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VIA EDGAR
August 12, 2002
United States Securities
and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Report on Form 10-Q of PG&E Funding LLC
Commission File No. 333-30715
---------------------------------------
Ladies and Gentlemen,
On behalf of PG&E Funding LLC (the "Company"), enclosed is a Report on
Form 10-Q for the period ended June 30, 2002. Because the Company meets the
conditions set forth in General Instruction H 1(a) and (b) of Form 10-Q, the
Company is filing this form with the reduced disclosure format.
Please direct any questions you may have regarding this filing to the
undersigned at (415) 973-3639.
Sincerely yours,
Nancy Geroso
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q
(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _____
COMMISSION FILE NUMBER 333-30715
---------
CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK
SPECIAL PURPOSE TRUST PG&E-1
----------------------------
(Issuer of the Certificates)
PG&E Funding LLC
----------------
(Exact name of Registrant as Specified in its Charter)
Delaware 94-3274751
-------- ----------
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
245 Market Street, Room 424, San Francisco, California 94105
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 972-5467
-------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X]. No___.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION
H 1(A) AND (B) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH
THE REDUCED DISCLOSURE FORMAT.
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
PG&E FUNDING LLC (A DELAWARE LLC)
CONDENSED BALANCE SHEETS (IN THOUSANDS)
June 30, December
2002 2001
-------- --------
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalent $ 12,947 $ 12,852
Current portion of Transition Property receivable 289,286 276,945
--------- ----------
TOTAL CURRENT ASSETS 302,233 289,797
NONCURRENT ASSETS:
Restricted funds 43,670 42,763
Transition Property receivable 1,301,788 1,453,963
Unamortized debt issuance expenses 5,652 6,639
---------- ----------
TOTAL NONCURRENT ASSETS 1,351,110 1,503,365
---------- ----------
TOTAL ASSETS $1,653,343 $1,793,162
========== ==========
LIABILITIES AND MEMBER'S EQUITY
- ---------------------------------
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses 10 -
Interest payable 1,710 1,857
Current portion of long-term debt 290,000 290,000
---------- ----------
TOTAL CURRENT LIABILITIES 291,720 291,857
LONG-TERM DEBT 1,309,815 1,450,481
---------- ----------
TOTAL LIABILITIES 1,601,535 1,742,338
MEMBER'S EQUITY 51,808 50,824
---------- ----------
Commitments and Contingencies - -
TOTAL LIABILITIES AND MEMBER'S EQUITY $1,653,343 $1,793,162
========== ==========
The accompanying Notes to the Condensed Financial Statements
are an integral part of this statement.
PG&E FUNDING LLC (A DELAWARE LLC)
CONDENSED STATEMENTS OF INCOME AND CHANGES IN MEMBER'S EQUITY (IN THOUSANDS)
Three months ended June 30, Six months ended June 30,
2002 2001 2002 2001
------ ------ ------ ------
INCOME
- ------
Income from Transition Property receivable $28,298 $32,687 $57,823 $66,627
Interest income 400 1,370 794 3,234
------- ------- ------- -------
TOTAL INCOME 28,698 34,057 58,617 69,861
EXPENSES
- --------
Interest expense 27,128 31,784 55,417 64,396
Servicing fees 1,041 1,222 2,129 2,491
Administrative and general 46 47 87 106
------- ------- ------- -------
TOTAL EXPENSES 28,215 33,053 57,633 66,993
------- ------- ------- -------
NET INCOME $ 483 $ 1,004 $ 984 $ 2,868
MEMBER'S EQUITY AT BEGINNING OF PERIOD 51,325 48,404 50,824 46,540
------- ------- ------- -------
MEMBER'S EQUITY AT END OF PERIOD $51,808 $49,408 $51,808 $49,408
======= ======= ======= =======
The accompanying Notes to the Condensed Financial Statements
are an integral part of this statement.
PG&E FUNDING LLC (A DELAWARE LLC)
CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
2002 2001
For the six months ended June 30, -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $141,693 $161,554
- -------- --------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Principal payments on long-term debt (140,691) (140,783)
Net change in restricted funds (907) (19,804)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (141,598) (160,587)
- --------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 95 967
CASH AND CASH EQUIVALENTS AT JANUARY 1, 12,852 11,767
- --------- ---------
CASH AND CASH EQUIVALENTS AT JUNE 30, $12,947 $12,734
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $54,552 $63,583
The accompanying Notes to the Condensed Financial Statements
are an integral part of this statement.
Notes to Financial Statements
- -----------------------------
A. Basis of Presentation
This Quarterly Report on Form 10-Q includes the accounts of PG&E
Funding LLC, a Delaware special purpose limited liability company, whose sole
member is Pacific Gas and Electric Company, a provider of electric and
natural gas services. Pacific Gas and Electric Company is a subsidiary
of PG&E Corporation. Both Pacific Gas and Electric Company and PG&E
Corporation are subject to the reporting requirements of the
Securities Exchange Act of 1934. This quarterly report should be read in
conjunction with PG&E Funding LLC's Financial Statements and Notes to the
Financial Statements included in its 2001 Annual Report on Form 10-K.
PG&E Funding LLC was formed on July 1, 1997, in order to effect the
issuance of $2,901,000,000 in principal amount of PG&E Funding LLC Notes
(the "Notes"),intended to support a ten percent electric rate reduction.
This reduction, which became effective as of January 1, 1998, is provided to
Pacific Gas and Electric Company's residential and small commercial electric
customers in connection with the electric industry restructuring mandated by
California Assembly Bill 1890, as amended by California Senate Bill 477
(electric restructuring legislation).
PG&E Funding LLC was organized for the limited purposes of issuing
the Notes and purchasing Transition Property. Transition Property is the right
to be paid a specified amount (presented in the financial statements as
"Transition Property receivable") from a non-bypassable charge payable by
residential and small commercial electric customers. The non-bypassable charge
was authorized by the California Public Utilities Commission (the "CPUC")
pursuant to the electric restructuring legislation. PG&E Funding LLC issued
the Notes in December 1997 to the California Infrastructure and Economic
Development Bank Special Purpose Trust PG&E-1, a Delaware business trust
(the "Trust"), which issued certificates corresponding to each class of Notes
(the "Certificates") in a public offering.
PG&E Funding LLC is restricted by its organizational documents from
engaging in any other activities. In addition, PG&E Funding LLC's
organizational documents require it to operate in such a manner that it should
not be consolidated into the bankruptcy estate of Pacific Gas and Electric
Company(discussed below). PG&E Funding LLC is legally separate from Pacific Gas
and Electric Company. The assets of PG&E Funding LLC are not available to
creditors of Pacific Gas and Electric Company or PG&E Corporation, and the
Transition Property is legally not an asset of Pacific Gas and Electric Company
or PG&E Corporation. PG&E Funding LLC is expected to terminate after final
maturity of the Notes on December 26, 2009.
On April 6, 2001, Pacific Gas and Electric Company, the servicer of
the Transition Property (the "Servicer"), filed a bankruptcy petition under
Chapter 11 of the United States Bankruptcy Code. PG&E Funding LLC does not
expect payments on the Notes to be affected by the filing. The Servicer has
informed PG&E Funding LLC that, despite the bankruptcy filing, it will continue
to perform all duties as servicer, including remitting daily to the Trustee
(defined below) all amounts paid by ratepayers with respect to the Notes.
On April 11, 2001, Deutsche Bank National Trust Company (the "Trustee"),
formerly Bankers Trust of California, N.A., informed holders of Certificates
that pursuant to Section 7.01(d) of the servicing agreement between
PG&E Funding LLC and Pacific Gas and Electric Company (the "Servicing
Agreement"), a servicer default had occurred as a result of the commencement
of bankruptcy proceedings. The Trustee indicated that it did not intend to
pursue any remedies without the written request of the requisite number of
holders of Certificates.
On September 20, 2001, the Servicer and its parent company, PG&E
Corporation, jointly filed with the United States Bankruptcy Court for the
Northern District of California (the "Bankruptcy Court") a proposed plan of
reorganization (the "Plan") under Chapter 11 of the U.S. Bankruptcy Code and a
proposed disclosure statement describing the Plan. The Plan was amended on
December 19, 2001, February 4, 2002, March 7, 2002, and April 19, 2002. The CPUC
has proposed an alternative plan of reorganization. Disclosure statements
relating to both plans have been mailed to creditors and equity interest holders
to solicit acceptances or rejections of the plans. All ballots are due
August 12, 2002. Confirmation hearings are scheduled to begin on November 12,
2002. The Servicer has asserted that neither Pacific Gas and Electric Company's
plan nor the CPUC's alternative plan will have an adverse effect on its ability
to perform all duties as servicer.
PG&E Funding LLC believes that the accompanying statements reflect
all adjustments that are necessary to present a fair statement of the
financial position and results of operations for the interim periods. All
material adjustments are of a normal recurring nature unless otherwise
disclosed in this Form 10-Q. Results of operations for interim periods are
not necessarily indicative of results to be expected for a full year.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions. These estimates and assumptions
affect the reported amounts of revenues, expenses, assets, and liabilities and
the disclosure of contingencies. Actual results could differ from these
estimates.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following analysis of the results of operations of PG&E Funding LLC
is in an abbreviated format pursuant to Instruction H of Form 10-Q. Such
analysis should be read in conjunction with the Condensed Financial Statements
included herein and the Financial Statements and Notes to the Financial
Statements included in PG&E Funding LLC's Annual Report on Form 10-K as of and
for the year ended December 31, 2001.
PG&E Funding LLC is a special purpose, single member limited
liability company organized in July 1997 for the limited purposes of holding
and servicing the Transition Property (as described below), issuing notes
secured primarily by the Transition Property and performing related
activities. Pacific Gas and Electric Company, as the sole member of PG&E
Funding LLC, owns all of the equity securities of PG&E Funding LLC. PG&E
Funding LLC's organizational documents require it to operate in a manner such
that it should not be consolidated in the bankruptcy estate of Pacific Gas and
Electric Company (discussed below).
In December 1997, PG&E Funding LLC acquired Transition
Property from Pacific Gas and Electric Company and issued $2,901,000,000 in
principal amount of the PG&E Funding LLC Notes, Series 1997-1, Class A-1 through
Class A-8 (the "Notes"), with scheduled maturities ranging from ten months to
ten years and final maturities ranging from two to twelve years. The Notes were
issued pursuant to an Indenture dated December 8, 1997 (the "Indenture") between
PG&E Funding LLC and Deutsche Bank National Trust Company (formerly Bankers
Trust Company of California, N.A.), as trustee. PG&E Funding LLC sold
the Notes to the California Infrastructure and Economic Development Bank Special
Purpose Trust PG&E-1, a Delaware business trust (the "Trust"), which issued
certificates corresponding to each class of Notes (the "Certificates")
in a public offering. PG&E Funding LLC entered into a servicing
agreement (the "Servicing Agreement") with Pacific Gas and Electric Company
pursuant to which Pacific Gas and Electric Company is required to service the
Transition Property on behalf of PG&E Funding LLC.
The California Public Utilities Code (the "PU Code") provides for the
creation of "Transition Property". A financing order dated September 3, 1997
(the "Financing Order") issued by the California Public Utilities Commission
(the "CPUC"), together with the related Issuance Advice Letter, establishes,
among other things, separate non-bypassable charges (the "FTA Charges")
payable by residential electric customers and small commercial electric
customers in an aggregate amount sufficient to repay in full the Certificates,
fund the Overcollateralization and Capital Subaccounts (the "Subaccounts")
established under the Indenture, and pay all related costs and fees. Under
the PU Code and the Financing Order, the owner of Transition Property is
entitled to collect FTA Charges until such owner has received amounts sufficient
to retire all outstanding series of Notes and cover related fees and expenses
and the overcollateralization amount described in the Financing Order.
In order to enhance the likelihood that actual collections with respect
to the Transition Property are neither more nor less than the amount necessary
to amortize the Notes in accordance with their expected amortization schedules,
pay all related fees and expenses, and fund certain accounts established
pursuant to the Indenture, the Servicing Agreement requires Pacific Gas and
Electric Company, as the Servicer of the Transition Property (the "Servicer"),
to seek, and the Financing Order and the PU Code require the CPUC to approve,
periodic adjustments to the FTA Charges. Such adjustments will be based on
actual collections and updated assumptions by the Servicer as to future usage
of electricity by specified customers, future expenses relating to the
Transition Property, the Notes, and the rate of delinquencies and write-offs.
In December 2001, the Servicer filed an advice letter with the CPUC,
advising of an increase to the FTA Charge for residential and small commercial
customers effective January 1, 2002, to offset reduced collections of FTA
Charges due to the decline in sales in 2001, and the projected sales decline
in 2002. Lower electric sales and interest earned on the collection account,
established pursuant to the Serving Agreement, for the period January 1, 2002
through the end of May 2002 resulted in an $8.3 million shortfall in the
required level of the Subaccounts. In order to reduce this shortfall, on
June 28, 2002, the Servicer filed with the CPUC a non-routine true-up
mechanism advice letter to establish an additional increase in FTA Charges
effective on October 1, 2002. The CPUC approved the filing on July 18, 2002.
PG&E Funding LLC uses collections of the Transition Property
receivable to make scheduled principal and interest payments on the Notes.
Income earned on the Transition Property receivable is expected to offset
(1) interest expense on the Notes, (2) amortization of debt issuance expenses
and the discount on the Notes and (3) the fees charged by Pacific Gas and
Electric Company for servicing the Transition Property and providing
administrative services to PG&E Funding LLC.
On January 4, 2001, Standard and Poor's lowered the short-term credit
rating of the Servicer to A-3, and on January 5, 2001, Moody's Investor Services
Inc. lowered the short-term credit rating of the Servicer to P-3. In accordance
with section 6.11(b) of the Servicing Agreement, on January 8, 2001 the
Servicer began remitting collections to the Trustee on a daily basis.
Previously the Servicer remitted payments monthly.
On April 6, 2001, the Servicer of the Transition Property filed a
bankruptcy petition under Chapter 11 of the United States Bankruptcy Code.
PG&E Funding LLC does not expect payments on the Notes to be affected
by the filing. The Servicer has informed PG&E Funding LLC that, despite the
bankruptcy filing, it will continue to perform all duties as servicer,
including remitting daily to the Trustee all amounts paid by ratepayers with
respect to the Notes.
On April 11, 2001, Deutsche Bank National Trust Company (the "Trustee")
informed holders of Certificates that, pursuant to Section 7.01(d) of the
Servicing Agreement, a servicer default had occurred as a result of the
commencement of bankruptcy proceedings. The Trustee indicated that it did not
intend to pursue any remedies without the written request of the requisite
number of holders of Certificates.
On September 20, 2001, the Servicer and its parent company, PG&E
Corporation, jointly filed with the United States Bankruptcy Court of the
Northern District of California (the "Bankruptcy Court") a proposed plan of
reorganization (the "Plan") under Chapter 11 of the U.S. Bankruptcy Code and
a proposed disclosure statement describing the Plan. The Plan was amended on
December 19, 2001, February 4, 2002, March 7, 2002, and April 19, 2002. The
CPUC has proposed an alternative plan of reorganization. Disclosure statements
relating to both plans have been mailed to creditors and equity interest
holders to solicit acceptances or rejections of the plans. All ballots are
due August 12, 2002. Confirmation hearings are scheduled to begin on
November 12, 2002. The Servicer has asserted that neither Pacific Gas and
Electric Company's Plan nor the CPUC's alternative plan will have an adverse
effect on it ability to perform all duties as servicer.
Income generated from the Transition Property receivable for the three
and six month periods ended June 30, 2002 was approximately $28,298,000 and
$57,823,000, respectively, and for the three and six month periods ended
June 30, 2001 was approximately $32,687,000 and $66,627,000, respectively.
The decrease reflects the declining Transition Property receivable balance.
During the three months ended June 30, 2002 and 2001, PG&E Funding LLC
earned interest income from other investments of approximately $400,000 and
$1,370,000, respectively, and had interest expense of approximately $27,128,000
and $31,784,000, respectively. During the six months ended June 30, 2002 and
2001, PG&E Funding LLC earned interest income from other investments of
approximately $794,000 and $3,234,000, respectively, and had interest expense
of approximately $55,417,000 and $64,396,000, respectively. The decrease in
interest income in 2002 is mainly attributable to a decrease in the average
balance of restricted funds on which PG&E Funding LLC earns interest, and a
decrease in the interest rate. The restricted funds decreased due to
the decrease in FTA Charge collections described below. The interest expense
comprises interest on the Notes, and amortization of the Note discount and
issuance costs. The decrease in interest expense is due to the declining
balance of the Notes.
PG&E Funding LLC incurred servicing fees of approximately $1,041,000
and $1,222,000, and trustee, administrative, and general fees of approximately
$46,000 and $47,000 for the three month periods ended June 30, 2002 and 2001,
respectively. For the six month periods ended June 30, 2002 and 2001, PG&E
Funding LLC incurred servicing fees of approximately $2,129,000 and $2,491,000,
and trustee administrative, and general fees of approximately $87,000 and
$106,000, respectively.
For the three month periods ended June 30, 2002 and 2001, collections
of FTA Charges were approximately $99,389,000 and $87,494,000, respectively.
This brought year-to-date collections as of June 30, 2002, and 2001 to
approximately $197,658,000 and $224,501,000, respectively. The increase in
collections in the second quarter of 2002 compared to the same three month
period in 2001 is due to the increase in FTA Charges for residential and small
commercial customers, which became effective on January 1, 2002. The decrease
in collections for the year-to-date is mainly due to a reduction in electricity
usage in 2002, and the change from monthly to daily remittance of FTA Charges
from the Servicer on January 8, 2001, which resulted in an extra month of
FTA Charges of approximately $32,212,000 being remitted in the first quarter
of 2001.
Principal and interest payments on the Notes were approximately
$92,552,000 and $96,728,000, with payment for servicing fees and other
expenses of $1,077,000 and $1,269,000 for the three month periods ended
June 30, 2002 and 2001, respectively. For the six month periods ended June 30,
2002 and 2001, principal and interest payments were approximately $195,243,000
and $204,366,000, with payments for servicing fees and other expenses of
$2,206,000, and $2,597,000, respectively.
A shortfall in collections of FTA Charges results when scheduled
payments of principal and interest on the Notes, and related expenses, exceed
the FTA Charges collected. A surplus in collections of FTA Charges results when
collections of these charges exceed scheduled payments of principal and interest
on the Notes and related expenses. Collections of FTA Charges resulted in a
surplus of $1,002,000 for the six month period ended June 30, 2002, and a
surplus of $20,772,000 for same period in the prior year.
The collections of FTA Charges are deposited in separate bank
accounts, which are restricted and can only be used to pay principal, interest
on the Notes, and related expenses. These funds are classified as "Restricted
funds" in the Condensed Balance Sheets and amounted to $43,670,000 at June 30,
2002 and $42,763,000 at December 31, 2001.
The Indenture requires PG&E Funding LLC to maintain certain minimum
balances in the Subaccounts within the Restricted funds that are to be used
only in the event of a shortfall in collections of FTA Charges. Because FTA
Charge collections for the first quarter of 2002 were not sufficient to pay
required principal and interest payments on the Notes and other expenses of
PG&E Funding LLC, funds in the Subaccounts were used to pay for the shortfall.
At June 30, 2002, the balance in the Subaccounts totaled $12,641,000. At June
30, 2002, the aggregate balance required to be maintained by the Indenture in
the Subaccounts was $20,932,250. No default occurs under the Indenture if the
balances are not maintained. However, the Servicer is required to establish
the FTA Charges at a level that is projected to replenish such Subaccounts to
their required balances within twelve months of the effective date of any
change in the FTA Charge. On June 28, 2002, in order to reduce the $8.3
million shortfall in the required level of the Subaccuonts, the Servicer filed
with the CPUC a non-routine true-up mechanism advice letter to establish an
additional increase in FTA Charges effective on October 1, 2002. The CPUC
approved the filing on July 18, 2002.
PGE&E Funding LLC monitors the level of Restricted funds available to
cover any possible shortfall in collections of FTA Charges. PG&E Funding LLC
expects future collections of FTA Charges to be sufficient to cover scheduled
principal and interest payments on the Notes, to cover related expenses, and
to begin replenishing the Subaccount balances.
Forward-looking Information:
- ----------------------------
This Quarterly Report on Form 10-Q, contains forward looking statements
that future collections of FTA Charges are expected to be sufficient to cover
scheduled principal and interest payments on the Notes, related expenses,
and to begin replenishing the Subaccount balances. These statements involve
risks and uncertainties and are based on the beliefs and assumptions of
management and on information currently available to management.
Actual results or outcomes could differ materially as a result of
Various factors, including:
? future electricity sales levels which are affected by a variety of factors,
including general economic and financial market conditions, weather,
conservation efforts, and outages, and
? updated assumptions by the Servicer as to future expenses relating to the
Transition Property, the Notes, and the rate of delinquencies and write-offs.
PART II
OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
The Quarterly Servicer's Certificate dated June 25, 2002 attached as
Exhibit 99.1 hereto includes certain additional information regarding
collections of FTA Charges.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required to be filed by Item 601 of Regulation S-K:
99.1 Quarterly Servicer's Certificate dated June 25, 2002.
(b) Exhibits required to be filed by Section 906 of the Sarbanes-Oxley
Act of 2002
99.2 Certifications of the Chief Executive Officer and the
Chief Financial Officer of PG&E Funding LLC required by
Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on this the 12 day of August, 2002.
PG&E FUNDING LLC, as Registrant
By /s/ DINYAR B. MISTRY
-----------------------------
Dinyar B. Mistry, Controller
(duly authorized officer and
chief accounting officer)
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
99.1 Quarterly Servicer's Certificate, dated June 25, 2002
99.2 Certifications of the Chief Executive Officer and the Chief
Financial Officer of PG&E Funding LLC required by Section 906
of the Sarbanes-Oxley Act of 2002
EXHIBIT 99.1
QUARTERLY SERVICER'S CERTIFICATE
Exhibit E to Servicing Agreement
Quarterly Servicer's Certificate
California Infrastructure and Economic Development Bank Special
Purpose Trust PG&E-1
$2,901,000,000 Rate Reduction Certificates, Series 1997-1
Pursuant to Section 4.01(d)(ii) of the Transition Property Servicing
Agreement dated as of December 8, 1997 (the "Transition Property Servicing
Agreement") between Pacific Gas and Electric Company, as Servicer, and PG&E
Funding LLC, as Note Issuer, the Servicer does hereby certify as follows:
Capitalized terms used in the Quarterly Servicer's Certificate (the
"Quarterly Certificate") have their respective meanings as set forth in the
Agreement. References herein to certain sections and subsections are
references to the respective sections of the Agreement.
Collection Periods: March 2002, April 2002, May 2002
Distribution Date: June 25, 2002
1. Collections Allocable and Aggregate Amounts Available for the Current
Distribution Date:
i. Remittances for the March '02 Collection Period $33,846,330.00
ii. Remittances for the April '02 Collection Period $33,043,398.00
iii. Remittances for the May '02 Collection Period $32,563,035.00
iv. Net Earnings on Collection Account $346,224.01
-------------------
v. General Sub-Account Balance $99,798,987.01
vi Reserve Sub-Account Balance $0.00
vii. Overcollateralization Sub-Account Balance $0.00
viii.Capital Sub-Account Balance (less $100K) $6,482,024.91
-------------------
ix. Collection Account Balance $106,281,011.92
2. Outstanding Principal Balance and Collection Account Balance as of Prior
Distribution Date:
i. Class A-1 Principal Balance $0.00
ii. Class A-2 Principal Balance $0.00
iii. Class A-3 Principal Balance $0.00
iv. Class A-4 Principal Balance $0.00
v. Class A-5 Principal Balance $24,770,146.00
vi. Class A-6 Principal Balance $375,000,000.00
vii. Class A-7 Principal Balance $866,000,000.00
viii.Class A-8 Principal Balance $400,000,000.00
-------------------
ix. Rate Reduction Certificate Principal Balance $1,665,770,146.00
x. Reserve Sub-Account Balance $0.00
xi. Overcollateralization Sub-Account Balance $0.00
xii. Capital Sub-Account Balance $6,482,024.91
3. Required Funding/Payments as of Current Distribution Date:
i. Projected Class A-1 Certificate Balance $0.00
ii. Projected Class A-2 Certificate Balance $0.00
iii. Projected Class A-3 Certificate Balance $0.00
iv. Projected Class A-4 Certificate Balance $0.00
v. Projected Class A-5 Certificate Balance $0.00
vi. Projected Class A-6 Certificate Balance $333,909,318.00
vii. Projected Class A-7 Certificate Balance $866,000,000.00
viii.Projected Class A-8 Certificate Balance $400,000,000.00
-------------------
ix. Projected Class A Certificate Balance $1,599,909,318.00
x. Required Class A-1 Coupon $0.00
xi. Required Class A-2 Coupon $0.00
xii. Required Class A-3 Coupon $0.00
xiii.Required Class A-4 Coupon $0.00
xiv. Required Class A-5 Coupon $387,033.53
xv. Required Class A-6 Coupon $5,925,000.00
xvi. Required Class A-7 Coupon $13,899,300.00
xvii. Required Class A-8 Coupon $6,480,000.00
xviii.Required Overcollateralization Funding $6,527,250.00
xix. Required Capital Sub-Account Funding $7,922,975.09
3. Allocation of Remittances as of Current Distribution Date Pursuant
to 8.02(d) of Indenture:
i. Note, Delaware and Certificate Trustee Fees $1,083.33
ii. Quarterly Servicing Fee $1,041,106.34
iii. Quarterly Administration Fee $25,000.00
iv. Operating Expenses (subject to $100,000 cap) $10,278.74
v. Quarterly Interest $26,691,333.53
1. Class A-1 Certificate Coupon Payment $0.00
2. Class A-2 Certificate Coupon Payment $0.00
3. Class A-3 Certificate Coupon Payment $0.00
4. Class A-4 Certificate Coupon Payment $0.00
5. Class A-5 Certificate Coupon Payment $387,033.53
6. Class A-6 Certificate Coupon Payment $5,925,000.00
7. Class A-7 Certificate Coupon Payment $13,899,300.00
8. Class A-8 Certificate Coupon Payment $6,480,000.00
vi. Principal Due and Payable $0.00
vii. Quarterly Principal $65,860,828.00
1. Class A-1 Certificate Principal Payment $0.00
2. Class A-2 Certificate Principal Payment $0.00
3. Class A-3 Certificate Principal Payment $0.00
4. Class A-4 Certificate Principal Payment $0.00
5. Class A-5 Certificate Principal Payment $24,770,146.00
6. Class A-6 Certificate Principal Payment $41,090,682.00
7. Class A-7 Certificate Principal Payment $0.00
8. Class A-8 Certificate Principal Payment $0.00
viii.Operating Expenses (in excess of $100,000) $10,278.74
ix. Funding of Overcollateralization Sub-Account
(to required level) $6,159,078.33
x. Funding of Capital Sub-Account (to required level) $0.00
xi. Net Earnings Released to Note Issuer $0.00
xii. Released to Note Issuer upon Series Retirement:
Overcollateralization Sub-Account $0.00
xiii.Released to Note Issuer upon Series Retirement:
Capital Sub-Account $0.00
xiv. Deposits to Reserve Sub-Account $0.00
xv. Released to Note Issuer upon Series Retirement:
Collection Account $0.00
5. Outstanding Principal Balance and Collection Account Balance
as of current distribution date:
(after giving effect to payments to be made on such distribution date):
i. Class A-1 Principal Balance $0.00
ii. Class A-2 Principal Balance $0.00
iii. Class A-3 Principal Balance $0.00
iv. Class A-4 Principal Balance $0.00
v. Class A-5 Principal Balance $0.00
vi. Class A-6 Principal Balance $333,909,318.00
vii. Class A-7 Principal Balance $866,000,000.00
viii.Class A-8 Principal Balance $400,000,000.00
-------------------
ix. Rate Reduction Certificate Principal Balance $1,599,909,318.00
x. Reserve Sub-Account Balance $0.00
xi. Overcollateralization Sub-Account Balance $6,159,078.33
xii. Capital Sub-Account Balance $6,482,024.91
6. Sub-Account Draws as of Current Distribution Date (if applicable,
pursuant to Section 8.02(e) of Indenture):
i. Reserve Sub-Account $0.00
ii. Overcollateralization Sub-Account $0.00
iii. Capital Sub-Account $0.00
-------------------
iv. Total Draws $0.00
7. Shortfalls In Interest and Principal Payments as of Current
Distribution Date:
i. Quarterly Interest $0.00
1. Class A-1 Certificate Coupon Payment $0.00
2. Class A-2 Certificate Coupon Payment $0.00
3. Class A-3 Certificate Coupon Payment $0.00
4. Class A-4 Certificate Coupon Payment $0.00
5. Class A-5 Certificate Coupon Payment $0.00
6. Class A-6 Certificate Coupon Payment $0.00
7. Class A-7 Certificate Coupon Payment $0.00
8. Class A-8 Certificate Coupon Payment $0.00
ii. Quarterly Principal $0.00
1. Class A-1 Certificate Principal Payment $0.00
2. Class A-2 Certificate Principal Payment $0.00
3. Class A-3 Certificate Principal Payment $0.00
4. Class A-4 Certificate Principal Payment $0.00
5. Class A-5 Certificate Principal Payment $0.00
6. Class A-6 Certificate Principal Payment $0.00
7. Class A-7 Certificate Principal Payment $0.00
8. Class A-8 Certificate Principal Payment $0.00
8. Shortfalls in Required Sub-Account Levels as of Current Distribution Date:
i. Overcollateralization Sub-Account $368,171.67
ii. Capital Sub-Account $7,922,975.09
9. Distributions of Principal per $1,000 of Original Principal Amount
Principal Payment
per $1,000 of
Original Principal Principal Payment Orig. Principal Amt.
[ A ] [ B ] [ B/A x 1,000]
------------------ ----------------- --------------------
i. Class A-1 $0.00 $0.00 $0.000000
ii. Class A-2 $0.00 $0.00 $0.000000
iii. Class A-3 $0.00 $0.00 $0.000000
iv. Class A-4 $0.00 $0.00 $0.000000
v. Class A-5 $24,770,146.00 $24,770,146.00 $1,000.000000
vi. Class A-6 $375,000,000.00 $41,090,682.00 $109.575152
vii. Class A-7 $866,000,000.00 $0.00 $0.000000
viii.Class A-8 $400,000,000.00 $0.00 $0.000000
----------------- -----------------
$1,665,770,146.00 $65,860,828.00
10. Distributions of Interest per $1,000 of Original Principal Amount
Interest Payment
per $1,000 of
Original Principal Interest Payment Orig. Principal Amt.
[ A ] [ B ] [ B/A x 1,000]
------------------ ----------------- --------------------
i. Class A-1 $0.00 $0.00 $0.000000
ii. Class A-2 $0.00 $0.00 $0.000000
iii. Class A-3 $0.00 $0.00 $0.000000
iv. Class A-4 $0.00 $0.00 $0.000000
v. Class A-5 $24,770,146.00 $387,033.53.00 $15.625000
vi. Class A-6 $375,000,000.00 $5,925,000.00 $15.800000
vii. Class A-7 $866,000,000.00 $13,899,300.00 $16.050000
viii.Class A-8 $400,000,000.00 $6,480,000.00 $16.200000
----------------- -----------------
$1,665,770,146.00 $26,691,333.53
IN WITNESS HEREOF, the undersigned has duly executed and delivered this
Quarterly Servicer's Certificate this 25th day of June, 2002.
PACIFIC GAS AND ELECTRIC COMPANY, as Servicer
by: /s/ Michael J. Donnelly
---------------------------
Michael J. Donnelly
Assistant Treasurer
Exhibit 99.2
PG&E FUNDING LLC
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Quarterly Report on
Form 10-Q of PG&E Funding LLC for the quarter ended June 30, 2002, I,
Kent M. Harvey, Chairman and President of PG&E Funding LLC, hereby certify
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:
(1) such Quarterly Report on Form 10-Q for the quarter ended June 30, 2002
fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) the information contained in such Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002 fairly presents, in all material respects,
the financial condition and results of operations of PG&E Funding LLC.
August 12, 2002 KENT M. HARVEY
Kent M. Harvey
Chairman and President
PG&E FUNDING LLC
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying Quarterly Report on
Form 10-Q of PG&E Funding LLC for the quarter ended June 30, 2002, I,
Michael J. Donnelly, Treasurer of PG&E Funding LLC, hereby certify pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:
(1) such Quarterly Report on Form 10-Q for the quarter ended June 30, 2002
fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2) the information contained in such Quarterly Report on Form 10-Q for
the quarter ended June 30, 2002 fairly presents, in all material respects,
the financial condition and results of operations of PG&E Funding LLC.
August 12, 2002 MICHAEL J. DONNELLY
Michael J. Donnelly
Treasurer