind mif' in e n)V fbf f gppg int isHw Iu' fore 6ttrqirTH* ' T E l#"W I fysy f(n o jypj 61 th. n M % f, bhbb bo %, AttvishfUlglof fillDf'ic l.te% i%ucN in NecenNrr i nie,al ssn9.713 s... nv s b,,..o u m. 10k.ntahMu d new hnant Ll accountmg standards for income 5tur 2nl.113 HG.015 139.473 tatn. The Com}uny currently is ruduating the seu. anting, blah ut rent 791.158 T vi.201 54n.4:r3 regn alot) and ndnCla! implication

• of bhAb bo Ub, b birb mu Ir adopt,1 b PN3. The Com,iain ntimatn that b lichirfd-f*Mleral and tute K F dawn balaniinpuouna 056.682) 1 11.0'11i 78.4 6 3

Denxian..n 161,937 i9um um dated arett and habilitin ndiincrece by 1wola three bilhon 1 iy (13,373) ( 23 'M)2 ) ( 27,M ) I acfermi iasn ana uie reLimi rrrubiery a+ Due io ni-icd enuna,,, em, 3e m.sm %te in dedw norn 3.n76 09.020 t 2n,173 ). future regulatory treattnent, adoption thould not hine a Sigmf. I Other - pri 13.H 6 l, C8,1pM t (2,3216 je3ng {qw on g}.c Comlon[>. rewlb of oy ations Lui Jefer re.1 78, Hon 161326 8 1,O'37 Inmorwnt in anht-net (111,128). t_19.M11, 411,161) {Netis] rennam o,m, sim.su m u.i? mon C O M fA IT M E NT$ ('lambranon niincome tue, i lua luded m o[wrating rijrtwes $863,nH9 $85trtnl $ 79 8.718 g-dM eb .it d espenditures for IW2 are edlm.lled included m ot hem nei tll M 5) 05 ? 16 i a lf. (1 ) to le approxinutdy $2.8 bilhon, comisting of $lh billion for hhnew tu ey.en,e sa31.53. wu.6s. mo:3 utiht) m}rmhtures P4i million for the l,Gl. l,Gd h, p;pchne npansion project, bl23 million for Diabhi Canyos and Sini rnillion for nonreculated imntments. Utility and pipeline esparrion espemhtures indude AFUDC. At Decendrr 31, (Wl, Enterprie, had couaniturnte to make rapital runtributiom for ita e< pat) share of generating facility projW t % Ihe Contribution % pa)hble nju ut coinillerrlal O}rratjon ofIhe projects, are estimated to he $11 million and $50 milbon in Pm and lW1. regici tnel. 3

4 f 4 l Qunhfyingfue ilsrio W/ s) Under the l'ubhc Utiht) Hegula-Stud Opthm 1%n The Comjan) has a WL Option Plan tory helicy Act of IV7R the Gimpany in nquimi to purchee ( Plan ) to grant to Ley manacement employ eentuck options w ith energy and capacity pnxluted by Qli. The CPUC ntaeVhed a or without a sociated stort appreciation rightdSAlbh and serin of y>wer purchaw agreenx nin bich wt the aopt5 rtde daidend npihalento terms, conditions and price optiomi. The QF muu zwet certain A total of 1.5 milhon shares of PC& Ei common atm L he performance ohhpations, depending on the contract, prior to been authorimi for award under the Plan. Gate awelatnl with receiving ca}ucity ju3 ments. Tlw total cmt ofloth energy and the Plan are not recoverable in ratet At December 31.1991, stm L options on l#55,1135 sharn, capacity guy ments to Qb h rnmetable in rates. grantnl at ttock option prices rar4tng from $lti.75 to $20 63, Payments to Qh are expected to vary in future years. 'lh' amourit of energy recched from Qfs and the iotal cuergy and were outstanding. Optfor, prices are the marLet price ter share capacit) payment, made under thew aghtmentri were: on the date of gt ant. Outstanding wtock optiva npire ten years and one day after , ~,__.. _ _ _ _... _ _ '998 _lH'_R, Ihe date of grant, and become nortisable on a cumulat h e hash I I" "'M at one third each year cornmencing. two year 4 from the Jate ! Kwh reccimi 19,127 17.010 12.47's I W "* l Enng> gwm nu 597n f873 NCl time liruitations ulon retirement. dleabiht y m death. lCa;mayt.inwnh_.. _ _ _. _ 82% l In lWl, stod options arul SAlb on 37,fl35 sharce were h $150

1. Et m

ggg irrigurion dht is n und aroter ogentin The Comiony has Dnember 31, lWl, etock options on 2ui.59tt share, were omtrat to with sarious irrigation districts and water agenein to nerci6alde, purchaw hydroelectric ivwet. The contracti n pire on sarious dates from 2001 to 20'11. Under thew contracts the Company P_ete to ] must male specified month!y or wini annual minimum luya CONTINGEN0lES ments whether or not any energy b supphed, subject to the providnbetention of fi. llc authorintion. A&litional sariside llelm. I'urnped sroruge 1%nt (Ilcim ) The rmupletton of pay ments for o;rration and maintenance nwis incurmi by the !!cinn wa delayed due to a water cowluit rupture in PM2 and prm iders abo are required to le made under the contracts The vaUmiihrt up problem

• elatal toIhe plantigenerators.

total cut of thew Juy ments h reemerable in rates At Decemler ILna becamt commetrially oirraldr in 1981. 31,1991, the future mintu,um guy menti under ihe contracts The total cu+t of the plant at Decemler 31,IWI w $%7 were $33 mihion for each of the years 1992 through IWh ami nuhion, of w hlch $7U1 mi!non has tren allowed in rate ivw and $541 nillion for perhuis thereafter. Total payments nnder $22 nullion was disallowed Sy the CPUC in 191G in Pm, as a thee contracts were $17 million, $ U milhon and $47 million in result of an asetw dechion in the litigation with USN Girlo 1991, PMI and 191W, rewinth ely. ration in w hit h the jury found Iha' the Coronanyi negligence w a. the prc ximate cauw of the water corl til ruptum, the Gmjeny . llntern trea l%urr.ldminhuntion (il fl* thnerg wee- ,nd i&,Mdy SM tnilhon for the tortslafter adjust. ment The Conquny h.u an agreement witb WAl% ta perchaw mem fdgn.cWinn) attributable to Ihe conduit rupture, erargy from them and rewllit to them ujon their n geest' Tlw rennuning StG million(after adjustment for deprn9 tion 1 The energy under contract has been purcha ed by the Gnnpuu) h nu in e le and then bw h nm emdng a rA n on fron WAPA at fmorable prices losed on M Al%i co ;t of gen-h dwm.Tb Ginem mght rum ry of the majority of c ation. That energy must be sold hvi to WAPA at a price th ce thmgh litidion Wth Weninghouw Decuk equal to the Compann current thermal pmluction cost at th" Corption @winghon-) br comn ribmable to the pmb-time ofdeliwry to WAPA lew the Company'mviep4 that rnulted krns Mtb 6 perMon,.The Conen@o mugh hom (n,m the purchaso at the lower WAPA prien. Weninchouw recoverv of the rnenues lost during the time The contract will npire in 206. At Dewmler 31, PNb the ths lidms mm M nice for the moddication and repair - con lo ihe Company to wturn se amount of energy em rently ofIb p rwmmrt Ther wunun and n led n cordnhmen a mailable to WAPA was appralmdely $274 million, usuming amotmted to $53 rWlhorn UAPA r'quntsikreturnofall heenergy priorioIhe contract'" b PNI, the Gmyiany and Wntinghouse enterni into a npiration date. Iloweser, such co t reprewnts a return of the epn hemhr wulem m agm m< m m re olw the llelms hiiga-br nefits 1he Osmpeny rereh ed through 115 purchaws from tion. Under ihe terms of the agreement, Westinghouse agrmi to WAl%;

• hich were }uwed on io r.4:epayers at that time. The waw tim >+ ofp4 and wnke, pun hmun b fmum Company helines it b entitled to recmer in rateicmts of by crnhts with a net present value of $30 million. Euluding energy retold 1o WAl%-

de emt, of the water conduit rup,are already wennl and the $30 nullion willement from Wntinghouw, the emaining m-39 ~-+ .y-

N_O T E S 10 C O N S O t.10 AT E D {l N,AgC I A l, S T AT E C E NJSj, g.,,Jh-1p nonnw t>,uiwo unreemeral co te ofllelmd atter adju tment for depin iation ) In lwh timral awlihe Gimion> rignni a settiement agree-and rnenon dbcu%ed alme amount io appeosimatel $110 inna and new steam raln agterment Io wttle litigation letween 3 milhon. The untmnetnl llelna unte include approximatch Ihem. The actn menh hn ome efiedhe upon receipt of rertain 41H milhon of ennstruc t!on eyrmhturn not attributable to reculator3 apprm al. l'nder thc artilement,l't. oral wouki pay the problenn with the pencrutoro The Com1ony has filnl an the Gunpam 513 mdhon for 31 the Company incurred for a apphration for rate recowry of the remainitu untennerniih hm-tdant that w e nner built Irranse of im ufht ient, team, aad the Gimpan) would }u) k (HerallO milhon jn Actilernent of Co*tv alH1 b4: nnenun, 1he CPli todicatnlin a PE raie dabkn that shoaid the l'nwaru laim that she steam pnee wan improprtly <alculatel. All other daim of both urtin would be dismimi Compan3 eck tecmcry in rain of eyenditurn tehted toIhe t Sett ement h a not tren teni hed with Ihermal Power pnMemn with the plant'n generato *. it will trar a he.n y burden l of prvofin nnabli.hing their renonaldenco. The cpl'C al*o Gimiun3. Thermal has a 2% internt in the propertie, operated b3 :mmal at 1 he Grucre an,I haquinal in l'nm ali lanuit, 1 dn honiin IE oinclude in rato the rnenun ncordnt durina the time lichn, was out of *ersice for the rm hhcatm and The tr'al currently is

• hnlutni to becm in f ebruar) IW2. The reguir of the generaton,.

Gimpany b contn. ting the hnoulto sigorou 1. 3 The Grupany Icheser, Ihat it 14 uncertain w hether, and to The Com;uny eniet to to appit for rate termeri of any what extent,any of the remainire co.ts and rnenun wdi be amount, juid por+uant to the settlement agreemeni with Unocal reemered through the ratemaling [o treo. und Irlines Ihat Ihe ultimate outunne of Ihh n. tter would not hate a *ietuficant im;w t on its fifuorial }nnition or inuh* b leusinsutante PG&[ h a mernlet of NudNr Mutual of1 w rations. 9 IJmitnh NMLiand Nurb ar IJectric Imurance 1.irniin101:ll. I and 11), if the nudear plant of a memler unhty in damaced f to ironmental mouer. 'the Comjuny uwnnn on an ongoing or increased roots for replacement lower are inruired due to a tu,n mea uns that may need to le talen, pr;nrP,ully at tetirni proloved accidental outage, PG& E may be subject to ma s onum manufm tured gas plant site. and gas comprenor station *, to compl *ith Lw, and regulatlom telatni to emtrornnental u%euments of $21 mdhon Iproperty damage 1or f hdhon 3 i bunnew interrupuun b in each cwe per puhey ir riod, if Im,n deanup a th itin Ahhough the merall emn ofihne mecuin exceed premiums,incr$n and other resouroc of NML, Mll.1 are.idhroh tu ntimate due so uncencinty about the nient o> NEIL 11. of em ironmental :id, and ihe Gimpany i enpomibdity, the The federal gmermnent hau nacted law

• that rnpdre all comp 1nity of em tronmental bwe 2nd regtdattom, and the unhtin w ith nuclear generating facthin to share in luyment for odertion of alternathe comphance approm hn, the Gimpany claime rnulting from a nudear incident, The Price Anderson ha rn ordnl a habihty at Deermler 31, UNI eIapprn,dmately Art hmin industry liabiht) for third qntty cbims rnuhing from 87 i mdlion for ntimatnl metall deanup emts.

any nuclear incident to $7.1 bilhon per incident. Cmerage lo the estent that emitonmental deanup ants are not of the first (200 mdhon h pnnided by prhate imuram e. If a seemernl theough imorance or b3 onh-r means,ihe Gunpany ~ nudear incident anults in pubbe liabihty dalms in nenv of wih apply for rate rcemery ot am h unta throuch qrrial emirore $200 milhon, PG& E may Ic m coed up to f126 mdhon per ment I ratemning pornlurn niabikhed by the cpl'C and incident, wuh pay rnents in em h year hm:tnl to a maenum of cyrds tht me+t prudently incurre.1cmiromnen'al remnha- $20 milhon irr incident. If addihonal funds are neednl to uti fy 1 ion rmt*

• ulle en morni tbrough rutn.The Guniony be pubbe habihty daims and legal een arbing from an> nudcar rnunini a regubtory awet at I crend r 31, PNI of appnaimately incident. PG& E can be aun*nt an mlditional %.3 miUion.

E2 million reprnenting ihe minimum amount of au rued em iron mennd deanup urts eyertnl to be reu r.ernl under the Ceothermal arcom contrue#4 litipullon in PC,Iwo b"oult* < urrent ratemaline run hanbm. Due to eyectol repubtory I were hled agaimt the Cumjony rehting to mntract> for sale of Deatment, the Com;uny trhnn that the uhlmate outcorm of peotherma} Iteam to the Company for use at The Ge> sets Power thne matten uould not haic a *1griiheunt impact on its Phnt (The Geyser 4 In total, the law nuin ehdmed d<unarn in hn,m&l petmn or inuh* of operattom. excn* of f120 million for breachn of contract, The Company had fded a tro+ complaint requnting damagn in excm of 557 mihion. 40

y Q U Mi I h C LY C O N & C LI D A T E O_.l'l N A N C I A L D AT_A ii W. hent > l- -3_ .r 1% Va t.moillin ou ti.mpm Quarterly flnath ial data for Ihe four gaarterv of IWI and 1080 lu*is, and thorr are no slynihrant restrk tions on Ihe persent are thow n I clow, Ilue to the kravmal rittuse ofIhe ut tht) hu* al iht) ofIhe Compan) Io ju) dhiderule, in Ihe fir >t quarter ot Hen and the beheduhtl relat ling outares for llhddo Canyon. Pf)r ANG w role off its ingri truent in a magneklurn incial op rating resenues, e,ierating imome, and net income arr not production fauhty project in A!berta, Caruda. As a av, ult, the pnerated etenly h) quarter during the 3rar, Conquny's ear ninp dyreawd approstmatel) $2h million af ter Tlie Corripan>, coriirnori i,to< L 1. traded oiiihe Ni m YorL, ias. Iri ihe second quarter of Ini, Ihe Coriipari3 '. cartiiry3 l'ao6c, london, Arn.ic tdam. llascl and /o r ii h itm l c u hanm. dn traml approsinutel) $Ninullion after tas duc tu an u.heric There wer s apptosiinatel 2tilMuh ornmon sharcholder, of de< ii ton in the lichn. l'un. ped 5toraer I'lant writer ronduit 3 reconi at lici ender 31. ml. Ihsidend. are guid on a quarted) rupture htigarton and to related *cttiernent e o t. tts kJ M hr f 4 tha4 %lfleb, f 4f 'jfllh / dLpf U f's.Me hr, , mi

• Operating restnue*

$3,635,012 $2,520181 $2J151.1017 $2.270.879, Operotty income $ 105,592 5 196,1113 $ 171,187 5 3311.517 l Net income 5 216,118n $ 338,597 5 305,563 5 139,363 Earninp 1* r cornmon $ hare .51' .75* .67' .2fi'i

l)hidendidedated n t rommon > hare 5

.Il .it .41 .ll i l Conunon oto L prire per Share l liyh 5 3161 5 2'/.25 2 7.311 5 26.25 i low 5 28.63 24.63 21,75 5 21.00 ; .1%) l j o.,annn n.,eno- $ 2,nw6 $ 2.ww,0 . 2,inun 2,wdns : r 0;rr uting income $ 391,5u, 8 S m.2H?. $ 389,530 $ 377,755 l t Net huome $ 216,%l t. 391,181 $ 166,213 f 210.112 ! Lunirsp. per common whare f 8 .lui .33' 8 . IP! thridende de<Jan d rr cornroon phare . 3 71 5 .3tl JH V .31 ! I i Coottoon sim L prire lcr

• hare l

Ilich 5 25h3 5 23.25 23.50 8 211U1 ; [ low I 21.10 f 20D) 21.13 20.(10 j 't.u wo tu!M.n...n wai ojahv anw \\ e ..m...- ~.--._J 41

p. 1 P 0 0 E,C,o M P AR AT,1v t s T AflM T ic s j ryn,J,ng r-- nu 6 Ce usuli In on e r"<anje s i I ha. u,.h J tw ndn u tl Ivtl I+nt t wrs twt L L E C1 R10 $1 A11$11C S

• Net alea outjiut (iniUlans of kw h )

lLit 727 02,103 91jn; y },;73 Net atea output-jetrent llydttriectric plants H.2"o it.3"o 11.5'% 93"o 1 Thermal elect r:e plant, t cu ludmg nuricar i 32.6 3 ).5 3i.0 42.3 Nuclear plant, 17.0 17.7 1 6.11 12.5 Other producer, l * 'i9.5 3 5.11 35.9 'i li, int itWi.0"n lu u r.. MWurs 1(unr% Areu capahihty-mu { at annual peak) II)dnrh4ctrle plante ( a<herre conihtlon< l 3,1011 3Jt?7 3.119 5 3Ji?S Ther mal clet t ric plant

• t e teluding nuclear i r,,936 H,936 11.095 8,995 Nut leur plants 2,160 2,lm 2,1N) 2,100

()ther proluters 7.762 6.467 H,191 H,917 7hral 22.739 21.910 2'l.214 23.917 Net area }ral demand-rnw 16,630 17,1W 17,623 1R440 llesersn tapacit) margin at iral.. pen ent 9.!au 10.3"u Ktrt 7Jt's 3 ! Anr.ual hiad factor--percent 59.2% N1.1'% 61.0'% 56.7'% 'e" race annual resith nt tal consumption-L w h 6,12 l ti,113 6,INI 6.537 ' Average residential tesenue ter kw h I I.60e 10.11( 9.64c tuott

Aserage annual reendentiallull

$715 $671 $626 55M ' 'Ibtal customers (at scar.cnd ) 1,257,000 4,197dN K) 4,110.0(O 4.02?Jk0 l'lant insc>tment }rr customer 53,115 13A13 $3,171 $3,520 ' Customere, per mile of diutribution line il 1 41.2 40.8 10.3 , G AS $14tl5 TICS { Gab purt ha etl for U.S. o}rratmn,( thouwn6 of mcIl 612,175 737,302 756,222 745,606 Source of pa. archumi-gertent Iroinf tor nl3 11.9% 10 6'% l l.7"o 1511"o i froe srher +tain 3 2.11 37.5 39 ' 33.0 h om Canada 55.3 51.9 49.1 51.2 Ti, sol 100.0 % 10iur% luurj. lin05 ' Averare cost of gas pun hased rr mtf( D.M. o}rration, i i from California 52.00 $2.0 % $ 1.fl3 51.69 from other > tate * $2.68 $2.8) $2.N1 $0.17 I rom Canada $2.12 32.19 $2.30 $ 1.88 4 Aserafe $2.29 $2.10 $2.38 $2.05 Peak day sendout-rumtf 3,559 1/ vi3 3.130 J,524 Average annual residential consumption-- mcf 6 l.0 61.0 67.0 M.0 Averare rnidentlui rnenue ger mel $5Jt2 $ 5.58 $ 5.28 $ 1.77 Average annual rnidential1111 537i $355 $352 4305 , hal customerdat year.endl 3,500,000 3 A50.a o 3,372.000 3,3m,0r Plant insntment irr cu*tomer 5fl93 $748 $705 SM5 , Customers irr mile of distribution main 100.3 lui.5 Im.1 IW1 MISCELLANEOU$ STAf tMICS Cm tomers served jr't ernployee 290 292 2116 275 Depreciation and amortuahon as a percent of userage depreciable p)dnt Electrie 3.7% 3.6"o 3.U% 3.6'% Ga5 1.6% 1R% 5.3's 5.3't PG& E comin rite Iinclude4 t onanon plant in eers it e ) 1,1% 41rv 1,0% Tjr%

• }bgvunHg Vu JVM( julcruf uyddsn jgu.e s enl:ah mtan A a hu h arr *w boy'r? UnteR ruled u Uh $% Al l

43

\\ JW.1 l@ 146 tw .~..... . int _.___ _._i. m_ __ __ _ _ _f _el 88.411 ~ lith 33 (G,3% 81.227 Tfl.ll?9 78.3W 80.uw 10.2% 17.4 % 13.3 % 17.9 % 22.9 % 14 9 % 13.2% 38 " "8.7 40.2 36 8 28 9 31.7 4 8.11 15.8 11.5 7.6 .3 3511 39.4 38.9 45.0 48.2 48,4 3P.0 1(tur% lin(rb 1(n0% l(ntr% 1m.0% 1(turb 1(kttrb 3,938 3,875 3,913 3,723 2h58 2,51fl 2,517 9.070 9,171 11,939 8,926 8F!3 8,699 8,111 5 2,ltil 2,152 1,073 .. _ 6.551_ _,jf.9]E, _ _ _ 611!i(L_ _. 7/i61 _ _ _ _7 h 1] _ _. 6,673 11.732 21.726 22.176 20.791 20.110 14,1011 17JN1 20.0(il 16 202 15,439 16,507 16.225 15,156 13,907 15.542 19.3% 25.7 % 11.6 % 6.2% 8.8% 9.0% Syb 62.3 % 62H4 59.1% 59.1 % 59.4% 61.4% 59 2 % .6,189 6,3 43 65l3 6.557 6,386 6,252 - ti,469 734 7.82( 7.88( 6.75f 6.03t 7.33t 5.77c $5(b $496 $515 $443 $3fl5 StS8 $374 3,911JXU 3JG5MU 3,761JKo 3#16JMO 3,591MO 3,516,0T 3,515,tro $3,565 $3,592 $3,407 $3,157 52.fil7 $2,554 f 2,310 40.0 _._394_ __, 38.8- ,_ 38 3._ _ 39.4 _ _ _ 3_o 1 _ _,39.2 681,421 586,135 77a.318 UX),455 021,539 698,166 1G5#11 18.3% 24.4% - 21#% 24ffb 23.1 % 18.2% 19.5 % 27.7 33.7 39.3 42.4 36.9 45.4 49.2 ' 51.0 ' 41.9 38fl_,. _ 33 ft._ _ ;to.(( _ _ 36.4 _ 31.3 100.0 % 1(0.(r% 100.0'% 1(utr% 1(xur% 1(n(rb ](n0% 1 81.71 82 'K1 $2.88 $3.60 $3.40 $3.U) 82.60 82.16 8 2.511 $3.61 8 3.911 $1.02 $3.51 f2.57 $l.87 82.26 $3.14 $l.21 $ 1.49 $5.11 - $1.86 I 81.92

1. 2.36

$3.27 $3,96 $ 1.07 64.01 53.29 3,530 3,107 3 # 13 3,2(G 3,025 3,133 3,14 i (6.0 61.6 75.1 U).6 73.0 7tl.3 72.7 $4 55 S4.75 $5.39 $5.43 $ 1.81 $ 1.39 $3.91 8300 $30? Stol . 837fl $35$, -$311 8284 j 3,245,000 3,158A0 3,083JR0 3,021 A0 2,919Jk0 2,915AX) 2,897/ 00 $621 $595 $555 $5(0 $471 1474 $675 1.I.0 1 _.-. _ J P 8 %9-98 4 97 2 _.._. M8 _, $'9 264 240 231 236 2 40 2 19 2 41 3.UL 3.5% 3.Ub 3.7% 3 *i% 3.5% 3.3% 5.7% 42% 4.3% 4.3% 4 2";. 42N 3S% 4.0% 3X% 3.8% 3V% 3.7% 3.7% 3.4% $s t. .u is a 4 . e.eu-.m e.e_ q .a 41

3 j C G N S C L I C AT E D Q E V E N U E S A N D S A L E S < f 6.,Juntd -- ~ 16(/k Gas allh to, G,mjm> 1ruwslaillnemW 11 1%I tvan twtv twt

In skumd, E LECTRIC DI PARTME NI firsennes liesidentici

$ 2,729,763 $ 2,4111,250 0 2,212,7FN I 1,950,125 4 Ginnnene,al 2.785,010 2,512,e/5 2,2119,7 2 6 2,0fl3.570 f Italustrial(1,000 % a deruand or mer) 1,1166,852 i,071,714 1,032,361 915,fN3 l Agricultutal power 177,397 129,415 3 16,4112 2W,139 l'uldic st reet atni highw ay lighting 50,631 47.121 43,210 41,251 Of her electric utilities 208,089 217,276 90,700 101.117 i Mi cellaneous 96,367 211,1W 50,959 117,120 Other 61113 5,f139 4,80u 3.851 ik ulatory lalancing accounts (127.9! ?) 102,57? 142,17f1 _ _ _ 6,763 F ThenI rlectric reernues % 7.3tL6th 9 7,0 %.071 5 6,216.050 9 5.512.8th i l Sales-l u h llesidential 23.538.1122 23.222,0fL3 22,815,271 22,5f>t,697 Onumercial 25,757,736 25,Ph7,393 21,723.165 23,917,480 i Indur trial (1,000 kw dctnand or owr ) 16,8725 83 16,271,379 16,222,406 15,912.700 l Agr; cultural per 1,733,798 4,701,Il31 3,1N7,556 3,782,011 l'ubhc street and h4hway lighung 3n8JAll 375,122 365,595 3 4 9,1110 l Other electric utihtles 3,:408.283 3.6111.428 1,711h15 _ 1,981,110 7bini clerfrir solci in runforners , 7l 195.1190 74.056.536 69.765.728 N1.537318 l } CAS DEPARTMENT l Retrnues ilesidential 5 1,226,091 $ 1,130,943 $ 1,103,416 8 936,872 l Gunmercial 551,669 565,u18 532,587 467,331 industrial 366.316 453,871 419.526 1(N,014 Other pas utilities 13,228 81,771 99,110 91,405 Mi*cellaneouc (54,056) 52,303 (33,463) 1D1,583 llegulatory halancing acrunts (11.213) ( 121,U)6) (17,283) (42,422) j Subsidiarf rotu;ianies (li,S. and Canmid 192,067 155,312 159,953 128,412 Cas transport 133,388 _ _ 106,759 _ 73,H38 _ _ 66,655 < 7btalgns reernues $ 2,109,l79 $ 2,131.021 $ 2,372,214 S 2,132.883 4 l , u cs-mcr ilealennal 210,657 201,133 210,116 196,275 Conunercial 115,203 102,579 101,3 &3 92,67) Industrial i19,916 !33,930 141.233 143,419 l Other pas utilities 12,617 __ 31Jul 41,531 _ _2f),897 7bini gas sules to ewlamers 1211,393 472,516 407,009 46), 3 2 ! PG&E uw(primanly electric gentration i 2 2 0,5119 231,001 227,663 263,588 l Sulmidiary companies t U.S. c.nd Canada 3 7Ig9 _ 61M _ j 1,1b2 51pH i 7hent 720,571 7(5,707 786.731 775.889 l 44 t - 1

e .,_,_...a__._.,_.,_--.__.___.-.~,._,. 1 /WM. /W3 . #t i /W1i 14U /Wil l WIT ~. _.. _ = i $ 1,711,031 8 1J09,108 $ U'5%401 $ 1,140,1113 6 1,192,W7 8 1, KIL267 $ 1.12fijl51 1,955,721 - 1,9 ttl.w3 - 1,9 %,531 1,50b,192 1 1'6,406 1,530.112 1,233,%l WiO,773 -1,181,217 1.3til.Jio 1,101.7 m 914.7tb 1,078,193 1100,577 .l 239,201 220,162 287,22n 239.614 1$7428 235,Ib1 211,22l 40,1103 45.149

463f, 41,970 411,320 53,224 41,4u8 l 4

122.319 63,915 '11,173 R350 129,W2 172,1119 117,791 i 77.102 73519 W,737 I l6,0*o 40,J30 56.2% 70 Ant j 'i 3,192 3,501 5,303 7,113 7BA) flMC 7.313, ____m2.553 _ _. _, -. _. - _....~ 3. 00,%..~7. ,-% 7_., 9 141 87..,.515 ~ j68,7 171) 201,461 v (19,151 ' 8 5.133ACH $ 5.567,438 $ 5.819.483 5 C 10tl.ltA $ 3MG hl4 5 3.fillt.U12 5 3,(AG 873 J . 21,932,Mi 20,919,230 21,067,234 20,730,060 19,77f),553 - 19,107,115 19.575,283 22,021,071 21.286,100 21,1;2J153 20,626,4(4 19,259,758 18,MC,382 111,722,951 - 16,061,922 - 15,972.091-17.412,319 16,10tl 571 14,9m;,722 15,813,bl6 %,401,293 - 3,151,373 2,500,390- - 3 252.215 3,309,155 2,30L05 2,922,511 3prJMi8 j .3 3tl,M9 314.276 336,736 329,378 339,fl23 365,119 401.930 i j 2_,416,3_7_1..__7_25.,_39_7 ._1_,5_76,215. _.~2,2_30,163_ 3 311,48_4_.._. 3,M4,%3 -.2,6_16. $_8 E5cm.190 61.H37.131 61.727.ud 61,333.741 (0.011.065 U).115.u 6 ,61.NJt.5 t6 ~ 8 201,326 $ 899 M 9 $ 1,1 % 002 8 IJG8,995 5 972.150 $ 93596 $ 761,INI 't 435,618 43S/'51 562,59G 5 %,107 651.332 Mll,520 607,417 299.870 437,677 life,651 732,87h 6111.832 712,341 791,7f6 mlJ161 28A0 38,322 37,410 39,202 52,589 158,433 l (2,777 ) - (270) 4,117 2,417 3,710 2,462 2,152 (276,749)l 119,818 220,1110 (233,0M) (107,521l 91,820 149,1117 136 322 207,m13. 280,428 319,986 332,080 395,395 238,057 .uiMO3 _._.lMI .._.J232___. I+239.._ _. I+I59 6,37;l 138 2 m._. $ 2.052.673 - $ 2.249.223 $ 2.610.498 8 2.671.538 $ 2,740R15 S 2.936A93 $ 2.28Fl.702 l t -197Jta? If6,120 - 211,935 1(G,092 200,774 213,031 195 Ell 80,144

78,087-

- 89A15 90,027 1WJa7 -121,622 128,758 99,719 128,8M 178,407 137,178 114.310 132,789 171,769 ~! _ S/17..,_..._?N2 ._9 2I7. __ 8 2N_._ 8.532. _ _12,021i _ 35,135 1 421,72r 4053>3 e2,ml 430,378 u3,253 482,va 53i,293 239,815 ' 153,566 263,017-242,935 170,773 201,219 280,990 2 ..;14 29 J bO27,. _,. 62 & ;,;. 61,4 0 _bytt17_ _96,330 _ 73,l_66 = 710.7ue 615.486 - 817,20s 73tna 673al3 780mi2 - m 5.419 -. ~. _..... _ _ _ _ _ t L-

==.A

=e..

46 .a,_.-..,~-m-~ .w.,,w,,+-+. <a-,.,., e-m.vv. e n,+.-.w.m

r _' 2_0 m- ~~ ' ' ~ " ^ f %r,c Ce ed I h tw O*Foo D OAftD O F,, y"O % yrg8 PE R M Akt hi N"*"5'Wl5HR"'"$ DIRE CTOR. [,can of ( nherat) COMMITit[$ OF ( o,npenudion fi,tronirtre Tut DOARD Of

16. hor'I l. f loric lhtendon, Unlu tnh of DIRECTOR $'

} Clairman of the Ibard and Cadifornia,ikr(e c) for nondnation an dderf orN l e oriie i omminer and compensation arni Chief 1:u cuthe Offu er. l ~s..h ri< L fl llie ll.r. l'. Mit hin limits mas merrl*" emplosee beneht pohrten Pacific Cas and Lin tric lonner Chairman of the p >wers arul perform dulic* g 4 m., p gje u plan. Corniuny lloard and Chief f.teruthe oftheBocrd. florey U. i onp, Odker, Pm%da* und ning for euentira deselop-likhard A.tllurke ment and t.ur4 cnion. Chainnan of the lhad and El"ctrk Cannpany (Chdunaul ing,. L.1,uut'en* Chief Executhe Odicer. Il illin,n t. Uilh r llany M.Conver gg,nd) llomeslake Mining Professor of Pubhc Inhe L. Luttgen* 1ra Mkhal Hey man Company and Prhate Management flichard ll Madden g dham L Maler if illin en 3. Ihn ihg and Profmor of Johnll3Ll%et John HXlhe

pygng, Computer Science.

Stanley T. Skinner John C.Saw hill Tin %ons C'rnpanks ine. Stanfoh\\ Ynh'" M t mlit i;ommitter pan, pan,, n,m unov ( retml procerf ) John l'. V. Pim r lin new $ hnancial Unicu puhhc pdicy l,cu i 5.1 nron* ID'"tVI N""d",oh h" statemente and interaal te dkh could ngnih* Chairrnan of the Lrthern Board arol Chh f % cuthe arrounting and corit td andy adert vnstomers Cahfornia Group of Offirer, CnKler klich*I procedmn with indepen. ,3 ,'hoMen. emphiy en. Glendale federalllank CorpomHon and Crot kW dent pubbe accountank or the t o*nmunmeon u d. len yh loo l licunnu llatry M.Congd and recommends phm+ Prok wor ofld ""l L Hnus ^"".Cladnnan of die had (Chainnani and prograna to amu

• Ca>

Wdhani Stada em h hsues Unherats of Cashfotnia, gateley ' aul Prendent. Meh in H. lane Hklard A.Chuke Dunaumt Enterprhe*, Inc. 5 n S. Metr Ma y, h in ll. l.une R. iatrman) k"" "" " "'"' } '"" "'""rM. U"" Corv.uhant to Sunset f ra Mh hart lley nan Publhhing, Corporation Co'I I! Ifrirb"'.h linu m e # W im urtr Meh in 11. Lane Chainoan of the ibanl and lkrommend, hing range Man EMett f.nlic1 ! utrcon. CM E muu' OHint. San i ranch.co llay Area dd p. W and Feb L W. Mkib, jo g F i Con ny 4.mm mhue kg WW community leader W %4 Fugo Ud. N.A. g h d m u b w doi

• Hh hnid IL Umiden y g,(,yau p;g; ohyn tium.

C:hairman of the Board aad Pren. dent and Cldef lui hard A.C.larke I Mi. dmo? '% '^, Chief E.xet , j fa;y%g, n, ;ws Potlatch (juthe O!!,a er, F me Ofhn r, Wnd I iwau, r a m' _nrporation g gg, p,,pg.M d R Mdh u 8 N iv4 sh'J f"' 'r.h ri,,n vi 1WJ (dhersifinHon st pnuf actd - Hund %)lliam l'. Midu Perrr A Mocouan' emironmental Carl E.1:ekhardt Chairmanof thelWrd, orgamr.ation ) Stanley T. Skinner Preadent. and Chief w a., y 9,;nnc, Harry 1.ae.on % tlhams Eu cuthe Ofurer, Pn& m ed CIM Safew a) Inc. O Hnp O8ien, morce I. Vunenth Pacific Gas and former President, Pacific Electric Carnluny Gas and Eh ctric Company , f,.o u ilNan President. William

• Pacbe Venture. Inc.

( T entute CapitLd and real m. ate) 49 _mA_

g], __. m, he@r i:ns urulik ou C mie r PGAt OFFICER $ John ( Ifon,rlern John f;, hy, y,8 CHitF t XICUf 4VE 'llir1m nt 1. Clarle Mu' Preddent Vh e Prc6hlent 0f F1CLH$ Or PnlNCIPAL PGat Chai!! nan eltlu' lhttd and (h40putn and bantounity arnl $ U li slDi a R 1 E 5 Chief futufhe Olllect n60rn unichthuu Governthentai llelationti t.N D AF F ILI Air 5 'Nunta 1: bl.inno r II'ilhn!n li. 3f asoni \\lanon il ilhio h Pmklint and

1. """ hl 'l l'""" r Vire Pre *klent Pinklent and Chief Y u Preudent Ga. and IJn tric Tn hnical Esecuthe Officer Chir i Opetating Officer WN[Y"t"l"kN

' *)rrry R \\lo l.cml Con *trut Ihin: Ym uthe Mee Psnident l '.' * * ' f ~ % t w n Nephe n it thy ru.hh Generation reOnt Prendent and Chief

• Jamru IL shijju e

"" M in Trad Non beruthe Ofilter Vice i,"nident Eurutive Vice Preuden Pacific Ga. Transtniulon i J<n..in ir IWnernuh I ,Ibunahl I.Ihnnal r,eneral sen sce,. y,p g g,,ny Senkir \\ ice Priddent Hoger J. I.ly n n G.orgu>rute Flanning %n ennn I. n ogner and Generol Manver,

y. p" ;""!

la'n' a 11. Ibpr chm""d" "I t h" II"d"I' Capneering and Pn ddent and Chief " ""4 " " "I C "" Mee Pinhlent Comtniction Executhe Offh er Businen Unit M i""'" ll I "l"""f o Sacramento Valley llegion Moe Preddent Alheita Natural Gas An"us A. Hurulolph Company Ltd

• llabert 11.,.1 nn'Jr'

h. lear.let hnied Sen ten b..re i,reddent 3

ur Senior Mrc Prnident l'""irl1: ' ibw" %n Generation l'"""bl 'l< 'l"'l"'ul and General Manger, Chairrnan of the Board, 5ite Preddent llonlon Parmh IJr, tric 3up;dy I inblent and thief !!udnen UrJI b," N dPl Y Yh c Preddent und f.uvuthe Officer flou unl i. t. vin h Chief f,inancialOfficer 'fle n/ amin I.%us,n Alberta and Southern b.a5 (f' pthi gent awg y. Senior Mee Psn klent "ennal bl un+1 39,,,, y,,w, w,,,, (. y Mid Ceneral Manager. yic, p,,33,g, C Hit F E A E CU16Vi' g tu p,M.qupp y )lufJnew l. t 1 rluna ll. Guarofwn Gn Trute. mission OFFICtHS Or Yiec PrNidetti and Storapr. PRINCIPAL PGar ' litril 6. Ro.c Senior Vire Preddent CoWo Gale Don j l n li. 'l u nn nel UD& DI ARltS AND i and General Manager, RobertJ.llom "ml Mee Preddent ntLATED vtNiunts Dietribution Du Aincu l! nit Vier Pinklent lhablo Can)on Olrrations Jon ph 1, if illiom> ' Gregory 11. Hu ecer Power Planning and arn! Plant Manwer Prendent and Chief Senior Vice Prnident and Cont'#l' Eucuthr00lrer r;lo,iu 3. r;, e Gennal Managn, lho,nn, u:ll;ch ControHer PG&E Hnouren Cornpany Nuclear Pourr Generation Moe Pinident und hera \\l.llar m

lusinru tn, ut Anistw to the g

jy,,A H briny Lhairrxn nf the brd Preddent and Chiet' %ninan L lleyon Hrian I \\lo t...trah Euruthe thTicer Yke Prnident 6,,nt t llorne . ""' " F "'" U.S. Generating Conyuny Chan Air Vehicin Mce Pre < ident becretary k.' V"'d I:uri ll. li anLlin Ccm pe l: t:lijh n,Jr.

k. f" dun Hueen ut Mrc Prn. dent Gunmunicat kin, Prnklent and Chief

• "'QP"'"'"

Eucative oak n fet Iby llegion Jori,1:JentineNarl, 3cerelary Mce President and (ES. Opnating $.cnion Huuril li. CunnInghu m Mee Prmident Trenurer l',' U b. '* Conyony f Aetant 'Irenurn lluman lies.outen Dorrnhl L kr nwuly, Jr. . ilan ll: Herincunid. Yke Pre *klent Picoident an i Chief 1%ilip G.DaruuA Lwouthe Oflicer Mce Prendent N"h"M Nes"fl 'il* " licemu C'""'"'" E C A E P'"I"'"i"'I"r-En#ncering and John C. k~eper Construction: Mee Prahlent Tran4mj% ion and Mdtketing and Cuttomer Dieribution Sen ten 47

7 e SH AMEHOLDER INF00M4140H p - l ik & Ga and Ilac (synn, S H Ali E H O L D E R in PG&l7s Dh'.dend flow to broolialurr DIVIDEND I cinse+tment Plan. Also, . f re onne. H EINVE 31ME NT PL AN 8 E $T E T RODM 2000 you recche all dkidend II)ou want to ronsohdate S AN FR ANC15CD }wnIDP114, annu"l and mid-wur wp.arate arcountn jnto irst sour dhidends from C A 94106 year relorb,amg rony one armunt, you shoulu, mnunon and prefer nd 6twl p 1 800 367 7131 rnalerials through wur wntact the Shareholder ' " " " " '" '" "I E I,' beeler.Therefore,if you 5ers teer ofBec to td>tain the $HAHEHOLDER HANDBOOK are recetting unwanted neret Aary forrin af kl initr ue-dul cate maPings. you tion >. When accounin are licintestinent PLm. di l,G&l,. has pic}ortsl a t hare-g if you hold certificain holder handbook prmi-not I,C61,,, to climhinte necenkart to reissue the ' " I ""

• "n"*"*'"(h"'

ging infortnation on the the duplh allont slot k ocrtihrates. Lompany's 6hatchnhjer than through a broker, het vices, blo( L rettificain LO$1 OR ST0LE R lloir io I hrninute )ou may obtain Ihe Plan

9, gg, %it prospectun ami euroHment and Sto(L tramfer 5)6tems.

CE R11FIC AT E $ 9 If)ou wstat to maintala form by contacting the fopies are ranilable irom your stot L conhute har i mm e than one a rount hut Shareholder S trien ofk'e. the Sharehohler krviten heen lost, stolen or in mme "m* cluninate ad&donal rnalb gomn, houn enMatn w a) destro)ed, you Should Mha MN of annual and m$ car f et name b een you 8TOCK HELD 1N tiotify the Shareholder Mn relotto you nmy do m by BROKERAGEACCOUNT$ Service $ olhoe in w riting Det: ding ihe labch ( or a ate not eligible 1o par. - ("5TH E E1 N AM E") homd&Iy. copy of the lalels ) from a ticl[mte in the Dhidend Ilcinmhneut Plan. M. hen you purch.we your MULTIPLE DIVIDEND Con parW malling to the Stor( and h h held for you CHECKSAND bharehol' der Sers kvn o@ce' by y our broker,it is listed OUPLIC ATE M AILINGS indk atitig the names you broker'u rame,or\\ n the with t, e Com1on i Some shareholders hohl w bh to keep on the mailing n N "i' ""' k "" ""' '""""b i g" """""j "*j * ""' street name" PG& F don not in different names (e.g., telerta and thqnamen you know the idenMiv ufindi-wish to delete. Ihh will bbelt A. Johnson and vidual Slum > holders w ha N' M"*"h D"" O "jI g 'g" *

• hold thair tharn in this mun, the law nu;uirn h&nd cherb ami proxy marmer-we almph know

" "' " """ # #

• E"'#'#

that a broker holM e certain number of > hares w hu.h "* " " I # ""," n u M malig R E P L AC E M E N T Ol' may he for any nutuber Addrnes are tin: sarpe, we DIVIDEND CHECK $ of euttomers. are nyuh ni to m&d up If you hold your stoel arate dnend (hn L5 and if you do not recene your in street name, you are not ann a n Far nA MOMMkMnb eligible to participate to cael, acconnt, business days afu r the Flyment date, or if a check it' lost or debtroyed, you should rmcify the Share-holder Sergires th.cc wo that payinent may he Atop {#d on the check and a replacethent iwutd. Deurm lirtam a littem. Inc..Nn baruw o l'hotieraphp Tom Truy. im4u.an I I - 4.

v t.y 4' ( ST^CH EXCH ANGE SHAREHOLDER ANNUAL MEETING - LISTI:ZS SE RVICE S OF $HAREHOLDER4 PG&P's comnmn stak is if suu have gun:iuns alcut Date: April 15,IW2 traded on ihe New WrL, your anvunt or md mples TLme 240p.m. Pacine, london, thl, of the Gunpanyv publica-locatiom Lorich and Anaterdam tions, piece write to the Maonic Auditorium

etock cxthangn. tnt Tramfer Agent at the akirem 1111 Cahfornia Street

' ofikial New Wik Stock shown letow. San Francisco,Cahfornia Eachange symio!.is*PCG" If you have general A notice of the meeting, but the Com;anyimmmon quntions alcut PGA E or prosy statement and proxy gock usuallyisintniin the tr/ormation contained in the form are 1,eing nailni with newsgaper under *PacCE7 annual or midyear reporta, this annual report on or about The Cvnpany has 20 pleue wrl'c ro ehe Ollice Februaty 26,1992 io all inun of prefnred stock, of the Corp > rate Secretary sharelmldns of record. nmit of w hich are ilsted at the addrm shown below, A repri on the annual on the Amerfran Stock Security analysts,lort' meeting willalso be mallni " Etchange and the Pactue folio rnanagers or other to shareholders f dlowirig Shk Exchange. reymntativa of the invnt. the mecurg g.g,,,, ment community should - laue

• ynd.d write to the Ihrector of 10;K REPORT

~"~ investor llelations at the DrstIi ferral, addren simwn below. Ifyou wouldlike a mpy of the a Cumubtive, Pn; %1ue Cominny's 1991 Form 10 K $251tr Shareltedeemable: ~ Ileport to the Securitica and C0neoR ATE ' 10.28% ' PGEpfW S E C R tY"AR Y ExchangeCanmin' n plew o .10.llyk PCEpfT contact the Shareholder f 77I al 3""***"0C ti lloom 3205 9,pg pgg ry San franetsco,CA 91106 p 1992 OlyIDEND 9,0(yk _ PGCpH, . (415)973 2W - PAYMENT D ATES 'EO 'IN ' TRANSFER A0f NT Connemin l' referred 8.Wk - PGEpfK su,,k w L. ' 8.00% PGEpf0 Daniel T. lemey anuary 15 Felimary 15 7.11 1 %. PGEpGl Shareholder Services A I I5 .May la P 5.00k PGEpfD 77 Peale Street.fkom 2#10 3"I I'. A"8"" I f ' 5.WS Series A PCEpfE San Francisco,CA 91106 'O 4.80% PGEpfG l 80(A3677731 43f% PCEp01 ~ gg pgg [j DIRECTOR OF p

Non-14deemable:

400% PGEpfA ' laura L Mountcastle 5,fa PCEpfil 77 Ucale Street,ihom 840 S M LL. PGEpfC Sar Francisco,CA 91106 93100 Fint Preferml,. (415)973 3007' Cumulati e.ParWlue - fl00 lVr Share.-

RE0t&TR AR OF STOCK

, L 10.17% - Unlisted Firu Intnetdbl , 9.WS L Urdisted M Cahfornia 315 California Street - San Franciwo,CA 911M @ %cret a pnnen arr cam a ~ t N .g uL

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