G - Z-Factor

Appendix G
	Calculation of Pacific Bell's SFAS 106 Z-Factor in 1997 and 1998
	SFAS 106 Z-Factor Based on D.92-12-015, OP 8, which Limited the Z-Factor to the Lesser of (i) Pacific's SFAS 106 Accrual Less PAYGO Costs, or (ii) Pacific's Tax-Deductible Contributions to PBOP Trusts.
			Intrastate Regulated Amounts in
	1997 Z-Factor		000's		Reference
1.	SFAS 106 Accrual (Includes Deprecation)		180,867		Exhibit Phase 2A: 404, Vol. 2, Attach. 7-6
2.	Plus: Correction to TBO		2,148		Exhibit Phase 2A: 307, p. 25, Lines 1 -15; Appendix F, Line 17
3.	Less: TBO Reduction for VEBA 3 Contributions		(7,225)		Appendix I, Line 11
4.	Net SFAS 106 Accrual		175,790		Line 1 + Line 2 + Line 3
5.	PAYGO Costs		123,728		Note 1
6.	Tax-Deductible Contributions (Excludes VEBA 3 Transfers)		206,192		Exhibit Phase 2A: 404, Vol. 2, Attach. 7-6
7.	Z-Factor Authorized by D.92-12-015: Lesser of (i) SFAS 106 Accrual - PAYGO, or (ii) Contributions		52,062		Line 4 - Line 5
8.	Actual Z-Factor		99,500		D.98-10-026, 82 CPUC 2d 335, 366
9.	Difference Between Authorized and Actual Z-Factor		(47,438)		Line 7 - Line 8
	1998 Z-Factor		000's		Reference
10.	SFAS 106 Accrual (Includes Deprecation)		159,940		Exhibit Phase 2A: 404, Vol. 2, Attach. 7-7
11.	Plus: Correction to TBO		2,148		Exhibit Phase 2A: 307, p. 25, Lines 1 -15; Appendix F, Line 17
12.	Less: TBO Reduction for VEBA 3 Contributions		(7,225)		Appendix I, Line 11
13.	Net SFAS 106 Accrual		154,863		Line 10 + Line 11 + Line 12
14.	PAYGO Costs		125,882		Note 2
15.	Tax-Deductible Contributions (Excludes VEBA 3 Transfers)		164,499		Exhibit Phase 2A: 404, Vol. 2, Attach. 7-7
16.	Z-Factor Authorized by D.92-12-015: Lesser of (i) SFAS 106 Accrual - PAYGO, or (ii) Contributions		28,981		Line 13 - Line 14
17.	Actual Z-Factor		99,500		D.98-10-026, 82 CPUC 2d 335, 366
18.	Difference Between Authorized and Actual Z-Factor		(70,519)		Line 16 - Line 17
	Note 1 - 1997 PAYGO Costs
19.	PAYGO Costs		178,100		Exhibit Phase 2A: 307, p. 30
20.	Intrastate Factor		0.8043		Exhibit. Phase 2A: 404, Attach. 7-6
21.	Regulated Factor		0.9409		Exhibit. Phase 2A: 404, Attach. 7-6
22.	Expense Factor		0.9180		Exhibit. Phase 2A: 404, Attach. 7-6
23.	Pre-Tax Intrastate Regulated PAYGO Costs		123,728		Line 19 x Line 20 x Line 21 x Line 22
	Note 2 - 1998 PAYGO Costs
24.	PAYGO Costs		181,200		Exhibit Phase 2A: 307, p. 30
25.	Intrastate Factor		0.8043		Exhibit. Phase 2A: 404, Attach. 7-7
26.	Regulated Factor		0.9409		Exhibit. Phase 2A: 404, Attach. 7-7
27.	Expense Factor		0.9180		Exhibit. Phase 2A: 404, Attach. 7-7
28.	Pre-Tax Intrastate Regulated PAYGO Costs		125,882		Line 24 x Line 25 x Line 26 x Line 27