Message-ID: <30171828.1075854945373.JavaMail.evans@thyme>
Date: Thu, 20 Sep 2001 10:57:44 -0700 (PDT)
From: lisa.mellencamp@enron.com
To: c..williams@enron.com, vicki.sharp@enron.com, b..sanders@enron.com, 
	legal <.schuler@enron.com>, e..haedicke@enron.com, 
	james.derrick@enron.com, diann.huddleson@enron.com, 
	wanda.curry@enron.com, elizabeth.sager@enron.com
Subject: FW: PACIFIC GAS AND ELECTRIC COMPANY AND PG&E CORPORATION FILE PLAN
 OF REORGANIZATION
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 -----Original Message-----
From: =09Dasovich, Jeff =20
Sent:=09Thursday, September 20, 2001 12:52 PM
To:=09Shapiro, Richard; Steffes, James D.; Kaufman, Paul; Kean, Steven J.; =
Tribolet, Michael; Mellencamp, Lisa; Kingerski, Harry; Lawner, Leslie; Scot=
t Govenar (E-mail); 'hgovenar@govadv.com'; 'bhansen@lhom.com'
Subject:=09FW: PACIFIC GAS AND ELECTRIC COMPANY AND PG&E CORPORATION FILE P=
LAN OF REORGANIZATION=20

FYI.  This is likely to create a considerable stir in California.  Let the =
games begin...

Best,
Jeff

 -----Original Message-----
From: =09Comnes, Alan =20
Sent:=09Thursday, September 20, 2001 12:46 PM
To:=09Alonso, Tom; Alvarez, Ray; Badeer, Robert; Belden, Tim; Calger, Chris=
topher F.; Choi, Paul; Dasovich, Jeff; Driscoll, Michael M.; Fischer, Mark;=
 Foster, Chris H.; Guzman, Mark; Hall, Steve C. (Legal); Heizenrader, Tim; =
Kaufman, Paul; Mainzer, Elliot; Mallory, Chris; Malowney, John; Mara, Susan=
; Motley, Matt; Perrino, Dave; Platter, Phillip; Rance, Susan; Richter, Jef=
f; Rosman, Stewart; Scholtes, Diana; Stokley, Chris; Swain, Steve; Swerzbin=
, Mike; Symes, Kate; Walton, Steve; Williams III, Bill
Subject:=09PACIFIC GAS AND ELECTRIC COMPANY AND PG&E CORPORATION FILE PLAN =
OF REORGANIZATION=20

It's out ...

FOR IMMEDIATE RELEASE=09September 20, 2001
CONTACT: PG&E News Department (415) 973-5930

PACIFIC GAS AND ELECTRIC COMPANY AND PG&E CORPORATION FILE PLAN OF REORGANI=
ZATION=20
Plan Pays Claims in Full, Does Not Call for Retail Rate Increases or State =
Bailout
(San Francisco, CA)- PG&E Corporation (NYSE: PCG) and its utility unit Paci=
fic Gas and Electric Company jointly filed a Plan of Reorganization in U.S.=
 Bankruptcy Court today that enables Pacific Gas and Electric Company to pa=
y all valid creditor claims in full and emerge from Chapter 11 bankruptcy p=
roceedings. The official creditors' committee supports the plan.
"This plan is an achievable solution that will enable Pacific Gas and Elect=
ric Company to move out of Chapter 11 as a financially strong business posi=
tioned to continue safe, reliable and responsive delivery of gas and electr=
icity to its customers, pay all valid creditor claims in full, and do so wi=
thout asking for a rate increase or a state bailout," said Robert D. Glynn,=
 Jr., Chairman of Pacific Gas and Electric Company and Chairman, CEO and Pr=
esident of PG&E Corporation.  "And, the plan will enable us to provide long=
-term growth prospects to shareholders." =20
The plan reorganizes Pacific Gas and Electric Company and PG&E Corporation =
into two separate, stand-alone companies no longer affiliated with one anot=
her. The reorganized Pacific Gas and Electric Company will continue to own =
and operate the existing retail electric and natural gas distribution syste=
m.  The electric generation, electric transmission, and natural gas transmi=
ssion operations currently under Pacific Gas and Electric Company will be p=
art of PG&E Corporation. The common shares of the reorganized Pacific Gas a=
nd Electric will be distributed to PG&E Corporation shareholders.
The electric generation, electric transmission and gas transmission operati=
ons, when reorganized as new businesses under PG&E Corporation, will have t=
he ability to issue debt that will be combined with new financing at Pacifi=
c Gas and Electric and used to help pay creditors' claims. The plan also re=
structures certain existing debt and uses $3.3 billion in cash on hand to s=
atisfy creditor claims.=20
Under the plan, all valid creditor claims will be paid in full, using a com=
bination of cash and long-term notes.  In total, the plan will provide cred=
itors with about $9.1 billion in cash and $4.1 billion in notes. The vast m=
ajority of creditors-those with allowed claims of $100,000 or less-will rec=
eive cash payments for the full amount of their allowed claims on the effec=
tive date of the plan.  Most secured creditors will also receive 100 percen=
t of their allowed claims in cash.  Finally, unsecured creditors with allow=
ed claims in excess of the $100,000 threshold will be paid 60 percent in ca=
sh and 40 percent in notes.
 =09Following the restructuring, Pacific Gas and Electric Company and PG&E =
Corporation will be organized as follows:=20

?=09Pacific Gas and Electric Company will be a separate California corporat=
ion focused on providing electric and natural gas distribution service to i=
ts customers in Northern and Central California.  It will hold 70 percent o=
f the current utility assets (in terms of book value) and will employ 16,00=
0 people.  Pacific Gas and Electric Company will continue to provide the fu=
ll range of utility services to one out of every 20 Americans. =20

?=09PG&E Corporation, in addition to its existing National Energy Group bus=
iness, will have three new businesses that will own and operate the electri=
c generation, electric transmission and gas transmission operations formerl=
y under Pacific Gas and Electric Company.=20

The new electric generation business will be a California company establish=
ed to own and operate the hydroelectric and nuclear generation assets and a=
ssociated lands, and to assume the power contracts with irrigation district=
s, now held by the utility.  In total, the unit will have approximately 7,1=
00 megawatts of generation.  The facilities will be operated in accordance =
with all current FERC and Nuclear Regulatory Commission licenses, and in ke=
eping with sound environmental stewardship policies.  The generating busine=
ss will sell its power back to the reorganized Pacific Gas and Electric Com=
pany under a 12-year contract at a stable, market-based rate.=20
The new electric transmission business will be a California company establi=
shed to own and operate the transmission system currently operated by the u=
tility.  The system comprises 18,500 circuit miles of electric transmission=
 lines and cables.
The new gas transmission business will be a California company established =
to own and operate the natural gas transmission assets currently operated b=
y the utility, including 6,300 miles of transmission pipelines and three ga=
s storage facilities. =20
Following the reorganization, the California Public Utilities Commission wi=
ll continue to regulate the reorganized Pacific Gas and Electric Company, i=
ncluding retail electric and natural gas rates.  The Federal Energy Regulat=
ory Commission (FERC) will continue to have jurisdiction over the licenses =
for the hydroelectric assets, and the rates, terms and conditions of servic=
e provided by the electric transmission business.  FERC will also assume ju=
risdiction over rates for the power generated by the Diablo Canyon Nuclear =
Power Plant, and over the rates, terms and conditions of service for the ga=
s transmission system, which will become an interstate pipeline. =20
Glynn said, "This plan, without raising retail rates, provides a safe, reli=
able and long-term electric supply to California customers.  It enables our=
 company to maintain a qualified workforce.  And it enables us to keep our =
generating assets intact and integrated, rather than selling them piecemeal=
 to pay creditors."
The company expects that roles and responsibilities for the vast majority o=
f its workforce will be unaffected by the plan. The reorganized Pacific Gas=
 and Electric Company and the newly established entities will employ essent=
ially the same people who operate the various assets under the current orga=
nization.=20
"We envision essentially the same experienced, dedicated team continuing to=
 do their jobs with a comparable level of pay and benefits programs," said =
Glynn.  "We believe these businesses should be operated and maintained by t=
he people who know how to run them best."
In addition to resolving creditors' claims and maintaining stability for cu=
stomers and employees, the plan also provides long-term benefits to the sta=
te.  It provides the state with a path to exit the business of buying power=
 for customers, by identifying conditions under which Pacific Gas and Elect=
ric Company would be financially able to re-assume the procurement responsi=
bility that is currently being fulfilled by the state Department of Water R=
esources.
The Chapter 11 process requires that the plan of reorganization ultimately =
be confirmed by the Bankruptcy Court before it can be implemented.=20
Paul Aronzon, legal counsel for the Official Committee of Unsecured Credito=
rs, said "This plan provides a comprehensive and responsible framework to r=
esolve creditors' claims and restore PG&E's creditworthiness.  It has our f=
ull support, and we look forward to an expeditious resolution of the Chapte=
r 11 process."=20
"With this plan filed," said Glynn, "we are now focused on bringing the Cha=
pter 11 process to completion, reaffirming the financial health and creditw=
orthiness of our operations through this reorganization, restoring customer=
s' confidence, and rebuilding value for our shareholders."
- 30 -

At 10:00 AM Pacific Time today, PG&E Corporation and Pacific Gas and Electr=
ic Company will discuss the plan of reorganization on a conference call for=
 members of the media.  The dial-in number for the call is 1 (877) 691-0877=
 or 1 (800) 521-5461.  Passcode 7234.

At 11:30 AM Pacific Time today, PG&E Corporation and Pacific Gas and Electr=
ic Company will discuss the plan on a conference call for members of the fi=
nancial community.  The call will be webcast. To access the webcast, go to =
www.pgecorp.com.

On Monday, September 24, at 5:30 AM Pacific Time, PG&E Corporation and Paci=
fic Gas and Electric Company will make a presentation to financial analysts=
 on the plan.  The presentation will be webcast.  To access the webcast, go=
 to www.pgecorp.com.


This release contains forward looking statements about the proposed plan of=
 reorganization (Plan) under Chapter 11 of the Bankruptcy Code for Pacific =
Gas and Electric Company (Utility). These statements are necessarily subjec=
t to various risks and uncertainties that could cause actual results to dif=
fer materially from those contemplated by the forward looking statements.  =
Although PG&E Corporation and the Utility are not able to predict all of th=
e factors that may affect whether the Plan will be confirmed, or whether, i=
f confirmed, it will become effective, some of the factors that could affec=
t the outcome materially include: the pace of the Bankruptcy Court proceedi=
ngs; the extent to which the Plan is amended or modified; legislative and r=
egulatory initiatives regarding deregulation and restructuring of the elect=
ric and natural gas industries in the United States, particularly in Califo=
rnia; whether the Utility is able to obtain timely regulatory approvals or =
whether the Utility is able to obtain regulatory approvals at all; risks re=
lating to the issuance of new debt securities by each of the disaggregated =
entities, including higher interest rates than are assumed in the financial=
 projections which could affect the amount of cash raised to satisfy allowe=
d claims, and the inability to successfully market the debt securities due =
to, among other reasons, an adverse change in market conditions or in the c=
ondition of the disaggregated entities before completion of the offerings; =
whether the Bankruptcy Court exercises its authority to pre-empt relevant n=
on-bankruptcy law and if so, whether and the extent to which such assertion=
 of jurisdiction is successfully challenged; whether a favorable tax ruling=
 or opinion is obtained regarding the tax-free nature of the internal restr=
ucturings and  spin off contemplated by the Plan; and the ability of the Ut=
ility to successfully disaggregate its businesses;=20

Please visit our websites: www.pgecorp.com and www.pge.com