ALJ/RAB/sid * Mailed 2/26/2002

Decision 02-02-043 February 21, 2002

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of PACIFIC GAS AND ELECTRIC COMPANY for Authority, Among Other Things, To Increase Rates and Charges for Electric Service Effective on January 1, 2001 (U39M).

Application 00-07-043 (Filed July 27, 2000)

(See Appendix B for a list of appearances.)

OPINION AUTHORIZING AN ATTRITION

RATE ADJUSTMENT INCREASE OF $150,838,000

Summary

Pacific Gas and Electric Company (PG&E) seeks an attrition increase of $184,575,000 starting January 1, 2001. The Office of Ratepayers Advocates (ORA) and others oppose. This decision grants an increase of $150,838,000, based on the effect of inflation in 2001 on 1999 forecast expenses and on rate base. Because of the uncertainty regarding PG&E's capital costs in 2001, the capital-related portion of this increase shall be subject to a true-up based on PG&E's actual 2001 capital costs. We deny an inflation increase for 2000. The $22.8 million balance in PG&E's Vegetation Management Balancing Account (VMBA) is credited to PG&E's Transition Revenue Account (TRA). ORA's proposal to refund the $22.8 million directly to ratepayers is denied. The authorized increase is effective for tariff filing purposes January 1, 2001 as required by Decision (D.) 00-12-061. However, because of the rate freeze, rates will not increase.