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DUFF & PHELPS REMOVES PACIFIC GAS & ELECTRIC COMPANY FROM RATING WATCH -- UNFAVORABLE

 CHICAGO, May 24 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of `A' (Single-A) to Pacific Gas & Electric Power Company's (PCG) shelf registration for $1 billion of first and refunding mortgage bonds. A rating of `A-' (Single-A-Minus) has been assigned to the company's shelf registration for 10 million shares of first preferred stock ($25 par value). Proceeds will be used for capital expenditures and repayment or retirement of outstanding debt or preferred stock. All fixed income securities are removed from Rating Watch -- Unfavorable and reaffirmed.
 The reaffirmation reflects the expectation of satisfactory treatment of pending gas cost regulatory action, reasonable settlements of Canadian gas take-or-pay issues, and recovery of such costs. Longer term credit protection measures are expected to remain satisfactory. The company's performance has been enhanced by excellent operations at the Diablo Canyon nuclear plant. While the company benefits from excellent plant performance under the December 1988 settlement, which excluded Diablo Canyon from rate base, coverage levels will depend on the continuation of high performance levels at Diablo.
 PCG's management has taken several steps to better prepare the company for a more price sensitive, competitive environment. In February, the company announced it would eliminate 3,000 positions by 1995. In April, PCG announced it would freeze retail electric rates through the end of 1994, forego recovery of certain revenue adjustment entitlements, and file an economic stimulus rate to attract and maintain businesses in the service territory.
 However, the regulatory environment in California shows increasing signs of uncertainty. The California Public Utilities Commission's December 1992 order in PCG's general rate case failed to recognize the compensatory equity necessary for its substantial purchased power obligations. The authorized return on equity was lowered to 11.9 percent for 1993 from 12.65 percent in 1992. Nevertheless, PCG is expected to minimize debt leverage.
 Pacific Gas & 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- 5/24/93
 /CONTACT: William A. Abrams, CFA of Duff & Phelps Credit Rating Co., 312-368-3112/
 (PCG)


CO: Pacific Gas & Electric Power Company ST: California IN: UTI SU: RTG

LR -- NY082 -- 1828 05/24/93 15:59 EDT
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Publication:PR Newswire
Date:May 24, 1993
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