Assignment of Proceeding

Michael R. Peevey is the Assigned Commissioner and Bertram D. Patrick is the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. PG&E pays franchise fees to local governments on revenues PG&E collects to repay RRBs.

2. Currently, PG&E does not recover the cost of franchise fee payments related to RRB revenues because its tariffs lack a provision allowing it to recover these costs in rates.

3. PG&E requests that it be authorized to include a provision in the Preliminary Statement of its tariffs allowing it to recover the cost of RRB revenue franchise fee payments in rates. PG&E requests such recovery on a prospective basis only.

Conclusions of Law

1. The analysis in the record of the RRB proceeding supporting the decision (D.97-09-055) authorizing PG&E to move forward with the RRB transaction anticipated that PG&E's customers would bear the costs of related franchise fees.

2. Since PG&E has emerged from bankruptcy, the bankruptcy Settlement Agreement does not bar PG&E from requesting recovery of ongoing RRB revenue franchise fee costs.

3. PG&E should be authorized to recover in rates RRB revenue franchise fee costs, on a prospective basis, through the appropriate addition to the Preliminary Statement in its tariffs.

ORDER

IT IS ORDERED that:

1. Pacific Gas and Electric Company (PG&E) is authorized to recover in rates the cost of Rate Reduction Bond revenue franchise fees through an entry in its tariff Preliminary Statement Part CZ-Distribution Revenue Adjustment Mechanism. Recovery shall be for costs incurred effective the date of this decision and thereafter.

2. Within 10 days PG&E shall file an advice letter to revise its tariffs to comply with the provisions of this decision. The tariff charges shall become effective on today's date subject to Energy Division determining that they are in compliance with this decision.

3. Application 05-09-009 is closed.

This order is effective today.

Dated October 19, 2006, at Fresno, California.

MICHAEL R. PEEVEY

                    President

GEOFFREY F. BROWN
JOHN A. BOHN

RACHELLE B. CHONG

Commissioners

Commissioner Dian M. Grueneich, being necessarily absent, did not participate.