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November 13, 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 September 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 September 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)
September 30, December 31,
2002 2001
-------- --------
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 13,762 $ 12,852
Current portion of Transition Property receivable 286,630 276,945
--------- ----------
TOTAL CURRENT ASSETS 300,392 289,797
NONCURRENT ASSETS:
Restricted funds 57,040 42,763
Transition Property receivable 1,218,178 1,453,963
Unamortized debt issuance expenses 5,264 6,639
---------- ----------
TOTAL NONCURRENT ASSETS 1,280,482 1,503,365
---------- ----------
TOTAL ASSETS $1,580,874 $1,793,162
========== ==========
LIABILITIES AND MEMBER'S EQUITY
- ---------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses 3 -
Interest payable 1,634 1,857
Current portion of long-term debt 290,000 290,000
---------- ----------
TOTAL CURRENT LIABILITIES 291,637 291,857
LONG-TERM DEBT 1,237,106 1,450,481
---------- ----------
TOTAL LIABILITIES 1,528,743 1,742,338
MEMBER'S EQUITY 52,131 50,824
---------- ----------
Commitments and Contingencies - -
TOTAL LIABILITIES AND MEMBER'S EQUITY $1,580,874 $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 September 30, Nine months ended September 30,
2002 2001 2002 2001
------ ------ ------ ------
INCOME
- ------
Income from Transition Property receivable $26,902 $31,653 $84,725 $ 98,280
Interest income 441 1,117 1,235 4,352
------- ------- ------- --------
TOTAL INCOME 27,343 32,770 85,960 102,632
EXPENSES
- --------
Interest expense 25,977 30,624 81,394 95,019
Servicing fees 1,000 1,181 3,129 3,673
Administrative and general 43 53 130 160
------- ------- ------- --------
TOTAL EXPENSES 27,020 31,858 84,653 98,852
------- ------- ------- --------
NET INCOME $ 323 $ 912 $ 1,307 $ 3,780
MEMBER'S EQUITY AT BEGINNING OF PERIOD 51,808 49,408 50,824 46,540
------- ------- ------- --------
MEMBER'S EQUITY AT END OF PERIOD $52,131 $50,320 $52,131 $ 50,320
======= ======= ======= ========
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 nine months ended September 30, -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $228,597 $222,405
-------- --------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Principal payments on long-term debt (213,410) (213,400)
Net change in restricted funds (14,277) (7,951)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (227,687) (221,351)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 910 1,054
CASH AND CASH EQUIVALENTS AT JANUARY 1 12,852 11,767
--------- ---------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30 $13,762 $12,821
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $80,207 $93,776
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 non-bypassable charges payable by
residential and small commercial electric customers (the "FTA Charges").
The FTA Charges were 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.
The collections of FTA Charges are held by the Trustee in separate
bank accounts, which are restricted and can only be used to pay principal and
interest on the Notes and related expenses. These funds are classified as
"Restricted funds" in the Condensed Balance Sheets and amounted to $57,040,000
at September 30, 2002 and $42,763,000 at December 31, 2001.
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 voluntary petition for
relief 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 (explained 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 several occasions after the initial filing. The CPUC has proposed an
alternative plan of reorganization. Creditor voting on the plans concluded
on August 12, 2002 and on September 9, 2002, the voting results were filed
with the Bankruptcy Court. Confirmation hearings on the plans are scheduled
to begin on November 18, 2002.
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 income, 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.
OVERVIEW
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 into 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.), the "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 the Subaccounts, 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 Charges 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
voluntary petition for relief 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, 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
several occasions after the initial filing. The CPUC has proposed an
alternative plan of reorganization. Creditor voting on the plans concluded
on August 12, 2002 and on September 9, 2002, the voting results were filed
with the Bankruptcy Court. Confirmation hearings on the plans are scheduled
to begin on November 18, 2002. The Servicer has asserted that neither the
Servicer's plan nor the CPUC's alternative plan will have an adverse effect
on its ability to perform all duties as servicer.
RESULTS OF OPERATIONS
Income generated from the Transition Property receivable for the three
and nine month periods ended September 30, 2002 was approximately $26,902,000
and $84,725,000, respectively, and for the three and nine month periods ended
September 30, 2001 was approximately $31,653,000 and $98,280,000, respectively.
The decrease reflects the declining Transition Property receivable balance.
During the three months ended September 30, 2002 and 2001, PG&E Funding
LLC earned interest income from other investments of approximately $441,000 and
$1,117,000, respectively. For the nine months ended September 30, 2002 and
2001, PG&E Funding LLC earned interest income from other investments of
approximately $1,235,000 and $4,352,000, 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 average interest rate. The restricted funds average balance
decreased due to the decrease in FTA Charges collected described below.
During the three months ended September 30, 2002 and 2001, PG&E Funding
LLC had interest expense of approximately $25,977,000 and $30,624,000,
respectively. For the nine months ended September 30, 2002 and 2001, PG&E
Funding LLC had interest expense of approximately $81,394,000 and $95,019,000,
respectively. Interest expense is comprised of 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 $1,000,000
and $1,181,000, and trustee, administrative, and general fees of approximately
$43,000 and $53,000 for the three month periods ended September 30, 2002 and
2001, respectively. For the nine month periods ended September 30, 2002 and
2001, PG&E Funding LLC incurred servicing fees of approximately $3,129,000 and
$3,673,000, and trustee administrative, and general fees of approximately
$130,000 and $160,000, respectively. Servicing fees are calculated as a
percentage of the outstanding Note balance. The decrease in servicing fees
in 2002 is due to the declining balance of the Notes.
LIQUIDITY AND FINANCIAL RESOURCES
Collections of FTA Charges for the three month periods ended September
30, 2002 and 2001, were approximately $113,168,000 and $91,157,000,
respectively. The increase in collections in 2002 is due to an increase in FTA
Charges for residential and small commercial customers, which became effective
on January 1, 2002 (see discussion above). For the nine month period ended
September 30, 2002, collections of FTA Charges were approximately $310,825,000
and $315,658,000, respectively. The decrease in collections in 2002 is mainly
due to 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.
Other factors affecting collections of FTA Charges were a reduction in
electricity usage in 2002 and an increase in FTA Charges effective January
1, 2002 (discussed above).
Principal and interest payments on the Notes were approximately
$98,374,000 and $102,810,000, with payment for servicing fees and other
expenses of $1,050,000 and $1,234,000 for the three month periods ended
September 30, 2002 and 2001, respectively. For the nine month periods ended
September 30, 2002 and 2001, principal and interest payments were
approximately $293,617,000 and $307,176,000, with payments for servicing fees
and other expenses of $3,256,000, and $3,833,000, respectively.
FTA CHARGES AND RESTRICTED FUNDS
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 $15,187,000 for the nine month period ended September 30, 2002, and
a surplus of $9,001,000 for the same period in the prior year.
The collections of FTA Charges are held by the Trustee 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 $57,040,000
at September 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, which are to be used
only in the event of a shortfall in collections of FTA Charges. No default
occurs under the Indenture if the minimum balances are not maintained. However,
the Servicer is to take reasonable actions to establish the FTA Charges at a
level that is projected to replenish the Subaccounts to their required balances
within twelve months of the effective date of any change in the FTA Charges.
As of September 30, 2002,the balances in the Subaccounts are fully funded as
required by the Indenture.
PG&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 and related expenses.
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, and related expenses.
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Omitted with respect to the Note Issuer pursuant to Instructions H 1(A)
and (B) of Form 10-Q. Not applicable to the Trust.
ITEM 4. CONTROLS AND PROCEDURES.
Based on an evaluation of PG&E Funding LLC's disclosure controls
and procedures conducted on October 21, 2002, PG&E Funding LLC's principal
executive officer and principal financial officer have concluded that such
controls and procedures effectively ensure that information required to be
disclosed by PG&E Funding LLC in reports the company files or submits under
the Securities and Exchange Act of 1934 is recorded, processed, summarized,
and reported, within the time periods specified in the SEC's rules and forms.
There were no significant changes in internal controls or in other
factors that could significantly affect these controls subsequent to the
date of their evaluation.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
The Quarterly Servicer's Certificate dated September 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 September 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 13th day of November, 2002.
PG&E FUNDING LLC, as Registrant
By /s/ DINYAR B. MISTRY
-----------------------------
Dinyar B. Mistry, Controller
(duly authorized officer and
chief accounting officer)
I, Kent M. Harvey, certify that:
1. I have reviewed this quarterly report on Form 10-Q of PG&E Funding LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
* designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
* evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
* presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):
* all significant deficiencies in the design or operation of internal
controls which could and adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
* any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: November 13, 2002
KENT M. HARVEY
Kent M. Harvey
Chairman and President
I, Michael J. Donnelly, certify that:
1. I have reviewed this quarterly report on Form 10-Q of PG&E Funding LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
* designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
* evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
* presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):
* all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
* any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 13, 2002
MICHAEL J. DONNELLY
Michael J. Donnelly
Treasurer
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
99.1 Quarterly Servicer's Certificate, dated September
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: June 2002, July 2002, August 2002
Distribution Date: September 25, 2002
1. Collections Allocable and Aggregate Amounts Available for the Current
Distribution Date:
i. Remittances for the June '02 Collection Period $33,252,976.00
ii. Remittances for the July '02 Collection Period $36,249,330.00
iii. Remittances for the August '02 Collection Period $40,605,582.00
iv. Net Earnings on Collection Account $383,538.91
-------------------
v. General Sub-Account Balance $110,491,426.91
vi Reserve Sub-Account Balance $0.00
vii. Overcollateralization Sub-Account Balance $6,159,078.33
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 $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
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 $261,190,055.00
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 $1,527,190,055.00
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 $0.00
xv. Required Class A-6 Coupon $5,275,767.22
xvi. Required Class A-7 Coupon $13,899,300.00
xvii. Required Class A-8 Coupon $6,480,000.00
xviii.Required Overcollateralization Funding $730,796.67
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 $999,943.32
iii. Quarterly Administration Fee $25,000.00
iv. Operating Expenses (subject to $100,000 cap) $26,731.39
v. Quarterly Interest $25,655,067.22
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 $5,275,767.22
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 $72,719,263.00
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 $72,719,263.00
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) $0.00
ix. Funding of Overcollateralization Sub-Account
(to required level) $730,796.67
x. Funding of Capital Sub-Account (to required level) $7,922,975.09
xi. Net Earnings Released to Note Issuer $383,538.91
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 $2,027,027.97
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 $261,190,055.00
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 $1,527,190,055.00
x. Reserve Sub-Account Balance $2,027,027.97
xi. Overcollateralization Sub-Account Balance $6,889,875.00
xii. Capital Sub-Account Balance $14,405,000.00
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 $0.00
ii. Capital Sub-Account $0.00
9. Distributions of Principal per $1,000 of Original Principal Amount
Principal Payment
Per $1,000
Original Principal Outstanding Balance Principal Payment Orig. Principal Amt.
[ A ] [ B ] [ C ] [ C/A x 1,000]
- ------------------ ------------------- ----------------- -------------------
i. Class A-1 $0.00 $0.00 $0.00 $0.000000
ii. Class A-2 $0.00 $0.00 $0.00 $0.000000
iii. Class A-3 $0.00 $0.00 $0.00 $0.000000
iv. Class A-4 $0.00 $0.00 $0.00 $0.000000
v. Class A-5 $0.00 $0.00 $0.00 $0.000000
vi. Class A-6 $375,000,000.00 $333,909,318.00 $72,719,263.00 $193.918035
vii. Class A-7 $866,000,000.00 $866,000,000.00 $0.00 $0.000000
viii.Class A-8 $400,000,000.00 $400,000,000.00 $0.00 $0.000000
---------------- ---------------- -----------------
$1,641,000,000.00 $1,599,909,318.00 $72,719,263.00
10. Distributions of Interest per $1,000 of Original Principal Amount
Principal Payment
Per $1,000
Original Principal Outstanding Balance Interest Payment Orig. Principal Amt.
[ A ] [ B ] [ C ] [ C/A x 1,000]
- ------------------ ------------------- ---------------- ------------------
i. Class A-1 $0.00 $0.00 $0.00 $0.000000
ii. Class A-2 $0.00 $0.00 $0.00 $0.000000
iii. Class A-3 $0.00 $0.00 $0.00 $0.000000
iv. Class A-4 $0.00 $0.00 $0.00 $0.000000
v. Class A-5 $0.00 $0.00 $0.00 $0.000000
vi. Class A-6 $375,000,000.00 $333,909,318.00 $5,275,767.22 $14.068713
vii. Class A-7 $866,000,000.00 $866,000,000.00 $13,899,300.00 $16.050000
viii.Class A-8 $400,000,000.00 $400,000,000.00 $6,480,000.00 $16.200000
--------------- ---------------- -----------------
$1,641,000,000.00 $1,599,909,318.00 $25,655,067.22
IN WITNESS HEREOF, the undersigned has duly executed and delivered this
Quarterly Servicer's Certificate this 25th day of September, 2002.
PACIFIC GAS AND ELECTRIC COMPANY, as Servicer
by: /s/ Michael J. Donnelly
---------------------------
Michael J. Donnelly
Treasurer
Exhibit 99.2
PG&E FUNDING LLC
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT 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 September 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 September 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 September 30, 2002 fairly presents, in all material
respects, the financial condition and results of operations of PG&E
Funding LLC.
November 13, 2002 KENT M. HARVEY
Kent M. Harvey
Chairman and President
PG&E FUNDING LLC
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT 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 September 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
September 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 September 30, 2002 fairly presents,
in all material respects,the financial condition and results
of operations of PG&E Funding LLC.
November 13, 2002 MICHAEL J. DONNELLY
Michael J. Donnelly
Treasurer