4. Discussion

We are persuaded by PG&E that it has a reasonable need to issue additional debt as soon as possible to finance its TRA undercollection. Therefore, pursuant to § 816 et seq., we grant PG&E's request for authority to issue $4 billion of additional debt to finance its TRA undercollection.¹² We also grant PG&E's request to exclude from its authorized capital structure any debt issued by PG&E to finance the TRA undercollection.¹³

We grant PG&E's request to finance its TRA undercollection with any combination of short-term and long-term debt authorized by D.00-10-065 and D.00-12-064. This includes debt secured by a pledge of PG&E's property, plant, equipment and other assets. It is imperative that we provide PG&E with flexibility and not undercut its financing ability by prohibiting the pledge of assets. We also did not impose a pledge of assets prohibition in Southern California Edison's recent financing authority, D.01-01-021. There is no basis to treat PG&E differently from Edison.

We agree with PG&E that for ratemaking purposes, the maximum carrying cost for its TRA undercollection should be based on the 3-month commercial paper rate. This is consistent with D.00-12-064 wherein we adopted PG&E's stipulation to accrue interest on that portion of its TRA undercollection that is financed with long-term debt based on the lower of (i) the 3-month commercial paper rate, or (ii) the actual cost of long-term debt issued by PG&E to finance its TRA undercollection. However, given the large and growing size of PG&E's TRA undercollection, the panoply of debt instruments that PG&E may issue to finance the undercollection, and the attendant difficulty in tracking the cost of every debt instrument used to finance the undercollection, we conclude that it would be both fair and easier if the carrying cost for PG&E's entire TRA undercollection were based on the 3-month commercial paper rate as reported in Federal Reserve Statistical Release G.13. Therefore, sua sponte, PG&E is authorized to accrue interest on its TRA undercollection based on the 3-month commercial paper rate.¹⁴

PG&E shall track and report the information required by General Order (GO) 24-B with respect to any debt that PG&E issues pursuant to this decision.¹⁵ Although GO 24-B requires utilities to report on a monthly basis, we routinely authorize utilities to report on a quarterly basis. PG&E may likewise report on a quarterly basis the information required by GO 24-B with respect to debt that PG&E issue pursuant to today's decision, except that PG&E shall report on a monthly basis if directed to do so by Commission staff.

PG&E's authority to issue debt to finance its TRA undercollection shall expire six months after the undercollection is extinguished.¹⁶ Therefore, once the undercollection is extinguished, PG&E shall have six months to permanently reduce its outstanding debt by an amount equal to the debt issued by PG&E pursuant to this decision, D.00-10-065, D.00-12-064, and the companion decision we issue today regarding PG&E's petition to modify D.00-10-065. PG&E does not have to effect the permanent reduction of its outstanding debt by retiring or defeasing the exact debt issued by PG&E to finance its TRA undercollection. Rather, PG&E can effect the reduction using any of its outstanding debt.¹⁷

We are acting on PG&E's Petition on an expedited basis. We do so based on PG&E's assertion that there is an urgent need to act swiftly in order avoid the possibility of PG&E being unable to fund its ongoing operations. So that we may act expeditiously, today's decision is made pursuant to Rule 87, which allows the Commission to permit deviations from its Rules in special cases and for good cause shown. More specifically, we are waiving our Rules to the extent our Rules require (1) PG&E's Petition to contain specific wording to carry out all of PG&E's requested modifications to D.00-12-64, and (2) an opportunity for parties to file responses to PG&E's amended Petition.

D.00-12-064 remains in full force and effect. This decision makes no finding regarding the reasonableness of the terms and conditions of any debt issued by PG&E pursuant to this decision.