XIV. Automatic Trigger Mechanism

PG&E seeks authority to replace its annual cost of capital filing with an automatic trigger mechanism for the subsequent five years (2002-2006). PG&E proposes to streamline its rate regulation, maintain rate stability and a reasonable relationship with important financial indicators, and to ensure that significant capital market changes do not unfairly advantage or disadvantage PG&E's shareholders or ratepayers.

However, with the recent turmoil in the California energy market, deterioration of PG&E's financial condition and downgrading of PG&E's credit rating went to below investment grade, PG&E's goals are not attainable at this time. PG&E's request for a trigger mechanism is premature. Although we deny PG&E's request for a cost of capital trigger mechanism, our denial is not intended to preclude PG&E from seeking our approval at a later date when the California energy market and PG&E's financial condition has stabilized.