Attachment D

Quarterly Financial Information Update

Based on the UAC recommendations, the reports for all three utilities now cover the same reporting period. Therefore, financial data related to Electric purchases are based on seven months actual and two months estimated costs for the period of February 1, 2005 - March 31, 2005, as bills have not been received. Transitioning to the ISO billing/ settlement regimen is the main cause of the delay in receiving the final electric bills from NCPA. Gas and Water figures are based on nine months of actual data.

Electric

/ FY 03-04 / FY 04-05 Adopted
Budget / FY 04-05
Actual / Difference
Of Adopted Budget and Actual / %
Difference
Actual / Jul04-Mar 05 / Jul04-Mar 05
Retail Sales Units (kWh)
System Average Retail Rate
($/kWh)
Retail Sales Revenue
Purchase Cost
Operating Margin / 958,025,890
$0.0729
$69,823,869
22,826,094
$46,997,775 / 705,172,430
$0.0746
$ 52,571,085
28,660,771
$ 23,910,314 / 710,997,625
$0.0753
$ 53,509,299
30,811,519
$ 22,697,780 / 5,825,195
$0.0007
$ 938,214
(2,150,748)
$ (1,212,534) / 0.8%
1.0%
1.8%
7.5%
(5.1%)

Explanation:

FY 03-04: Annual sales level of 958 million kWh was 4.2 percent below the adjusted budget forecast.

FY 04-05: Sales units and revenues through March have been higher than the adopted budget projections by 0.8 and 1.8 percent, respectively. Purchase costs for the same period are estimated to be higher than the budgeted cost by 7.5 percent. Higher purchase costs are mainly due to lower than budgeted energy availability from Western during the first quarter, and the delay in receiving budgeted RAC credits from Western. However, considerable cost offsetting wholesale energy and ancillary services sales revenues were also received during the period. The projected net impact on the operating margin is a decrease of 5.1percent, or $1.2 million.

Proposed Electric Supply Rate Stabilization Reserve

All figures in thousands (000’s)

FY 04-05 Adopted Budget Ending Balance

/ $ 52,462
Projected Adjustments:
Changes to FY 04-05 Adopted Budget Beginning Balance / $ 968
Estimated Change in Operating Margin through March / (1,629)
Budget Amendment Ordinance Expense / -
Other Revenue changes to Budget
Other Expense changes to Budget / 3,841
Purchase Cost related to outside sales / -
Other Projected Wholesale Revenue changes to Budget / 515
Net Sum of Projected Adjustments
/ $ 3,694
Estimated FY 04-05 Ending Balance
/ $ 56,156
Adopted Budget SRSR Maximum Guideline is
/ $ 37,886

Proposed Electric Distribution Rate Stabilization Reserve

All figures in thousands (000’s)

FY 04-05 Adopted Budget Ending Balance

/ $ 6,876
Projected Adjustments:
Changes to FY 04-05 Adopted Budget Beginning Balance / $ (1,633)
Estimated Change in Operating Margin through March / 417
Budget Amendment Ordinances Expense / -
Other Revenue changes to Budget / -
Other Expense changes to Budget / 5,307
Net Sum of Projected Adjustments
/ $ 4,091
Projected FY 04-05 Ending Balance
/ $ 10,967
Adopted Budget DRSR Maximum Guideline is
/ $ 10,755

Electric Supply Rate Stabilization Reserve: As explained in the previous UAC quarterly report, the FY 04-05 adjustment of $968 thousand is the net impact of savings in purchase costs due to lower sales level, RAC refunds from WAPA, lower ISO costs, NCPA pool revenues, increased asset layoff revenues and lower revenues from sales.

In FY 04-05, the projected $1.6 million decrease in operating margin through March reflects the net impact of higher than projected sales revenues offset by the estimated $2.2 million higher purchase costs. Lower Western energy availability and the resulting need to purchase higher cost market energy is the main reason for the increased costs during the first nine months of the fiscal year. These higher costs in the first nine months have been somewhat offset by revenues from wholesale energy and ancillary services sales, lower NCPA legal expenses, and NCPA FY 03-04 budget settlements. During the last 3 months of the year, costs are expected to be lower by approximately $3.8 million, mainly a result of the expectation of receiving the delayed RAC credit from Western during this period. Net costs during the last quarter are also expected to be lower than budget, due to higher than average Calaveras production and lower than projected transmission related charges. The net result of the above factors is a projected increase in the ending balance of the SRSR of $3.7 million.

Note: As outlined in Attachment C, a number of transmission related charges were conservatively budgeted for by staff in prior years. However, PG&E/ISO had not billed Western or NCPA for this service until the most recent $51 million bill received by Western to cover periods dating back to 2001.

Electric Distribution Rate Stabilization Reserve: The $1.6 million decrease to the adopted beginning balance is the net impact of lower than projected sales and unrealized investment income. The $417 thousand increase in the operating margin through March is the result of higher than projected sales. In addition, $5.3 million is expected to return to the reserves as a result of the closure of past CIP projects. The net result is a projected increase of $4.1 million to the ending balance of the DRSR.

Gas

/ FY 03-04 / FY 04-05 Adopted Budget / FY 04-05
Actual / Difference
Of Adopted Budget and Actual / % Difference
Actual / Jul 04–Mar 05 / Jul 04 –Mar 05
Sales Units (Therms)
System Average Rate
($/Therm)
Retail Sales Revenue
Purchase Cost
Operating Margin / 31,506,997
$0.785
$ 24,734,399
15,965,423
$ 8,768,976 / 24,749,442
$0.83
$ 20,655,543
13,413,336
$ 7,242,207 / 24,696,090
$0.91
$ 22,394,506
15,099,255
$ 7,295,251 / (53,352)
$ 0.07
$ 1,738,963
1,685,919
$ 53,044 / (0.2%)
8.7%
8.4%
12.6%
0.7%

Explanation:

FY 03-04: Sales units were 9.2 percent below budget projections.

FY 04-05: Sales units through March are lower than projected by 0.2%, however, revenues for the same period are higher than projected by 8.4 percent due to a 20% supply-side rate increase effective January 1, 2005. Due to higher than projected market prices, purchase costs are greater than the adopted budget by 12.6percent. Preliminary figures show the net impact for the first nine months of the fiscal year is an increase of $53 thousand, or 0.7 percent of the Operating Margin.

Proposed Gas Supply Rate Stabilization Reserve

All figures in thousands (000’s)

FY 04-05 Adopted Budget Ending Balance

/ $ 6,556
Projected Adjustments:
Changes to FY 04-05 Adopted Budget Beginning Balance / $ (139)
Change in Operating Margin through March / 53
Budget Amendment Ordinances (BAO)
Other Revenue changes to Budget / 1,762
Other Expense changes to Budget / (694)
Net Sum of Projected Adjustments
/ $ 982
Projected FY 04-05 Ending Balance
/ $ 7,538
Adopted Budget SRSR Minimum Guideline is
/ $ 6,275

Proposed Gas Distribution Rate Stabilization Reserve

All figures in thousands (000’s)

FY 04-05 Adopted Budget Ending Balance

/ $ 3,862
Projected Adjustments:
Changes to FY 04-05 Adopted Budget Beginning Balance / $ (251)
Change in Operating Margin through March
Budget Amendment Ordinances (BAO) / -
Other Revenue changes to Budget / -
Other Expense changes to Budget / (56)
Net Sum of Projected Adjustments
/ $ (307)
Projected FY 04-05 Ending Balance
/ $ 3,555
Adopted Budget DRSR Maximum Guideline is
/ $ 4,236

Gas Supply Rate Stabilization Reserve: The $139 thousand decrease to the FY 04-05 beginning balance is primarily the net result of lower than the adopted budget purchase costs offset by decreased sales and interest income. For FY 04-05, the operating margin through March has increased by $53 thousand, which reflects the impact of higher sales revenues offset by higher purchase costs. For the months April through June, a $1.8 million projected revenue change. The expected revenue change is a combination of $964 thousand in additional revenues resulting from the January 1, 2005, rate increase plus a $798 thousand PG&E refund. The $694 thousand expense change reflects a $581 thousand projected increase in purchase costs for the last three months of FY 04-05, as well as $113 thousand cost addition legal and regulatory expenses from the midyear process. The projected net impact of the above for the fiscal year is an increase in the SRSR ending balance of $982 thousand.

Gas Distribution Rate Stabilization Reserve: The $251 thousand decrease in the beginning balance reflects lower than expected Administrative and Operating Expenses, lower sales levels and unrealized investment income. For FY 2004-05, there was a $56 thousand increase in expenses for contract services approved during the midyear process. Based on the above, the net impact is a projected decrease of $307 thousand in the DRSR ending balance.

Water

/ FY 03-04 / FY 04-05 Adopted
Budget / FY 04-05
Actual / Difference
Of Adopted Budget and Actual / % Difference
Actual / Jul 04–Mar 05 / Jul 04– Mar 05
Sales Units (Ccf)
System Average Rate $/Ccf)
Sales Revenue
Purchase Cost
Operating Margin / 5,962,767
$3.54
$ 21,131,850
7,441,523
$ 13,690,324 / 4,289,000
$3.88
$ 16,637,000
5,557,850
$ 11,079,150 / 4,021,524
$3.91
$ 15,709,795
5,242,339
$ 10,467,456 / (267,476)
$0.03
$ (927,205)
(315,511)
$ (611,694) / (6.2%)
0.7%
(5.6%)
(5.7%)
(5.5%)

Explanation:

FY 03-04: Sales Units of 5.9 million CCF were 0.1 percent below projections.

FY 04-05: Water sales units were 6.2 percent lower than the budget projected figures through March, primarily due to higher precipitation than normal weather. Consequently, sales revenues are 5.6 percent lower than the budget projections for the same months and purchase costs were 5.7 percent lower than the adopted budget. The net impact of the above is a decrease in the Operating Margin of $612 thousand, or 5.5 percent.

Proposed Water Rate Stabilization Reserve

All figures in thousands (000’s)

FY 04-05 Adopted Budget Ending Balance

/ $ 6,728
Projected Adjustments:
Changes to FY 04-05 Adopted Budget Beginning Balance / $ (863)
Change in Operating Margin through March / (612)
Budget Amendment Ordinances (BAO) / -
Other Revenue changes to Budget / -
Other Expense changes to Budget / 200
Net Sum of Projected Adjustments
/ $ (1,275)
Projected FY 04-05 Ending Balance
/ $ 5,453
Adopted Budget RSR Minimum Guideline is
/ $ 7,105

The $863 thousand change to the FY 04-05 Beginning Balance is primarily due to unrealized investment income, lower than budgeted connection fee revenue, and higher operating expenses. For FY 2004-05, from July to March, the net impact of lower than projected sales and decreased costs is a decrease in the operating margin of $612 thousand. Purchase cost for the final quarter of FY04-05, is expected to be lower than the projected figures for this period by $200 thousand due to reduced wholesale water rates. The net impact of the above is that the RSR expected ending balance of $5.5 million is lower than projected by$1.3 million.


Item No.65/4/05Page 1 of 7