I (2)- VEBA 3 TBO Curtailment

Appendix I
	Note 2: Reduction in TBO Adjustment Due to TBO Write-Off in 1993
	Pacific correctly notes in its opening comments on the Proposed Decision, at page 6, Fn. 57, that the TBO adjustment should be reduced to reflect the impact of the TBO write-off that occurred in 1993. The nature of the TBO write-off is described in Exhibit Phase 2A: 404, Part 2, pp. 7-19 to 7-21.
			Amounts in
			$000's		Reference
17.	Total VEBA 3 Contributions		208,000		Line 3
18.	Percent Included in TBO Write-Off in 1993		26.48%		Exhibit Phase 2A: 404, Part 2, P. 7-20
19.	VEBA 3 Contributions Included in TBO Write-Off in 1993		55,078		Line 17 x Line 18
	Note 3: Reduction in PBOP Regulatory Asset for VEBA 3 Contributions Included in TBO Write-Off in 1993
	The majority of Pacific's PBOP Regulatory Asset was due to the TBO write-off in 1993. The TBO write-off improperly included some VEBA 3 contributions that should have been expensed in 1989 and 1990. (Exhibit Phase 2A: 404, Part 2, pp. 7-19 to 7-21.) Hence, the write-off of the Reg. Asset in 1998 should be reduced by the amount of VEBA 3 contributions improperly included in the Reg. Asset as part of the TBO write-off in 1993.
			Amounts in
			000's		Reference
20.	VEBA 3 Contributions Included in 1993 TBO Write-Off and PBOP Reg. Asset		55,078		Line 19
21.	Intrastate Factor		0.8043		Exh. Phase 2A: 404, Attach. 7-6, 7-7, and 7-8
22.	Regulated Factor		0.9409		Exh. Phase 2A: 404, Attach. 7-6, 7-7, and 7-8
23.	Pre-Tax Reduction to PBOP. Reg. Asset		41,681		Line 20 x Line 21 x Line 22
24.	Expense Factor		0.9180		Exh. Phase 2A: 404, Attach. 7-6, 7-7, and 7-8
25.	Pre-Tax Intrastate Regulated Amount		38,264		Line 23 x Line 24
26.	Tax Factor		0.59254		(1 - .40746 (Combined Fed. and State Tax))
27.	After-Tax Intrastate Regulated Expense		22,673		Line 25 x Line 26