DUFF & PHELPS: PACIFIC GAS AND ELECTRIC COMPANY $1.5 BILLION FIRST AND REFUNDING MORTGAGE BONDS (SHELF) RATED 'A'
CHICAGO, Nov. 3 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of 'A' (Single-A) to Pacific Gas and Electric Company's shelf registration for $1.5 billion of first and refunding mortgage bonds. Proceeds will be used for capital expenditures and for redemption or repayment of outstanding debt and preferred stock. Pacific Gas and Electric's credit protection measures are expected to remain stable. The company has a relatively heavy reliance on purchased power. The regulatory environment in California, which has been showing increasing signs of uncertainty, has not adequately recognized these obligations. An administrative law judge recently recommended that the California Public Utilities Commission reject the company's position that increased equity ratios are necessary to compensate for the debt equivalence of its purchased power obligations. Pacific Gas and Electric's higher rates in a power long region put a strain on the company's competitive position. Management has taken several steps to better prepare the company for a more price sensitive, competitive environment. Commitments include workforce reductions, a retail rate freeze through 1994, and foregoing recovery of certain revenue adjustment entitlements. The rating assumes satisfactory treatment of the pending gas cost regulatory action and recovery of such costs. Almost all of the Canadian natural gas suppliers have agreed to terminate their existing long-term gas contracts. While the contract restructurings are a positive, Pacific Gas and Electric will incur costs associated with these contract buyouts. Pacific Gas and Electric is one of the nation's largest investor- owned electric and gas utilities, serving 11.8 million people in northern and central California. -0- 11/3/93 /CONTACT: John C. Dell of Duff & Phelps Credit Rating Co., 312-368-3161/ (PCG)
CO: Pacific Gas and Electric Company ST: California IN: UTI SU: RTG
LD -- NY104 -- 0323 11/03/93 16:55 EST