PG&E says unit may run out of cash in 3 weeksPosted at 9:43 a.m. PST Tuesday, Jan. 2, 2001

PG&E says unit may run out of cash in 3 weeks

NEW YORK, (Reuters) - PG&E Corp. said its Pacific Gas & Electric Co. unit expects to exhaust a $1.2 billion cash reserve by the third week of January unless creditors back off a demand for advance payment for natural gas and power deliveries.

In its filing with the Securities and Exchange Commission on Friday, PG&E said Pacific Gas has payments of $438 million and $583 million due on Jan. 3 and Feb. 1, respectively. Without a rate increase or additional financing, it said, the unit will eat through its reserves in three to seven weeks.

PG&E and Edison International , which own California's biggest utilities and are operating under a rate freeze, are seeking respective rate hikes of 26 percent and 30 percent so they can pass on soaring wholesale power costs to consumers. The California Public Utilities Commission is expected on Thursday to decide whether to lift the freeze.

PG&E said it needs to raise $3.6 billion by the end of the first quarter, adding that if its credit ratings fall significantly -- a move that top rating agencies have threatened -- it would need to raise an additional $2 billion to pay down short-term debt and repay existing lenders.

PG&E shares fell 3/8 to $19-5/8 on the New York Stock Exchange. Edison International dropped 7/16 to $15-3/16 on the NYSE.

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-- Martin Thompson (mthom1927@aol.com), January 02, 2001