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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-277286-01
This preliminary prospectus supplement and the accompanyingprospectus relate
to an effective registration statement under the Securities Act of 1933, as
amended. The information in this preliminary prospectus supplement is not
complete and may be subject to change. This preliminary prospectus supplement
andthe accompanying prospectus are not an offer to sell these securities and
we are not soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED SEPTEMBER 3, 2024
PROSPECTUS SUPPLEMENT
(To Prospectus datedFebruary 22, 2024)
$
$Floating Rate First Mortgage Bonds due 20
$ % First Mortgage Bonds due 20
We are offering$ aggregate principal amount of our floating rate first
mortgage bonds due 20 (the "floating rate mortgage bonds") and $ aggregate
principal amount of our % first mortgage bonds due 20 (the"20 mortgage bonds"
and, together with the floating rate mortgage bonds, the "mortgage bonds").
The floating rate mortgage bonds will bear interest at a rate per annum equal
to Compounded SOFR (as defined herein) for theapplicable Interest Period (as
defined herein) plus% ( basis points). The per annum interest rate on the 20
mortgage bonds will be %.
We will pay interest on the floating rate mortgage bonds quarterly in arrears
on , , and of each year, beginning on , 2024. We will pay interest on the 20
mortgage bonds semi-annually in arrears on and of each year, beginning on ,
20. The floating rate mortgage bonds will mature on , 20. The 20 mortgage
bonds will mature on ,20. The mortgage bonds will be issued in minimum
denominations of $2,000 and integral multiples of $1,000 in excess thereof.
The mortgage bonds will be secured by a first lien, subject to permitted
liens, on substantially all of our realproperty and certain tangible personal
property related to our facilities. See "Description of the Mortgage
Bonds--Lien of the Mortgage Indenture."
There is no existing public market for the mortgage bonds. We do not intend to
list the mortgage bonds on any securities exchange or seek theirquotation on
any automated quotation system.
Investing inthe mortgage bonds involves risks. For a description of these
risks, see "
Risk Factors
" beginning on
page S-13 of
this prospectus supplement and the sectiontitled "Risk Factors" in Item 1A of
Part I of the 2023 Annual Report (as defined herein) and in Item 1A of Part II
of the Q2 Quarterly Report (as defined herein), each incorporated by reference
herein.
None of the Securities and Exchange Commission, any state securities
commission or any other regulatory body has approved or disapproved ofthese
securities or passed upon the adequacy or accuracy of this prospectus
supplement or the accompanying prospectus. Any representation to the contrary
is a criminal offense.
Price to the Public Underwriting Proceeds to Pacific
(1) Discounts Gas and Electric
Company Before
Expenses
Per Floating Rate Mortgage Bond % % %
Total Floating Rate Mortgage Bonds $ $ $
Per 20Mortgage Bond % % %
Total 20Mortgage Bonds $ $ $
(1) Plus accrued interest from and including September , 2024, if settlement occurs after that date.
The mortgage bonds will be ready for delivery in book-entry form only through
the facilities of The Depository TrustCompany for the accounts of its
participants, including Clearstream Banking S.A. and Euroclear Bank SA/NV, as
operator of the Euroclear System, on or about September , 2024.
Joint Book-Running Managers
Barclays J. P. Morgan MUFG Wells Fargo Securities
September, 2024
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This prospectus supplement should be read in conjunction with the accompanying
prospectusand any related free writing prospectus. Neither we nor any
underwriter has authorized any other person to provide you with different or
additional information. We do not take any responsibility for, and can provide
no assurance as to thereliability of, any information that others may give
you. Neither we nor any underwriter is making an offer to sell the mortgage
bonds in any jurisdiction where the offer or sale is not permitted. You should
assume that the information contained inthis prospectus supplement and the
accompanying prospectus is accurate only as of the date hereof.
TABLE OF CONTENTS
Prospectus Supplement
Page
ABOUT THIS PROSPECTUS S-1
FORWARD-LOOKING STATEMENTS S-2
SUMMARY S-6
RISK FACTORS S-13
USE OF PROCEEDS S-19
CAPITALIZATION S-20
DESCRIPTION OF OTHER INDEBTEDNESS AND PREFERRED STOCK S-21
DESCRIPTION OF THE MORTGAGE BONDS S-30
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS S-51
UNDERWRITING (CONFLICTS OF INTEREST) S-56
LEGAL MATTERS S-63
EXPERTS S-63
WHERE YOU CAN FIND MORE INFORMATION S-63
CERTAIN DOCUMENTS INCORPORATED BY REFERENCE S-63
Prospectus
Page
ABOUT THIS PROSPECTUS ii
OUR COMPANY 1
RISK FACTORS 1
FORWARD-LOOKING STATEMENTS 2
USE OF PROCEEDS 6
DESCRIPTION OF SECURITIES 7
DESCRIPTION OF THE DEBT SECURITIES OF PG&E CORPORATION 8
SENIOR NOTES 8
SUBORDINATED NOTES 15
DESCRIPTION OF THE DEBT SECURITIES OF PACIFIC GAS AND ELECTRICCOMPANY 23
UNSECURED SENIOR NOTES 23
DESCRIPTION OF THE FIRST MORTGAGE BONDS 34
DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK 50
DESCRIPTION OF WARRANTS 54
DESCRIPTION OF SECURITIES PURCHASE CONTRACTS AND SECURITIES PURCHASE UNITS 57
DESCRIPTION OF DEPOSITARY SHARES 59
DESCRIPTION OF SUBSCRIPTION RIGHTS 60
GLOBAL SECURITIES 62
PLAN OF DISTRIBUTION 64
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Page
LEGAL MATTERS 66
EXPERTS 66
WHERE YOU CAN FIND MORE INFORMATION 66
CERTAIN DOCUMENTS INCORPORATED BY REFERENCE 67
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ABOUT THIS PROSPECTUS
This document consists of two parts. The first part is this prospectus
supplement, which describes the specific terms of this offering. Thesecond
part is the accompanying prospectus, which describes more general information,
some of which may not apply to this offering. This prospectus supplement and
the accompanying prospectus are part of a registration statement that
PG&ECorporation and Pacific Gas and Electric Company filed with the Securities
and Exchange Commission (the "SEC"), utilizing a "shelf" registration process.
When used in this prospectus supplement, (i) the terms "we,""our," "us" and
"the Company" refer to Pacific Gas and Electric Company and its subsidiaries,
and the term "Corp" refers to our parent, PG&E Corporation, and (ii) the
"underwriters" refersto the firms listed on the cover page of this prospectus
supplement. Capitalized terms used in this prospectus supplement and not
otherwise defined herein have the meanings given such terms in the Company's
and Corp's Joint Annual Report
on Form 10-K for the
year ended December 31, 2023 (the "2023 Annual Report") and the Company's and
Corp's Joint Quarterly Report on Form
10-Q
for the quarter ended June 30, 2024 (the "Q2 Quarterly Report"), which are
incorporated by reference into this prospectus supplement and the accompanying
prospectus.
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FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and any documents
incorporated by reference into this prospectus supplement and theaccompanying
prospectus contain forward-looking statements that are necessarily subject to
various risks and uncertainties. These statements reflect management's
judgment and opinions that are based on current estimates, expectations,
andprojections about future events and assumptions regarding these events and
management's knowledge of facts as of the date of this prospectus supplement.
These forward-looking statements relate to, among other matters, estimated
losses,including penalties and fines associated with various investigations
and proceedings; forecasts of capital expenditures; forecasts of cost savings;
estimates and assumptions used in critical accounting estimates, including
those relating toinsurance receivables, regulatory assets and liabilities,
environmental remediation, litigation, third-party claims, the Wildfire Fund,
and other liabilities; and the level of future equity or debt issuances. These
statements are also identified bywords such as "assume," "expect," "intend,"
"forecast," "plan," "project," "believe," "estimate," "predict," "anticipate,"
"commit,""goal," "target," "will," "may," "should," "would," "could,"
"potential," and similar expressions. We and Corp are not able to predict all
the factors that may affectfuture results. Some of the factors that could
cause future results to differ materially from those expressed or implied by
the forward-looking statements, or from historical results, include, but are
not limited to:
. the extent to which the Wildfire Fund and revised prudency standard under AB 1054
effectively mitigate the riskof liability for damages arising from catastrophic
wildfires, including whether the Company maintains an approved WMP and a valid
safety certification and whether the Wildfire Fund has sufficient remaining funds;
. the risks and uncertainties associated with wildfires that have occurred or may occur
in the Company'sservice area, including the wildfire that began on October 23,
2019 northeast of Geyserville in Sonoma County, California (the "2019 Kincade fire"),
the wildfire that began on July 13, 2021 near the Cresta Dam in the FeatherRiver
Canyon in Plumas County, California (the "2021 Dixie fire"), the wildfire that
began on September 6, 2022 near Oxbow Reservoir in Placer County, California (the
"2022 Mosquito fire"), and any other wildfires for whichthe causes have yet to
be determined; the damage caused by such wildfires; the extent of the Company's
liability in connection with such wildfires (including the risk that the Company
may be found liable for damages regardless of fault);investigations into such
wildfires, including those being conducted by the CPUC; potential liabilities in
connection with fines or penalties that could be imposed on the Company if the CPUC
or any other enforcement agency were to bring anenforcement action in respect of
any such fire; the risk that the Company is not able to recover costs from the
Wildfire Fund or other third parties or through rates; and the effect on Corp's
and the Company's reputations of suchwildfires, investigations, and proceedings;
. the extent to which the Company's wildfire mitigation initiatives are effective, including theCompany's ability
to comply with the targets and metrics set forth in its WMP; the effectiveness of its system hardening,
including undergrounding; the cost of the program and the timing and outcome of any proceeding to recover
such coststhrough rates; and any determination by the OEIS that the Company has not complied with its WMP;
. the Company's ability to safely, reliably, and efficiently construct, maintain, operate, protect,
anddecommission its facilities, and provide electricity and natural gas services safely and reliably;
. significant changes to the electric power and natural gas industries driven by
technological advancements,electrification, and the transition to a decarbonized
economy; the impact of reductions in utility customer demand for electricity and
natural gas, driven by customer self-generation, customer departures to community
choice aggregators, directaccess providers, and government-owned utilities, and
legislative mandates to reduce the use of natural gas; and whether the Company is
successful in addressing the impact of growing distributed and renewable generation
resources and changingcustomer demand for its natural gas and electric services;
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. cyber or physical attacks, including acts of terrorism, war, and
vandalism, on the Company or its third-partyvendors, contractors, or
customers (or others with whom they have shared data) which could
result in operational disruption; the misappropriation or loss of
confidential or proprietary assets, information or data, including
customer, employee,financial, or operating system information, or
intellectual property; corruption of data; or potential costs, lost revenues,
litigation, or reputational harm incurred in connection therewith;
. the Company's ability to attract or retain specialty personnel;
. the impact of severe weather events and other natural disasters, including
wildfires and other fires, storms,tornadoes, floods, extreme heat events, drought,
earthquakes, lightning, tsunamis, rising sea levels, mudslides, pandemics,
solar events, electromagnetic events, wind events or other weather-related
conditions, climate change, or natural disasters,and other events that can
cause unplanned outages, reduce generating output, disrupt the Company's
service to customers, or damage or disrupt the facilities, operations, or
information technology and systems owned by the Company, its customers,or
third parties on which the Company relies, and the effectiveness of the Company's
efforts to prevent, mitigate, or respond to such conditions or events;
the reparation and other costs that the Company may incur in connection
with suchconditions or events; the impact of the adequacy of the Company's
emergency preparedness; whether the Company incurs liability to third parties
for property damage or personal injury caused by such events; whether the
Company is able to procurereplacement power; and whether the Company is subject
to civil, criminal, or regulatory penalties in connection with such events;
. existing and future regulation and federal, state or local legislation,
their implementation, and theirinterpretation; the cost to comply with such
regulation and legislation; and the extent to which the Company recovers
its associated compliance and investment costs, including those regarding:
. wildfires, including inverse condemnation reform, wildfire insurance, and additional
wildfire mitigation measuresor other reforms targeted at the Company or its industry;
. the environment, including the costs incurred to discharge the Company's
remediation obligations or thecosts to comply with standards for
greenhouse gas emissions, renewable energy targets, energy efficiency
standards, distributed energy resources, and electric vehicles;
. the nuclear industry, including operations, seismic design, security, safety,
relicensing, the storage of spentnuclear fuel, decommissioning, and cooling water
intake, and whether Diablo Canyon's operations are extended; and the Company's
ability to continue operating Diablo Canyon until its planned retirement;
. the regulation of utilities and their affiliates, including the conditions that apply to Corp as theCompany's holding company;
. privacy and cybersecurity; and
. taxes and tax audits;
. the timing and outcomes of the Company's pending and future ratemaking and regulatory proceedings, includingthe
extent to which Corp and the Company are able to recover their costs through rates as recorded in memorandum accounts
or balancing accounts, or as otherwise requested; and the transfer of ownership of the Company's assets to municipalitiesor
other public entities, including as a result of the City and County of San Francisco's valuation petition;
. whether the Company can control its operating costs within the
authorized levels of spending; whether the Companycan continue
implementing the Lean operating system and achieve projected savings;
the extent to which the Company incurs unrecoverable costs that
are higher than the forecasts of such costs; the risks and uncertainties
associated with inflation;and changes in cost forecasts or
the scope and timing of planned work resulting from changes in
customer demand for electricity and natural gas or other reasons;
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. the outcome of current and future self-reports, investigations, agency compliance reports
or other enforcementactions, or notices of violation that could be issued related to the
Company's compliance with laws, rules, regulations, or orders applicable to its gas and
electric operations; the construction, expansion, or replacement of its electric andgas
facilities; electric grid reliability; audit, inspection and maintenance practices; customer
billing and privacy; physical and cybersecurity protections; environmental laws and
regulations; or otherwise, such as fines; penalties; remediationobligations; or the
implementation of corporate governance, operational or other changes in connection with the EOEP;
. the risks and uncertainties associated with Corp's and the Company's substantial indebtedness
and thelimitations on their operating flexibility in the documents governing that indebtedness;
. the risks and uncertainties associated with the resolution of the
Subordinated Claims and the timing and outcomesof Corp's and the
Company's ongoing litigation, including certain indemnity obligations
to current and former officers and directors, the Wildfire-Related
Non-Bankruptcy
Securities Claims, and otherthird-party claims, as well as potential
indemnity obligations to underwriters for certain of the Company's
note offerings, including the extent to which related costs can be
recovered through insurance, rates, or from other third parties;
. whether Corp or the Company undergoes an "ownership change" within the meaning
of Section 382 ofthe IRC, as a result of which tax attributes could be limited;
. the ultimate amount of unrecoverable environmental costs the Company incurs associated with the Company'snatural
gas compressor station site located near Hinkley, California and the Company's fossil fuel-fired generation sites;
. the supply and price of electricity, natural gas, and nuclear fuel; the extent to which the Company can manageand respond
to the volatility of energy commodity prices; the ability of the Company and its counterparties to post or return
collateral in connection with price risk management activities; and whether the Company is able to recover timely
itselectric generation and energy commodity costs through rates, including its renewable energy procurement costs;
. the ability of Corp and the Company to access capital markets and other
sources of debt and equity financing in atimely manner on acceptable terms;
. the risks and uncertainties associated with high rates for the Company's customers;
. actions by credit rating agencies to downgrade Corp's or the Company's credit ratings;
. the severity, extent and duration of the global
COVID-19
pandemic and theCompany's ability to collect on customer receivables; and
. the impact of changes in GAAP, standards, rules, or policies, including those related to
regulatory accounting,and the impact of changes in their interpretation or application.
For more information about the significant risks thatcould affect the outcome
of the forward-looking statements and our future financial condition, results
of operations, liquidity and cash flows, you should read the section titled
"Risk Factors" in this prospectus supplement and the sectiontitled "Risk
Factors" in Item 1A of Part I of the 2023 Annual Report and in Item 1A of Part
II of the Q2 Quarterly Report, each incorporated by reference in this
prospectus supplement and the accompanying prospectus.
You should read this prospectus supplement, the accompanying prospectus and
the documents that we incorporate by reference into thisprospectus supplement
and the accompanying prospectus, the documents that we have included as
exhibits to the registration statement of which this prospectus supplement and
the accompanying prospectus are a part and the documents that we refer tounder
the section of the accompanying prospectus titled "Where You Can Find More
Information" completely and with the understanding that our actual future
results could be materially different from what we expect when making
theforward-looking statements.
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We qualify all our forward-looking statements by these cautionary statements.
These forward-looking statements speak only as of the date of this prospectus
supplement or the date of the documentincorporated by reference. Except as
required by applicable laws or regulations, we do not undertake any obligation
to update or revise any forward-looking statement, whether as a result of new
information, future events or otherwise.
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SUMMARY
This summary highlights certain information about our business and this
offering. This is a summary of information contained elsewhere inthis
prospectus supplement, the accompanying prospectus or incorporated by
reference herein or therein and does not contain all of the information that
you should consider before investing in the mortgage bonds. For a more
complete understanding ofthis offering and our business, you should read and
carefully consider this entire prospectus supplement, including the section
titled "Risk Factors," the accompanying prospectus and all documents
incorporated by reference herein andtherein.
Our Company
We are one of the largest combination natural gas and electric utilities in
the United States. We were incorporated in California in 1905 andare a
subsidiary of PG&E Corporation. We provide natural gas and electric service to
approximately 16 million people throughout
a 70,000-square-mile service
area in northern and centralCalifornia. We generate revenues mainly through
the sale and delivery of electricity and natural gas to customers.
The principalexecutive offices of PG&E Corporation and Pacific Gas and
Electric Company are located at 300 Lakeside Drive, Oakland, California 94612.
The telephone number of PG&E Corporation is
(415) 973-1000 and
the telephone number of Pacific Gas and Electric Company
is (415) 973-7000. Our
website address is www.pge.com. Theinformation contained on, or that can be
accessed through, our website is not a part of this prospectus supplement. We
have included our website address in this prospectus supplement solely as an
inactive textual reference.
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The Offering
Issuer Pacific Gas and Electric Company, a California corporation.
Mortgage Bonds Offered $ aggregate principal amount of Floating Rate First Mortgage Bonds due 20 .
$ aggregate principal amount of % First Mortgage Bonds due 20 .
Maturities The floating rate mortgage bonds will mature on , 20 .
The 20mortgage bonds will mature on , 20 .
Interest Rates The floating rate mortgage bonds will bear interest at a rate equal to Compounded SOFR, plus %.
The per annum interest rate on the 20 mortgage bonds will be %.
Interest Payment Dates Interest on the floating rate mortgage bonds will be payable
quarterly in arrears on , , and of each year, commencing on ,
2024. Intereston the 20mortgage bonds will be payable semi-annually
in arrears on and of each year, commencing on , 20.
Ranking and Security The mortgage bonds will be our senior obligations and will rank equally in right of payment with
our other existing or future first mortgage bonds issued under the Mortgage Indenture. At June
30, 2024, we had approximately$44.07 billion of first mortgage bonds outstanding under the Mortgage
Indenture (including first mortgage bonds securing our credit facilities, all of which rank
pari passu
with the mortgage bonds). In addition, we would havehad approximately $1.53 billion of availability to incur
additional indebtedness under our revolving credit facility (the "Utility Revolving Credit Facility") pursuant
to the Utility Revolving Credit Agreement (as defined herein), atJune 30, 2024, all of which indebtedness
would be secured by additional first mortgage bonds issued under the same indenture as the mortgage bonds.
The mortgage bonds will be secured by a first lien, subject to Permitted
Liens (as defined herein), on substantially all of our real property
and certain tangible personal property related to our facilities.
See"Description of the Mortgage Bonds--Lien of the Mortgage Indenture."
Use of Proceeds The net proceeds from this offering will be $ , after deducting the respective underwriting
discounts and before estimated offering expenses payable by us. We expect to use the net
proceeds from this offering for the repayment of aportion of borrowings outstanding under our
$2.0 billion bridge loan credit agreement (the "Utility Bridge Term Loan Credit Agreement").
At August 29, 2024, borrowings under the Utility Bridge Term Loan Credit Agreement totaled $2.0 billion.
Suchborrowings bear interest based at a floating rate (6.69% per annum at August 29, 2024). The
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Utility Bridge Term Loan Credit Agreement matures on December 16, 2024. The proceeds of the loans
under the Utility Bridge Term Loan Credit Agreement were used for general corporatepurposes.
Conflicts of Interest An affiliate of Barclays Capital Inc. is the sole lender under the Utility
Bridge Term Loan Credit Agreement, a portion of the borrowings under which
will be repaid with the net proceeds of this offering, and therefore an affiliate
of BarclaysCapital Inc. will receive 5% or more of the net proceeds of
this offering, not including the underwriting discount, as a result of our
intention to use the net proceeds to repay a portion of the borrowings outstanding
under the Utility Bridge TermLoan Credit Agreement. See "Use of Proceeds."
Such underwriter would be considered to have a "conflict of interest"
pursuant to Rule 5121 of the Financial Industry Regulatory Authority, Inc.
("FINRA"). Consequently,this offering will be made in compliance with FINRA
Rule 5121. Pursuant to that rule, the appointment of a qualified independent
underwriter is not necessary in connection with the offering because the
offering is of a class of securities that areinvestment grade rated. No
affected underwriter will confirm sales to any account over which it exercises
discretionary authority without the prior written consent of the account
holder. See "Underwriting (Conflicts of Interest)--Conflictsof Interest."
Optional Redemption The Company may not redeem the floating rate mortgage bonds prior to their maturity.
Prior to , 20 , the Company may redeem the 20 mortgage bonds at its option, in whole
or in part, at any time and from time to time, at the "make whole" redemptionprice
described under "Description of the Mortgage Bonds--Optional Redemption" plus
accrued and unpaid interest thereon to, but excluding, the redemption date.
On or after , 20 , the Company may redeem the 20 mortgage bonds in whole or
in part, at any time and from time to time, at a redemption price equal to
100% of theprincipal amount of the 20 mortgage bonds being redeemed plus
accrued and unpaid interest thereon to, but excluding, the redemption date.
Basis for Issuance of the Mortgage Bonds We will issue $ aggregate principal amount of
the mortgage bonds under the Mortgage Indenture
based upon the value of Retired Securities(as
defined herein). The Retired Securities consist
of a portion of the collateral first mortgage
bond securing the Utility Bridge Term Loan
Credit Agreement being prepaid on the date of
closing of the mortgage bonds offered hereby
(the"Collateral Bond"). As of the date of this
prospectus supplement, we could issue under
the Mortgage Indenture (i) based upon the value
of Property Additions constituting Unfunded
Property, up to approximately $8.61 billion
ofadditional first mortgage bonds and (ii) based
upon Retired Securities, up to $480 million of
additional first mortgage bonds (such amount
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not including the value of Retired Securities represented by the Collateral Bond) ($ after giving effect
to this offering). See "Description of the Mortgage Bonds--Basisfor Issuance of the Mortgage Bonds."
Additional Mortgage Bonds We may issue additional first mortgage bonds under the Mortgage Indenture (as defined herein)
only in amounts not exceeding 70% of the net amount of Property Additions or in amounts
equal to the aggregate principal amount of previously issuedfirst mortgage bonds being canceled.
See "Description of the Mortgage Bonds--Issuance of Additional First Mortgage Bonds."
Certain Covenants The Mortgage Indenture that will govern the mortgage bonds contains
certain covenants limiting our ability to, among other things:
. merge or consolidate with another entity; and
. convey, lease or otherwise transfer all or substantially all of our assets.
These covenants are subject to the qualifications and exceptions described under
"Description of the Mortgage Bonds--Consolidation, Merger, Transfer of Mortgaged Property."
Book-Entry, Delivery and Form We will issue the mortgage bonds of each series in the
form of one or more fully registered global notes
registered in the name of the nominee of The Depository
Trust Company ("DTC"). Investors may elect to hold
the interests in theglobal notes through any of DTC,
Clearstream Banking S.A. or Euroclear Bank SA/NV, as
described under the heading "Description of the Mortgage
Bonds--Book-Entry Issuance; Global Securities."
Mortgage Trustee The Bank of New York Mellon Trust Company, N.A., as trustee (the "Mortgage Trustee").
Tax Considerations For a discussion of certain material income tax considerations of an
investment in the mortgage bonds, see "United States Federal Income
Tax Considerations." You should consult your own tax advisor to
determine the tax considerationsof an investment in the mortgage bonds.
Governing Law The Mortgage Indenture and the mortgage bonds
shall be governed by, and construed and
enforced in accordance with, the laws of the
State of New York (including without limitation
Section 5-1401
of theNew York General Obligations Law or any successor to such
statute), except to the extent that the 1939 Act (as defined
herein) shall be applicable, provided that the law of the
jurisdiction in which the Mortgaged Property consisting of real
propertyis located shall govern the creation of a mortgage lien on
and security interest in, or perfection, priority or enforcement
of the lien of the Mortgage Indenture or exercise of remedies
with respect to, such portion of the Mortgaged Property.
Listing The mortgage bonds will not be listed on any securities exchange or any automated quotation system.
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Risk Factors See the risks that are described under "Risk Factors" in this prospectus
supplement and the section titled "Risk Factors" in Item 1A of Part I of the 2023
Annual Report and in Item 1A of Part II of the Q2 QuarterlyReport, each incorporated
by reference in this prospectus supplement and the accompanying prospectus.
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Summary Historical Financial and Operating Information
Historical Financial Information
The following table sets forth summary historical consolidated financial data
as of the dates and for the periods indicated. The summaryhistorical
consolidated financial data as of December 31, 2023 and 2022 and for the years
ended December 31, 2023, 2022, and 2021, is derived from our audited
consolidated financial statements, which are incorporated by reference in
thisprospectus supplement. The summary historical consolidated financial data
as of June 30, 2024 and for the six months ended June 30, 2024 and 2023, is
derived from our unaudited consolidated financial statements, which are
incorporated byreference in this prospectus supplement. Our historical results
are not necessarily indicative of the results to be expected for future
periods, and our results for any interim period are not necessarily indicative
of the results to be expected forthe full fiscal year or any other future
period. The summary historical financial data should be read in conjunction
with the sections entitled "Capitalization," "Risk Factors," "Prospectus
Summary--The Offering" inthis prospectus supplement and our historical
consolidated financial statements and related notes thereto, which are
included elsewhere or incorporated by reference in this prospectus supplement.
For the Years Ended December 31, For the Six Months Ended
June 30,
(In millions) 2023 2022 2021 2024 2023
Income Data:
Electric $ 17,424 $ 15,060 $ 15,131 $ 8,510 $ 7,971
Natural gas 7,004 6,620 5,511 3,337 3,528
Total Operating Revenues 24,428 21,680 20,642 11,847 11,499
Operating Expenses
Cost of electricity 2,443 2,756 3,232 1,084 1,194
Cost of natural gas 1,754 2,100 1,149 733 1,190
Operating and maintenance 11,913 9,725 10,194 5,384 5,105
SB 901 securitization charges, net 1,267 608 -- -- 562
Wildfire-related claims, net of recoveries 64 237 258 (4 ) (3 )
Wildfire fund expense 567 477 517 156 234
Depreciation, amortization and decommissioning 3,738 3,856 3,403 2,075 2,074
Total Operating Expenses 21,746 19,759 18,753 9,428 10,356
Operating Income 2,682 1,921 1,889 2,419 1,143
Interest income 593 162 22 333 250
Interest expense (2,485 ) (1,658 ) (1,373 ) (1,404 ) (1,073 )
Other income, net 293 595 512 158 148
Reorganization items, net -- -- (12 ) -- --
Income Before Income Taxes 1,083 1,020 1,038 1,506 468
Income Tax Provision (Benefit) (1,461 ) (1,206 ) 900 160 (638 )
Net Income $ 2,544 $ 2,226 $ 138 $ 1,346 $ 1,106
Cash Flow Data:
Net cash provided by (used in) operating activities $ 5,097 $ 3,831 $ 2,448 $ 3,114 $ 2,627
Net cash used in investing activities (9,162 ) (10,069 ) (7,050 ) (5,225 ) (4,420 )
Net cash provided by financing activities 3,979 6,879 4,379 2,671 1,772
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As at December 31, As of June 30,
(In millions) 2023 2022 2024 2023
Balance Sheet Data:
Current Assets $ 14,187 $ 12,687 $ 16,483 $ 14,187
Net Property, Plant and Equipment 82,321 76,207 85,242 82,321
Total Assets 125,355 118,378 130,383 125,355
Current Liabilities 16,916 15,370 18,171 16,916
Total Shareholders' Equity 29,524 27,484 30,617 29,524
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RISK FACTORS
Investing in the mortgage bonds involves risk. These risks are described below
and in the section titled "Risk Factors" in Item1A of Part I of the 2023
Annual Report and in Item 1A of Part II of the Q2 Quarterly Report. See the
section titled "Where You Can Find More Information." Before making a decision
to invest in the mortgage bonds, you should carefullyconsider these risks, as
well as other information contained or incorporated by reference in this
prospectus supplement and the accompanying prospectus.
Risks Relating to the Mortgage Bonds
The proceeds from any sale of collateral may be insufficient to satisfy all
the obligations secured by the collateral, and additional indebtedness maybe
secured on a pari passu basis.
The mortgage bonds will be secured by a lien on substantially all of our real
property andcertain tangible personal property related to our facilities. As
of June 30, 2024, we had approximately $44.07 billion of indebtedness and
letters of credit outstanding secured on a
pari passu
basis by thecollateral securing our first mortgage bonds (including first
mortgage bonds securing our credit facilities). If we are entitled to incur
any additional mortgage bonds in accordance with the incurrence limitations in
the Mortgage Indenture and we doso (including to serve as collateral for other
debt), the holders thereof will be entitled to share ratably with you in any
proceeds distributed in connection with any insolvency, liquidation,
reorganization, dissolution or other winding up of ourcompany. Given the
extensive number of real properties subject to the lien of the Mortgage
Indenture, certain provisions of California law that limit enforcement of
remedies and the requirement for certain approvals for property transfers
fromregulatory authorities, we cannot assure you that the collateral securing
the first mortgage bonds can be readily sold following an acceleration of
maturity of the mortgage bonds, or that the proceeds of any such sale would be
sufficient to satisfyamounts due on the mortgage bonds and any other debt
secured by the collateral in full or at all.
The Company's substantial indebtedness, alarge percentage of which is secured,
may adversely affect our financial health and operating flexibility.
We have a substantialamount of indebtedness. As of June 30, 2024, we had
approximately $44.07 billion of total indebtedness and letters of credit
outstanding. Substantially all of our outstanding indebtedness, including the
mortgage bonds hereby, is secured bysubstantially all of our real property and
certain tangible personal property related to our facilities. In addition, as
of June 30, 2024, Corp had approximately $4.65 billion of additional
indebtedness outstanding. Because we areCorp's primary subsidiary, we expect
that Corp will look to dividends from us to satisfy its debt obligations. See
"Capitalization" for more information.
Since we have such a high level of debt, a substantial portion of cash flow
from operations will be used to make payments on this debt.Furthermore, since
a significant percentage of our assets is used to secure this debt, this
reduces the amount of collateral available for future secured debt or credit
support and reduces our flexibility in operating these secured assets.
Thisrelatively high level of debt and related security could have other
important consequences for us, including:
. limiting our ability or increasing the costs to refinance our indebtedness;
. limiting our ability to borrow additional amounts for working capital, capital expenditures,
debt servicerequirements, execution of our business strategy or other purposes;
. limiting our ability to use operating cash flow in other areas of our business;
. increasing our vulnerability to general adverse economic and industry conditions, including increases in interestrates,
particularly given our substantial indebtedness that bears interest at variable rates, as well as to catastrophic events; and
. limiting our ability to capitalize on business opportunities.
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Under the terms of the agreements and indentures governing our indebtedness,
including theMortgage Indenture, we and our subsidiaries are permitted to
incur additional indebtedness, some of which could be secured (subject to
compliance with certain tests), and which could further accentuate these
risks. As a result of our high level ofindebtedness, we may be unable to
generate sufficient cash through our operations to service our debt, including
the mortgage bonds offered hereby, and we may need to refinance our
indebtedness, including the mortgage bonds offered hereby, at orprior to
maturity and be unable to obtain financing on suitable terms or at all, any of
which could have a material adverse effect on our business, financial
condition and results of operations and which could have an adverse effect on
the marketprice of the mortgage bonds offered hereby.
The documents that govern our indebtedness contain restrictions that limit our
flexibility in operatingour business.
Our material financing agreements, including certain credit agreements and
indentures, contain various covenantslimiting, subject to certain exceptions,
among other things, our ability to:
. incur or assume indebtedness or guarantees of indebtedness;
. incur or assume liens;
. sell or dispose of all or substantially all of our property or business;
. merge or consolidate with other companies;
. enter into sale leaseback transactions; and
. enter into swap agreements.
The restrictions contained in these material financing agreements could affect
our ability to operate our business and may limit our abilityto react to
market conditions or take advantage of potential business opportunities as
they arise. For example, such restrictions could adversely affect our ability
to finance our operations and expenditures, make strategic acquisitions,
investmentsor alliances, restructure our organization or finance our capital
needs. Additionally, our ability to comply with these covenants and
restrictions may be affected by events beyond our control, including, but not
limited to, prevailing economic,financial and industry conditions.
The composition and characteristics of SOFR (as defined herein) are not the
same as the London Inter-bankOffered Rate ("LIBOR").
On June 22, 2017, the Alternative Reference Rates Committee (the "ARRC")
convenedby the Board of Governors of the Federal Reserve System and the
Federal Reserve Bank of New York identified SOFR as the rate that, in the
consensus view of the ARRC, represented best practice for use in certain new
United States dollar derivativesand other financial contracts. SOFR is a broad
measure of the cost of borrowing cash overnight collateralized by United
States Treasury securities and has been published by the Federal Reserve Bank
of New York since April 2018. TheFederal Reserve Bank of New York has also
begun publishing historical indicative SOFR from 2014. Investors should not
rely on any historical changes or trends in SOFR as an indicator of future
changes in SOFR.
The composition and characteristics of SOFR are not the same as those of
LIBOR, and SOFR is fundamentally different from LIBOR for two keyreasons.
First, SOFR is a secured rate, while LIBOR is an unsecured rate. Second, SOFR
is an overnight rate, while LIBOR is a forward-looking rate that represents
interbank funding over different maturities (e.g., three months). As aresult,
there can be no assurance that SOFR (including Compounded SOFR) will perform
in the same way as LIBOR would have at any time, including, without
limitation, as a result of changes in interest and yield rates in the market,
market volatilityor global or regional economic, financial, political,
regulatory, judicial or other events.
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The amount of interest payable on the floating rate mortgage bonds may
fluctuate substantially.
The floating rate mortgage bonds will bear interest at a floating rate based
on Compounded SOFR. Since the initial publication ofSOFR, daily changes in the
rate have, on occasion, been more volatile than daily changes in comparable
benchmark or market rates, and SOFR over time may bear little or no relation
to the historical actual or historical indicative data. In addition,the return
on and value of the floating rate mortgage bonds may fluctuate more than
floating rate securities that are linked to less volatile rates. Any
historical upward or downward trend in the SOFR is not an indication that the
SOFR is more orless likely to increase or decrease at any time during an
Interest Period, and you should not take the historical levels of SOFR as an
indication of its future performance. In addition, although the actual
Compounded SOFR on a Floating Rate InterestPayment Date (as defined herein) or
at other times during an Interest Period may be higher than Compounded SOFR on
the applicable Interest Payment Determination Date (as defined herein), you
will not benefit from Compounded SOFR at any time otherthan on the Interest
Payment Determination Date for such Interest Period. As a result, changes in
Compounded SOFR, or other applicable benchmark rate, may not result in a
comparable change in the market value of the floating rate mortgage
bonds.Increases in Compounded SOFR as of any Interest Payment Determination
Date will require us to make higher interest payments on the floating rate
floating rate mortgage bonds, which would increase our fixed charges.
SOFR may be more volatile than other benchmark or market rates.
Since the initial publication of SOFR, daily changes in SOFR have, on
occasion, been more volatile than daily changes in other benchmark ormarket
rates, such as United States dollar LIBOR. Although changes in Compounded SOFR
generally are not expected to be as volatile as changes in daily levels of
SOFR, the return on and value of the floating rate mortgage bonds may
fluctuatemore than floating rate debt securities that are linked to less
volatile rates. In addition, the volatility of SOFR has reflected the
underlying volatility of the overnight United States Treasury repurchase
agreement ("repo")market. The Federal Reserve Bank of New York has at times
conducted operations in the overnight United States Treasury repo market in
order to help maintain the federal funds rate within a target range. There can
be no assurance that theFederal Reserve Bank of New York will continue to
conduct such operations in the future, and the duration and extent of any such
operations is inherently uncertain. The effect of any such operations, or of
the cessation of such operations tothe extent they are commenced, is uncertain
and could be materially adverse to investors in the floating rate mortgage
bonds.
The interest rate onthe floating rate mortgage bonds is based on a Compounded
SOFR rate and the SOFR Index (as defined herein), both of which may not be
widely adopted by other market participants and therefore would likely
adversely affect the liquidity and marketvalue of the floating rate mortgage
bonds.
For each Interest Period, the interest rate on the floating rate mortgage
bonds isbased on Compounded SOFR, which is calculated using the SOFR Index
published by the Federal Reserve Bank of New York according to the specific
formula described under the caption "Description of the Mortgage Bonds--Interest
--FloatingRate Mortgage Bonds--Compounded SOFR and the SOFR Index," not the
SOFR rate published on or in respect of a particular date during such Interest
Period or an arithmetic average of SOFR rates during such period. For this and
otherreasons, the interest rate on the floating rate mortgage bonds during any
Interest Period will not necessarily be the same as the interest rate on other
SOFR-linked investments that use an alternative basis to determine the
applicable interestrate. Further, if the SOFR rate in respect of a particular
date during an Interest Period is negative, its contribution to the SOFR Index
will be less than one, resulting in a reduction to Compounded SOFR used to
calculate the interest payableon the floating rate mortgage bonds on the
Floating Rate Interest Payment Date for such Interest Period.
The method for calculating aninterest rate based upon SOFR varies. In
addition, the Federal Reserve Bank of New York only began publishing the SOFR
Index on March 2, 2020. Accordingly, the use of the SOFR Index or the specific
formula for the Compounded SOFR rateused in the floating rate mortgage bonds
may not be widely adopted by other market participants, if at all. If the
market adopts a different calculation method, that would likely adversely
affect the liquidity and market value of the floatingrate mortgage bonds.
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Compounded SOFR and, therefore, the total amount of interest payable with
respect to a particularInterest Period will only be capable of being
determined near the end of the relevant Interest Period.
The level of CompoundedSOFR applicable to a particular Interest Period and,
therefore, the amount of interest payable with respect to such Interest Period
will be determined on the Interest Payment Determination Date for such
Interest Period. Because each such dateis near the end of such Interest
Period, investors will not know the amount of interest payable with respect to
a particular Interest Period until shortly prior to the related Floating Rate
Interest Payment Date and it may be difficult for aninvestor to reliably
estimate the amount of interest that will be payable on each such Floating
Rate Interest Payment Date. In addition, some investors may be unwilling or
unable to trade the floating rate mortgage bonds without changes totheir
information technology systems. An inability to reliably estimate accrued and
unpaid interest as well as the potential need for some investors to change
their information technology systems could both adversely impact the liquidity
andtrading price of the floating rate mortgage bonds.
The administrator of the Secured Overnight Financing Rate may make changes
that could change thevalue of the Secured Overnight Financing Rate or
discontinue the Secured Overnight Financing Rate and has no obligation to
consider your interests in doing so.
The New York Federal Reserve, as administrator of the Secured Overnight
Financing Rate, may make methodological or other changes that couldchange the
value of the Secured Overnight Financing Rate, including changes related to
the method by which the Secured Overnight Financing Rate is calculated,
eligibility criteria applicable to the transactions used to calculate the
SecuredOvernight Financing Rate or timing related to the publication of the
Secured Overnight Financing Rate. If the manner in which the Secured Overnight
Financing Rate is calculated is changed, that change may result in a reduction
of the amount ofinterest payable on the floating rate mortgage bonds, which
may adversely affect the trading prices of the floating rate mortgage bonds.
In addition, the administrator may alter, discontinue or suspend calculation
or dissemination of the SecuredOvernight Financing Rate (in which case a
fallback method of determining the interest rate on the floating rate mortgage
bonds, as further described under "Description of the Mortgage Bonds--Interest--
Floating Rate MortgageBonds--Effect of Benchmark Transition Event," will
apply). The administrator has no obligation to consider your interests in
calculating, adjusting, converting, revising or discontinuing the Secured
Overnight Financing Rate.
The SOFR Index may be modified or discontinued and the floating rate mortgage
bonds may bear interest by reference to a rate other than Compounded
SOFR,which could adversely affect the value of the floating rate mortgage
bonds.
The SOFR Index is published by the Federal ReserveBank of New York based on
data received by it from sources other than the Company, and the Company has
no control over its methods of calculation, publication schedule, rate
revision practices or availability of the SOFR Index at anytime. There can be
no guarantee, particularly given its relatively recent introduction, that the
SOFR Index will not be discontinued or fundamentally altered in a manner that
is materially adverse to the interests of investors in the floatingrate
mortgage bonds. If the manner in which the SOFR Index is calculated, including
the manner in which SOFR is calculated, is changed, that change may result in
a reduction in the amount of interest payable on the floating rate mortgage
bondsand the trading prices of the floating rate mortgage bonds. Further, if
the benchmark rate (plus the applicable margin) on the floating rate mortgage
bonds during the floating rate period on any Interest Payment Determination
Date declines tozero or becomes negative, the interest rate will be deemed to
equal zero. In addition, the Federal Reserve Bank of New York may withdraw,
modify or amend the published SOFR Index or SOFR data in its sole discretion
and without notice. Theinterest rate for any Interest Period will not be
adjusted for any modifications or amendments to the SOFR Index or SOFR data
that the Federal Reserve Bank of New York may publish after the interest rate
for that Interest Period has been determined.
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If the Company (or its designee (which may be an independent financial advisor
or any otherdesignee of the Company) (any of such entities, a "Designee"))
determines that a Benchmark Transition Event (as defined herein) and its
related Benchmark Replacement Date (as defined herein) have occurred in
respect of the SOFR Index, thenthe interest rate on the floating rate mortgage
bonds will no longer be determined by reference to the SOFR Index, but instead
will be determined by reference to a different rate, plus a spread adjustment,
which is referred to as a "BenchmarkReplacement" (as defined herein), as
further described under the caption "Description of the Mortgage Bonds--Interest
--Floating Rate Mortgage Bonds--Effect of Benchmark Transition Event."
If a particular Benchmark Replacement or Benchmark Replacement Adjustment (as
defined herein) cannot be determined, then the next-availableBenchmark
Replacement or Benchmark Replacement Adjustment will apply. These replacement
rates and adjustments may be selected, recommended or formulated by (i) the
Relevant Governmental Body (as defined herein) (such as the ARRC), (ii)
theInternational Swaps and Derivatives Association ("ISDA") or (iii) in
certain circumstances, the Company (or its Designee). In addition, the terms
of the floating rate mortgage bonds expressly authorize the Company (or
itsDesignee) to make Benchmark Replacement Conforming Changes (as defined
herein) with respect to, among other things, changes to the definition of
"Interest Period", the timing and frequency of determining rates and making
payments ofinterest, rounding of amounts or tenors and other administrative
matters. The determination of a Benchmark Replacement, the calculation of the
interest rate on the floating rate floating rate mortgage bonds by reference
to a BenchmarkReplacement (including the application of a Benchmark
Replacement Adjustment), any implementation of Benchmark Replacement
Conforming Changes and any other determinations and decisions or elections
that may be made under the terms of the floatingrate mortgage bonds in
connection with a Benchmark Transition Event could adversely affect the value
of the floating rate mortgage bonds, the return on the floating rate mortgage
bonds and the price at which an investor can sell such floating ratemortgage
bonds.
In addition, (i) the composition and characteristics of the Benchmark
Replacement will not be the same as those ofCompounded SOFR, the Benchmark
Replacement may not be the economic equivalent of Compounded SOFR, there can
be no assurance that the Benchmark Replacement will perform in the same way as
Compounded SOFR would have at any time and there is noguarantee that the
Benchmark Replacement will be a comparable substitute for Compounded SOFR
(each of which means that a Benchmark Transition Event could adversely affect
the value of the floating rate mortgage bonds, the return on the floating
ratemortgage bonds and the price at which an investor can sell the floating
rate mortgage bonds), (ii) any failure of the Benchmark Replacement to gain
market acceptance could adversely affect the value of floating rate mortgage
bonds, (iii) theBenchmark Replacement may have a very limited history and the
future performance of the Benchmark Replacement may not be predicted based on
historical performance, (iv) the secondary trading market for floating rate
mortgage bonds linked to theBenchmark Replacement may be limited and (v) the
administrator of the Benchmark Replacement may make changes that could change
the value of the Benchmark Replacement or discontinue the Benchmark
Replacement and has no obligation to considerinvestors' interests in doing so,
all of which could similarly have an adverse effect on the value, return and
price of the floating rate mortgage bonds.
The Company (or its Designee) will make certain determinations with respect to
the floating rate mortgage bonds, which determinations mayadversely affect the
floating rate mortgage bonds.
The Company (or its Designee) will make certain determinations with respect to
thefloating rate mortgage bonds as further described under the caption
"Description of the Mortgage Bonds--Interest--Floating Rate Mortgage Bonds."
For example, if a Benchmark Transition Event and its related BenchmarkReplacemen
t Date have occurred, the Company (or its Designee) will make certain
determinations with respect to the floating rate mortgage bonds in its (or its
Designee's) sole discretion as further described under the caption
"Descriptionof the Mortgage Bonds--Interest--Floating Rate Mortgage
Bonds--Effect of Benchmark Transition Event." Any determination, decision or
election pursuant to the benchmark replacement provisions not made by the
Company'sDesignee will be made by the Company. Any of these determinations may
adversely affect the value of the floating rate mortgage bonds, the return on
the floating rate mortgage bonds and the price at which an
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investor can sell such floating rate mortgage bonds. Moreover, certain
determinations may require the exercise of discretion and the making of
subjective judgments, such as with respect toCompounded SOFR or the occurrence
or
non-occurrence
of a Benchmark Transition Event and any Benchmark Replacement Conforming
Changes. These potentially subjective determinations may adversely affect
thevalue of the floating mortgage bonds, the return on the floating rate
mortgage bonds and the price at which an investor can sell such floating rate
mortgage bonds. For further information regarding these types of determinations,
see"Description of the Mortgage Bonds--Interest--Floating Rate Mortgage
Bonds--Effect of Benchmark Transition Event."
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USE OF PROCEEDS
The net proceeds from this offering will be $, after deducting the respective
underwriting discounts and before estimatedoffering expenses payable by us. We
expect to use the net proceeds from this offering for the repayment of a
portion of borrowings outstanding under the Utility Bridge Term Loan Credit
Agreement.
At August 29, 2024, borrowings under the Utility Bridge Term Loan Credit
Agreement totaled $2.0 billion. Such borrowings bearinterest based at a
floating rate (6.69% per annum at August 29, 2024). The Utility Bridge Term
Loan Credit Agreement matures on December 16, 2024. The proceeds of the loans
under the Utility Bridge Term Loan Credit Agreement were used forgeneral
corporate purposes.
An affiliate of Barclays Capital Inc. is the sole lender under the Utility
Bridge Term Loan Credit Agreement,the borrowings under which will be repaid
with the net proceeds of this offering, and therefore an affiliate of Barclays
Capital Inc. will receive all of such proceeds upon such repayment. See
"Underwriting (Conflicts of Interest)."
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CAPITALIZATION
The following table sets forth our cash and cash equivalents, current
liabilities and capitalization as of June 30, 2024 on an(x) actual basis and
(y) as adjusted basis, after giving effect to (i) the issuance of the mortgage
bonds in this offering and (ii) the application of the net proceeds therefrom
(after deducting the underwriting discounts andbefore estimated offering
expenses payable by us) to repay approximately $ of borrowings under the
Utility Bridge Term Loan Credit Agreement. You should read this table in
conjunction with the financial statements and the related notesincorporated by
reference in this prospectus supplement and the accompanying prospectus,
together with the information included under the heading "Summary Historical
Financial and Operating Information" included elsewhere in thisprospectus
supplement.
As of June 30, 2024
(in millions) Actual As
Adjusted
(1)
Cash and cash equivalents $ 1,060 $
(2)
Current Liabilities:
Short-term borrowings $ 4,972 $
(3)(4)
Long-term debt, classified ascurrent 1,578
(5)
Capitalization:
Long-term debt, classified as $ 48,058 $
non-current
(6)(7)
Shareholders' equity 30,617
(8)
Total Capitalization $ 78,675 $
Notes:
(1) As adjusted amounts of Cash and cash equivalents and Long-term debt, classified as current, do not reflect
theretirement on August 15, 2024 of $350 million aggregate principal amount of 3.40% Senior Notes due August 15, 2024.
(2) As adjusted cash and cash equivalents does not give effect to expenses
of this offering which would reduce cashand cash equivalents.
See "Underwriting (Conflicts of Interest) - Commissions and
Discounts" for further information on expenses of this offering.
(3) At June 30, 2024 and August 23, 2024, outstanding borrowings under
the Utility Revolving CreditFacility were $2.45 billion and $1.11
billion, respectively. Such amounts exclude $416.2 million and
$402.6 million of letters of credit outstanding, respectively.
(4) Adjusted to give effect only to the issuance of the floating rate mortgage bonds offered by this prospectussupplement
before estimated offering expenses payable by us and the expected repayment of approximately $ of borrowings under
the Utility Bridge Term Loan Credit Agreement with the net proceeds of the mortgage bonds offered by thisprospectus
supplement (after deducting the underwriting discounts and before estimated offering expenses payable by us).
(5) Net of unamortized debt discount. Includes $179 million related to variable interest entities.
(6) Net of unamortized debt discount. Includes $10.4 billion related to variable interest entities.
(7) Adjusted to give effect only to the issuance of the 20mortgage bonds offered
by this prospectussupplement before estimated offering expenses payable by us.
(8) Includes $258 million of preferred stock without mandatory redemption provisions.
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DESCRIPTION OF OTHER INDEBTEDNESS AND PREFERRED STOCK
Company Credit Agreements
General
The descriptions of the Utility Revolving Credit Agreement, the Utility Term
Loan Credit Agreement and the Utility Bridge TermLoan Credit Agreement (each
as defined herein) in this section do not purport to be complete and are
subject, and qualified in entirety by reference, to the full text of the
Utility Revolving Credit Agreement, a copy of which is included as Exhibit10.4
to our Current Report on Form
8-K
filed with the SEC on July 2, 2020 and Amendment No. 3 to the Utility
Revolving Credit Agreement, a copy of which is included as Exhibit 10.2 to our
CurrentReport on Form
8-K
filed with the SEC on June 26, 2023, the Utility Term Loan Credit Agreement, a
copy of which is included as Exhibit 10.1 to our Current Report on Form
8-K
filed with the SEC on April 21, 2022 and Amendment No. 3 to the Utility Term
Loan Credit Agreement, a copy of which is included as Exhibit 10.1 to our
Quarterly Report on Form
10-Q
for the quarter ended March 31, 2024 and the Utility Bridge Term Loan Credit
Agreement, a copy of which is included as Exhibit 10.1 to our Current Report
on Form
8-K
filed with the SEC on November 20, 2023 and Amendment No. 1 to the Utility
Bridge Term Loan Credit Agreement, a copy of which is included as Exhibit 10.3
to our Quarterly Report on Form
10-Q
for thequarter ended June 30, 2024. The description of the Utility Accounts
Receivable Facility (as defined herein) in this section does not purport to be
complete and is subject, and qualified in entirety by reference, to the full
text of AmendmentNo. 12 to Receivables Financing Agreement, dated as of June
26, 2024, a copy of which is included as Exhibit 10.2 to our Quarterly Report
on Form
10-Q
for the quarter ended June 30, 2024 andAmendment No. 3 to Purchase and Sale
Agreement, dated as of April 20, 2022, a copy of which is included as Exhibit
10.3 to our Current Report on Form
8-K
filed with the SEC on April 21, 2022.
Utility Revolving Credit Agreement
On July 1, 2020, the Company entered into a $3.5 billion revolving credit
agreement (the "Utility Revolving CreditAgreement").
On October 4, 2022, the Company amended the Utility Revolving Credit Agreement
to, among other things,(i) increase the aggregate commitments provided by the
lenders thereunder to $4.4 billion and (ii) extend the maturity date of such
agreement to June 22, 2027 (subject to
a one-year extension
at the option of the Company).
On July 25, 2024, the Companyfurther amended the Utility Revolving Credit
Agreement to extend the maturity date for commitments in an aggregate amount
equal to $4.1958 billion to June 22, 2029. The maturity date for the remaining
$204.2 million of commitmentsunder the Utility Revolving Credit Agreement is
June 22, 2028.
Maturity and Prepayments
The Utility Revolving Credit Agreement has a maturity date of June 22, 2029
(except for a portion of the commitments thereunder which willmature on June
22, 2028), subject to a
one-year
extension at the option of the Company.
TheCompany may voluntarily repay outstanding loans under the Utility Revolving
Credit Agreement at any time without premium or penalty, other than customary
"breakage" costs with respect to SOFR loans. Any voluntary prepayments made by
theCompany will not reduce the commitments under the Utility Revolving Credit
Agreement.
Interest Rate and Fees
Borrowings under the Utility Revolving Credit Agreement bear interest based on
the Company's election of either (1) Term SOFR (asdefined in the Utility
Revolving Credit Agreement, as amended) (plus a 0.10% credit
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spread adjustment) plus an applicable margin of 1.125% to 2.50% based on the
Company's credit rating or (2) the base rate plus an applicable margin of
0.125% to 1.50% based on theCompany's credit rating. In addition to interest
on outstanding principal under the Utility Revolving Credit Agreement, the
Company is required to pay a commitment fee to the lenders in respect of the
unutilized commitments thereunder, rangingfrom 0.125% to 0.50% per annum
depending on the Company's credit rating. The Utility Revolving Credit
Agreement has a maximum letter of credit sublimit equal to $2.0 billion. The
Company may also pay customary letter of credit fees basedon letters of credit
issued under the Utility Revolving Credit Agreement.
Security
Our obligations under the Utility Revolving Credit Agreement are secured by
the issuance of first mortgage bonds secured by a first lien onsubstantially
all of our real property and certain tangible personal property related to our
facilities, subject to certain exceptions, and rank
pari passu
with our other first mortgage bonds, including the mortgage bondsoffered by
this prospectus supplement and the other first mortgage bonds described under
"--Refinanced First Mortgage Bonds" below.
Certain Covenants and Events of Default
The Utility Revolving Credit Agreement includes usual and customary provisions
for revolving credit agreements of this type, includingcovenants limiting,
with certain exceptions, (1) liens, (2) sale and leaseback transactions, (3)
fundamental changes, (4) entering into swap agreements and (5) modifications
to the Mortgage Indenture. In addition, theUtility Revolving Credit Agreement
requires that the Company maintain a ratio of total consolidated debt to
consolidated capitalization of no greater than 65% as of the end of each
fiscal quarter. As of June 30, 2024, the Company was incompliance with this
covenant.
Utility Term Loan Credit Agreement
On April 20, 2022, the Company entered into a term loan credit agreement (the
"Utility Term Loan Credit Agreement"), comprisedof
364-day
tranche loans in the aggregate principal amount of $125 million (the
"364-Day
Tranche Loans") and
two-year
tranche loans in the aggregate principal amount of $400 million (the
"2-Year
Tranche Loans"). The Company borrowed the entire amount of the
364-Day
Tranche Loans and the
2-Year
Tranche Loans on April 20, 2022.
On April 18, 2023, the Company amended the Utility Term Loan Credit Agreement
to extend the maturity date of the
364-Day
Tranche Loans to April 16, 2024 and to amend the applicable margin with
respect to the
364-Day
Tranche Loans.
On April 16, 2024, the Company amended the Utility Term Loan Credit Agreement
to, among other things, combine its $400 million
2-year
tranche loan maturing April 19, 2024 and its $125 million
364-day
tranche loan maturing April 16, 2024 into a single loan of $525 million
maturingApril 15, 2025.
Maturity
The Utility Term Loan Credit Agreement has a maturity date of April 15, 2025.
Interest Rate and Fees
Borrowings under the Utility Term Loan Credit Agreement bear interest based on
the Company's election of either (1) Term SOFR (plus a0.10% credit spread
adjustment) plus an applicable margin of 1.375% or (2) the alternative base
rate plus an applicable margin of 0.375%.
Security
Our obligationsunder the Utility Term Loan Credit Agreement are secured by the
issuance of first mortgage bonds secured by first lien on substantially all of
our real property and certain tangible personal property related
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to our facilities, subject to certain exceptions, and rank
pari passu
with our other first mortgage bonds, including the mortgage bonds offered by
this prospectussupplement and the other first mortgage bonds described under
"--Refinanced First Mortgage Bonds," "--Utility Reinstated Collateralized
Senior Notes" and "--Subsequent First Mortgage Bond Issuances" below.
Certain Covenants and Events of Default
The Utility Term Loan Credit Agreement includes usual and customary provisions
for term loan agreements of this type, including covenantslimiting, with
certain exceptions, (1) liens, (2) sale and leaseback transactions, (3)
fundamental changes, (4) entering into swap agreements and (5) modifications
to the Mortgage Indenture. In addition, the Utility TermLoan Credit Agreement
requires that the Company maintain a ratio of total consolidated debt to
consolidated capitalization of no greater than 65% as of the end of each
fiscal quarter. As of June 30, 2024, the Company was in compliance with
thiscovenant.
Utility Bridge Term Loan Credit Agreement
On November 15, 2023, the Company entered into a bridge term loan credit
agreement (the "Utility Bridge Term Loan CreditAgreement"), pursuant to which
the lenders agreed to make available to the Company term loans in the
aggregate principal amount equal to $2.1 billion. The Company borrowed the
entire amount of the term loans on November 15, 2023.After giving effect to a
prepayment of $100 million on April 15, 2024, the total aggregate principal
amount of term loans outstanding under the Utility Bridge Term Loan Credit
Agreement is $2.0 billion.
On June 28, 2024, the Company amended the Utility Bridge Term Loan Credit
Agreement to, among other things, (i) extend the maturitydate from August 15,
2024 to December 16, 2024, and (ii) modify the mandatory prepayment provision
to require the Company to prepay the outstanding term loans, subject to
certain exceptions, with 100% of the net cash proceeds receivedby the Company
from the issuance of debt securities or incurrence of any debt under any bank
credit facilities (other than the incurrence of any debt under the Utility
Revolving Credit Agreement), in each case, by the Company or its subsidiary,Paci
fic Generation LLC.
The Company expects to prepay a portion of borrowings under the Utility Bridge
Term Loan Credit Agreement withthe net proceeds of this offering. See "Use of
Proceeds."
Maturity and Mandatory Prepayment
The Utility Bridge Term Loan Credit Agreement has a maturity date of December
16, 2024. The Company is required to prepay the outstandingterm loans under
the Utility Bridge Term Loan Credit Agreement, subject to certain exceptions,
with 100% of the net cash proceeds received by the Company from the issuance
of debt securities or incurrence of any debt under any bank credit
facilities(other than the incurrence of any debt under the Utility Revolving
Credit Agreement), in each case, by the Company or its subsidiary, Pacific
Generation LLC.
Interest Rate and Fees
Borrowings under the Utility Bridge Term Loan Credit Agreement bear interest
based on the Utility's election of either (1) Term SOFR(as defined in the
Utility Bridge Term Loan Credit Agreement) (plus a 0.10% credit spread
adjustment) plus an applicable margin of 1.25% or (2) the alternative base
rate plus an applicable margin of 0.25%.
Security
Our obligationsunder the Utility Bridge Term Loan Credit Agreement are secured
by the issuance of first mortgage bonds secured by a first lien on
substantially all of our real property and certain tangible personal
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property related to our facilities, subject to certain exceptions, and rank
pari passu
with our other first mortgage bonds, including the mortgage bonds offered by
thisprospectus supplement and the other first mortgage bonds described under
"--Refinanced First Mortgage Bonds" below.
Certain Covenants and Events of Default
The Utility Bridge Term Loan Credit Agreement includes usual and customary
provisions for term loan agreements of this type, includingcovenants limiting,
with certain exceptions, (1) liens, (2) sale and leaseback transactions, (3)
fundamental changes, (4) entering into swap agreements and (5) modifications
to the Mortgage Indenture. In addition, theUtility Bridge Term Loan Credit
Agreement requires that the Company maintain a ratio of total consolidated
debt to consolidated capitalization of no greater than 65% as of the end of
each fiscal quarter. As of June 30, 2024, the Company was incompliance with
this covenant.
Utility Accounts Receivable Facility
On October 5, 2020, PG&E AR Facility LLC (the "SPV"), a special purpose entity
wholly owned by the Company entered into anaccounts receivable securitization
program (the "Utility Accounts Receivable Facility"). Under this program, we
will sell certain of our receivables and certain related rights to payment and
obligations with respect to such receivables andcertain other related rights
(collectively, the "Receivables") to the SPV, which, in turn, will obtain
loans secured by the Receivables.
On June 9, 2023, the Company entered into an amendment to the Utility Accounts
Receivable Facility to, among other things, extend thescheduled termination
date from September 30, 2024 to June 9, 2025 and increase the low end of the
facility limit from $1.0 billion to $1.25 billion.
On June 26, 2024, the Company entered into an amendment to the Utility
Accounts Receivable Facility to, among other things, extend thescheduled
termination date from June 9, 2025 to June 26, 2026.
Maturity
The Utility Accounts Receivable Facility may be terminated upon the occurrence
of certain specified events, including failure by the SPV to payamounts when
due, certain defaults on indebtedness under our credit facility, certain
judgments, a change of control, certain events negatively affecting the
overall credit quality of transferred Receivables and bankruptcy and
insolvency events. TheUtility Accounts Receivable Facility is scheduled to
terminate on June 26, 2026.
Interest Rate and Fees
The aggregate principal amount of the loans will not exceed between $1.25
billion and $1.5 billion (depending on the seasonalfacility limit applicable
at such time) outstanding at any time and bear interest based on a spread over
Term SOFR (as defined in the underlying receivables financing agreement, as
amended) dependent on the tranche period thereto and any brokeragefees
accrued. The administrative agent for the program receives certain fees as
agent.
Security
We have pledged 100% of the equity interests in the SPV as security for
repayment of obligations.
Certain Covenants and Events of Default
The Utility Accounts Receivable Facility contains certain customary
representations and warranties and affirmative and negative covenants,including
as to the eligibility of the Receivables being sold by the originator and
securing the loans made by the lenders, as well as customary reserve
requirements, accounts receivable securitization program termination events,
originatortermination events and servicer defaults. The accounts
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receivable securitization program termination events permit the lenders to
terminate the underlying receivables financing agreement upon the occurrence
of certain specified events, includingfailure by the SPV to pay amounts when
due, certain defaults on indebtedness under the Company's credit facility,
certain judgments, a change of control, certain events negatively affecting
the overall credit quality of transferred Receivablesand bankruptcy and
insolvency events.
Refinanced First Mortgage Bonds
As part of our emergence from bankruptcy on July 1, 2020, we issued $11.85294
billion aggregate principal amount of first mortgagebonds in satisfaction of
all claims arising out of the Utility Short-Term Senior Notes, the Utility
Long-Term Senior Notes and the Utility Funded Debt, consisting of the New
Utility Short-Term Bonds, the New Utility Long-Term Bonds and the NewUtility
Funded Debt Exchange Bonds (together, the "Refinanced First Mortgage Bonds").
The New Utility Short-Term Bonds consistof $875 million aggregate principal
amount of new 3.45% first mortgage bonds due 2025 and $875 million aggregate
principal amount of new 3.75% first mortgage bonds due 2028.
The New Utility Long-Term Bonds consist of $3.1 billion aggregate principal
amount of new 4.55% first mortgage bonds due 2030 and$3.1 billion aggregate
principal amount of new 4.95% first mortgage bonds due 2050. The New Utility
Funded Debt Exchange Bonds consist of $1.951 billion aggregate principal
amount of new 3.15% first mortgage bonds due 2026 and$1.951 billion aggregate
principal amount of new 4.50% first mortgage bonds due 2040.
Each such series of Refinanced First MortgageBonds was issued under the
Mortgage Indenture and is secured by a first lien, subject to permitted liens,
on substantially all of our real property and certain tangible property
related to our facilities. The Refinanced Mortgage Bonds are theCompany's
senior obligations and rank equally in right of payment with our other
existing or future first mortgage bonds issued under the Mortgage Indenture,
including the mortgage bonds offered hereby.
The Mortgage Indenture contains covenants that limit our ability, to, among
other things:
. create liens on Mortgaged Property;
. withdraw cash held by the Mortgage Trustee; and
. merge or consolidate with another person, or convey, otherwise
transfer or lease all or substantially all of ourMortgaged Property.
We may redeem each series of Refinanced First Mortgage Bonds at any time prior
to maturity, inwhole or in part, at a "make-whole" redemption price set forth
in the applicable supplemental indenture, except that during a period prior to
maturity specified in the applicable supplemental indenture, we may redeem
each series of theRefinanced First Mortgage Bonds in whole or in part, at a
redemption price equal to 100% of the principal amount of the Refinanced First
Mortgage Bonds being redeemed, plus accrued and unpaid interest to, but not
including, the redemption date.
See "Description of the Debt Securities of Pacific Gas and Electric
Company--Description of the First Mortgage Bonds" in theaccompanying
prospectus for a description of the terms and provisions of the Mortgage
Indenture.
Utility Reinstated Collateralized Senior Notes
As part of our emergence from bankruptcy on July 1, 2020, we reinstated $9.575
billion aggregate principal amount
of pre-petition Utility
Reinstated Senior Notes. Each such series of Utility Reinstated Senior Notes
was reinstated on the same contractual terms under the indenture under which
it was originally issued.
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The Utility Reinstated Collateralized Senior Notes consist of $850,000,000
aggregateprincipal amount of the 3.95% Senior Notes due 2047, $600,000,000
aggregate principal amount of the 4.00% Senior Notes due 2046, $450,000,000
aggregate principal amount of the 4.25% Senior Notes due 2046, $600,000,000
aggregate principal amount ofthe 4.30% Senior Notes due 2045, $675,000,000
aggregate principal amount of the 4.75% Senior Notes due 2044, $375,000,000
aggregate principal amount of the 4.60% Senior Notes due 2043, $400,000,000
aggregate principal amount of the 4.45% SeniorNotes due 2042, $350,000,000
aggregate principal amount of the 3.75% Senior Notes due 2042, $250,000,000
aggregate principal amount of the 4.50% Senior Notes due 2041, $300,000,000
aggregate principal amount of the 4.65% Senior Notes due 2028,$400,000,000
aggregate principal amount of the 3.30% Senior Notes due 2027, $1,150,000,000
aggregate principal amount of the 3.30% Senior Notes due 2027, $600,000,000
aggregate principal amount of the 2.95% Senior Notes due 2026, $600,000,000aggre
gate principal amount of the 3.50% Senior Notes due 2025, $450,000,000
aggregate principal amount of the 3.75% Senior Notes due 2024, $350,000,000
aggregate principal amount of the 3.40% Senior Notes due 2024, $300,000,000
aggregate principalamount of the 3.85% Senior Notes due 2023, $500,000,000
aggregate principal amount of the 4.25% Senior Notes due 2023 and $375,000,000
aggregate principal amount of the 3.25% Senior Notes due 2023. On February 15,
2024, we retired our$450,000,000 aggregate principal amount of 3.75% Senior
Notes due 2024. On August 15, 2024, we retired our $350,000,000 aggregate
principal amount of 3.40% Senior Notes due 2024.
We collateralized each series of Utility Reinstated Notes by delivering first
mortgage bonds to the applicable unsecured trustee of suchseries. The Utility
Reinstated Collateralized Senior Notes are the Company's senior obligations
and rank equally in right of payment with our other existing or future first
mortgage bonds issued under the Mortgage Indenture, including themortgage
bonds offered hereby.
We may redeem each series of Utility Reinstated Collateralized Senior Notes at
any time prior to maturity,in whole or in part, at a "make-whole" redemption
price set forth in the applicable supplemental indenture, except that during a
period prior to maturity specified in the applicable supplemental indenture,
we may redeem each series of theUtility Reinstated Collateralized Senior
Notes, in whole or in part, at a redemption price equal to 100% of the
principal amount of the Utility Reinstated Collateralized Senior Notes being
redeemed, plus accrued and unpaid interest to, but notincluding, the
redemption date.
The indentures under which the Utility Reinstated Collateralized Senior Notes
were issued includecovenants limiting, with certain exceptions, sale and
leaseback transactions and consolidation, merger, conveyance or other
transfers.
SubsequentFirst Mortgage Bond Issuances
In connection with the Company's emergence from bankruptcy, in June 2020, the
Company completed thesale of (i) $500 million aggregate principal amount of
floating rate first mortgage bonds due June 16, 2022, (ii) $2.5 billion
aggregate principal amount of 1.75% first mortgage bonds due June 16, 2022,
(iii) $1 billionaggregate principal amount of 2.10% first mortgage bonds due
August 1, 2027, (iv) $2 billion aggregate principal amount of 2.50% first
mortgage bonds due February 1, 2031, (v) $1 billion aggregate principal amount
of 3.30% firstmortgage bonds due August 1, 2040, and (vi) $1.925 billion
aggregate principal amount of 3.50% first mortgage bonds due August 1, 2050.
In May 2022, the Company redeemed all $500 million aggregate principal amount
of floatingrate first mortgage bonds due June 16, 2022 and all $2.5 billion
aggregate principal amount of 1.75% first mortgage bonds due June 16, 2022.
In November 2020, the Company completed the sale of $1.45 billion aggregate
principal amount of floating rate first mortgage bonds dueNovember 15, 2021,
which were repaid at maturity.
In March 2021, the Company completed the sale of (i) $1.5 billion
aggregateprincipal amount of 1.367% first mortgage bonds due March 10, 2023,
(ii) $450 million aggregate principal amount of 3.25% first mortgage
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bonds due June 1, 2031, and (iii) $450 million aggregate principal amount of
4.20% first mortgage bonds due June 1, 2041. In July 2022, the Company
redeemed all $1.5 billionaggregate principal amount of 1.367% first mortgage
bonds due March 10, 2023.
In June 2021, the Company completed the sale of$800 million aggregate
principal amount of 3.000% first mortgage bonds due June 15, 2028.
In November 2021, the Companycompleted the sale of (i) $300 million aggregate
principal amount of floating rate first mortgage bonds due November 14, 2022,
(ii) $900 million aggregate principal amount of 1.70% first mortgage bonds due
November 15, 2023 and(iii) an additional $550 million aggregate principal
amount of 3.25% first mortgage bonds due June 1, 2031 (the "2031 Bonds"). The
2031 Bonds are part of the same series of debt securities issued by the
Company in March2021. In November 2022, the Company repaid at maturity all
$300 million aggregate principal amount of floating rate first mortgage bonds
due November 14, 2022. In November 2023, the Company repaid at maturity all
$900 millionaggregate principal amount of 1.70% first mortgage bonds due
November 15, 2023.
In February 2022, the Company completed the sale of(i) $1 billion aggregate
principal amount of 3.25% first mortgage bonds due 2024, (ii) $400 million
aggregate principal amount of 4.20% first mortgage bonds due 2029, (iii) $450
million aggregate principal amount of 4.40% firstmortgage bonds due 2032 and
(iv) $550 million aggregate principal amount of 5.25% first mortgage bonds due
2052.
In June 2022, theCompany completed the sale of (i) $450 million aggregate
principal amount of 4.950% first mortgage bonds due 2025, (ii) $450 million
aggregate principal amount of 5.450% first mortgage bonds due 2027 and (iii)
$600 million aggregateprincipal amount of 5.900% first mortgage bonds due 2032.
In January 2023, the Company completed the sale of (i) $750 millionaggregate
principal amount of 6.150% first mortgage bonds due 2033 and (ii) $750 million
aggregate principal amount of 6.750% first mortgage bonds due 2053.
In March 2023, the Company completed the sale of $750 million aggregate
principal amount of 6.700% first mortgage bonds due 2053.
In June 2023, the Company completed the sale of (i) $850 million aggregate
principal amount of 6.100% first mortgage bonds due 2029, (ii)$1.15 billion
aggregate principal amount of 6.400% first mortgage bonds due 2033 and (iii)
$500 million aggregate principal amount 6.750% first mortgage bonds due 2053
(the "2053 Bonds"). The 2053 Bonds are part of the sameseries of debt
securities issued by the Company in January 2023.
In November 2023, the Company completed the sale of $800 millionaggregate
principal amount of 6.950% first mortgage bonds due 2034.
In February 2024, the Company completed the sale of (i)$850 million aggregate
principal amount of 5.550% first mortgage bonds due 2029, (ii) $1.1 billion
aggregate principal amount of 5.800% first mortgage bonds due 2034 and (iii)
$300 million aggregate principal amount of 6.750% firstmortgage bonds due 2053
(the "2053 Bonds"). The 2053 Bonds are part of the same series of debt
securities issued by the Company in January 2023 and June 2023.
Each aforementioned series of first mortgage bonds has substantially similar
covenants, events of default, security and other terms as themortgage bonds
offered hereby, with the exception of interest rates, payment dates, maturity
dates and redemption provisions.
Preferred Stock
On July 1, 2020, we reinstated $257,994,500 of shares of our preferred stock
(the "Utility Reinstated Preferred Stock"). Eachsuch series of Utility
Reinstated Preferred Stock was reinstated on the same terms under which it was
originally issued.
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The Utility Reinstated Preferred Stock consists of 4,211,661 shares of 6%
NonredeemableFirst Preferred Stock, 1,173,163 shares of 5.5% Nonredeemable
first Preferred Stock, 400,000 shares of 5% Nonredeemable First Preferred
Stock, 1,778,172 shares of 5% First Preferred Series A Stock, 934,322 shares
of 5% First Preferred Stock, 793,031shares of 4.8% First Preferred Stock,
611,142 shares of 4.5% First Preferred Stock, and 418,291 shares of 4.36%
First Preferred Series A Stock. All Utility Reinstated Preferred Stock that
was reinstated on July 1, 2020 has a $25 par value.
Except as otherwise provided by law, holders of the Utility Reinstated
Preferred Stock have voting rights on the basis of one vote per shareon each
matter submitted to a vote at a meeting of shareholders. Our shareholders may
not cumulate votes in elections of directors. As a result, the holders of the
Utility Reinstated Preferred Stock entitled to exercise more than 50% of the
votingrights in an election of directors can elect all of the directors to be
elected if they choose to do so. In such event, the holders of the remaining
Utility Reinstated Preferred Stock voting for the election of directors will
not be able to electany persons to the Board of Directors.
Dividends
The holders of shares of the Utility Reinstated Preferred Stock are entitled
to receive, out of funds legally available therefor, cumulativepreferential
dividends, when and as declared by our Board of Directors, at the rates set
forth above.
Such dividends shall be declaredand shall be either paid or set apart for
payment before any dividend upon the shares of common stock shall be either
declared or paid. All shares of Utility Reinstated Preferred Stock rank
equally in priority with regard to preference in dividendrights, except that
shares of different classes or different series thereof may differ as to the
amounts of dividends to which they are entitled.
Liquidation Preference
Upon the liquidation or dissolution of the Company at any time and in any
manner, the holders of the Utility Reinstated Preferred Stock will beentitled
to receive an amount equal to the par value of such shares plus an amount
equal to all accumulated and unpaid dividends thereon to and including the
date fixed for such distribution or payment before any amount shall be paid to
the holdersof our common stock (all of which is held by Corp). All shares of
the Utility Reinstated Preferred Stock rank equally in priority with regard to
preference in liquidation rights, except that shares of different classes or
different series thereofmay differ as to the amounts of liquidation payments
to which they are entitled.
Redemption, Repurchase and Other Rights
None of the 6% Nonredeemable First Preferred Stock, 5.5% Nonredeemable First
Preferred Stock and 5% Nonredeemable First Preferred Stock issubject to
redemption. The remaining outstanding series of the Utility Reinstated
Preferred Stock may be redeemed at our option, at any time or from time to
time, at the redemption price fixed for such series of Preferred Stock
together withaccumulated and unpaid dividends at the rate fixed therefor to
and including the date fixed for redemption. None of the Reinstated Utility
Preferred Stock is subject to mandatory redemption. None of the Preferred
Stock has preemptive rights orconversion rights.
Securitizations
AB 1054 Securitizations
On November 12, 2021, PG&E Recovery Funding LLC, a bankruptcy remote, limited
liability company wholly owned by the Company, issuedapproximately $860
million of Series
2021-A
Senior Secured Recovery Bonds. The Series
2021-A
Senior Secured Recovery Bonds were issued in three tranches:(1) approximately
$266 million with an interest rate of 1.460% due July 15, 2033, (2)
approximately $160 million with an interest
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rate of 2.280% due January 15, 2038 and (3) approximately $434 million with an
interest rate of 2.822% due July 15, 2048. The net proceeds were used by the
Company to fundfire risk mitigation capital expenditures that were incurred by
the Company from the period beginning January 2020 through September 2021. On
November 30, 2022, PG&E Recovery Funding LLC issued approximately $983 million
of Series
2022-A
Senior Secured Recovery Bonds. The Series
2022-A
Senior Secured Recovery Bonds were issued in three tranches: (1) approximately
$215 million with an interestrate of 5.045% due July 15, 2034, (2)
approximately $200 million with an interest rate of 5.256% due January 15,
2040 and (3) approximately $568 million with an interest rate of 5.536% due
July 15, 2049. The netproceeds were used by the Company to fund fire risk
mitigation capital expenditures that were incurred by the Company from the
period beginning October 2021 through October 2022. On August 1, 2024, PG&E
Recovery Funding LLC, a bankruptcyremote, limited liability company wholly
owned by the Company, issued approximately $1.419 billion of Series
2024-A
Senior Secured Recovery Bonds. The Series
2024-A
Senior Secured Recovery Bonds were issued in three tranches: (1) approximately
$300 million with an interest rate of 4.838% due June 1, 2033, (2)
approximately $373 million with an interest rate of 5.231% due June 1, 2042and
(3) approximately $746 million with an interest rate of 5.529% due June 1,
2051. The net proceeds were used by the Company to fund fire risk mitigation
capital expenditures that were previously incurred by the Company and
eligiblefor recovery.
SB 901 Securitizations
On May 10, 2022, PG&E Wildfire Recovery Funding LLC, a bankruptcy remote,
limited liability company wholly owned by the Company,issued $3.6 billion
aggregate principal amount of Series
2022-A
Senior Secured Recovery Bonds. The Series
2022-A
Senior Secured Recovery Bonds were issued in fivetranches: (1) $540 million
with an interest rate of 3.594% due June 1, 2032, (2) $540 million with an
interest rate of 4.263% due June 1, 2038, (3) $360 million with an interest
rate of 4.377% due June 3, 2041, (4)$1.26 billion with an interest rate of
4.451% due December 1, 2049 and (5) $900 million with an interest rate of
4.674% due December 1, 2053. The net proceeds were used by the Company to
reimburse itself for previously incurredrecovery costs, including the
retirement of related debt. On July 20, 2022, PG&E Wildfire Recovery Funding
LLC issued $3.9 billion aggregate principal amount of Series
2022-B
Senior SecuredRecovery Bonds. The Series
2022-B
Senior Secured Recovery Bonds were issued in five tranches: (1) approximately
$613 million with an interest rate of 4.022% due June 1, 2033, (2)$600 million
with an interest rate of 4.722% due June 1, 2039, (3) approximately $500
million with an interest rate of 5.081% due June 1, 2043, (4) approximately
$1.15 billion with an interest rate of 5.212% dueDecember 1, 2049 and (5)
approximately $1.037 billion with an interest rate of 5.099% due June 1, 2054.
The net proceeds were used by the Company to reimburse itself for previously
incurred recovery costs, including theretirement of related debt.
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DESCRIPTION OF THE MORTGAGE BONDS
The mortgage bonds represent two series of first mortgage bonds described in
the accompanying prospectus under the section"Description of the Debt
Securities of Pacific Gas and Electric Company--Description of the First
Mortgage Bonds." The following information concerning the mortgage bonds
should be read in conjunction with the statements under suchsection of the
accompanying prospectus, which the following information supplements and, in
the event of any inconsistencies, supersedes. The following information does
not purport to be complete and is subject to, and is qualified in its
entiretyto, the terms of the Mortgage Indenture. The Mortgage Indenture is
described in the accompanying prospectus and has been filed as an exhibit to
the registration statement of which the accompanying prospectus is a part. We
urge you to read theMortgage Indenture and the mortgage bonds because the
Mortgage Indenture and the mortgage bonds, and not this description, define
your rights as holders of the applicable series of mortgage bonds. You may
request copies of the Mortgage Indenture andthe mortgage bonds at our address
set forth under the heading "Where You Can Find More Information."
General
As used in this section, the terms "
we
," "
us
" and "
our
" refer to Pacific Gas and ElectricCompany, and not to any of its direct or
indirect subsidiaries or affiliates. In this section, references to "
Corp
" refer only to PG&E Corporation and not any of its direct or indirect
subsidiaries or affiliates.
The floating rate mortgage bonds are being offered in the aggregate principal
amount of $ and will mature on, 20.
The 20 mortgage bonds are being offered in the aggregate principal amount of $
andwill mature on , 20.
We will issue the mortgage bonds under a mortgage indenture, dated as of June
19,2020 (as heretofore supplemented and amended and to be supplemented by a
supplemental indenture establishing the mortgage bonds of each series (the
"Supplemental Indenture"), the "Mortgage Indenture"), between us and the
MortgageTrustee. The Mortgage Indenture is qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act") and the terms of the mortgage bonds
will include those made part of the Mortgage Indenture by the 1939 Act.
Pursuant to the 1939 Act, if a default occurs on the mortgage bonds, The Bank
of New York Mellon Trust Company, N.A. may be required to resignas trustee
under the Mortgage Indenture if it has a conflicting interest (as defined in
the 1939 Act), unless the default is cured, duly waived or otherwise
eliminated within 90 days.
We will issue the mortgage bonds in minimum denominations of $2,000 and
integral multiples of $1,000 in excess thereof.
We will issue the mortgage bonds in the form of one or more global securities,
which will be deposited with, or on behalf of, The DepositoryTrust Company, or
DTC, and registered in the name of DTC's nominee. Information regarding DTC's
book-entry system is set forth under "--Book-Entry Issuance; Global
Securities."
The Mortgage Indenture constitutes a first lien, subject to Permitted Liens
(as described below), on substantially all of our real propertyand certain
tangible personal property related to our facilities. The Mortgage Indenture
does not limit the amount of debt that we may issue under it. However, we may
issue additional first mortgage bonds under the Mortgage Indenture only on
thebasis of, and to the extent we have available, Property Additions (as
described below), Retired Securities (as described below) and cash. See
"--Issuance of Additional First Mortgage Bonds." The mortgage bonds will be
entitled to thebenefit of the Mortgage Indenture equally and ratably with all
other mortgage bonds issued under the Mortgage Indenture.
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Interest
Floating Rate Mortgage Bonds
Thefloating rate mortgage bonds will bear interest from the date of original
issuance, payable quarterly in arrears on, , and of each year (each,
a"Floating Rate Interest Payment Date") to the person in whose name such
floating rate mortgage bond is registered as of the close of business on the
regular record date for the applicable Floating Rate Interest Payment Date,
which will bethe close of business on (i) the Business Day immediately
preceding such Floating Rate Interest Payment Date so long as all of the
floating rate mortgage bonds remain in book-entry only form or(ii) the,, and
immediately preceding such Floating Rate Interest Payment Date (whether or not
a Business Day) if any of thefloating rate mortgage bonds do not remain in
book-entry only form. However, interest payable at maturity will be paid to
the person to whom the principal is payable. The initial Floating Rate
Interest Payment Date is , 2024.
The floating rate mortgage bonds will bear interest at an annual rate equal to
Compounded SOFR, determined as described below, plus basis points (the
"Margin"). Interest on the floating rate mortgage bonds will accrue from and
including the date of original issuance to but excluding the first Floating
Rate Interest PaymentDate. Starting on the first Floating Rate Interest
Payment Date, interest on each floating rate mortgage bond will accrue from
and including the last Floating Rate Interest Payment Date to which the
Company has paid, or duly provided for thepayment of, interest on that
floating rate mortgage bond to but excluding the next succeeding Floating Rate
Interest Payment Date. No interest will accrue on a floating rate mortgage
bond for the day that the floating rate mortgage bondmatures. The amount of
interest payable for any period will be computed on the basis of a
360-day
year and the actual number of days in the Interest Period.
If any Floating Rate Interest Payment Date falls on a day that is not a
Business Day, the Company will be required to make the interestpayment on the
next succeeding Business Day unless that Business Day is in the next
succeeding calendar month, in which case (other than in the case of the
maturity date) the Company will be required to make the interest payment on
the immediatelypreceding Business Day. If an interest payment is made on the
next succeeding Business Day, no interest will accrue as a result of the delay
in payment. If the maturity date of the floating rate mortgage bonds falls on
a day that is not a BusinessDay, the payment due on such date will be
postponed to the next succeeding Business Day, and no further interest will
accrue in respect of such postponement. "Business Day" means a day other than
(i) a Saturday or Sunday, (ii) aday on which banks in New York, New York are
authorized or obligated by law or executive order to remain closed or (iii) a
day on which the Mortgage Trustee's corporate trust office is closed for
business.
As further described below, on each Interest Payment Determination Date
relating to the applicable Floating Rate Interest Payment Date, theCalculation
Agent (as defined herein) will calculate the amount of accrued interest
payable on the floating rate mortgage bonds by multiplying (i) the outstanding
principal amount of the floating rate mortgage bonds by (ii) the product of(a)
the interest rate for the relevant Interest Period multiplied by (b) the
quotient of the actual number of calendar days in such Interest Period divided
by 360. In no event will the interest rate on the floating rate mortgage
bondsbe less than zero.
The term "Interest Period", with respect to the floating rate mortgage bonds,
means the period commencing onany Floating Rate Interest Payment Date (or,
with respect to the initial Interest Period only, commencing on the initial
issue date) to, but excluding, the next succeeding Floating Rate Interest
Payment Date and, in the case of the last such period,the period from and
including the Floating Rate Interest Payment Date immediately preceding the
maturity date to, but excluding, the maturity date.
Compounded SOFR and the SOFR Index
SOFR is published by the Federal Reserve Bank of New York and is intended to
be a broad measure of the cost of borrowing cash overnightcollateralized by
United States Treasury securities.
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The SOFR Index is published by the Federal Reserve Bank of New York and
measures thecumulative impact of compounding SOFR on a unit of investment over
time, with the initial value set to 1.00000000 on April 2, 2018, the first
value date of SOFR. The SOFR Index value reflects the effect of compounding
SOFR each BusinessDay and allows the calculation of compounded SOFR averages
over custom time periods.
The Federal Reserve Bank of New York notes on itspublication page for the SOFR
Index that use of the SOFR Index is subject to important limitations,
indemnification obligations and disclaimers, including that the Federal
Reserve Bank of New York may alter the methods of calculation, publicationschedu
le, rate revision practices or availability of the SOFR Index at any time
without notice. The interest rate for any Interest Period will not be adjusted
for any modifications or amendments to the SOFR Index or SOFR data that the
FederalReserve Bank of New York may publish after the interest rate for that
Interest Period has been determined.
Compounded SOFR
."Compounded SOFR" will be determined by the Calculation Agent in accordance
with the following formula (and the resulting percentage will be rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point):
where:
"SOFR IndexStart" means, for periods other than the initial Interest Period,
the SOFR Index value on the preceding Interest PaymentDetermination Date, and,
for the initial Interest Period, the SOFR Index value two United States
Government Securities Business Days (as defined herein) before the initial
issue date;
"SOFR IndexEnd" means the SOFR Index value on the Interest Payment
Determination Date relating to the applicable Floating RateInterest Payment
Date (or, in the final Interest Period, relating to the maturity date); and
"dc" is the number of calendardays in the relevant Observation Period.
For purposes of determining Compounded SOFR:
"Interest Payment Determination Date" means the date that is two United States
Government Securities Business Days before eachFloating Rate Interest Payment
Date (or, in the final Interest Period, before the maturity date).
"Observation Period" means,in respect of each Interest Period, the period
from, and including, the date that is two United States Government Securities
Business Days preceding the first date in such Interest Period to, but
excluding, the date that is two United StatesGovernment Securities Business
Days preceding the Floating Rate Interest Payment Date for such Interest
Period (or in the final Interest Period, preceding the maturity date).
"SOFR Index" means, with respect to any United States Government Securities
Business Day:
(1) the SOFR Index value as published by the SOFR Administrator as
such index appears on the SOFRAdministrator's Website at 3:00 p.m.
(New York time) on such United States Government Securities
Business Day (the "SOFR Index Determination Time"); provided that:
(2) if a SOFR Index value does not so appear as specified in clause (1) above at
the SOFR Index DeterminationTime, then: (i) if a Benchmark Transition Event
and its related Benchmark Replacement Date have not occurred with respect
to SOFR, then Compounded SOFR shall be the rate determined pursuant to the
"SOFR Index Unavailable Provisions"described below; or (ii) if a Benchmark
Transition Event and its related Benchmark Replacement Date have occurred with
respect to SOFR, then Compounded SOFR shall be the rate determined pursuant
to the "Effect of Benchmark TransitionEvent" provisions described below.
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"SOFR" means the daily secured overnight financing rate as provided by the
SOFRAdministrator on the SOFR Administrator's Website.
"SOFR Administrator" means the Federal Reserve Bank of New York (or asuccessor
administrator of SOFR).
"SOFR Administrator's Website" means the website of the Federal Reserve Bank
of NewYork, currently at http://www.newyorkfed.org, or any successor source.
"United States Government Securities Business Day" meansany day except for a
Saturday, a Sunday or a day on which the Securities Industry and Financial
Markets Association recommends that the fixed income departments of its
members be closed for the entire day for purposes of trading in United
Statesgovernment securities.
Notwithstanding anything to the contrary in the documentation relating to the
floating rate mortgage bonds, if theCompany (or its Designee) determines on or
prior to the relevant Reference Time (as defined herein) that a Benchmark
Transition Event and its related Benchmark Replacement Date have occurred with
respect to determining Compounded SOFR, then thebenchmark replacement
provisions set forth below under "Effect of Benchmark Transition Event" will
thereafter apply to all determinations of the rate of interest payable on the
floating rate mortgage bonds.
For the avoidance of doubt, in accordance with the benchmark replacement
provisions, after a Benchmark Transition Event and its relatedBenchmark
Replacement Date have occurred, the interest rate for each Interest Period on
the floating rate mortgage bonds will be an annual rate equal to the sum of
the Benchmark Replacement and the Margin.
SOFR Index Unavailable Provisions
. If a SOFR IndexStart or SOFR IndexEnd is not published on the associated
Interest PaymentDetermination Date and a Benchmark Transition Event and its
related Benchmark Replacement Date have not occurred with respect to SOFR,
"Compounded SOFR" means, for the applicable Interest Period for which such
index is not available, therate of return on a daily compounded interest
investment calculated in accordance with the formula for SOFR Averages, and
definitions required for such formula, published on the SOFR Administrator's
Website, initially located athttps://www.newyorkfed.org/markets/treasury-repo-re
ference-rates-information. For the purposes of this provision, references in
the SOFR Averages compounding formula and related definitions to "calculation
period" shall be replacedwith "Observation Period" and the words "that is,
30-,
90-,
or
180-
calendar days" shall be removed. IfSOFR does not so appear for any day, "i" in
the Observation Period, SOFRi for such day "i" shall be SOFR published in
respect of the first preceding United States Government Securities Business
Day for which SOFR was published onthe SOFR Administrator's Website.
Effect of Benchmark Transition Event
Benchmark Replacement
Ifthe Company (or its Designee) determines that a Benchmark Transition Event
and its related Benchmark Replacement Date have occurred prior to the
Reference Time in respect of any determination of the Benchmark on any date,
the Benchmark Replacementwill replace the then-current Benchmark for all
purposes relating to the floating rate mortgage bonds in respect of such
determination on such date and all determinations on all subsequent dates.
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Benchmark Replacement Conforming Changes
In connection with the implementation of a Benchmark Replacement, the Company
(or its Designee) will have the right to make BenchmarkReplacement Conforming
Changes from time to time.
Decisions and Determinations
Any determination, decision or election that may be made by the Company (or
its Designee) pursuant this subsection "Effect of BenchmarkTransition Event,"
including any determination with respect to tenor, rate or adjustment or of
the occurrence or
non-occurrence
of an event, circumstance or date and any decision to take or refrain
fromtaking any action or any selection:
. will be conclusive and binding absent manifest error;
. will be made in the Company's (or its Designee's) sole discretion;
. if made by our designee, will be made after consultation with us, and such designee
will not make any suchdetermination, decision or election to which we object; and
. notwithstanding anything to the contrary in any documentation relating to the floating rate mortgage bonds,
shallbecome effective without consent from the holders of the floating rate mortgage bonds or any other party.
CertainDefined Terms
As used in this subsection "Effect of Benchmark Transition Event," the
following terms have the followingmeanings:
"Benchmark" means, initially, Compounded SOFR, as such term is defined above;
provided that if a Benchmark TransitionEvent and its related Benchmark
Replacement Date have occurred with respect to Compounded SOFR (or the
published SOFR Index used in the calculation thereof) or the then-current
Benchmark, then "Benchmark" means the applicable BenchmarkReplacement.
"Benchmark Replacement" means the first alternative set forth in the order
below that can be determined by theCompany (or its Designee) as of the
Benchmark Replacement Date:
(1) the sum of: (a) the alternate rate of interest that has been selected or recommended by the RelevantGovernmental
Body as the replacement for the then-current Benchmark and (b) the Benchmark Replacement Adjustment;
(2) the sum of: (a) the ISDA Fallback Rate (as defined herein) and (b) the Benchmark ReplacementAdjustment; and
(3) the sum of: (a) the alternate rate of interest that has been selected by the Company (or its Designee)
asthe replacement for the then-current Benchmark giving due consideration to any industry-accepted
rate of interest as a replacement for the then-current Benchmark for United States dollar
denominated floating rate debt securities at such time and(b) the Benchmark Replacement Adjustment.
"Benchmark Replacement Adjustment" means the first alternativeset forth in the
order below that can be determined by the Company (or its Designee) as of the
Benchmark Replacement Date:
(1) the spread adjustment, or method for calculating or determining such
spread adjustment (which may be positiveor negative value or zero) that
has been selected or recommended by the Relevant Governmental Body for
the applicable Unadjusted Benchmark Replacement (as defined herein);
(2) if the applicable Unadjusted Benchmark Replacement is equivalent
to the ISDA Fallback Rate, then the ISDAFallback Adjustment; and
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(3) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Company(or
its Designee) giving due consideration to any industry-accepted spread adjustment, or method for calculating
or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable
Unadjusted BenchmarkReplacement for United States dollar denominated floating rate debt securities at such time.
The Benchmark ReplacementAdjustment shall not include the Margin specified in
this prospectus supplement and such Margin shall be applied to the Benchmark
Replacement to determine the interest payable on the floating rate mortgage
bonds.
"Benchmark Replacement Conforming Changes" means, with respect to any
Benchmark Replacement, any technical, administrative oroperational changes
(including changes to the definition or interpretation of "Interest Period",
timing and frequency of determining rates and making payments of interest,
rounding of amounts or tenor, and other administrative matters), orany other
changes to any other terms or provisions of the floating rate mortgage bonds,
in each case that the Company (or its Designee) decides may be appropriate to
reflect the adoption of such Benchmark Replacement in a manner substantiallycons
istent with market practice (or, if the Company (or its Designee) decides that
adoption of any portion of such market practice is not administratively
feasible or if the Company (or its Designee) determines that no market
practice for use of theBenchmark Replacement exists, in such other manner as
the Company (or its Designee) determines is reasonably necessary or
practicable).
"Benchmark Replacement Date" means the earliest to occur of the following
events with respect to the then-current Benchmark(including the daily
published component used in the calculation thereof):
(1) in the case of clause (1) or (2) of the definition of "Benchmark Transition Event,"
the later of(a) the date of the public statement or publication of information
referenced therein and (b) the date on which the administrator of the Benchmark
permanently or indefinitely ceases to provide the Benchmark (or such component); or
(2) in the case of clause (3) of the definition of "Benchmark Transition Event," the
date of thepublic statement or publication of information referenced therein.
For the avoidance of doubt, if the event giving riseto the Benchmark
Replacement Date occurs on the same day as, but earlier than, the Reference
Time in respect of any determination, the Benchmark Replacement Date will be
deemed to have occurred prior to the Reference Time for such determination.
"Benchmark Transition Event" means the occurrence of one or more of the
following events with respect to the then-currentBenchmark (including the
daily published component used in the calculation thereof):
(1) a public statement or publication of information by or on behalf of the administrator of the Benchmark (or
suchcomponent) announcing that such administrator has ceased or will cease to provide the Benchmark (or
such component), permanently or indefinitely, provided that, at the time of such statement or publication,
there is no successor administrator thatwill continue to provide the Benchmark (or such component);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of theBenchmark
(or such component), the central bank for the currency of the Benchmark (or such component), an insolvency
official with jurisdiction over the administrator for the Benchmark (or such component), a resolution authority
with jurisdictionover the administrator for the Benchmark (or such component) or a court or an entity with
similar insolvency or resolution authority over the administrator for the Benchmark (or such component), which
states that the administrator of the Benchmark(or such component) has ceased or will cease to provide the
Benchmark (or such component) permanently or indefinitely, provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide theBenchmark (or such component); or
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(3) a public statement or publication of information by the regulatory supervisor for the
administrator of theBenchmark announcing that the Benchmark is no longer representative.
"ISDA Definitions" means the 2006 ISDADefinitions published by the ISDA or any
successor thereto, as amended or supplemented from time to time, or any
successor definitional booklet for interest rate derivatives published from
time to time.
"ISDA Fallback Adjustment" means the spread adjustment (which may be a
positive or negative value or zero) that would apply forderivatives
transactions referencing the ISDA Definitions to be determined upon the
occurrence of an index cessation event with respect to the Benchmark.
"ISDA Fallback Rate" means the rate that would apply for derivatives
transactions referencing the ISDA Definitions to be effectiveupon the
occurrence of an index cessation date with respect to the Benchmark for the
applicable tenor excluding the applicable ISDA Fallback Adjustment.
"Reference Time" with respect to any determination of the Benchmark means (1)
if the Benchmark is Compounded SOFR, the SOFRIndex Determination Time, as such
time is defined above, and (2) if the Benchmark is not Compounded SOFR, the
time determined by the Company (or its Designee) in accordance with the
Benchmark Replacement Conforming Changes.
"Relevant Governmental Body" means the Federal Reserve Board and/or the
Federal Reserve Bank of New York, or a committeeofficially endorsed or
convened by the Federal Reserve Board and/or the Federal Reserve Bank of New
York or any successor thereto.
"Unadjusted Benchmark Replacement" means the Benchmark Replacement excluding
the Benchmark Replacement Adjustment.
Calculation of the Floating Interest Rate
The "Calculation Agent" means a banking institution or trust company appointed
by us to act as calculation agent, initially The Bankof New York Mellon Trust
Company, N.A.
Absent willful misconduct, bad faith or manifest error, the calculation of the
applicable interestrate for each Interest Period by the Calculation Agent, or
in certain circumstances described above, by the Company (or its Designee),
will be final and binding on the Company, the Mortgage Trustee and the holders
of the floating rate mortgagebonds.
None of the Mortgage Trustee, paying agent, registrar or Calculation Agent
shall be under any obligation (i) to monitor,determine or verify the
unavailability or cessation of SOFR, the SOFR Index or any applicable
Benchmark, or whether or when there has occurred, or to give notice to any
other transaction party of the occurrence of, any Benchmark Transition Event
orrelated Benchmark Replacement Date, (ii) to select, determine or designate
any alternative method, Benchmark Replacement or alternative index, or other
successor or replacement alternative index, or whether any conditions to the
designation ofsuch a rate or index have been satisfied, (iii) to select,
determine or designate any Benchmark Replacement Adjustment, or other modifier
to any replacement or successor index, or (iv) to determine whether or what
Benchmark ReplacementConforming Changes with respect to such alternative
method, Benchmark Replacement or alternative index are necessary or advisable,
if any, in connection with any of the foregoing.
None of the Mortgage Trustee, paying agent, registrar or Calculation Agent
shall be liable for any inability, failure or delay on its part toperform any
of its duties described in this prospectus supplement and the accompanying
prospectus as a result of the unavailability of SOFR, the SOFR Index or other
applicable Benchmark Replacement, including as a result of any failure,
inability,delay, error or inaccuracy on the part of any other transaction
party in providing any direction, instruction, notice or information
contemplated by this prospectus supplement and the accompanying prospectus and
reasonably required for theperformance of such duties.
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20Mortgage Bonds
The 20mortgage bonds will bear interest from, 2024 at % per annum, payable
semiannually oneachand, commencing on, 20.
Interest on the20mortgage bonds payable on each interest payment date will be
paid to the person in whose name that 20 mortgage bond is registered as of the
close of business on the regular record date for the applicable interest
payment date, whichwill be the close of business on (i) the Business Day
immediately preceding such interest payment date so long as all of the
20mortgage bonds remain in book-entry only form or(ii) theandimmediately
preceding such interest payment date (whether or not a Business Day) if any of
the 20mortgage bonds do not remain in book-entry only form. However,
interestpayable at maturity will be paid to the person to whom the principal
is payable.
If there has been a default in the payment of intereston the 20mortgage bonds,
the defaulted interest may be paid to the holders of the 20mortgage bonds
plus, in either case, accrued and unpaid interest thereon to the redemption
date as of a special record date for the payment of suchdefaulted interest
which shall not be more than 30 days and not less than 10 days prior to the
date of the proposed payment and not less than 25 days after the receipt by
the Mortgage Trustee of the notice of the proposed payment.
Interest on the 20mortgage bonds will be calculated on the basis of
a 360-day year
comprised of
twelve 30-day months.
Optional Redemption
Floating Rate Mortgage Bonds
Thefloating rate mortgage bonds are not subject to optional redemption.
20Mortgage Bonds
Prior to , 20 (months prior to the maturity date of the 20mortgage bonds) (the
"Par CallDate"), the Company may redeem the 20mortgage bonds at its option, in
whole or in part, at any time and from time to time, at a redemption price
(expressed as a percentage of the principal amount and rounded to three
decimal places)equal to the greater of:
. (1)(a) the sum of the present values of the remaining scheduled payments of principal and interest thereondiscounted
to the redemption date (assuming the mortgage bonds matured on the Par Call Date) on a semi-annual basis (assuming a
360-day
year consisting of twelve
30-day
months) at the Treasury Rate plusbasis points, less (b)
interest accrued to, but excluding, the date of redemption; and
. (2) 100% of the principal amount of the 20 mortgage bonds to be redeemed,
plus, in either case, accrued and unpaid interest thereon to, but excluding,
the redemption date.
On or after the Par Call Date, the Company may redeem the 20mortgage bonds, in
whole or in part, at any time and from time to time, ata redemption price
equal to 100% of the principal amount of the 20mortgage bonds being redeemed
plus accrued and unpaid interest thereon to, but excluding, the redemption
date.
"Treasury Rate" means, with respect to any redemption date, the yield
determined by the Company in accordance with the following twoparagraphs.
The Treasury Rate shall be determined by the Company after 4:15 p.m., New York
City time (or after such time as yields onU.S. government securities are
posted daily by the Board of Governors of the Federal Reserve System), on the
third business day preceding the redemption date based upon the yield or
yields for the most
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recent day that appear after such time on such day in the most recent
statistical release published by the Board of Governors of the Federal Reserve
System designated as "Selected InterestRates (Daily)--H.15" (or any successor
designation or publication) ("H.15") under the caption "U.S. government
securities-Treasury constant maturities-Nominal" (or any successor caption or
heading) ("H.15TCM"). In determining the Treasury Rate, the Company shall
select, as applicable: (1) the yield for the Treasury constant maturity on
H.15 exactly equal to the period from the redemption date to the Par Call Date
(the "RemainingLife"); or (2) if there is no such Treasury constant maturity
on H.15 exactly equal to the Remaining Life, the two yields--one yield
corresponding to the Treasury constant maturity on H.15 immediately shorter
than and one yieldcorresponding to the Treasury constant maturity on H.15
immediately longer than the Remaining Life--and shall interpolate to the Par
Call Date on a straight-line basis (using the actual number of days) using
such yields and rounding the resultto three decimal places; or (3) if there is
no such Treasury constant maturity on H.15 shorter than or longer than the
Remaining Life, the yield for the single Treasury constant maturity on H.15
closest to the Remaining Life. For purposes ofthis paragraph, the applicable
Treasury constant maturity or maturities on H.15 shall be deemed to have a
maturity date equal to the relevant number of months or years, as applicable,
of such Treasury constant maturity from the redemption date.
If on the third business day preceding the redemption date H.15 TCM is no
longer published, the Company shall calculate the Treasury Ratebased on the
rate per annum equal to the semi-annual equivalent yield to maturity at 11:00
a.m., New York City time, on the second business day preceding such redemption
date of the United States Treasury security maturing on, or with a
maturitythat is closest to, the Par Call Date. If there is no United States
Treasury security maturing on the Par Call Date but there are two or more
United States Treasury securities with a maturity date equally distant from
the Par Call Date, one with amaturity date preceding the Par Call Date and one
with a maturity date following the Par Call Date, the Company shall select the
United States Treasury security with a maturity date preceding the Par Call
Date. If there are two or more United StatesTreasury securities maturing on
the Par Call Date or two or more United States Treasury securities meeting the
criteria of the preceding sentence, the Company shall select from among these
two or more United States Treasury securities the UnitedStates Treasury
security that is trading closest to par based upon the average of the bid and
asked prices for such United States Treasury securities at 11:00 a.m., New
York City time. In determining the Treasury Rate in accordance with the terms
ofthis paragraph, the semi-annual yield to maturity of the applicable United
States Treasury security shall be based upon the average of the bid and asked
prices (expressed as a percentage of principal amount) at 11:00 a.m., New York
City time, ofsuch United States Treasury security, and rounded to three
decimal places.
The Company's actions and determinations in determiningthe redemption price
shall be conclusive and binding for all purposes, absent manifest error.
The Mortgage Trustee shall have no duty todetermine, or verity the
calculations of, the redemption price.
Notice of any redemption will be mailed or electronically delivered
(orotherwise transmitted in accordance with the depositary's procedures) at
least 10 days but not more than 60 days before the redemption date to each
holder of the mortgage bonds to be redeemed.
In the case of a partial redemption, selection of the mortgage bonds for
redemption will be made pro rata, by lot or by such other method asthe
Mortgage Trustee in its sole discretion deems appropriate and fair. No
mortgage bonds of a principal amount of $2,000 or less will be redeemed in
part. If any mortgage bond is to be redeemed in part only, the notice of
redemption that relates tothe mortgage bond will state the portion of the
principal amount of the mortgage bond to be redeemed. A new mortgage bond in a
principal amount equal to the unredeemed portion of the mortgage bond will be
issued in the name of the holder of themortgage bond upon surrender for
cancellation of the original mortgage bond. For so long as the mortgage bonds
are held by DTC (or another depositary), the redemption of the mortgage bonds
shall be done in accordance with the policies and proceduresof the depositary.
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Unless we default in payment of the redemption price of the mortgage bonds, on
and after theredemption date, interest will cease to accrue on the mortgage
bonds or portions of the mortgage bonds called for redemption.
We willhave the right to provide conditional redemption notices for
redemptions that are contingent upon the occurrence or nonoccurrence of an
event or condition that cannot be ascertained prior to the time we are
required to notify holders of theredemption.
A conditional notice may state that if we have not deposited redemption funds
with the Mortgage Trustee or a paying agent onor before the redemption date or
we have directed the Mortgage Trustee or paying agent not to apply money
deposited with it for redemption of mortgage bonds, we will not be required to
redeem the mortgage bonds on the redemption date.
Subject to the foregoing and to applicable law (including, without limitation,
United States federal securities laws), we or our affiliatesmay, at any time
and from time to time, purchase outstanding mortgage bonds by tender, in the
open market or by private agreement.
Open MarketPurchases; Mandatory Redemption; No Sinking Fund
We may at any time and from time to time purchase mortgage bonds in the open
marketor otherwise. We will not be required to make any mandatory redemption
or sinking fund payments with respect to the mortgage bonds.
Lien of theMortgage Indenture
General
The Mortgage Indenture creates a first lien, subject to Permitted Liens, on
substantially all of our real property and certain tangiblepersonal property
related to our facilities. We refer to property that is subject to the lien of
the Mortgage Indenture as "Mortgaged Property" and property that is excepted
from the lien of the Mortgage Indenture as "ExceptedProperty."
The Mortgage Indenture provides that after-acquired property (other than
after-acquired property qualifying as ExceptedProperty) located in the State
of California will be subject to the lien of the Mortgage Indenture (subject
to Permitted Liens); provided, however, that in the case of a consolidation or
merger (whether or not we are the surviving corporation) orthe transfer or
lease of all or substantially all of the Mortgaged Property, the Mortgage
Indenture will not be required to be a lien upon any of the properties then
owned or thereafter acquired by the successor corporation except propertiesacqui
red from us in or as a result of that transaction, to the extent not
constituting Excepted Property, and improvements, extensions and additions to
those properties and renewals, replacements and substitutions of or for any
part or partsthereof. In addition, after-acquired property may be subject to
liens existing or placed thereon at the time of acquisition thereof,
including, but not limited to, purchase money liens, and, in certain
circumstances, liens attaching to the propertyprior to the recording or filing
of an instrument specifically subjecting the property to the lien of the
Mortgage Indenture.
TheMortgage Indenture provides that the Mortgage Trustee shall have a lien,
prior to the mortgage bonds, on the Mortgaged Property and on all other
property and funds held or collected by the Mortgage Trustee, other than
property and funds held intrust for the payment of principal, premium, if any,
and interest on the mortgage bonds, as security for the payment of the
Mortgage Trustee's reasonable compensation and expenses, and as security for
the performance by us of our obligation toindemnify the Mortgage Trustee
against certain liabilities.
Without the consent of the holders, we and the Mortgage Trustee may enterinto
supplemental indentures in order to subject additional property to the lien of
the Mortgage Indenture (including property which would
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otherwise be Excepted Property). This property would thereupon constitute
Property Additions (so long as it would otherwise qualify as Property
Additions as described below) and be available as abasis for the issuance of
additional first mortgage bonds. See "--Issuance of Additional First Mortgage
Bonds."
We willissue a portion of the mortgage bonds under the Mortgage Indenture
based upon the value of Property Additions constituting Unfunded Property.
Pursuant to the Mortgage Indenture, the Company must cause the Supplemental
Indenture (or a memorandumthereof) to be promptly recorded and filed in such
manner and in such places, as may be required by law in order to perfect the
liens created thereby and within 120 days following the date of such
instrument, provide the Mortgage Trustee an opinionstating that the
Supplemental Indenture (or a memorandum thereof) have been so recorded and
filed. The Company has delivered the opinion of Hunton Andrews Kurth LLP dated
June 29, 2024 as to the recording and filings of instruments prior tosuch date.
Excepted Property
The Mortgage Indenture constitutes a first lien, subject to Permitted Liens,
on substantially all of our real property and certain tangiblepersonal
property related to our facilities, located in the State of California, except
for the Diablo Canyon nuclear power plant, our corporate offices, certain
specified properties as set forth in the Mortgage Indenture and the following
ExceptedProperty (unless otherwise indicated in any applicable prospectus
supplement):
. all money, investment property and deposit accounts and security entitlements (as
those terms are defined in theCalifornia Commercial Code as in effect on the date of
execution of the Mortgage Indenture), and all cash on hand or on deposit in banks or
other financial institutions, shares of stock, joint ventures, interests in general or
limited partnershipsor limited liability companies, bonds, notes, other evidences of
indebtedness and other securities, commodity accounts and policies of insurance on
the lives of our officers and directors, of whatever kind and nature, in each case to
the extent notpaid or delivered to, deposited with or held by the Mortgage Trustee;
. all accounts, chattel paper, commercial tort
claims, documents, general intangibles (with
certain exclusions suchas licenses and
permits to use the real property of others),
instruments, letter-of-credit
rights and letters of credit (as those terms are defined in theCalifornia Commercial
Code) and all contracts, leases (including, but not limited to, the lease of certain
real property at our Diablo Canyon nuclear power plant), operating agreements and
other agreements of whatever kind and nature; all contractrights, bills and notes;
. all revenues, income and earnings, all accounts receivable, rights to payment and unbilled revenues,
and allrents, tolls, issues, product and profits, claims, credits, demands and judgments,
including any rights in or to rates, revenue components, charges, tariffs, or amounts arising therefrom,
or in any amounts that are accrued and recorded in aregulatory account for collections by us;
. all governmental and other licenses, permits, franchises, consents
and allowances including all emissionallowances and greenhouse gas
allowances (or similar rights) created under any similar existing
or future law relating to abatement or control of pollution of the
atmosphere, water or soil, other than all licenses and permits to
use the realproperty of others, franchises to use public roads,
streets and other public properties, rights of way and other rights,
or interests relating to the occupancy or use of real property;
. all patents, patent licenses and other patent rights, patent applications, trade names, trademarks,
copyrightsand other intellectual property, including computer software and software licenses;
. all claims, credits, choses in action, and other intangible property;
. all automobiles, buses, trucks, truck cranes, tractors, trailers, motor vehicles and similar vehicles
and movableequipment; all rolling stock, rail cars and other railroad equipment; all vessels,
boats, barges and other marine equipment; all airplanes, helicopters, aircraft engines and other
flight equipment; and all parts, accessories and supplies used inconnection with any of the foregoing;
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. all goods, stock in trade, wares, merchandise and inventory held for the purpose of
sale or lease in the ordinarycourse of business; all materials, supplies, inventory
and other items of personal property that are consumable (otherwise than by
ordinary wear and tear) in their use in the operation of the Mortgaged Property;
. all fuel, whether or not that fuel is in a form consumable in the operation of the Mortgaged
Property, includingseparate components of any fuel in the forms in which those components exist
at any time before, during or after the period of the use thereof as fuel; all hand and other
portable tools and equipment; all furniture and furnishings; and computers anddata processing,
data storage, data transmission, telecommunications and other facilities, equipment and
apparatus, which, in any case, are used primarily for administrative or clerical purposes or are
otherwise not necessary for the operation ormaintenance of the facilities, machinery, equipment
or fixtures described in the granting clauses of the Mortgage Indenture as Mortgaged Property;
. all personal property, the perfection of a security interest in which is not governed by the CaliforniaCommercial Code;
. all oil, gas and other minerals (as those terms are defined in the California Commercial Code) and all coal, ore,gas, oil
and other minerals and all timber, and all rights and interests in any of the foregoing, whether or not the minerals or
timber have been mined or extracted or otherwise separated from the land; and all electric energy and capacity, gas(natural
or artificial), steam, water and other products generated, produced, manufactured, purchased or otherwise acquired by us;
. all property that is the subject of a lease agreement designating us as lessee and all our
right, title andinterest in and to that leased property and in, to and under that lease
agreement, whether or not that lease agreement is intended as security (including, but
not limited to, certain real property leased at our Diablo Canyon nuclear power plant);
. all property, real, personal and mixed, which subsequent to the execution date
of the Mortgage Indenture, hasbeen released from the lien of the Mortgage
Indenture, and any improvements, extensions and additions to those properties
and renewals, replacements and substitutions of or for any parts thereof;
. all property, real, personal and mixed, that is stated in the Mortgage
Indenture to not be subject to the lien ofthe Mortgage Indenture;
. all Environmental Remediation Sites;
. all Diablo Canyon Property;
. all General Office Property;
. certain hydro properties identified in the Mortgage Indenture;
. all Mitigation Property;
. all Surplus Property; and
. all proceeds (as that term is defined in the California Commercial Code) of the foregoing Excepted Property;
provided, however, that Excepted Property shall not include the identifiable
proceeds (as that term is defined in the CaliforniaCommercial Code) of any
Mortgaged Property that we have disposed of in violation of the terms of the
Mortgage Indenture.
If an event ofdefault occurs under the Mortgage Indenture, certain of the
Excepted Property may become subject to the lien of the Mortgage Indenture.
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The Mortgage Indenture permits us to create or allow to exist certain
"PermittedLiens," such as mortgages, deeds of trust, pledges, security
interests, leases, reservations, restrictions, charges, encumbrances, or other
liens on the Mortgaged Property which rank senior to the lien of the Mortgage
Indenture.
"Permitted Liens" include:
. to the extent we consolidate with, or merge into, another entity, liens on the assets of such entity in
existenceon the date of the consolidation or merger and securing debt of such entity, provided that the
debt and liens were not created or incurred in anticipation of the consolidation or merger and do not
extend to any other Mortgaged Property in existenceimmediately prior to the consolidation or merger;
. as to property acquired by us after the date of execution of the Mortgage Indenture, liens existing or placedthereon
at the time of the acquisition thereof, provided that the liens do not extend to any other Mortgaged Property;
. liens for taxes, assessments and other governmental charges or requirements which are
not delinquent or which arebeing contested in good faith by appropriate proceedings;
. mechanics', workmen's, vendors', repairmen's, materialmen's, warehousemen's andcarriers' liens, inchoate liens, other liens
incident to construction, liens or privileges of any of our employees for salary or wages earned, but not yet payable, and other
liens, including, without limitation, liens for workers'compensation awards, arising in the ordinary course of business for
charges or requirements which are not delinquent or which are being contested in good faith and by appropriate proceedings;
. liens in respect of attachments, judgments or awards arising out of judicial or administrative proceedings(i) in an amount
not exceeding the greater of (A) $10 million to the extent in existence in calendar year 2020; provided, that, with
respect to measurement of these liens in existence in any subsequent calendar year, the amount shall beincreased by
the percentage increase in the consumer price index for all urban consumers, U.S. City average, or urban CPI, for the
period commencing on January 1, 2020 and ending on January 1 of the applicable calendar year and(B) three percent of the
principal amount of the mortgage bonds then outstanding or (ii) with respect to which we shall (x) in good faith be
prosecuting an appeal or other proceeding for review and with respect to which we shall havesecured a stay of execution
pending the appeal or other proceeding or (y) have the right to prosecute an appeal or other proceeding for review;
. easements, encumbrances, leases, reservations, restrictions or other rights of others in,
on, over and/or across,and laws, regulations and restrictions affecting, and defects,
irregularities, exceptions and limitations in title to, the Mortgaged Property or any
part thereof; provided, however, that the easements, encumbrances, leases, reservations,
rights,laws, regulations, restrictions, defects, irregularities, exceptions and
limitations (A) do not, in our opinion, materially impair the use by us of such Mortgaged
Property for the purposes for which it is held by us or (B) have beeninsured over by
a lender's policy of title insurance in favor of the Mortgage Trustee, as mortgagee;
. conservation easements in accordance with our Settlement Agreement as modified and approved by
the PublicUtilities Commission of the State of California in its Opinion and Order of December
18, 2003 and the Stipulation Resolving Issues Regarding the Land Conservation Commitment, dated
September 25, 2003, as filed with the Public UtilitiesCommission of the State of California;
. defects, irregularities,
exceptions and
limitations in title to
real property subject
to rights-of-way or
other similar rights
in favor of us
or used or to be
used by us primarily
for right-of-way purposes
or real property held under lease, easement, license or
similar right; provided, however, that (i) we obtain from
the apparentowner or owners of the real property a
sufficient right, by the terms of the instrument granting
the right-of-way, lease,
easement, license or similar right,to the use thereof for the purposes for which we acquired it,
(ii) such defects, irregularities, exceptions or limitations are subordinated to our interest
in such real property, (iii) we have power under eminent domain or similar statutesto remove the
defects, irregularities, exceptions or limitations to the extent such defects, irregularities,
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exceptions or limitations affect our interest therein or (iv) the defects,
irregularities, exceptions and limitations may be otherwise remedied
without undue effort or expense; and defects,irregularities, exceptions and
limitations in title to flood lands, flooding rights and/or water rights;
. liens upon real property or rights in or relating to real property for the purpose of the distribution ofelectricity or gas,
for the purpose of telephonic, telegraphic, radio, wireless or other electronic communication or otherwise for the purpose of
obtaining rights-of-way, which
liens secure or evidence indebtedness or other obligations neither created,
assumed nor guaranteed by us nor on account of whichit customarily pays interest;
. leases, licenses, or occupancy agreements existing at the date of execution of
the Mortgage Indenture affectingMortgaged Property owned by us at that time, and
renewals and extensions thereof; and leases, licenses, or occupancy agreements
affecting that Mortgaged Property entered into after the date of execution of the
Mortgage Indenture, or affectingmortgaged properties acquired by us after that
date which, in either case, (i) have terms of not more than 10 years (including
extensions or renewals at the option of the tenant) or (ii) do not materially impair
the use by us of theproperties for the purposes for which they are held by us;
. liens vested in lessors, licensors, franchisors or permittors
for rent or other amounts to become due or forother obligations
or acts to be performed, the payment of which rent or other
amounts or the performance of which other obligations or acts is
required under leases, subleases, licenses, franchises or permits,
so long as the payment of the rent orother amounts or the
performance of the other obligations or acts is not delinquent or
is being contested in good faith and by appropriate proceedings;
. controls, restrictions, obligations, duties and/or other burdens imposed by
federal, state, municipal or otherlaw, or by rules, regulations or orders
of governmental authorities, upon the Mortgaged Property or any part thereof
or the operation or use thereof or upon us with respect to the Mortgaged
Property or any part thereof or the operation or usethereof or with respect to
any franchise, grant, license, permit or public purpose requirement, or any
rights reserved to or otherwise vested in governmental authorities to impose
any such controls, restrictions, obligations, duties and/or otherburdens;
. rights which governmental authorities may have by virtue of franchises, grants, licenses, permits or contracts,or
by virtue of law, to purchase, recapture or designate a purchaser of or order the sale of the Mortgaged
Property or any part thereof, to terminate franchises, grants, licenses, permits, contracts or other rights
or to regulate our property andbusiness; and any and all our obligations correlative to any of these rights;
. liens required by law or governmental regulations (i) as a condition
to the transaction of any business orthe exercise of any privilege or
license, (ii) to enable us to maintain self-insurance or to participate
in any funds established to cover any insurance risks, (iii) in
connection with workers' compensation, unemployment insurance,social
security or any pension or welfare benefit plan or (iv) to share in the
privileges or benefits required for companies participating in one or
more of the arrangements described in clauses (ii) and (iii) above;
. liens on the Mortgaged Property or any part thereof which are granted by us to secure duties or
public orstatutory obligations or to secure, or serve in lieu of, surety, stay or appeal bonds;
. rights reserved to or vested in others to take or receive any part of any coal,
ore, gas, oil and other minerals,any timber and/or any electric capacity or energy,
gas, water, steam and any other products, developed, produced, manufactured,
generated, purchased or otherwise acquired by us or by others on our property;
. rights and interests of persons other than us arising out of contracts, agreements and other instruments to whichwe
are a party and which relate to the common ownership or joint use of property and all liens on the interests
of persons other than us in property owned in common by those persons and us if and to the extent that the
enforcement of those lienswould not adversely affect our interests in that property in any material respect;
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. any restrictions on transfer or assignment and/or requirements of any assignee to qualify
as a permittedtransferee or assignee and/or a public utility or public service corporation;
. any liens (A) which have been bonded over for the full amount in dispute or (B)
for the payment ofwhich other adequate security arrangements have been made;
. easements, ground leases
or right-of-way in,
upon, over and/or
across our property
or rights-of-way in
our favor for the purpose of roads, pipelines, transmission lines, distribution lines, communication lines, railways,
removal of coal orother minerals or timber, and other like purposes, or for the joint or common use of real
property, rights-of-way,
facilities
and/or equipment; provided,however, that the grant
does not materially impair the use of the property
or rights-of-way for
the purposes for
which the property
or rights-of-way are
held by us;
. prepaid liens and purchase money liens, as more particularly described in the Mortgage Indenture;
. liens contemplated by the Plan;
. any lien incurred in connection with the issuance of Qualified
Securitization Bonds (as such term is defined inthe Mortgage Indenture);
. any other liens which are in existence on the date of execution of the Mortgage
Indenture and the aggregateprincipal amount thereof does not exceed $30 million;
. any other liens which then outstanding principal amounts do not, in the aggregate, exceed $65 million to
theextent in existence in calendar year 2020, provided that with respect to any of these liens in existence
in any subsequent calendar year, the amount shall be increased by the percentage increase in the urban CPI
for the period commencing onJanuary 1, 2020 and ending on January 1 of the applicable calendar year; and
. the lien under the Mortgage Indenture in favor of the Mortgage Trustee with respect to the compensation
and otheramounts payable by us to the Mortgage Trustee in its capacity as Mortgage Trustee.
Basis for Issuance of the Mortgage Bonds
We will issue $aggregate principal amount of the mortgage bonds under the
Mortgage Indenture based upon the value of RetiredSecurities. The Retired
Securities consist of a portion of the Collateral Bond. As of the date of this
prospectus supplement, we could issue under the Mortgage Indenture (i) based
upon the value of Property Additions constituting UnfundedProperty, up to
approximately $8.61 billion of additional first mortgage bonds and (ii) based
upon Retired Securities, up to $480 million of additional first mortgage bonds
(such amount not including the value of Retired Securitiesrepresented by the
Collateral Bond) ($after giving effect to this offering). Pursuant to the
Mortgage Indenture, the Company must cause the Supplemental Indenture (or a
memorandum thereof) to be promptly recorded and filed in suchmanner and in
such places, as may be required by law in order to perfect the liens created
thereby, and, within 120 days following the date of such instrument, to
provide the Mortgage Trustee an opinion stating that the Supplemental
Indenture (or amemorandum thereof) have been so recorded and filed.
Issuance of Additional First Mortgage Bonds
We may issue additional first mortgage bonds of any series from time to time
against Property Additions, Retired Securities and cash depositedwith the
Mortgage Trustee, in an aggregate principal amount not exceeding:
. 70% of the aggregate of the net amounts of Property Additions which constitute Unfunded Property;
. the aggregate principal amount of previously issued first mortgage bonds that have
been canceled or that we havedelivered to the Mortgage Trustee for cancellation
or previously issued first mortgage bonds deemed to have been paid under the
Mortgage Indenture, each of which we refer to as "Retired Securities"; or
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. the amount of cash deposited with the Mortgage Trustee.
Any such additional first mortgage bonds either shall be fungible with the
original first mortgage bonds for U.S. federal income tax purposesor shall be
issued under a different CUSIP.
"Property Additions" generally include any item, unit or element of property
whichis owned by us and is subject to the lien of the Mortgage Indenture
except (with certain exceptions) goodwill, going concern value rights or
intangible property, or any property the cost of acquisition or construction
of which is properly chargeableto one of our operating expense accounts at the
time of such acquisition or construction.
The Mortgage Indenture includes limitations onthe issuance of first mortgage
bonds against property subject to liens and upon the increase of the amount of
any senior liens on Funded Property.
"Funded Property" generally means Mortgaged Property which has been used as
the basis for the issuance of first mortgage bonds or asthe basis for the
release or substitution of Mortgaged Property under the Mortgage Indenture.
"Retired Securities" means,generally, first mortgage bonds which are no longer
outstanding under the Mortgage Indenture, which have not been retired by the
application of funded cash and which have not been used as the basis for the
authentication and delivery of firstmortgage bonds, the release of property or
the withdrawal of cash.
"Unfunded Property" generally means Mortgaged Property whichhas not previously
been used as the basis for the issuance of first mortgage bonds (not otherwise
retired) or as the basis for the release or substitution of Mortgaged Property.
Release of Mortgaged Property
We mayrelease property from the lien of the Mortgage Indenture if we deliver
to the Mortgage Trustee cash equal to the Funded Property Basis (as described
below) of the property to be released, less any taxes and expenses incidental
to any sale, exchange,dedication or other disposition of the property to be
released. Any of the following or any combination of the following will be
applied as a credit against the cash we will be required to deliver to the
Mortgage Trustee:
. the aggregate principal amount of obligations secured by a Purchase Money Lien
on the property to be released,subject to certain limitations described below;
. an amount equal to the Net Cost or Net Fair Value to us (whichever is less) of certified Property
Additionsconstituting Unfunded Property after certain deductions and additions, primarily including
adjustments to offset property retirements (except that the adjustments need not be made if the
Property Additions were acquired, made or constructed within90 days before our request for release);
. an amount equal
to ten-sevenths of
the aggregate principalamount of first mortgage bonds we would be entitled to issue on the basis of
retired first mortgage bonds (with that entitlement being waived by operation of such release); and
. an amount equal
to ten-sevenths of
the aggregate principalamount of first mortgage bonds delivered to the Mortgage Trustee.
For purposes of this subsection, the following termshave the following meaning:
. "Funded Property Basis" generally means the Net Cost of Funded Property or the Net Fair
Value to us ofthe Funded Property at the time it became Funded Property, whichever is less.
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. "Net Cost" means, as of the date of calculation, the cost of the
property, less, if such property issubject to a senior lien, the lesser
of (i) the outstanding principal amount of any senior lien obligations
as of the date of calculation or (ii) the cost of the property.
. "Net Fair Value" means, as of the date of calculation, the fair value
of the property, less, if suchproperty is subject to a senior lien, the
lesser of (i) the outstanding principal amount of any senior lien obligations
as of the date of calculation or (ii) the fair value of the property.
. "Purchase Money Lien" means, generally, a lien on the property being released which is retained by thetransferor of such
property to secure all or part of its purchase price or granted to one or more other persons in connection with the
transfer or release thereof, or granted to or held by a Mortgage Trustee or agent for any such persons, and mayinclude
liens which cover property in addition to the property being released and/or which secure additional indebtedness.
We will be permitted to release from the lien of the Mortgage Indenture
Unfunded Property without depositing any cash with the MortgageTrustee or
providing any other credits if either (i) the lower of the Net Cost or Net
Fair Value to us of all Unfunded Property (excluding the property to be
released), after making certain adjustments, is at least zero, or (ii) the
lowerof the Net Cost or Net Fair Value to us of the Unfunded Property to be
released, after making certain adjustments, does not exceed the lower of the
Net Cost or Net Fair Value of all property acquired, made or constructed on or
after 90 days beforeour request, after making certain adjustments. If neither
(i) or (ii) in the immediately preceding sentence applies, we will be required
to deliver
a "make-up" amount
in cash. Wemay apply as a credit against the cash we will be required to
deliver to the Mortgage Trustee any of the items described under the bullet
points in this section.
We also will be permitted to release in a calendar year property up to the
lesser of $10 million (increased yearly by the urban CPI) or3% of the
aggregate principal amount of first mortgage bonds then outstanding without
complying with the other release provisions in the Mortgage Indenture.
However, if, upon reliance on this release provision, we release Funded
Property, we arerequired to deposit with the Mortgage Trustee, by the end of
the calendar year, cash equal to 70% of the Funded Property Basis of the
property released, net of certain credits.
The Mortgage Indenture provides simplified procedures for the release of
property taken by eminent domain, and provides for dispositions ofcertain
obsolete property and grants or surrender of certain rights without any
release or consent by the Mortgage Trustee.
Theprovisions described above permitting the release of property (except
property taken by eminent domain) will be operable only if no event of default
has occurred and is continuing under the Mortgage Indenture.
Withdrawal of Cash
Unless an event ofdefault has occurred and is continuing and subject to
certain limitations, cash held by the Mortgage Trustee may, generally,
. be withdrawn by us (i) to the extent of an amount equal to the Net Cost or Net Fair Value to us (whicheveris
less) of Property Additions constituting Unfunded Property, after certain deductions and additions, primarily
including adjustments to offset retirements (except that these adjustments need not be made if the Property
Additions were acquired ormade within 90 days before our request for withdrawal) or (ii) in an amount equal
to ten-sevenths (10/7ths)
of the aggregate principal amount of first mortgage bonds that
we would be entitled toissue on the basis of retired first
mortgage bonds (with the entitlement to that issuance being waived
by operation of the withdrawal) or (iii) in an amount equal
to ten-sevenths (10/7ths)
ofthe aggregate principal
amount of any outstanding first
mortgage bonds delivered to
the Mortgage Trustee; or
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. upon our written request, applied to (i) the purchase of first
mortgage bonds or (ii) the payment (orprovision for payment) at stated
maturity of any first mortgage bonds or the redemption (or provision
for redemption) of any first mortgage bonds which are redeemable.
Evidence to be Furnished to the Mortgage Trustee Under the Mortgage Indenture
We will demonstrate compliance with Mortgage Indenture provisions by providing
written statements to the Mortgage Trustee from our officers orpersons we
select. For instance, we may select an engineer to provide a written statement
regarding the value of property being certified or released or counsel
regarding compliance with the Mortgage Indenture generally. In certain major
matters,applicable law requires that an accountant, engineer or other expert
must be independent. We must file a certificate each year with respect to our
compliance with the conditions and covenants under the Mortgage Indenture.
Consolidation, Merger, Transfer of Mortgaged Property
We may not consolidate with or merge with or into any other Person (as
described below) or convey, otherwise transfer or lease all orsubstantially
all of our Mortgaged Property to any Person unless:
. the Person formed by that consolidation or into which we are merged or the Person which acquires by conveyance
orother transfer, or which leases, all or substantially all of the Mortgaged Property is a corporation,
partnership, limited liability company, association, company, joint stock company or business trust,
organized and existing under the laws of theUnited States, or any state thereof or the District of Columbia;
. that Person executes and delivers to the Mortgage Trustee a supplemental Mortgage
Indenture that in the case of aconsolidation, merger, conveyance or other
transfer, or in the case of a lease if the term thereof extends beyond the
last stated maturity of the first mortgage bonds then outstanding, contains
an assumption by the successor Person of the due andpunctual payment of the
principal of and premium, if any, and interest, if any, on all first mortgage
bonds then outstanding and the performance and observance of every covenant
and conditions under the Mortgage Indenture to be performed or observedby us;
. that Person executes and delivers to the Mortgage Trustee a supplemental Mortgage Indenture that
contains agrant, conveyance, transfer and mortgage by the successor Person confirming the lien
of the Mortgage Indenture on the Mortgaged Property and subjecting to the lien all property
(other than Excepted Property) thereafter acquired by the successorPerson that shall constitute
an improvement, extension or addition to the Mortgaged Property or renewal, replacement or
substitution of or for any part thereof and, at the election of the successor Person, subjecting
to the lien of the MortgageIndenture the other property, real, personal and mixed, then owned
or thereafter acquired by the Person as the person shall specify in its sole discretion;
. in the case of a lease, the lease is made expressly subject to termination by us at any
time during thecontinuance of an event of default and by the purchaser of the property
so leased at any sale of the property under the Mortgage Indenture, whether under the
power of sale conferred by the Mortgage Indenture or pursuant to judicial proceedings;
. immediately after giving effect to the transaction and treating any
indebtedness that becomes our obligation as aresult of the transaction
as having been incurred by us at the time of the transaction, no
default or event of default shall have occurred and be continuing; and
. we have delivered to the Mortgage Trustee an officer's certificate and an opinion of counsel, each statingthat the merger,
consolidation, conveyance, lease or transfer, as the case may be, fully complies with all provisions of the Mortgage
Indenture; provided, however, that the delivery of the officer's certificate and opinion of counsel shall notbe required with
respect to any merger, consolidation, conveyance, transfer or lease between us and any of our wholly-owned subsidiaries.
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Notwithstanding the foregoing, we may merge or consolidate with or transfer
all orsubstantially all of our assets to an affiliate that has no significant
assets or liabilities and was formed solely for the purpose of changing our
jurisdiction of organization or our form of organization or for the purpose of
forming a holdingcompany; provided that the amount of our indebtedness is not
increased; and provided, further, that the successor assumes all of our
obligations under the Mortgage Indenture.
In the case of a conveyance or other transfer of all or substantially all of
the Mortgaged Property to any other Person as contemplated underthe Mortgage
Indenture, upon the satisfaction of all the conditions described above we (as
we would exist without giving effect to the transaction) would be released and
discharged from all obligations under the Mortgage Indenture and on the
firstmortgage bonds then outstanding unless we elect to waive the release and
discharge.
The meaning of the term "substantially all"has not been definitively
established and is likely to be interpreted by reference to applicable state
law if and at the time the issue arises and will depend on the facts and
circumstances existing at the time.
For purposes of this subsection:
. "Person" means any individual, corporation, limited liability partnership, joint venture, trust orunincorporated organization,
or any other entity, whether or not a legal entity, or any Governmental Authority (as defined in the Mortgage Indenture).
Additional Covenants
We have agreed inthe Mortgage Indenture, among other things:
. to maintain a place of payment for any series of first mortgage bonds; and
. to maintain our corporate existence (subject to the provisions above relating to mergers and consolidations).
Book-Entry Issuance
GlobalSecurities
The mortgage bonds will be represented by one or more global securities that
will be deposited with and registered inthe name of DTC or its nominee. Thus,
we will not issue certificated securities to you for the mortgage bonds,
except in the limited circumstances described below. Each global security will
be issued to DTC, which will keep a computerized record ofits participants
whose clients have purchased the mortgage bonds. Each participant will then
keep a record of its clients. Unless it is exchanged in whole or in part for a
certificated security, a global security may not be transferred. DTC,
itsnominees and their successors may, however, transfer a global security as a
whole to one another, and these transfers are required to be recorded on our
records or a register to be maintained by the Mortgage Trustee. The laws of
some jurisdictionsmay require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and laws
may impair the ability to transfer or pledge beneficial interests in the
global securities.
Beneficial interests in a global security will be shown on, and transfers of
beneficial interests in the global security will be made onlythrough, records
maintained by DTC and its participants. DTC has provided us with the following
information: DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning ofthe New York
Banking Law, a member of the United States Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the provisions ofSection 17A of the
Exchange Act of 1934, as amended. DTC holds securities that its direct
participants deposit with DTC. DTC also records the settlements among direct
participants of securities transactions, such as transfers and pledges,
indeposited
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securities through computerized records for direct participants' accounts.
This eliminates the need to exchange certificated securities. Direct
participants include securities brokers anddealers, banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representatives) own DTC.
DTC's book-entry system is also used by other organizations such as securities
brokers and dealers, banks and trust companies that workthrough a direct
participant. The rules that apply to DTC and its participants are on file with
the SEC.
When you purchase mortgage bondsthrough the DTC system, the purchases must be
made by or through a direct participant, which will receive credit for the
mortgage bonds on DTC's records. When you actually purchase the mortgage
bonds, you will become their beneficial owner.Your ownership interest will be
recorded only on the direct or indirect participants' records. DTC will have
no knowledge of your individual ownership of the mortgage bonds. DTC's records
will show only the identity of the directparticipant and the amount of the
mortgage bonds held by or through them. You will not receive a written
confirmation of your purchase or sale or any periodic account statement
directly from DTC. You should instead receive these from your direct
orindirect participant. As a result, the direct or indirect participants are
responsible for keeping accurate account of the holdings of their customers.
The Mortgage Trustee will wire payments on the mortgage bonds to DTC's
nominee. The MortgageTrustee and we will treat DTC's nominee as the owner of
each global security for all purposes. Accordingly, the Mortgage Trustee, any
paying agent and we will have no direct responsibility or liability to pay
amounts due on a global security toyou or any other beneficial owners in that
global security. Any redemption notices will be sent by us directly to DTC,
which will, in turn, inform the direct participants (or the indirect
participants), which will then contact you as a beneficialholder.
It is DTC's current practice, upon receipt of any payment of distributions or
liquidation amounts, to proportionately creditdirect participants' accounts on
the payment date based on their holdings. In addition, it is DTC's current
practice to pass through any consenting or voting rights to such participants
by using an omnibus proxy. Those participants will,in turn, make payments to
and solicit votes from you, the ultimate owner of mortgage bonds, based on
their customary practices. Payments to you will be the responsibility of the
participants and not of DTC, the Mortgage Trustee or our company.
Mortgage bonds represented by one or more global securities will be
exchangeable for certificated securities with the same terms in authorizeddenomi
nations only if:
. DTC is unwilling or unable to continue as depositary or ceases to be a clearing agency
registered underapplicable law, and a successor is not appointed by us within 90 days;
. we decide to discontinue the book-entry system; or
. an event of default has occurred and is continuing with respect to the mortgage bonds.
If the global security is exchanged for certificated securities, the Mortgage
Trustee will keep the registration books for the mortgage bondsat its
corporate trust office and follow customary practices and procedures regarding
those certificated securities.
Clearstream and Euroclear
Links have been established among DTC, Euroclear Bank SA/NV, as operator of
the Euroclear System ("Euroclear") andClearstream Banking S.A. ("Clearstream"),
which are two European book-entry depositaries similar to DTC, to facilitate
the initial issuance of the mortgage bonds sold outside of the United States
of America and cross-market transfers ofthe mortgage bonds associated with
secondary market trading.
Although DTC, Clearstream and Euroclear have agreed to the proceduresprovided
below in order to facilitate transfers, they are under no obligation to
perform these procedures, and these procedures may be modified or discontinued
at any time.
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Clearstream and Euroclear will record the ownership interests of their
participants in muchthe same way as DTC, and DTC will record the total
ownership of each of the U.S. agents of Clearstream and Euroclear, as
participants in DTC.
When mortgage bonds are to be transferred from the account of a DTC
participant to the account of a Clearstream participant or a Euroclearparticipan
t, the purchaser must send instructions to Clearstream or Euroclear through a
participant at least one day prior to settlement. Clearstream or Euroclear, as
the case may be, will instruct its U.S. agent to receive mortgage bonds
againstpayment. After settlement, Clearstream or Euroclear will credit its
participant's account. Credit for the mortgage bonds will appear on the next
day (European time).
Because settlement is taking place during New York business hours, DTC
participants will be able to employ their usual procedures for sendingmortgage
bonds to the relevant U.S. agent acting for the benefit of Clearstream or
Euroclear participants. The sale proceeds will be available to the DTC seller
on the settlement date. As a result, to the DTC participant, a cross-market
transactionwill settle no differently than a trade between two DTC
participants.
When a Clearstream or Euroclear participant wishes to transfermortgage bonds
to a DTC participant, the seller will be required to send instructions to
Clearstream or Euroclear through a participant at least one Business Day prior
to settlement. In these cases, Clearstream or Euroclear will instruct its
U.S.agent to transfer these mortgage bonds against payment for them. The
payment will then be reflected in the account of the Clearstream or Euroclear
participant the following day, with the proceeds back-valued to the value
date, which would be thepreceding day, when settlement occurs in New York. If
settlement is not completed on the intended value date, that is, the trade
fails, proceeds credited to the Clearstream or Euroclear participant's account
will instead be valued as of theactual settlement date.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes certain material United States ("U.S.")
federal income tax considerations relevant to thepurchase, ownership and
disposition of the mortgage bonds. This summary only applies to investors who
will hold their mortgage bonds as "capital assets" under the Internal Revenue
Code of 1986, as amended (the "Internal RevenueCode") and purchase their
mortgage bonds for cash upon initial issuance at the "issue price" (the first
price at which a substantial amount of the mortgage bonds is sold for money to
investors, not including bond houses, brokers orsimilar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers).
This summary is based uponcurrent U.S. federal income tax law, which is
subject to change or differing interpretations, possibly with retroactive
effect. This summary does not discuss all aspects of U.S. federal income
taxation that may be important to particular investorsin light of their
individual circumstances, such as investors subject to special tax rules
(e.g., financial institutions (including banks), insurance companies,
expatriates, broker dealers, real estate investment trusts ("REITs"),regulated
investment companies, traders in securities who elect a
mark-to-market
method of tax accounting, tax exempt organizations, persons that will hold the
mortgagebonds as a part of a straddle, conversion, constructive sale or other
integrated transaction for U.S. federal income tax purposes, investors subject
to section 451(b) of the Internal Revenue Code, entities or arrangements
treated as partnerships forU.S. federal income tax purposes or investors
therein, or U.S. Holders (as defined below) that have a "functional currency"
other than the U.S. dollar), all of whom may be subject to tax rules that
differ materially from those summarizedbelow. This summary does not discuss
any alternative minimum tax consequences, and it does not discuss all of the
aspects of U.S. federal income taxation that may be relevant to you in light
of your particular investment or other circumstances. Weare not planning to
seek a ruling from the Internal Revenue Service ("IRS") regarding the U.S.
federal income tax considerations of the purchase, ownership or disposition of
the mortgage bonds. Accordingly, there can be no assurance thatthe IRS will
not successfully challenge one or more of the conclusions stated herein. Each
prospective investor is urged to consult its own tax advisor regarding the
U.S. federal, state, local and foreign income and other tax considerations of
thepurchase, ownership or disposition of the mortgage bonds.
For purposes of this summary, a "U.S. Holder" is a beneficial ownerof a
mortgage bond that is, for U.S. federal income tax purposes, (1) an individual
who is a citizen or resident of the United States, (2) a corporation created
or organized under the laws of the United States, any state thereof or
theDistrict of Columbia, (3) an estate, the income of which is subject to U.S.
federal income tax regardless of its source or (4) a trust, if (a) a U.S.
court can exercise primary supervision over the administration of the trust
and oneor more "United States persons" within the meaning of the Internal
Revenue Code control all substantial trust decisions or (b) the trust has a
valid election in effect under applicable U.S. Treasury regulations to be
treated as aUnited States person. A beneficial owner of a mortgage bond that
for U.S. federal income tax purposes is an individual, corporation, estate or
trust that is not a U.S. Holder is referred to herein as
a "Non-U.S. Holder."
If an entity or arrangement treated as a partnership forU.S. federal income
tax purposes is a beneficial owner of mortgage bonds, the tax treatment of a
partner in such partnership generally will depend upon the status of the
partner and the activities of such partnership. A partnership considering
aninvestment in the mortgage bonds, and partners in such a partnership, are
urged to consult their tax advisors about the U.S. federal income tax
considerations of purchasing, owning and disposing of the mortgage bonds.
U.S. Holders
Interest
It is anticipated, and this discussion assumes, that the mortgage bonds will
be issued without, or with less than a de minimis amount of,original issue
discount for U.S. federal income tax purposes. Subject to the discussion below
on short-term notes, interest on a mortgage bond will generally be taxable to
a U.S. Holder as ordinary interest income at the time it is paid or accrued,in
accordance with the U.S. Holder's regular method of tax accounting for U.S.
federal income tax purposes.
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Short-term notes
In the case of debt securities such as the floating rate mortgage bonds having
a term of one year or less ("short-term notes"), aU.S. Holder will generally
be taxed on the discount. The discount for these purposes will be equal to the
excess of all payments on the short-term notes over the issue price of the
short term notes. In general, individuals and certain other cashmethod U.S.
Holders of short-term notes are not required to include accrued discount in
their income currently unless they elect to do so, but they should be required
to include stated interest in income as the interest is received. U.S.
Holdersthat report income for U.S. federal income tax purposes on the accrual
method and certain other U.S. Holders are required to accrue discount on
short-term notes (as ordinary income) on a straight-line basis, unless an
election is made to accrue thediscount according to a constant yield method
based on daily compounding. In addition, a U.S. Holder that is not required,
and does not elect, to currently include accrued discount in income, may be
required to defer deductions for a portion of theU.S. Holder's interest
expense with respect to any indebtedness attributable to the short-term notes.
Upon a sale, exchange,retirement, redemption or other taxable disposition of
short-term notes, a U.S. Holder generally will recognize gain or loss in an
amount equal to the difference, if any, between the amount realized on the
disposition and the U.S. Holder'sadjusted tax basis in such short-term notes.
The amount realized will include the amount of any cash and the fair market
value of any property received for the short-term notes (reduced (but not
below zero) by an amount equal to any accrued andunpaid discount that has been
included in income as interest). A U.S. Holder's adjusted tax basis in a
short-term note generally will be equal to the cost of the short-term note to
such U.S. Holder increased by any discount previously includedin income and
decreased by any payments received on the short-term note. If a U.S. Holder is
not required, and does not elect, to include discount in income currently, any
gain realized on the sale, exchange or retirement of a short-term note
willgenerally be ordinary income to the extent of the discount accrued on a
straight line basis (or, if elected, according to a constant yield method
based on daily compounding) but not included as income through the date of
sale, exchange orretirement, and any excess gain will be short-term capital
gain. Any loss will be short-term capital loss. The deductibility of capital
losses is subject to certain limitations.
Sale, exchange, retirement, redemption or other taxable disposition of the
mortgage bonds
Subject to the discussion above on short-term notes, upon a sale, exchange,
retirement, redemption or other taxable disposition of the mortgagebonds, a
U.S. Holder generally will recognize gain or loss in an amount equal to the
difference, if any, between the amount realized on the disposition and the
U.S. Holder's adjusted tax basis in such mortgage bonds. The amount realized
willinclude the amount of any cash and the fair market value of any property
received for the mortgage bonds (except any amount received that is
attributable to accrued but unpaid interest will be taxable as ordinary
interest income to the extent notpreviously included in income). A U.S.
Holder's adjusted tax basis in a mortgage bond generally will be equal to the
cost of the mortgage bond to such U.S. Holder decreased by any payments
received on the mortgage bond other than statedinterest. Any such gain or loss
generally will be capital gain or loss, and will be long-term capital gain or
loss if the U.S. Holder's holding period for the mortgage bond is more than
one year at the time of disposition. For
non-corporate
U.S. Holders, long-term capital gain generally will be subject to reduced
rates of taxation. The deductibility of capital losses is subject to certain
limitations.
Additional tax on net investment income
The "net investment income" (or undistributed "net investment income," in the
case of a trust or estate) of certain U.S.Holders that are individuals, trusts
or estates and that have modified adjusted gross income (or adjusted gross
income, in the case of a trust or estate) above a certain threshold is subject
to a 3.8% tax, in addition to otherwise applicable U.S.federal income tax. A
U.S. Holder's "net investment income" generally includes, among other things,
interest income on and capital gain from the disposition of securities like
the mortgage bonds, subject to certain exceptions. U.S.Holders who are
individuals, trusts or estates are urged to consult their tax advisors
regarding the applicability of this tax to their investment in the mortgage
bonds.
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Non-U.S. Holders
Interest
Asdiscussed above, it is anticipated, and this discussion assumes, that the
mortgage bonds will be issued without, or with less than a de minimis amount
of, original issue discount. Subject to the discussions below concerning
backup withholding andFATCA, all payments of interest on the mortgage bonds
made to
a Non-U.S. Holder
will be exempt from U.S. federal income and withholding tax; provided that:
(1) such Non-U.S. Holder
does not own, directly, indirectly or constructively, 10% or more of the total
combined voting power of all classes of stock of the Company entitled to vote,
(2) such Non-U.S. Holder
is not a controlled foreign corporation with respect to which the Company is a
"related person" (within the meaning of section 864(d)(4) of the Internal
RevenueCode), (3) the beneficial owner of the mortgage bonds certifies, under
penalties of perjury, to us or the paying agent on IRS
Form W-8BEN or W-8BEN-E (or
appropriate substitute form) that it is not a U.S. person and provides
certainother information or satisfies certain other certification requirements
and (4) such payments are not effectively connected with
such Non-U.S. Holder's
conduct of a trade or business in theUnited States.
If
a Non-U.S. Holder
cannot satisfy the requirements describedabove, payments of interest will be
subject to a 30% U.S. federal withholding tax (or a U.S. federal withholding
tax at a lower applicable treaty rate), unless
such Non-U.S. Holder
provides us with aproperly executed (1) IRS
Form W-8BEN or W-8BEN-E (or
appropriate substitute form) claiming an exemptionfrom or reduction in
withholding under the benefit of an applicable income tax treaty or (2) IRS
Form W-8ECI (or
appropriate substitute form) stating that interest paid or accrued on
themortgage bonds is not subject to withholding tax because it is effectively
connected with the conduct of a trade or business in the United States and is
includible in
such Non-U.S. Holder's
gross income.
Sale, exchange, retirement, redemption or other taxable disposition of the
mortgage bonds
Subject to the discussion below concerning backup withholding and except with
respect to accrued but unpaid interest, which generally will besubject to the
rules described above under "--Interest,"
a Non-U.S. Holder
generally will not be subject to U.S. federal income or withholding tax on any
gain recognized upon the sale,exchange, retirement, redemption or other
taxable disposition of a mortgage bond, unless (1) such gain is effectively
connected with the conduct by
such Non-U.S. Holder
of a trade or businesswithin the United States, in which case such gain will
be taxed as described below under "--Income effectively connected with a U.S.
trade or business," or
(2) such Non-U.S. Holder
is an individual who is present in the United States for 183 days or more in
the taxable year of disposition, and certain other conditions are met, in
which case
such Non-U.S. Holder
will be subjectto tax at 30% (or, if applicable, a lower treaty rate) on the
gain derived from such disposition, which may be offset by U.S. source capital
losses.
Income effectively connected with a U.S. trade or business
If
a Non-U.S. Holder
of mortgage bonds is engaged in a trade or business in the UnitedStates, and
if interest on the mortgage bonds or gain realized on the sale, exchange,
retirement, redemption or other taxable disposition of the mortgage bonds is
effectively connected with the conduct of such trade or business,
the Non-U.S. Holder
generally will be subject to regular U.S. federal income tax on such income or
gain in the same manner as if
the Non-U.S. Holder
were aU.S. Holder. If
the Non-U.S. Holder
is eligible for the benefits of an income tax treaty between the United States
and
the Non-U.S. Holder's
country of residence, any "effectively connected" income or gain generally
will be subject to U.S. federal income tax only if it is also attributable to
a permanent establishment or fixed base maintained by
the Non-U.S. Holder
in the United States. In addition, if such
a Non-U.S. Holder
is a foreign corporation, such holder may also be subject to abranch profits
tax equal to 30% (or such lower rate provided by an applicable income tax
treaty) of its effectively connected earnings and profits, subject to certain
adjustments. Payments of interest that are effectively connected with a U.S.
tradeor business will not be subject to the 30% U.S. federal withholding tax
provided that
the Non-U.S. Holder
claims exemption from withholding. To claim exemption from withholding,
the Non-U.S. Holder
must certify its qualification, which generally can be done by filing a
properly executed IRS
Form W-8ECI (or
other applicable form).
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Information Reporting and Backup Withholding
U.S. Holders
Payments of stated interest on, or the proceeds of the sale, exchange,
retirement, redemption or other taxable disposition of, a mortgage bondare
generally subject to information reporting unless the U.S. Holder is an exempt
recipient (such as a corporation). Such payments may also be subject to U.S.
federal backup withholding at a specified rate, currently 24%, if the
recipient of suchpayment fails to supply a taxpayer identification number,
certified under penalties of perjury, as well as certain other information or
otherwise fails to establish an exemption from backup withholding. Backup
withholding is not an additional tax.Any amounts withheld under the backup
withholding rules will be allowed as a refund or credit against that U.S.
Holder's U.S. federal income tax liability provided the required information
is timely furnished to the IRS.
Non-U.S. Holders
A Non-U.S. Holder
may be required to comply with certain certification procedures toestablish
that the holder is not a United States person in order to avoid backup
withholding at a specified rate, currently 24%, with respect to payments of
stated interest on, or the proceeds of the sale, exchange, retirement,
redemption or othertaxable disposition of, a mortgage bond. Backup withholding
is not an additional tax. Any amounts withheld under the backup withholding
rules will be allowed as a refund or a credit against
that Non-U.S. Holder's
U.S. federal income tax liability provided the required information is timely
furnished to the IRS. In certain circumstances, the name and address of the
beneficial ownerand the amount of interest paid on a mortgage bond, as well as
the amount, if any, withheld, may be reported to the IRS. Copies of these
information returns may also be made available under the provisions of a
specific treaty or agreement to the taxauthorities of the country in which
the Non-U.S. Holder
resides.
FATCA
Under the Foreign Account Tax Compliance Act provisions of the Internal
Revenue Code and related U.S. Treasury guidance ("FATCA"), aU.S. federal
withholding tax of 30% will be imposed in certain circumstances on payments of
interest on the mortgage bonds. In the case of payments made to a "foreign
financial institution" (such as a bank, a broker, an investment fund or,in
certain cases, a holding company), as a beneficial owner or as an
intermediary, this tax generally will be imposed, subject to certain
exceptions, unless such institution (i) has agreed to (and does) comply with
the requirements of anagreement with the United States (an "FFI Agreement") or
(ii) is required by (and does comply with) applicable foreign law enacted in
connection with an intergovernmental agreement between the United States and a
foreign jurisdiction(an "IGA") to, among other things, collect and provide to
the U.S. tax authorities or other relevant tax authorities certain information
regarding U.S. account holders of such institution and, in either case, such
institution provides thewithholding agent with a certification as to its FATCA
status. In the case of payments made to a foreign entity that is not a
financial institution (as a beneficial owner), the tax generally will be
imposed, subject to certain exceptions, unlesssuch entity provides the
withholding agent with a certification as to its FATCA status and, in certain
cases, identifies any "substantial" U.S. owner (generally, any specified U.S.
person that directly or indirectly owns more than aspecified percentage of
such entity). If a mortgage bond is held through a foreign financial
institution that has agreed to comply with the requirements of an FFI
Agreement or is subject to similar requirements under applicable foreign law
enactedin connection with an IGA, such foreign financial institution (or, in
certain cases, a person paying amounts to such foreign financial institution)
generally will be required, subject to certain exceptions, to withhold tax on
payments made to(i) a person (including an individual) that fails to provide
any required information or documentation or (ii) a foreign financial
institution that has not agreed to comply with the requirements of an FFI
Agreement and is not subject tosimilar requirements under applicable foreign
law enacted in connection with an IGA. In addition, regulations proposed by
the U.S. Treasury Department would eliminate the requirement under FATCA of
withholding on gross proceeds (other than paymentsof interest) of the
disposition of the mortgage bonds, which would otherwise apply. The U.S.
Treasury Department has stated that taxpayers may rely on these proposed
regulations pending their finalization. We will not be obligated to
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make any "gross up" or additional payments in respect of amounts withheld on
the mortgage bonds if we determine that we must so withhold in order to comply
with FATCA in respect of theamounts described above. Prospective investors
should consult their tax advisors regarding the potential application of
withholding under FATCA to their investment in the mortgage bonds.
The preceding discussion of U.S. federal tax considerations is for general
information only. It is not tax advice. Each prospectiveinvestor should
consult its own tax advisor regarding the particular U.S. federal, state and
local
and non-U.S. tax
consequences of purchasing, holding and disposing of our common stock,
includingthe consequences of any proposed change in applicable laws.
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UNDERWRITING (CONFLICTS OF INTEREST)
We have entered into an underwriting agreement with respect to the mortgage
bonds with the underwriters listed below, for whom BarclaysCapital Inc., J.P.
Morgan Securities LLC, MUFG Securities Americas Inc. and Wells Fargo
Securities, LLC are acting as representatives. Subject to certain conditions,
each of the underwriters has severally, and not jointly, agreed to purchase
therespective principal amounts of mortgage bonds indicated in the following
table:
Name Principal Principal
Amount of Amount of 20
floating rate mortgage
mortgage bonds
bonds
Barclays Capital Inc. $ $
J.P. Morgan Securities LLC
MUFG Securities Americas Inc.
Wells Fargo Securities, LLC
Total $ $
The underwriting agreement provides that the obligations of the several
underwriters to pay for and acceptdelivery of the mortgage bonds are subject
to certain conditions, including the receipt of legal opinions relating to
certain matters. The underwriters must purchase all of the mortgage bonds if
they purchase any of the mortgage bonds. If anunderwriter defaults, the
underwriting agreement provides that the purchase commitments of the
nondefaulting underwriters may be increased or the underwriting agreement may
be terminated.
We have agreed to indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act, or tocontribute
to payments the underwriters may be required to make in respect of any of
these liabilities.
The underwriters are offering themortgage bonds subject to prior sale, when,
as and if issued to and accepted by them, subject to approval of legal matters
by their counsel, including the validity of the mortgage bonds, and other
conditions contained in the underwriting agreement,such as the receipt by the
underwriters of officers' certificates and legal opinions. The underwriters
reserve the right to withdraw, cancel or modify offers to the public and to
reject orders in whole or in part.
Commissions and Discounts
The mortgagebonds sold by the underwriters to the public will initially be
offered at the prices to the public set forth on the cover of this prospectus
supplement and may be offered to certain dealers at these prices less a
concession not in excess of (i)% of the aggregate principal amount of the
floating rate mortgage bonds and (ii) % of the aggregate principal amount of
the 20mortgage bonds. The underwriters may allow, and those dealers may
reallow, a discount not in excess of(i) % of the aggregate principal amount of
the floating rate mortgage bonds and (ii) % of the aggregate principal amount
of the 20mortgage bonds, to certain other dealers. If all of the mortgage
bonds are not sold at the pricesto the public, the underwriters may change the
prices to the public and the other selling terms.
The following table shows theunderwriting discounts that we will pay to the
underwriters in connection with this offering of the mortgage bonds:
Paid by Us
Per floating rate mortgage bond %
Total floating rate mortgage bonds $
Per 20mortgage bond %
Total 20mortgage bonds $
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The expenses of this offering, not including the underwriting discounts, are
estimated to beapproximately $million.
New Issue
Each series of mortgage bonds will be a new issue of securities with no
established trading market. The mortgage bonds will not be listed onany
securities exchange or included in any automated quotation system. We have
been advised by the underwriters that the underwriters intend to make a market
in each series of mortgage bonds, but they are not obligated to do so and may
discontinuemarket making at any time without notice. No assurance can be given
as to the liquidity of any trading markets for the mortgage bonds.
Settlement
It is expected that delivery of the mortgage bonds will be made against
payment for the mortgage bonds on or about the date specifiedon the cover page
of this prospectus supplement, which is the second business day following the
date of this prospectus supplement (such settlement cycle being referred to as
"T+2"). Under
Rule 15c6-1
under the Securities Exchange Act of 1934, as amended, trades in the secondary
market generally are required to settle in one business day unless the parties
to any such trade expressly agreeotherwise. Accordingly, purchasers who wish
to trade the mortgage bonds on the date of this prospectus supplement will be
required, by virtue of the fact that the mortgage bonds initially will settle
in T+2, to specify an alternative settlementcycle at the time of any such
trade to prevent failed settlement. Purchasers of the mortgage bonds who wish
to trade the mortgage bonds on the date of this prospectus supplement should
consult their own advisors.
Price Stabilization and Short Positions
In connection with this offering, the underwriters may engage in transactions
that stabilize, maintain, or otherwise affect the prices of themortgage bonds.
These transactions may include short sales, stabilizing transactions and
purchases to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater aggregate principal amount of mortgage
bondsthan they are required to purchase in this offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market prices of the mortgage bonds
while this offering is inprocess.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market prices of the mortgage bonds. As aresult, the prices of the
mortgage bonds may be higher than the prices that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by
the underwriters at any time. These transactions may be effected in
the over-the-counter market
or otherwise.
Other Relationships
The underwriters and their respective affiliates are full service financial
institutions engaged in various activities, which mayinclude securities
trading, commercial and investment banking, financial advisory, investment
management, investment research, principal investment, hedging, financing and
brokerage activities. Certain of the underwriters and their respectiveaffiliates
have, from time to time, performed, and may in the future perform, various
financial advisory, corporate trust and investment banking services for us,
for which they received or will receive customary fees and expenses. Certain
of theunderwriters or their respective affiliates may also serve as agents or
lenders under certain of our existing credit facilities for which they
received or will receive customary fees and expenses. In particular, an
affiliate of Barclays Capital Inc.is the sole lender under the Utility Bridge
Term Loan Credit Agreement, the borrowings under which will be repaid with the
net proceeds of this offering, and therefore will receive all of of such
proceeds upon such repayment. See "Conflicts ofInterest."
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In the ordinary course of their various business activities, the underwriters
and theirrespective affiliates, officers, directors and employees may
purchase, sell or hold a broad array of investments and actively trade
securities, derivatives, loans, commodities, currencies, credit default swaps
and other financial instruments fortheir own account and for the accounts of
their customers, and such investment and trading activities may involve or
relate to assets, securities or instruments of ours (directly, as collateral
securing other obligations or otherwise) or persons andentities with
relationships with us.
Certain of the underwriters and/or their affiliates that have a lending
relationship with usroutinely hedge, certain of the underwriters and/or their
affiliates are likely to hedge or otherwise reduce, and certain other of those
underwriters and/or their affiliates may hedge, their credit exposure to us
consistent with their customary riskmanagement policies. Typically, such
underwriters and their affiliates would hedge or reduce such exposure by
entering into transactions which consist of either the purchase of credit
default swaps or the creation of short positions in oursecurities, including
potentially the mortgage bonds offered hereby. Any such credit default swaps
or short positions could adversely affect future trading prices of the
mortgage bonds offered hereby.
The underwriters and their respective affiliates may also communicate
independent investment recommendations, market color or trading ideas
orpublish or express independent research views in respect of such assets,
securities or instruments and may at any time hold, or recommend to clients
that they should acquire, long and/or short positions in such assets,
securities and instruments.
Conflicts of Interest
As describedin "Use of Proceeds," we plan to use the net proceeds to repay
borrowings outstanding under the Utility Bridge Term Loan Credit Agreement. An
affiliate of Barclays Capital Inc. is the sole lender under the Utility Bridge
Term Loan CreditAgreement. As such, an affiliate of Barclays Capital Inc. will
receive 5% or more of the net proceeds of this offering, not including the
underwriting discount. Such underwriter would be considered to have a
"conflict of interest" pursuantto FINRA Rule 5121. Consequently, this offering
will be made in compliance with FINRA Rule 5121. Pursuant to that rule, the
appointment of a qualified independent underwriter is not necessary in
connection with the offering because the offering isof a class of securities
that are investment grade rated. No affected underwriter will confirm sales to
any account over which it exercises discretionary authority without the prior
written consent of the account holder.
Selling Restrictions
Notices to ProspectiveInvestors in Australia
No placement document, prospectus, product disclosure statement or other
disclosure document has beenlodged with the Australian Securities and
Investments Commission ("ASIC"), in relation to the offering. This prospectus
supplement and the accompanying prospectus does not constitute a prospectus,
product disclosure statement or otherdisclosure document under the
Corporations Act 2001 (the "Corporations Act"), and does not purport to
include the information required for a prospectus, product disclosure
statement or other disclosure document under the Corporations Act.
Any offer in Australia of the mortgage bonds may only be made to persons (the
"Exempt Investors") who are "sophisticatedinvestors" (within the meaning of
section 708(8) of the Corporations Act), "professional investors" (within the
meaning of section 708(11) of the Corporations Act) or otherwise pursuant to
one or more exemptions contained in section708 of the Corporations Act so that
it is lawful to offer the mortgage bonds without disclosure to investors under
Chapter 6D of the Corporations Act.
The mortgage bonds applied for by Exempt Investors in Australia must not be
offered for sale in Australia in the period of 12 months after thedate of
allotment under the offering, except in circumstances where disclosure to
investors under Chapter 6D of the Corporations Act would not be required
pursuant to an exemption
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under section 708 of the Corporations Act or otherwise or where the offer is
pursuant to a disclosure document which complies with Chapter 6D of the
Corporations Act. Any person acquiringmortgage bonds must observe such
Australian on-sale restrictions.
This prospectus supplement and the accompanying prospectus contain general
information only and do not take account of the investmentobjectives,
financial situation or particular needs of any particular person. This
prospectus supplement and the accompanying prospectus do not contain any
securities recommendations or financial product advice. Before making an
investment decision,investors need to consider whether the information in this
prospectus supplement and the accompanying prospectus is appropriate to their
needs, objectives and circumstances, and, if necessary, seek expert advice on
those matters.
Notices to Prospective Investors in Canada
The mortgage bonds may be sold only in to purchasers purchasing, or deemed to
be purchasing, as principal that are accredited investors, asdefined in
National
Instrument 45-106 Prospectus
Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are
permitted clients, as defined in National
Instrument 31-103 Registration
Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the
mortgage bonds must be made in accordance with an exemption from, or in a
transaction notsubject to, the prospectus requirements of applicable
securities laws.
Securities legislation in certain provinces or territories ofCanada may
provide a purchaser with remedies for rescission or damages if this prospectus
supplement and the accompanying prospectus (including any amendment thereto)
contains a misrepresentation, provided that the remedies for rescission or
damagesare exercised by the purchaser within the time limit prescribed by the
securities legislation of the purchaser's province or territory. The purchaser
should refer to any applicable provisions of the securities legislation of
thepurchaser's province or territory for particulars of these rights or
consult with a legal advisor.
Pursuant to section 3A.3 ofNational
Instrument 33-105 Underwriting
Conflicts
(NI 33-105), the
underwriters are not required to comply with the disclosure requirements of
NI 33-105 regarding
underwriter conflicts of interest in connection with this offering.
Notices toProspective Investors in European Economic Area
The mortgage bonds are not intended to be offered, sold or otherwise
madeavailable to and should not be offered, sold or otherwise made available
to any retail investor in the European Economic Area ("EEA"). For these
purposes, a retail investor means a person who is one (or more) of: (i) a
retail clientas defined in point (11) of Article 4(1) of Directive 2014/65/EU
(as amended, "MiFID II"); or (ii) a customer within the meaning of Directive
(EU) 2016/97, where that customer would not qualify as a professional client
as definedin point (10) of Article 4(1) of MiFID II; or (iii) not a qualified
investor as defined in Regulation (EU) 2017/1129. Consequently, no key
information document required by Regulation (EU) No 1286/2014 (as amended, the
"PRIIPsRegulation") for offering or selling the mortgage bonds or otherwise
making them available to retail investors in the EEA has been prepared and
therefore offering or selling the mortgage bonds or otherwise making them
available to any retailinvestor in the EEA may be unlawful under the PRIIPs
Regulation.
Notices to Prospective Investors in Hong Kong
The contents of this prospectus supplement and the accompanying prospectus
have not been reviewed or approved by any regulatory authority inHong Kong.
The mortgage bonds may not be offered or sold by means of any document other
than (i) in circumstances which do not constitute an offer to the public
within the meaning of the Companies (Winding Up and Miscellaneous
Provisions)Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to "professional
investors" within the meaning of the Securities and Futures Ordinance (Cap.
571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other
circumstanceswhich do not result in the document being a "prospectus" within
the meaning of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation or
document relating to themortgage
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bonds may be issued or may be in the possession of any person for the purpose
of issue (in each case whether in Hong Kong or elsewhere), which is directed
at, or the contents of which are likelyto be accessed or read by, the public
in Hong Kong (except if permitted to do so under the laws of Hong Kong) other
than with respect to mortgage bonds which are or are intended to be disposed
of only to persons outside Hong Kong or only to"professional investors" within
the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong
Kong) and any rules made thereunder.
Notices to Prospective Investors in Japan
The mortgage bonds have not been and will not be registered under the
Financial Instruments and Exchange Law of Japan (the FinancialInstruments and
Exchange Law) and each underwriter has agreed that it will not offer or sell
any securities, directly or indirectly, in Japan or to, or for the benefit of,
any resident of Japan (which term as used herein means any person resident
inJapan, including any corporation or other entity organized under the laws of
Japan), or to others
for re-offering or
resale, directly or indirectly, in Japan or to a resident of Japan,
exceptpursuant to an exemption from the registration requirements of, and
otherwise in compliance with, the Financial Instruments and Exchange Law and
any other applicable laws, regulations and ministerial guidelines of Japan.
Notice to Prospective Investors in Korea
The mortgage bonds may not be offered, sold and delivered directly or
indirectly, or offered or sold to any person for reoffering or resale,directly
or indirectly, in the Republic of Korea ("Korea") or to any resident of
Korea S-36 except
pursuant to the applicable laws and regulations of Korea, including the Korea
Securitiesand Exchange Act and the Foreign Exchange Transaction Law and the
decrees and regulations thereunder. The mortgage bonds have not been and will
not be registered with the Financial Services Commission of Korea for public
offering in Korea.Furthermore, the mortgage bonds may not be resold to Korean
residents unless the purchaser of the mortgage bonds complies with all
applicable regulatory requirements (including but not limited to government
approval requirements under the ForeignExchange Transaction Law and its
subordinate decrees and regulations) in connection with the purchase of the
mortgage bonds.
Notices to ProspectiveInvestors in Singapore
This prospectus supplement and the accompanying prospectus have not been
registered as a prospectus withthe Monetary Authority of Singapore.
Accordingly, this prospectus supplement, the accompanying prospectus and any
other document or material in connection with the offer or sale, or invitation
for subscription or purchase, of the mortgage bonds maynot be circulated or
distributed, nor may the mortgage bonds be offered or sold, or be made the
subject of an invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than (i) to an institutionalinvestor
under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore
(the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any
person pursuant to Section 275(1A), and in accordance with theconditions,
specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in
accordance with the conditions of, any other applicable provision of the SFA.
Where the mortgage bonds are subscribed or purchased under Section 275 of the
SFA by a relevant person which is: (a) a corporation(which is not an
accredited investor (as defined in Section 4A of the SFA)) the sole business
of which is to hold investments and the entire share capital of which is owned
by one or more individuals, each
of S-40 whom
is an accredited investor; or (b) a trust (where the trustee is not an
accredited investor) whose sole purpose is to hold investments and each
beneficiary of the trust is anindividual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or
the beneficiaries' rights and interest (howsoever described) in that trust
shall not be transferable for six months afterthat corporation or that trust
has acquired the mortgage bonds pursuant to an offer made under Section 275 of
the SFA except: (1) to an institutional investor or to a relevant person
defined in Section 275(2) of the SFA, or to anyperson arising from an offer
referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA, (2) where no
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consideration is given for the transfer, (3) where the transfer is by
operation of law, (4) as specified in Section 276(7) of the SFA; or (5) as
specified in Regulation 37A ofthe Securities and Futures (Offers of
Investments) (Securities and Securities-based Derivatives Contracts)
Regulations 2018 of Singapore.
Singapore Securities and Futures Act Product Classification--Solely for the
purposes of its obligations pursuant to sections 309B(1)(a)and 309B(1)(c) of
the Securities and Futures Act (Chapter 289 of Singapore) (the "SFA"), the
issuer has determined, and hereby notifies all relevant persons (as defined in
Section 309A of the SFA) that the mortgage bonds are"prescribed capital
markets products" (as defined in the Securities and Futures (Capital Markets
Products) Regulations 2018) and Excluded Investment Products (as defined in
MAS Notice
SFA 04-N12: Notice
on the Sale of Investment Products and MAS
Notice FAA-N16: Notice
on Recommendations on Investment Products).
Notices to Prospective Investors in Switzerland
This prospectus supplement is not intended to constitute an offer or
solicitation to purchase or invest in the mortgage bonds. The mortgagebonds
may not be publicly offered, directly or indirectly, in Switzerland within the
meaning of the Swiss Financial Services Act ("FinSA") and no application has
or will be made to admit the mortgage bonds to trading on any trading
venue(exchange or multilateral trading facility) in Switzerland. Neither this
prospectus supplement nor any other offering or marketing material relating to
the mortgage bonds constitutes a prospectus pursuant to the FinSA, and neither
this prospectussupplement nor any other offering or marketing material
relating to the mortgage bonds may be publicly distributed or otherwise made
publicly available in Switzerland.
Notices to Prospective Investors in Taiwan
The mortgage bonds have not been and will not be registered with the Financial
Supervisory Commission of Taiwan, the Republic of China("Taiwan"), pursuant to
relevant securities laws and regulations and may not be offered or sold in
Taiwan through a public offering or in any manner which would constitute an
offer within the meaning of the Securities and Exchange Act ofTaiwan or would
otherwise require registration with or the approval of the Financial
Supervisory Commission of Taiwan. No person or entity in Taiwan has been
authorized to offer, sell, give advice regarding or otherwise intermediate the
offering orsale of the mortgage bonds in Taiwan.
Notices to Prospective Investors in United Arab Emirates
This prospectus supplement and the accompanying prospectus have not been
reviewed, approved or licensed by the Central Bank of the United ArabEmirates
(the "UAE"), the Emirates Securities and Commodities Authority (the "SCA") or
any other relevant licensing authority in the UAE including any licensing
authority incorporated under the laws and regulations of any of thefree zones
established and operating in the UAE including, without limitation, the Dubai
Financial Services Authority, a regulatory authority of the Dubai
International Financial Centre.
This prospectus supplement and the accompanying prospectus are not intended
to, and do not, constitute an offer, sale or delivery of shares orother
securities under the laws of the UAE. Each underwriter has represented and
agreed that the mortgage bonds have not been and will not be registered with
the SCA or the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi
SecuritiesMarket or any other UAE regulatory authority or exchange.
The issue and/or sale of the mortgage bonds has not been approved or
licensedby the SCA, the UAE Central Bank or any other relevant licensing
authority in the UAE, and does not constitute a public offer of securities in
the UAE in accordance with the Commercial Companies Law, Federal Law No. 1 of
2015 (as amended) orotherwise, does not constitute an offer in the UAE in
accordance with the Board Decision No. 37 of
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2012 Concerning the Regulation of Investment Funds (whether by a Foreign Fund,
as defined therein, or otherwise), and further does not constitute the
brokerage of securities in the UAE inaccordance with the Board Decision No. 27
of 2014 Concerning Brokerage in Securities.
Notices to Prospective Investors in United Kingdom
The mortgage bonds are not intended to be offered, sold or otherwise made
available to and should not be offered, sold orotherwise made available to any
retail investor in the United Kingdom ("UK"). For these purposes, a retail
investor means a person who is one (or more) of: (i) a retail client, as
defined in point (8) of Article 2 of Regulation(EU) No 2017/565 as it forms
part of domestic law by virtue of the European Union (Withdrawal) Act 2018
("EUWA"); (ii) a customer within the meaning of the provisions of the
Financial Services and Markets Act 2000 (as amended, the"FSMA") and any rules
or regulations made under the FSMA to implement Directive (EU) 2016/97, where
that customer would not qualify as a professional client, as defined in point
(8) of Article 2(1) of Regulation (EU) No 600/2014 as itforms part of domestic
law by virtue of the EUWA; or (iii) not a qualified investor as defined in
Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by
virtue of the EUWA. Consequently no key information document requiredby
Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the
EUWA (the "UK PRIIPs Regulation") for offering or selling the mortgage bonds
or otherwise making them available to retail investors in the UK has
beenprepared and therefore offering or selling the mortgage bonds or otherwise
making them available to any retail investor in the UK may be unlawful under
the UK PRIIPs Regulation.
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LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon for
us by Hunton Andrews Kurth LLP, New York, New York. DavisPolk & Wardwell LLP,
New York, New York represents the underwriters.
EXPERTS
The financial statements, and the related financial statement schedules,
incorporated in this prospectus supplement by reference from theCompany's
Annual Report on
Form 10-K for
the year ended December 31, 2023, and the effectiveness of Pacific Gas and
Electric Company's internal control over financial reporting havebeen audited
by Deloitte & Touche LLP, an independent registered public accounting firm, as
stated in their reports, which are incorporated herein by reference. Such
financial statements and financial statement schedules have been soincorporated
in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information withthe SEC under
File No. 001-02348. The
SEC maintains a website that contains reports, proxy and information
statements, and other information regarding issuers, including the Company,
that fileelectronically with the SEC at http://www.sec.gov. The Company's SEC
filings are also available at our website: http://investor.pgecorp.com. Except
for documents filed with the SEC and incorporated by reference into this
prospectus supplementand the accompanying prospectus, no information contained
in, or that can be accessed through, our website is to be considered part of
this prospectus supplement.
CERTAIN DOCUMENTS INCORPORATED BY REFERENCE
The Company has "incorporated by reference" into this prospectus supplement
certain information that it files with the SEC. Thismeans that the Company can
disclose important business, financial and other information in this
prospectus supplement by referring you to the documents containing this
information.
The Company incorporates by reference the document listed below and any future
filings that it makes with the SEC under Section 13(a),13(c), 14 or 15(d) of
the Exchange Act (other than the Current Reports
on Form 8-K or
portions thereof that are "furnished" under Item 2.02 or Item 7.01 of
Form 8-K) from
the date of this prospectus supplement until the termination of this offering:
. Our Annual Report on
Form
10-K
for the year ended December 31, 2023;
. Our Quarterly Reports on Form
10-Q
for the quarters ended
March 31, 2024
and
June 30, 2024
;
. Our
definitive proxy statement
on Schedule 14A filed with the SEC on April 4, 2024 (to the extent incorporated by reference in our Annual Report on
Form
10-K
for the year ended December 31, 2023); and
. Our Current Reports on Form
8-K
filed with the SEC on
February 28, 2024
,
May 20, 2024
,
July 26, 2024
and
August 1, 2024
.
All information incorporated by reference is deemed to be part of this
prospectus supplement except to the extent that the information isupdated or
superseded by information filed with the SEC after the date the incorporated
information was filed (including later-dated reports listed above) or by the
information contained in this prospectus supplement. Any information that
wesubsequently file with the SEC that is incorporated by
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reference, as described above, will automatically update and supersede as of
the date of such filing any previous information that had been part of this
prospectus supplement, or that had beenincorporated herein by reference.
We will provide without charge to each person, including any beneficial owner,
to whom a copy of thisprospectus supplement has been delivered, on the written
or oral request of that person, a copy of any or all of the documents referred
to above which have been or may be incorporated by reference in this
prospectus supplement other than exhibits tothese documents, unless the
exhibits are also specifically incorporated by reference herein. Requests for
copies should be directed to the following address:
The Office of the Corporate Secretary
Pacific Gas and Electric Company
300 Lakeside Drive
Oakland,California 94612
Email: CorporateSecretary@pge.com
Telephone:
(415) 973-1000
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PROSPECTUS
PG&E Corporation
Debt Securities
CommonStock
Preferred Stock
Warrants to Purchase Common Stock, Preferred Stock or Debt Securities
Securities Purchase Contracts
Securities Purchase Units
Depositary Shares
Subscription Rights
Pacific Gas and Electric Company
Debt Securities
Warrantsto Purchase Debt Securities
Securities Purchase Contracts
Securities Purchase Units
PG&ECorporation and Pacific Gas and Electric Company may offer and sell an
indeterminate amount of securities identified above from time to time in one
or more offerings. This prospectus provides you with a general description of
the securities thatPG&E Corporation or Pacific Gas and Electric Company may
offer.
Each time PG&E Corporation or Pacific Gas and Electric Companyoffers and sells
securities, PG&E Corporation or Pacific Gas and Electric Company, as
applicable, will provide a supplement to this prospectus that contains
specific information about the offering and the terms of the offered
securities. Thesupplement and any related free writing prospectus may also
add, update or change information contained in this prospectus. You should
carefully read this prospectus, the accompanying prospectus supplement and any
related free writing prospectus, aswell as the documents incorporated by
reference, before you invest in any of our securities.
The securities may be offered and sold on adelayed or continuous basis
directly by PG&E Corporation or Pacific Gas and Electric Company, as
applicable, through agents, underwriters or dealers as designated from time to
time, through a combination of these methods, or through any othermethod as
provided in the applicable prospectus supplement. See "Plan of Distribution."
The applicable prospectus supplement will list any agents, underwriters or
dealers that may be involved and the compensation they will receive.
See "
Risk Factors
" on page 1 for information on certain risks related to the purchase of
oursecurities described in this prospectus.
PG&E Corporation's common stock is listed on the New York Stock Exchange under
thesymbol "PCG." On February 21, 2024, the last reported sale price of PG&E
Corporation's common stock on the New York Stock Exchange was $16.78 per
share. PG&E Corporation or Pacific Gas and Electric Company, as applicable,will
provide information in the applicable prospectus supplement for the trading
market, if any, for any other securities that may be offered hereby.
None of the Securities and Exchange Commission, any state securities
commission or any other regulatory body has approved or disapproved ofthese
securities or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
February 22, 2024
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TABLE OF CONTENTS
ABOUT THIS PROSPECTUS ii
OUR COMPANY 1
RISK FACTORS 1
FORWARD-LOOKING STATEMENTS 2
USE OF PROCEEDS 6
DESCRIPTION OF SECURITIES 7
DESCRIPTION OF THE DEBT SECURITIES OF PG&E CORPORATION 8
SENIOR NOTES 8
SUBORDINATED NOTES 15
DESCRIPTION OF THE DEBT SECURITIES OF PACIFIC GAS AND ELECTRICCOMPANY 23
UNSECURED SENIOR NOTES 23
DESCRIPTION OF THE FIRST MORTGAGE BONDS 34
DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK 50
DESCRIPTION OF WARRANTS 54
DESCRIPTION OF SECURITIES PURCHASE CONTRACTS AND SECURITIES PURCHASE UNITS 57
DESCRIPTION OF DEPOSITARY SHARES 59
DESCRIPTION OF SUBSCRIPTION RIGHTS 60
GLOBAL SECURITIES 62
PLAN OF DISTRIBUTION 64
LEGAL MATTERS 66
EXPERTS 66
WHERE YOU CAN FIND MORE INFORMATION 66
CERTAIN DOCUMENTS INCORPORATED BY REFERENCE 67
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that PG&E Corporation and
Pacific Gas and Electric Company filed with the Securitiesand Exchange
Commission, or the SEC, utilizing a "shelf" registration process. When we
refer to the "Utility" in this prospectus, we refer to Pacific Gas and
Electric Company, the principal operating subsidiary of PG&ECorporation. When
we refer to the "Company," "we," "our," "ours" and "us" in this prospectus
under the headings "Forward-Looking Statements" and "Our Company" we mean
PG&ECorporation and its subsidiaries, including the Utility, through which
substantially all of PG&E Corporation's operations are conducted. When such
terms are used elsewhere in this prospectus, we refer either to PG&E
Corporation or theUtility, as the case may be, as the applicable issuer of
securities and not to any of their respective direct or indirect subsidiaries
or affiliates except as expressly provided. Capitalized terms used in this
prospectus and not otherwise definedherein have the meanings given such terms
in PG&E Corporation's and the Utility's Joint Annual Report on Form
10-K
for the year ended December 31, 2023, which is incorporated by referenceinto
this prospectus.
Under this shelf registration process, we may from time to time offer and sell
securities as described in thisprospectus. This prospectus provides you with
only a general description of the securities that we may offer. This
prospectus does not contain all of the information set forth in the
registration statement of which this prospectus is a part, aspermitted by the
rules and regulations of the SEC. For additional information regarding us and
the offered securities, please refer to the registration statement of which
this prospectus is a part.
Each time we offer and sell securities, we will provide a prospectus
supplement that contains specific information about the offering and theterms
of the offered securities. The prospectus supplement and any related free
writing prospectus also may add, delete, update or change information
contained in this prospectus. You should rely only on the information in the
applicable prospectussupplement if this prospectus and the applicable
prospectus supplement are inconsistent. Before purchasing any securities, you
should carefully read both this prospectus and the applicable prospectus
supplement and any related free writingprospectus, together with the
additional information described under the section of this prospectus titled
"Where You Can Find More Information." In particular, you should carefully
consider the risks and uncertainties described under thesection titled "Risk
Factors" or otherwise included in any applicable prospectus supplement or
incorporated by reference in this prospectus before you decide whether to
purchase the securities. These risks and uncertainties, together withthose not
known to us or those that we may deem immaterial, could impair our business
and ultimately affect our ability to make payments on the securities.
We do not take any responsibility for, and can provide no assurance as to the
reliability of, any information that others may give you. Wehave not
authorized any other person to provide you with information different from the
information contained or incorporated by reference in this prospectus and any
applicable prospectus supplement. Neither we nor any underwriter, dealer or
agentwill make an offer to sell the securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information in this
prospectus and any applicable prospectus supplement is accurate only as of the
dates on theircovers and that any information incorporated by reference is
accurate only as of the date of the document incorporated by reference, unless
we indicate otherwise. Our business, financial condition, results of
operations and prospects may havechanged since those dates.
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OUR COMPANY
PG&E Corporation, incorporated in California in 1995, is a holding company
whose primary operating subsidiary is Pacific Gas and ElectricCompany, a
public utility operating in northern and central California. The Utility was
incorporated in California in 1905. PG&E Corporation became the holding
company of the Utility and its subsidiaries in 1997. The Utility generates
revenuesmainly through the sale and delivery of electricity and natural gas to
customers.
Our executive offices are located at 300 LakesideDrive, Oakland, California
94612. PG&E Corporation's telephone number is (415)
973-1000
and the Utility's telephone number is (415)
973-7000.
We maintain awebsite at www.pge.com where general information about us is
available. We are not incorporating the contents of the website into this
prospectus or any accompany prospectus supplement.
RISK FACTORS
Investing in our securities involves risk. You are urged to carefully read and
consider the risk factors described in PG&ECorporation's and the Utility's
Joint Annual Report on Form
10-K
and other reports filed with the SEC, which are all incorporated by reference
in this prospectus. Before making an investmentdecision, you should carefully
consider these risks as well as other information contained or incorporated by
reference in this prospectus or the applicable supplement to this prospectus.
The risks and uncertainties described are not the only onesfacing us.
Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations, financial
results and the value of our securities.
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FORWARD-LOOKING STATEMENTS
This prospectus, the documents incorporated by reference in this prospectus
and any applicable prospectus supplement contain forward-lookingstatements
that are necessarily subject to various risks and uncertainties. These
statements reflect management's judgment and opinions that are based on
current estimates, expectations and projections about future events and
assumptionsregarding these events and management's knowledge of facts as of
the date of this prospectus. These forward-looking statements relate to, among
other matters, estimated losses, including penalties and fines associated with
variousinvestigations and proceedings; forecasts of capital expenditures;
forecasts of expense reduction; estimates and assumptions used in critical
accounting estimates, including those relating to insurance receivables,
regulatory assets and liabilities,environmental remediation, litigation,
third-party claims, the Wildfire Fund, and other liabilities; and the level of
future equity or debt issuances. These statements are also identified by words
such as "assume," "expect,""intend," "forecast," "plan," "project," "believe,"
"estimate," "predict," "anticipate," "commit," "goal," "target," "will,""may,"
"should," "would," "could," "potential," and similar expressions. PG&E
Corporation and the Utility are not able to predict all the factors that may
affect future results. Some of thefactors that could cause future results to
differ materially from those expressed or implied by the forward-looking
statements, or from historical results, include, but are not limited to:
. the extent to which the Wildfire Fund and revised prudency standard under AB 1054
effectively mitigate the riskof liability for damages arising from catastrophic
wildfires, including whether the Utility maintains an approved WMP and a valid
safety certification and whether the Wildfire Fund has sufficient remaining funds;
. the risks and uncertainties associated with wildfires that have occurred or may occur in the
Utility'sservice area, including the wildfire that began on October 23, 2019 northeast of
Geyserville in Sonoma County, California (the "2019 Kincade fire"), the wildfire that began on
September 27, 2020 in the area of Zogg Mine Road andJenny Bird Lane, north of Igo in Shasta
County, California (the "2020 Zogg fire"), the wildfire that began on July 13, 2021 near the
Cresta Dam in the Feather River Canyon in Plumas County, California (the "2021 Dixiefire"),
the wildfire that began on September 6, 2022 near Oxbow Reservoir in Placer County, California
(the "2022 Mosquito fire"), and any other wildfires for which the causes have yet to
be determined; the damage caused by suchwildfires; the extent of the Utility's liability in
connection with such wildfires (including the risk that the Utility may be found liable for
damages regardless of fault); investigations into such wildfires, including those being
conducted bythe CPUC; potential liabilities in connection with fines or penalties that could be
imposed on the Utility if the CPUC or any other enforcement agency were to bring an enforcement
action in respect of any such fire; the risk that the Utility is notable to recover costs
from the Wildfire Fund or other third parties or through rates; and the effect on PG&E
Corporation's and the Utility's reputations of such wildfires, investigations, and proceedings;
. the extent to which the Utility's wildfire mitigation initiatives are effective, including theUtility's ability
to comply with the targets and metrics set forth in its WMP; the effectiveness of its system hardening,
including undergrounding; the cost of the program and the timing and outcome of any proceeding to recover
such coststhrough rates; and any determination by the OEIS that the Utility has not complied with its WMP;
. the impact of the Utility's implementation of its PSPS program, and whether any fines, penalties, or
civilliability for damages will be imposed on the Utility as a result; the costs in connection with
PSPS events, the timing and outcome of any proceeding to recover such costs through rates, and the
effects on PG&E Corporation's and theUtility's reputations caused by implementation of the PSPS program;
. the Utility's ability to safely, reliably, and efficiently construct, maintain, operate, protect,
anddecommission its facilities, and provide electricity and natural gas services safely and reliably;
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. significant changes to the electric power and natural gas industries driven by
technological advancements,electrification, and the transition to a decarbonized
economy; the impact of reductions in Utility customer demand for electricity and
natural gas, driven by customer self-generation, customer departures to community
choice aggregators, directaccess providers, and government-owned utilities, and
legislative mandates to reduce the use of natural gas; and whether the Utility is
successful in addressing the impact of growing distributed and renewable generation
resources and changingcustomer demand for its natural gas and electric services;
. cyber or physical attacks, including acts of terrorism, war, and
vandalism, on the Utility or its third-partyvendors, contractors, or
customers (or others with whom they have shared data) which could
result in operational disruption; the misappropriation or loss of
confidential or proprietary assets, information or data, including
customer, employee,financial, or operating system information, or
intellectual property; corruption of data; or potential costs, lost revenues,
litigation, or reputational harm incurred in connection therewith;
. the Utility's ability to attract or retain specialty personnel;
. the impact of severe weather events and other natural disasters, including
wildfires and other fires, storms,tornadoes, floods, extreme heat events, drought,
earthquakes, lightning, tsunamis, rising sea levels, mudslides, pandemics,
solar events, electromagnetic events, wind events or other weather-related
conditions, climate change, or natural disasters,and other events that can
cause unplanned outages, reduce generating output, disrupt the Utility's
service to customers, or damage or disrupt the facilities, operations, or
information technology and systems owned by the Utility, its customers,or
third parties on which the Utility relies, and the effectiveness of the Utility's
efforts to prevent, mitigate, or respond to such conditions or events;
the reparation and other costs that the Utility may incur in connection
with suchconditions or events; the impact of the adequacy of the Utility's
emergency preparedness; whether the Utility incurs liability to third parties
for property damage or personal injury caused by such events; whether the
Utility is able to procurereplacement power; and whether the Utility is subject
to civil, criminal, or regulatory penalties in connection with such events;
. existing and future regulation and federal, state or local legislation,
their implementation, and theirinterpretation; the cost to comply with such
regulation and legislation; and the extent to which the Utility recovers
its associated compliance and investment costs, including those regarding:
. wildfires, including inverse condemnation reform, wildfire insurance, and additional
wildfire mitigation measuresor other reforms targeted at the Utility or its industry;
. the environment, including the costs incurred to discharge the Utility's
remediation obligations or thecosts to comply with standards for
greenhouse gas emissions, renewable energy targets, energy efficiency
standards, distributed energy resources, and electric vehicles;
. the nuclear industry, including operations, seismic design, security, safety,
relicensing, the storage of spentnuclear fuel, decommissioning, and cooling water
intake, and whether Diablo Canyon's operations are extended; and the Utility's
ability to continue operating Diablo Canyon until its planned retirement;
. the regulation of utilities and their affiliates, including the conditions
that apply to PG&E Corporation asthe Utility's holding company;
. privacy and cybersecurity; and
. taxes and tax audits;
. the timing and outcomes of the Utility's pending and future ratemaking and regulatory
proceedings, includingthe extent to which PG&E Corporation and the Utility are
able to recover their costs through rates as recorded in memorandum accounts or balancing
accounts, or as otherwise requested; the Utility's application to transfer its
non-nuclear
generation assets to Pacific
Generation and the potential
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sale of a minority interest in Pacific Generation; and the transfer of ownership of the Utility's assets to municipalities
or other public entities, including as a result of the City andCounty of San Francisco's valuation petition;
. whether the Utility can control its operating costs within the
authorized levels of spending; whether the Utilitycan continue
implementing the Lean operating system and achieve projected savings;
the extent to which the Utility incurs unrecoverable costs that
are higher than the forecasts of such costs; the risks and uncertainties
associated with inflation;and changes in cost forecasts or
the scope and timing of planned work resulting from changes in
customer demand for electricity and natural gas or other reasons;
. the outcome of current and future self-reports, investigations or other enforcement
actions, or notices ofviolation that could be issued related to the Utility's compliance
with laws, rules, regulations, or orders applicable to its gas and electric operations;
the construction, expansion, or replacement of its electric and gas facilities;
electricgrid reliability; audit, inspection and maintenance practices; customer billing
and privacy; physical and cybersecurity protections; environmental laws and regulations;
or otherwise, such as fines; penalties; remediation obligations; or theimplementation
of corporate governance, operational or other changes in connection with the EOEP;
. the risks and uncertainties associated with PG&E Corporation's and the Utility's substantialindebtedness
and the limitations on their operating flexibility in the documents governing that indebtedness;
. the risks and uncertainties associated with the resolution of the
Subordinated Claims and the timing and outcomesof PG&E Corporation's and
the Utility's ongoing litigation, including certain indemnity obligations
to current and former officers and directors, the Wildfire-Related
Non-Bankruptcy
SecuritiesClaims, and other third-party claims, as well as potential
indemnity obligations to underwriters for certain of the Utility's
note offerings, including the extent to which related costs can be
recovered through insurance, rates, or from otherthird parties;
. the ability of PG&E Corporation and the Utility to use securitization to finance the recovery of theremaining
$1.385 billion of fire risk mitigation capital expenditures that were or will be incurred by the Utility;
. whether PG&E Corporation or the Utility undergoes an "ownership change" within the
meaning ofSection 382 of the IRC, as a result of which tax attributes could be limited;
. the ultimate amount of unrecoverable environmental costs the Utility incurs associated with the Utility'snatural
gas compressor station site located near Hinkley, California and the Utility's fossil fuel-fired generation sites;
. the supply and price of electricity, natural gas, and nuclear fuel; the extent to which the Utility can manageand respond
to the volatility of energy commodity prices; the ability of the Utility and its counterparties to post or return
collateral in connection with price risk management activities; and whether the Utility is able to recover timely
itselectric generation and energy commodity costs through rates, including its renewable energy procurement costs;
. the ability of PG&E Corporation and the Utility to access capital markets and
other sources of debt andequity financing in a timely manner on acceptable terms;
. the risks and uncertainties associated with high rates for the Utility's customers;
. actions by credit rating agencies to downgrade PG&E Corporation's or the Utility's credit ratings;
. the severity, extent and duration of the global
COVID-19
pandemic and theUtility's ability to collect on customer receivables; and
. the impact of changes in GAAP, standards, rules, or policies, including those related to
regulatory accounting,and the impact of changes in their interpretation or application.
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For more information about the significant risks that could affect the outcome
of theforward-looking statements and our future financial condition, results
of operations, liquidity, and cash flows, you should read the sections of the
documents incorporated herein by reference titled "Risk Factors," as well as
the importantfactors that may be set forth under the heading "Risk Factors" in
the applicable supplement to this prospectus.
You should readthis prospectus, any applicable prospectus supplements, the
documents that we incorporate by reference into this prospectus, the documents
that we have included as exhibits to the registration statement of which this
prospectus is a part and thedocuments that we refer to under the section of
this prospectus titled "Where You Can Find More Information" completely and
with the understanding that our actual future results could be materially
different from what we expect when makingthe forward-looking statement. We
qualify all our forward-looking statements by these cautionary statements.
These forward-looking statements speak only as of the date of this prospectus,
the date of the document incorporated by reference or thedate of any
applicable prospectus supplement. Except as required by applicable laws or
regulations, we do not undertake any obligation to update or revise any
forward-looking statement, whether as a result of new information, future
events orotherwise.
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USE OF PROCEEDS
Each prospectus supplement will describe the uses of the proceeds from the
issuance of the securities offered by that prospectus supplement.
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DESCRIPTION OF SECURITIES
The following is a general description of the terms and provisions of the
securities we may offer and sell by this prospectus. These summariesare not
meant to be a complete description of each security. This prospectus and any
accompanying prospectus supplement will contain the material terms and
conditions for each security. The accompanying prospectus supplement may add,
update orchange the terms and conditions of the securities as described in
this prospectus.
Holding Company Structure
PG&E Corporation conducts its operations primarily through its subsidiaries
and substantially all of its consolidated assets are held byits subsidiaries.
Accordingly, PG&E Corporation's cash flow and its ability to meet its
obligations under its debt securities are largely dependent upon the earnings
and cash flows of its subsidiaries and the distribution or other paymentof
these earnings and cash flows to PG&E Corporation in the form of dividends or
loans or advances and repayment of loans and advances from the Utility. PG&E
Corporation's subsidiaries are separate and distinct legal entities and haveno
obligation to pay any amounts due on its debt securities or to make any funds
available for payment of amounts due on these debt securities.
Because PG&E Corporation is a holding company, its obligations under its debt
securities will be structurally subordinated to all existingand future
liabilities of its subsidiaries, including all the existing and future
liabilities of the Utility. Therefore, the rights of PG&E Corporation and its
creditors, including the rights of the holders of its debt securities, to
participatein the assets of any subsidiary upon the liquidation or
reorganization of the subsidiary will be subject to the prior claims of the
subsidiary's creditors. To the extent that PG&E Corporation is itself a
creditor with recognized claimsagainst any of its subsidiaries, its claims
would still be effectively subordinated to any security interest in, or
mortgages or other liens on, the assets of the subsidiary and would be
subordinated to any indebtedness or other liabilities of thesubsidiary that
are senior to the claims held by PG&E Corporation.
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DESCRIPTION OF THE DEBT SECURITIES OF PG&E CORPORATION
SENIOR NOTES
Set forth below is a description of the general terms of the senior notes,
which may be unsecured or secured ("senior notes"). Thefollowing description
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, (i) the unsecured senior note indenture to be
entered into between us and The Bank of New York Mellon Trust Company,N.A., as
trustee (the "Unsecured Senior Note Indenture Trustee"), to be supplemented by
supplemental indentures establishing the unsecured senior notes of each series
and (ii) the senior secured note indenture, dated as ofJune 23, 2020, between
PG&E Corporation and The Bank of New York Mellon Trust Company, N.A., as
trustee (the "Secured Senior Note Indenture Trustee," and together with the
Unsecured Senior Note Indenture Trustee, the "SeniorNote Indenture Trustees"),
to be supplemented by supplemental indentures establishing the secured senior
notes of each series. The unsecured senior note indenture, as amended or
supplemented from time to time, is referred to herein as the"Unsecured Senior
Note Indenture." The secured senior note indenture, as amended or supplemented
from time to time, is herein referred to as the "Secured Senior Note
Indenture," and together with the Unsecured Senior NoteIndenture, the "Senior
Note Indentures."
There will be no requirement under either the Unsecured Senior Note Indenture
or theSecured Senior Note Indenture that our future issuances of senior notes
be issued exclusively under either indenture. We will be free to employ other
indentures or documentation containing provisions different from those
included in either indentureor applicable to one or more issuances of
unsecured senior notes or secured senior notes, as the case may be, in
connection with future issuances of other senior notes.
We have summarized selected provisions of the Senior Note Indentures and the
senior notes below. The information we are providing you in thisprospectus
concerning the senior notes and the Senior Note Indentures is only a summary
of the information provided in those documents, and the summary is qualified
in its entirety by reference to the provisions of the Senior Note
Indentures,including the form of applicable senior notes attached thereto. You
should consult the applicable form of the senior notes themselves and the
applicable Senior Note Indenture for more complete information on the senior
notes as they, and not thisprospectus or any applicable prospectus supplement,
govern your rights as a holder. The Secured Senior Note Indenture and the form
of the Unsecured Senior Note Indenture are included as exhibits to the
registration statement of which this prospectusis a part. The terms of the
senior notes will include those stated in the Senior Note Indentures and those
made a part of the Senior Note Indentures by reference to the Trust Indenture
Act of 1939, as amended, or the Trust Indenture Act. Certaincapitalized terms
used in this prospectus are defined in the applicable Senior Note Indenture.
In this section, references to"we," "our," "ours," "us" and "the Company"
refer only to PG&E Corporation and not to any of its direct or indirect
subsidiaries or affiliates except as expressly provided.
General
The unsecured senior notes willbe issued as unsecured senior debt securities
under the Unsecured Senior Note Indenture and will rank equally with all other
future unsecured and unsubordinated debt of the Company. The unsecured senior
notes will be effectively subordinated to allsecured debt of the Company,
including the secured senior notes. The secured senior notes will be issued as
secured senior debt securities under the Secured Senior Note Indenture and
will rank equally with all other future secured senior notes ofthe Company.
Neither Senior Note Indenture limits the aggregate principal amount of senior
notes that may be issued under such Senior Note Indenture and each Senior Note
Indenture provides that senior notes may be issued from time to time in one
ormore series pursuant to a supplemental indenture to such Senior Note
Indenture. The Senior Note Indentures give us the ability to reopen a previous
series of senior notes and issue additional senior notes of such series,
unless otherwise provided.
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Provisions of a Particular Series
The prospectus supplement applicable to each series of senior notes will
specify, among other things:
. the title of such senior notes;
. any limit on the aggregate principal amount of such senior notes;
. the date or dates on which the principal of such senior notes is payable, including the maturity date, or themethod or means
by which those dates will be determined, and our right, if any, to extend those dates and the duration of any such extension;
. the rate or rates at which such senior notes shall bear interest, if any, or any method by which such rate orrates
will be determined, the date or dates from which such interest will accrue, the interest payment dates on
which such interest shall be payable, the regular record date for the interest payable on any interest payment
date, and the right, ifany, to extend the interest payment periods and the duration of any such extension;
. the place or places where the principal of (and premium, if any) and interest, if any, on
such senior notes shallbe payable, the methods by which registration of transfer of senior
notes and exchanges of senior notes may be effected, and by which notices and demands to
or upon us in respect of such senior notes may be made, given, furnished, filed or served;
. the period or periods within which, or date or dates on which, the price or prices at which and the
terms andconditions on which the senior notes may be redeemed, in whole or in part, at our option;
. our obligation, if any, to redeem, purchase or repay such senior notes pursuant to any sinking fund or analogousprovisions or
at the option of the holder and the terms and conditions upon which the senior notes will be so redeemed, purchased or repaid;
. the denominations in which such senior notes shall be issuable;
. the currency or currencies in which the principal, premium, if any, and interest on the senior notes will
bepayable if other than U.S. dollars and the method for determining the equivalent amount in U.S. dollars;
. if the amount payable in respect of principal of or any premium or interest on any senior notes may be
determinedwith reference to an index or formula, the manner in which such amount will be determined;
. any deletions from, modifications of or additions to the Events of Default or covenants of the
Company asprovided in the applicable Senior Note Indenture pertaining to such senior notes;
. whether the senior notes of the series will be secured (including the terms of the collateral securing the
seniornotes of such series) or unsecured and the terms and provisions applicable to any such security arrangements
with respect to the senior notes of such series; whether such senior notes shall be issued in whole or in
part in the form of a globalsecurity and, if so, the name of the depositary for any global securities;
. the terms applicable to any rights to convert such senior notes into or
exchange them for other of our securitiesor those of any other entity;
. any
non-applicability
of Section 1007 of the applicable Senior NoteIndenture (Limitation on Liens) to the senior notes of such
series or any exceptions or modifications of such section with respect to the senior notes of such series; and
. any other terms of such senior notes.
We may sell senior notes at par or at a discount below their stated principal
amount or at a premium. We will describe in a prospectussupplement material
U.S. federal income tax considerations, if any, and any other special
considerations for any senior notes we sell that are denominated in a currency
other than U.S. dollars.
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The Senior Note Indentures do not contain provisions that afford holders of
senior notesprotection in the event of a highly leveraged transaction
involving us.
Registration and Transfer
We shall not be required to (i) issue, register the transfer of or exchange
senior notes of any series during a period of 15 daysimmediately preceding the
date notice is given identifying the senior notes of such series called for
redemption, or (ii) issue, register the transfer of or exchange any senior
notes so selected for redemption, in whole or in part, except theunredeemed
portion of any senior note being redeemed in part.
Payment and Paying Agent
Unless otherwise indicated in an applicable prospectus supplement, payment of
principal of any senior notes will be made only against surrenderto the Paying
Agent of such senior notes. Principal of and interest on senior notes will be
payable, subject to any applicable laws and regulations, at the office of such
Paying Agent or Paying Agents as we may designate from time to time,
exceptthat, at our option, payment of any interest may be made by wire
transfer or by check mailed to the address of the person entitled to an
interest payment as such address shall appear in the Security Register with
respect to the senior notes. Paymentof interest on senior notes on any
interest payment date will be made to the person in whose name the senior
notes (or predecessor security) are registered at the close of business on the
record date for such interest payment.
Unless otherwise indicated in an applicable prospectus supplement, the
applicable Senior Note Indenture Trustee will act as Paying Agent withrespect
to the senior notes. We may at any time designate additional Paying Agents or
rescind the designation of any Paying Agents or approve a change in the office
through which any Paying Agent acts.
All moneys paid by us to a Paying Agent for the payment of the principal (and
premium, if any) of or interest on the senior notes of anyseries which remain
unclaimed at the end of two years after such principal (and premium, if any)
or interest shall have become due and payable will be repaid to us, and the
holder of such senior notes will from that time forward look only to us
forpayment of such principal and interest.
Covenants
Any covenants pertaining to a series of senior notes will be set forth in a
prospectus supplement relating to such series of senior notes.
Consolidation, Merger and Sale
We shallnot consolidate with or merge into any other person or convey,
transfer or lease our properties and assets substantially as an entirety to
any person, unless:
. such other person is a corporation, partnership, limited liability company,
association, company, joint stockcompany or business trust organized and existing
under the laws of the United States, any state in the United States or the
District of Columbia and such other person expressly assumes, by supplemental
indenture executed and delivered to theapplicable Senior Note Indenture Trustee,
the payment of the principal of (and premium, if any) and interest on all
the senior notes and the performance of every covenant of the applicable
Senior Note Indenture on the part of the Company to beperformed or observed;
. immediately after giving effect to such transactions, no Event of Default, and no event which, after notice
orlapse of time or both, would become an Event of Default, shall have happened and be continuing; and
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. we have delivered to the applicable Senior Note Indenture Trustee an officer's certificate
and an opinion ofcounsel, each stating that such transaction complies with the provisions
of the applicable Senior Note Indenture governing consolidation, merger, conveyance, transfer
or lease and that all conditions precedent to the transaction have been compliedwith.
Notwithstanding the foregoing, we may merge or consolidate with or transfer
all or substantially all of ourassets to an affiliate that has no significant
assets or liabilities and was formed solely for the purpose of changing our
jurisdiction of organization or our form of organization; provided that the
amount of our indebtedness is not increased; andprovided, further that the
successor assumes all of our obligations under the applicable Senior Note
Indenture.
Modification
Each Senior Note Indenture contains provisions permitting us and the
applicable Senior Note Indenture Trustee, with the consent of the holdersof
not less than a majority in principal amount of the outstanding senior notes
of each series that is affected, to modify the applicable Senior Note
Indenture or the rights of the holders of the senior notes of such series;
provided, that no suchmodification may, without the consent of the holder of
each outstanding senior note that is affected:
. change the stated maturity of the principal of, or any installment of
principal of or interest on, any seniornote, or reduce the principal
amount of any senior note or the rate of interest on any senior note
or any premium payable upon the redemption of any senior note, or
change the method of calculating the rate of interest of any senior
note, or impairthe right to institute suit for the enforcement of any
such payment on or after the stated maturity of any senior note (or,
in the case of redemption, on or after the redemption date); or
. reduce the percentage of principal amount of the outstanding senior notes of any series, the consent of
whoseholders is required for any such supplemental indenture, or the consent of whose holders is required for
any waiver (of compliance with certain provisions of the applicable Senior Note Indenture or certain defaults
under such Senior Note Indentureand their consequences) provided for in such Senior Note Indenture; or
. modify any of the provisions of the applicable Senior Note Indenture relating to supplemental
indentures, waiverof past defaults, or waiver of certain covenants, except to increase any such
percentage or to provide that certain other provisions of such Senior Note Indenture cannot be
modified or waived without the consent of the holder of each outstandingsenior note that is affected.
In addition, we and the applicable Senior Note Indenture Trustee may execute,
without theconsent of any holders of senior notes, any supplemental indenture
for certain other usual purposes, including the creation of any new series of
senior notes.
Events of Default
Each Senior NoteIndenture provides that any one or more of the following
described events with respect to the senior notes of any series, which has
occurred and is continuing, constitutes an "Event of Default" with respect to
the senior notes of suchseries:
. failure for 30 days to pay interest on the senior notes of such series, when due
on an interest payment dateother than at maturity or upon earlier redemption; or
. failure to pay principal or premium, if any, or interest on the senior
notes of such series when due at maturityor upon earlier redemption; or
. failure for three Business Days to deposit any sinking fund payment when due by the terms of a senior note ofsuch series; or
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. failure to observe or perform any other covenant or warranty of ours
in the applicable Senior Note Indenture(other than a covenant or
warranty which has expressly been included in such Senior Note
Indenture solely for the benefit of one or more series of senior notes
other than such series) for 90 days after written notice to us
from the applicable SeniorNote Indenture Trustee or to us and such
Senior Note Indenture Trustee from the holders of at least 33% in
principal amount of the outstanding senior notes of such series; or
. certain events of bankruptcy, insolvency or reorganization of the Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the senior notes of any series have the right to directthe time,
method and place of conducting any proceeding for any remedy available to the
applicable Senior Note Indenture Trustee with respect to the senior notes of
such series. If a Senior Note Indenture Event of Default occurs and is
continuingwith respect to the senior notes of any series, then the applicable
Senior Note Indenture Trustee or the holders of not less than 33% in aggregate
outstanding principal amount of the senior notes of such series may declare
the principal amount ofthe senior notes due and payable immediately by notice
in writing to us (and to such Senior Note Indenture Trustee if given by the
holders), and upon any such declaration such principal amount shall become
immediately due and payable; provided,however, that upon the occurrence of an
Event of Default specified in the last bullet above, the principal amount of
all senior notes of that series then outstanding shall be due and payable
immediately without any declaration or other action bysuch Senior Note
Indenture Trustee or the holders of such series. At any time after such a
declaration of acceleration with respect to the senior notes of any series has
been made and before a judgment or decree for payment of the money due has
beenobtained as provided in the applicable Senior Note Indenture, the holders
of not less than a majority in aggregate outstanding principal amount of the
senior notes of such series may rescind and annul such declaration and its
consequences if allEvents of Default with respect to such senior notes, other
than the
non-payment
of the principal of such senior notes which has become due solely by such
declaration of acceleration, have been cured or waivedand the Company has paid
or deposited with such Senior Note Indenture Trustee a sum sufficient to pay
all overdue interest (including, to the extent such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor insuch
senior notes) and principal due otherwise than by acceleration and all sums
paid or advanced by such Senior Note Indenture Trustee, including reasonable
compensation and expenses of such Senior Note Indenture Trustee.
The holders of not less than a majority in aggregate outstanding principal
amount of the senior notes of any series may, on behalf of theholders of all
the senior notes of such series, waive any past default with respect to such
series, except (i) a default in the payment of principal or interest or (ii) a
default in respect of a covenant or provision which under theapplicable Senior
Note Indenture cannot be modified or amended without the consent of the holder
of each outstanding senior note of such series affected.
Satisfaction and Discharge
Any seniornote, or any portion of the principal amount thereof, will be deemed
to have been paid for purposes of the applicable Senior Note Indenture, and
our entire indebtedness in respect of the senior notes will be deemed to have
been satisfied anddischarged, if certain conditions are satisfied, including
an irrevocable deposit with the applicable Senior Note Indenture Trustee or
any paying agent (other than us) in trust of:
. money in an amount which will be sufficient; or
. in the case of a deposit made prior to the maturity of the senior
notes or portions thereof, Eligible Obligations(as defined below)
which do not contain provisions permitting the redemption or other
prepayment thereof at the option of the issuer thereof, the
principal of and the interest on which when due, without any
regard to reinvestment thereof, willprovide monies which, together
with the money, if any, deposited with or held by such Senior Note
Indenture Trustee or the paying agent, will be sufficient; or
. a combination of either of the two items described in the two preceding bullet points which will be sufficient;
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to pay when due the principal of and premium, if any, and interest, if any,
due and to become due on thesenior notes or portions thereof.
This discharge of the senior notes through the deposit with the applicable
Senior Note IndentureTrustee of cash or Eligible Obligations generally will be
treated as a taxable disposition for U.S. federal income tax purposes by the
holders of those senior notes. Prospective investors in the senior notes
should consult their own tax advisors asto the particular U.S. federal income
tax consequences applicable to them in the event of such discharge.
For purposes of thissubsection, "Eligible Obligations" for U.S. dollar-denominat
ed senior notes, means securities that are direct obligations of, or
obligations unconditionally guaranteed by, the United States, entitled to the
benefit of the full faith andcredit thereof, or depositary receipts issued by
a bank as custodian with respect to these obligations or any specific interest
or principal payments due in respect thereof held by the custodian for the
account of the holder of a depositary receipt.
Information Concerning the Senior Note Indenture Trustees
The applicable Senior Note Indenture Trustee, prior to an Event of Default
with respect to senior notes of any series, undertakes to perform,with respect
to senior notes of such series, only such duties as are specifically set forth
in such Senior Note Indenture and, in case an Event of Default with respect to
senior notes of any series has occurred and is continuing, shall exercise,with
respect to senior notes of such series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the applicable Senior Note Indenture Trustee is under no
obligation toexercise any of the powers vested in it by such Senior Note
Indenture at the request of any holder of senior notes of any series, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurredby such Senior Note Indenture Trustee. The
applicable Senior Note Indenture Trustee is not required to expend or risk its
own funds or otherwise incur any financial liability in the performance of its
duties if such Senior Note Indenture Trusteereasonably believes that repayment
or adequate indemnity is not reasonably assured to it.
We and certain of our subsidiaries may maintaindeposit accounts and banking
relationships with the Senior Note Indenture Trustees. The Senior Note
Indenture Trustees and certain of their affiliates may also serve as trustee
under other indentures pursuant to which securities of the Company andcertain
subsidiaries of the Company are outstanding.
The applicable Senior Note Indenture Trustee may resign at any time with
respect tothe senior notes of one or more series upon written notice to us,
and such Senior Note Indenture Trustee may be removed at any time by written
notice delivered to it and us and signed by the holders of at least a majority
in principal amount ofoutstanding senior notes. No resignation or removal of a
Senior Note Indenture Trustee will take effect until a successor trustee
accepts appointment. In addition, under certain circumstances, we may remove
the applicable Senior Note IndentureTrustee with respect to any series. We
must give notice of resignation and removal of the applicable Senior Note
Indenture Trustee with respect to a series or the appointment of a successor
trustee as provided in the applicable Senior NoteIndenture.
Governing Law
The SeniorNote Indentures and the senior notes will be governed by, and
construed in accordance with, the internal laws of the State of New York.
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Miscellaneous
We will have the right at all times to assign any of our rights or obligations
under any Senior Note Indenture to a direct or indirectwholly-owned
subsidiary; provided, that, in the event of any such assignment, we will
remain primarily liable for all such obligations. Subject to the foregoing,
the applicable Senior Note Indenture will be binding upon and inure to the
benefit ofthe parties to such Senior Note Indenture and their respective
successors and assigns.
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SUBORDINATED NOTES
Set forth below is a description of the general terms of the subordinated
notes. The following description does not purport to be complete andis subject
to, and is qualified in its entirety by reference to, the subordinated note
indenture to be entered into between us and a trustee to be named (the
"Subordinated Note Indenture Trustee"), to be supplemented by supplementalindent
ures establishing the subordinated notes of each series. The subordinated note
indenture, as amended or supplemented from time to time, is referred to as the
"Subordinated Note Indenture." The form of the Subordinated Note Indenturewas
filed as Exhibit 4.2 to the Form
8-K
we filed on March 9, 2009 (File
No. 001-12609).
We have summarized selected provisions of the Subordinated NoteIndenture and
the subordinated notes below. The information we are providing you in this
prospectus concerning the subordinated notes and the Subordinated Note
Indenture is only a summary of the information provided in those documents,
and thesummary is qualified in its entirety by reference to the provisions of
the Subordinated Note Indenture, including the form of subordinated notes
attached thereto. You should consult the form of the subordinated notes
themselves and the SubordinatedNote Indenture for more complete information on
the subordinated notes as they, and not this prospectus or any applicable
prospectus supplement, govern your rights as a holder. The terms of the
subordinated notes will include those stated in theSubordinated Note Indenture
and those made a part of the Subordinated Note Indenture by reference to the
Trust Indenture Act of 1939, as amended, or the Trust Indenture Act. Certain
capitalized terms used in this prospectus are defined in theSubordinated Note
Indenture.
In this section, references to "we," "our," "ours," "us" and"the Company"
refer only to PG&E Corporation and not to any of its direct or indirect
subsidiaries or affiliates except as expressly provided.
General
The subordinated notes will beissued as unsecured junior subordinated debt
securities under the Subordinated Note Indenture. The Subordinated Note
Indenture does not limit the aggregate principal amount of subordinated notes
that may be issued under the Subordinated NoteIndenture and provides that
subordinated notes may be issued from time to time in one or more series
pursuant to an indenture supplemental to the Subordinated Note Indenture. The
Subordinated Note Indenture gives us the ability to reopen a previousissue of
subordinated notes and issue additional subordinated notes of such series,
unless otherwise provided.
Provisions of a Particular Series
The prospectus supplement applicable to each series of subordinated notes will
specify, among other things:
. the title of such subordinated notes;
. any limit on the aggregate principal amount of such subordinated notes;
. the date or dates on which the principal of such subordinated notes
is payable, including the maturity date, orthe method or means
by which those dates will be determined, and our right, if any,
to extend those dates and the duration of any such extension;
. the rate or rates at which such subordinated notes shall bear interest, if any, or any method by which such rateor
rates will be determined, the date or dates from which such interest will accrue, the interest payment dates
on which such interest shall be payable, the regular record date for the interest payable on any interest payment
date, and the right, ifany, to extend the interest payment periods and the duration of any such extension;
. the place or places where the principal of (and premium, if any) and interest, if any, on such
subordinated notesshall be payable, the methods by which registration of the transfer of subordinated
notes and exchanges of subordinated notes may be effected, and by which notices and demands to
or upon us in respect of such subordinated notes may be made, given,furnished, filed or served;
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. the period or periods within which, or date or dates on which, the price or prices at which and the terms andconditions on
which the subordinated notes may be redeemed, in whole or in part, at our option, and any restrictions on such redemption;
. our obligation, if any, to redeem, purchase or repay such subordinated
notes pursuant to any sinking fund oranalogous provisions or
at the option of the holder and the terms and conditions upon which
the subordinated notes will be so redeemed, purchased or repaid;
. the denominations in which such subordinated notes shall be issuable;
. the currency or currencies in which the principal, premium, if any, and interest on the subordinated notes
willbe payable if other than U.S. dollars and the method for determining the equivalent amount in U.S. dollars;
. if the amount of payments of principal of (and premium, if any) or
interest (including Additional Interest (asdefined below)) on such
subordinated notes may be determined with reference to an index
or formula, the manner in which such amounts shall be determined;
. any deletions from, modifications of or additions to the Events of Default or covenants of the
Company asprovided in the Subordinated Note Indenture pertaining to such subordinated notes;
. whether such subordinated notes shall be issued in whole or in part in the form of a
global security and, if so,the name of the depositary for any global securities; and
. any other terms of such subordinated notes.
The Subordinated Note Indenture does not contain provisions that afford
holders of subordinated notes protection in the event of a highlyleveraged
transaction involving us.
Registration and Transfer
We shall not be required to (i) issue, register the transfer of or exchange
subordinated notes of any series during a period of 15 daysimmediately
preceding the date notice is given identifying the subordinated notes of such
series called for redemption, or (ii) issue, register the transfer of or
exchange any subordinated notes so selected for redemption, in whole or in
part,except the unredeemed portion of any subordinated note being redeemed in
part.
Payment and Paying Agent
Unless otherwise indicated in an applicable prospectus supplement, payment of
principal of any subordinated notes will be made only againstsurrender to the
Paying Agent of such subordinated notes. Principal of and interest on
subordinated notes will be payable, subject to any applicable laws and
regulations, at the office of such Paying Agent or Paying Agents as we may
designate fromtime to time, except that, at our option, payment of any
interest may be made by wire transfer or by check mailed to the address of the
person entitled to an interest payment as such address shall appear in the
Security Register with respect to thesubordinated notes. Payment of interest
on subordinated notes on any interest payment date will be made to the person
in whose name the subordinated notes (or predecessor security) are registered
at the close of business on the record date for suchinterest payment.
Unless otherwise indicated in an applicable prospectus supplement, the
Subordinated Note Indenture Trustee will act asPaying Agent with respect to
the subordinated notes. We may at any time designate additional Paying Agents
or rescind the designation of any Paying Agents or approve a change in the
office through which any Paying Agent acts.
All moneys paid by us to a Paying Agent for the payment of the principal of
(and premium, if any) or interest on the subordinated notes of anyseries which
remain unclaimed at the end of two years after such
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principal (and premium, if any) or interest shall have become due and payable
will be repaid to us, and the holder of such subordinated notes will from that
time forward look only to us forpayment of such principal (and premium, if
any) and interest.
Consolidation, Merger and Sale
The Company shall not consolidate with or merge into any other corporation or
convey, transfer or lease its properties and assets substantiallyas an
entirety to any Person (as defined below), unless:
. in case the Company shall consolidate with or merge into another
corporation or convey, transfer or lease itsproperties and assets
substantially as an entirety to any Person, the corporation formed
by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or transfer, or which
leases, the properties and assets ofthe Company substantially as an
entirety shall be a corporation organized and existing under the
laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by a supplemental
indenture to theSubordinated Note Indenture, executed and
delivered to the Subordinated Note Indenture Trustee, in form
satisfactory to the Subordinated Note Indenture Trustee, the due and
punctual payment of the principal of (and premium, if any) and
interest(including Additional Interest) on all the subordinated notes
and the performance of every covenant of the Subordinated Note
Indenture on the part of the Company to be performed or observed;
. immediately after giving effect to such transactions, no Event of Default, and no event which, after notice
orlapse of time or both, would become an Event of Default, shall have happened and be continuing; and
. the Company has delivered to the Subordinated Note Indenture Trustee an officer's certificate
and an opinionof counsel, each stating that such consolidation, merger, conveyance, transfer or
lease complies with Article Eight of the Subordinated Note Indenture and that all conditions
precedent relating to such transaction in the Subordinated Note Indenturehave been complied with.
Notwithstanding the foregoing, the Company may merge or consolidate with or
transfer all orsubstantially all of its assets to an affiliate that has no
significant assets or liabilities and was formed solely for the purpose of
changing the jurisdiction of organization of the Company or the form of
organization of the Company; provided thatthe amount of indebtedness of the
Company is not increased thereby; and provided, further that the successor
assumes all obligations of the Company under the Subordinated Note Indenture.
The meaning of the term "substantially all" has not been definitively
established and is likely to be interpreted by reference toapplicable state
law if and at the time the issue arises and will depend on the facts and
circumstances existing at the time.
Forpurposes of this subsection, "Person" means any individual, corporation,
partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization or government or any
agency or politicalsubdivision thereof.
Subordination
The subordinated notes are subordinated and junior in right of payment to all
of our Senior Indebtedness (as defined below). No payment of anyprincipal,
including redemption payments, if any, premium, if any, or interest on
(including Additional Interest) the subordinated notes shall be made if:
. any Senior Indebtedness is not paid when due whether at the stated maturity
of any such payment or by call forredemption and any applicable grace
period with respect to such default has ended, with such default remaining
uncured and such default has not been waived or otherwise ceased to exist;
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. the maturity of any Senior Indebtedness has been accelerated because of a default; or
. notice has been given of the exercise of an option to require repayment, mandatory payment or prepayment orotherwise.
Upon any payment or distribution of assets of the Company to creditors upon
any liquidation, dissolution,
winding-up,
reorganization, assignment for the benefit of creditors, marshalling of assets
or liabilities, or any bankruptcy, insolvency or similar proceedings of the
Company, the holders of Senior Indebtednessshall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness before the holders of the subordinated notes are entitled
to receive or retain any payment or distribution. Subject to theprior payment
of all Senior Indebtedness, the rights of the holders of the subordinated
notes will be subrogated to the rights of the holders of Senior Indebtedness
to receive payments and distributions applicable to such Senior Indebtedness
untilall amounts owing on the subordinated notes are paid in full.
For purposes of this subsection, "assets of the Company" shallnot be deemed to
include shares of stock of the Company as reorganized or readjusted, or
securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is subordinated at least
tothe extent provided in the Subordinated Note Indenture with respect to the
subordinated notes to the payment of all Senior Indebtedness that may at the
time be outstanding; provided, however, that (i) the Senior Indebtedness is
assumed by thenew corporation, if any, resulting from any such reorganization
or readjustment, and (ii) the rights of the holders of the Senior Indebtedness
are not, without the consent of such holders, altered by such reorganization
or readjustment. Theconsolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety,
or substantially as an entirety, toanother corporation upon the terms and
conditions provided for in Article Eight of the Subordinated Note Indenture
shall not be deemed a dissolution,
winding-up,
liquidation or reorganization for the purposesof this subsection if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Eight of the
Subordinated Note Indenture.
The term "Senior Indebtedness" means, with respect to us:
. any payment due in respect of our indebtedness, whether outstanding at the date of execution of the SubordinatedNote
Indenture or incurred, created or assumed after such date, (a) in respect of money borrowed (including any financial
derivative, hedging or futures contract or similar instrument) and (b) evidenced by securities, debentures, bonds,notes
or other similar instruments issued by us that, by their terms, are senior or senior subordinated debt securities;
. all capital lease obligations;
. all obligations issued or assumed as the deferred purchase price of property,
all conditional sale obligationsand all obligations of the Company under
any title retention agreement (but excluding trade accounts payable arising
in the ordinary course of business and long-term purchase obligations);
. all obligations for the reimbursement of any letter of credit, banker's
acceptance, security purchasefacility or similar credit transaction;
. all obligations of the type referred to in first four bullet points above of other persons
the payment of whichwe are responsible or liable as obligor, guarantor or otherwise; and
. all obligations of the type referred to in the first four bullet points above of other
persons secured by anylien on any property or asset of the Company (whether or not
such obligation is assumed by the Company), except for (1) any such indebtedness that
is by its terms subordinated to or that ranks equally with the subordinated notes
and(2) any unsecured indebtedness between or among us or our affiliates. Such Senior
Indebtedness shall continue to be Senior Indebtedness and be entitled to the benefits
of the subordination provisions contained in the Subordinated Note Indentureirrespective
of any amendment, modification or waiver of any term of such Senior Indebtedness.
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The Subordinated Note Indenture does not limit the aggregate amount of Senior
Indebtednessthat we may issue. At December 31, 2023, the outstanding Senior
Indebtedness of PG&E Corporation totaled approximately $4.6 billion.
Additional Interest
"AdditionalInterest" is defined in the Subordinated Note Indenture as (i) such
additional amounts as may be required so that the net amounts received and
retained by a holder of subordinated notes (if the holder is a Securities
Trust (as defined inthe Subordinated Note Indenture) formed to issue Trust
Securities (as defined in the Subordinated Note Indenture), the proceeds of
which are used to purchase subordinated notes of one or more series) after
paying taxes, duties, assessments orgovernmental charges of whatever nature
(other than withholding taxes) imposed by the United States or any other
taxing authority will not be less than the amounts the holder would have
received had no such taxes, duties, assessments or othergovernmental charges
been imposed; and (ii) any interest due and not paid on an interest payment
date, together with interest on such interest due from such interest payment
date to the date of payment, compounded quarterly, on each interestpayment
date.
Certain Covenants
TheCompany covenants in the Subordinated Note Indenture, for the benefit of
the holders of each series of subordinated notes, that:
. if the Company shall have given notice of its election to extend an interest payment
period for such series ofsubordinated notes and such extension shall be continuing;
. if the Company shall be in default with respect to its payment or other obligations under the guarantee
withrespect to the Trust Securities, if any, related to such series of subordinated notes; or
. if an Event of Default under the Subordinated Note Indenture with respect
to such series of subordinated notesshall have occurred and be continuing;
(a) the Company shall not declare or pay any dividend or make any
distributions with respect to,or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, and (b) the
Company shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debtsecurities (including guarantees
other than the guarantee with respect to the series of Trust Securities, if
any, related to such series of subordinated notes) issued by the Company which
rank equally with or junior to the subordinated notes.
None of the foregoing, however, shall restrict:
. any of the actions described in the preceding sentence resulting from
any reclassification of the Company'scapital stock or the exchange
or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock; or
. the purchase of fractional interests in shares of the Company's capital stock pursuant to the
conversion orexchange provisions of such capital stock or the security being converted or exchanged.
Modification
The Subordinated NoteIndenture contains provisions permitting us and the
Subordinated Note Indenture Trustee, with the consent of the holders of not
less than a majority in principal amount of the outstanding
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subordinated notes of each series that is affected, to modify the Subordinated
Note Indenture or the rights of the holders of the subordinated notes of such
series; provided, that no suchmodification may, without the consent of the
holder of each outstanding subordinated note that is affected:
. change the stated maturity of the principal of, or any installment of principal
of or interest on, anysubordinated note, or reduce the principal amount of
any subordinated note or the rate of interest (including Additional Interest)
of any subordinated note or any premium payable upon the redemption of any
subordinated note, or change the method ofcalculating the rate of interest
on any subordinated note, or impair the right to institute suit for the
enforcement of any such payment on or after the stated maturity of any subordinated
note (or, in the case of redemption, on or after theredemption date); or
. reduce the percentage of principal amount of the outstanding subordinated notes of any series, the consent
ofwhose holders is required for any such supplemental indenture, or the consent of whose holders is required for
any waiver (of compliance with certain provisions of the Subordinated Note Indenture or certain defaults under
the Subordinated NoteIndenture and their consequences) provided for in the Subordinated Note Indenture; or
. modify any of the provisions of the Subordinated Note Indenture relating to supplemental indentures,
waiver ofpast defaults, or waiver of certain covenants, except to increase any such percentage or
to provide that certain other provisions of the Subordinated Note Indenture cannot be modified or
waived without the consent of the holder of each outstandingsubordinated note that is affected; or
. modify the provisions of the Subordinated Note Indenture with respect to the
subordination of the subordinatednotes in a manner adverse to such holder.
In addition, we and the Subordinated Note Indenture Trustee may execute,without
the consent of any holders of subordinated notes, any supplemental indenture
for certain other usual purposes, including the creation of any new series of
subordinated notes.
Events of Default
The Subordinated NoteIndenture provides that any one or more of the following
described events with respect to the subordinated notes of any series, which
has occurred and is continuing, constitutes an "Event of Default" with respect
to the subordinated notesof such series:
. failure for 30 days to pay interest on the subordinated notes of such series, including any Additional Interest(as defined in
clause (ii) of the definition of Additional Interest in the Subordinated Note Indenture) on such unpaid interest, when due
on an interest payment date other than at maturity or upon earlier redemption; provided, however, that avalid extension of
the interest payment period by the Company shall not constitute a default in the payment of interest for this purpose; or
. failure for 30 days to pay Additional Interest (as defined in clause (i) of
the definition of AdditionalInterest in the Subordinated Note Indenture); or
. failure to pay principal or premium, if any, or interest, including
Additional Interest (as defined in clause(ii) of the definition of Additional
Interest in the Subordinated Note Indenture), on the subordinated notes
of such series when due at maturity or upon earlier redemption; or
. failure for three Business Days to deposit any sinking fund payment
when due by the terms of a subordinated noteof such series; or
. failure to observe or perform any other covenant or warranty of the Company in the Subordinated
Note Indenture(other than a covenant or warranty which has expressly been included in the
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Subordinated Note Indenture solely for the benefit of one or more series of subordinated notes
other than such series) for 90 days after written notice to the Company from the Subordinated
NoteIndenture Trustee or to the Company and the Subordinated Note Trustee from the holders
of at least 33% in principal amount of the outstanding subordinated notes of such series; or
. certain events of bankruptcy, insolvency or reorganization of the Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the subordinated notes of any series have the right todirect the
time, method and place of conducting any proceeding for any remedy available
to the Subordinated Note Indenture Trustee with respect to the subordinated
notes of such series. If a Subordinated Note Indenture Event of Default occurs
and iscontinuing with respect to the subordinated notes of any series, then
the Subordinated Note Indenture Trustee or the holders of not less than 33% in
aggregate outstanding principal amount of the subordinated notes of such
series may declare theprincipal amount of the subordinated notes due and
payable immediately by notice in writing to the Company (and to the
Subordinated Note Indenture Trustee if given by the holders), and upon any
such declaration such principal amount shall becomeimmediately due and
payable. At any time after such a declaration of acceleration with respect to
the subordinated notes of any series has been made and before a judgment or
decree for payment of the money due has been obtained as provided inArticle
Five of the Subordinated Note Indenture, the holders of not less than a
majority in aggregate outstanding principal amount of the subordinated notes
of such series may rescind and annul such declaration and its consequences if
the defaulthas been cured or waived and the Company has paid or deposited with
the Subordinated Note Indenture Trustee a sum sufficient to pay all matured
installments of interest (including any Additional Interest) and principal due
otherwise than byacceleration and all sums paid or advanced by the
Subordinated Note Indenture Trustee, including reasonable compensation and
expenses of the Subordinated Note Indenture Trustee.
The holders of not less than a majority in aggregate outstanding principal
amount of the subordinated notes of any series may, on behalf ofthe holders of
all the subordinated notes of such series, waive any past default with respect
to such series, except (i) a default in the payment of principal or interest
or (ii) a default in respect of a covenant or provision which underArticle
Nine of the Subordinated Note Indenture cannot be modified or amended without
the consent of the holder of each outstanding subordinated note of such series
affected.
Satisfaction and Discharge
Anysubordinated note, or any portion of the principal amount thereof, will be
deemed to have been paid for purposes of the Subordinated Note Indenture, and
our entire indebtedness in respect of the subordinated notes will be deemed to
have beensatisfied and discharged if certain conditions are satisfied,
including an irrevocable deposit with the Subordinated Note Indenture Trustee
or any paying agent (other than us) in trust of:
. money in an amount which will be sufficient; or
. in the case of a deposit made prior to the maturity of the subordinated
notes or portions thereof, EligibleObligations (as defined
below) which do not contain provisions permitting the redemption or
other prepayment thereof at the option of the issuer thereof, the
principal of and the interest on which when due, without any regard
to reinvestmentthereof, will provide monies which, together with
the money, if any, deposited with or held by the Subordinated Note
Indenture Trustee or the paying agent, will be sufficient; or
. a combination of either of the two items described in the two preceding bullet points which will be sufficient;
to pay when due the principal of and premium, if any, and interest, if any,
due and to become due on the subordinated notes or portionsthereof.
This discharge of the subordinated notes through the deposit with the
Subordinated Note Indenture Trustee of cash or EligibleObligations generally
will be treated as a taxable disposition for U.S. federal income tax
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purposes by the holders of those subordinated notes. Prospective investors in
the subordinated notes should consult their own tax advisors as to the
particular U.S. federal income taxconsequences applicable to them in the event
of such discharge.
For purposes of this subsection, "Eligible Obligations" forU.S. dollar-denominat
ed subordinated notes, means securities that are direct obligations of, or
obligations unconditionally guaranteed by, the United States, entitled to the
benefit of the full faith and credit thereof, or depositary receipts issuedby
a bank as custodian with respect to these obligations or any specific interest
or principal payments due in respect thereof held by the custodian for the
account of the holder of a depository receipt.
Information Concerning the Subordinated Note Indenture Trustee
The Subordinated Note Indenture Trustee, prior to an Event of Default with
respect to subordinated notes of any series, undertakes to perform,with
respect to subordinated notes of such series, only such duties as are
specifically set forth in the Subordinated Note Indenture and, in case an
Event of Default with respect to subordinated notes of any series has occurred
and is continuing,shall exercise, with respect to subordinated notes of such
series, the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Subordinated
Note Indenture Trustee is underno obligation to exercise any of the powers
vested in it by the Subordinated Note Indenture at the request of any holder
of subordinated notes of any series, unless offered reasonable indemnity by
such holder against the costs, expenses andliabilities which might be incurred
by the Subordinated Note Indenture Trustee. The Subordinated Note Indenture
Trustee is not required to expend or risk its own funds or otherwise incur any
financial liability in the performance of its duties ifthe Subordinated Note
Indenture Trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
TheCompany and certain of its subsidiaries may maintain deposit accounts and
banking relationships with the Subordinated Note Indenture Trustee. The
Subordinated Note Indenture Trustee and certain of its affiliates may also
serve as trustee under otherindentures pursuant to which securities of the
Company and certain subsidiaries of the Company are outstanding.
Governing Law
The Subordinated Note Indenture and the subordinated notes will be governed
by, and construed in accordance with, the internal laws of theState of New
York.
Miscellaneous
Wewill have the right at all times to assign any of our rights or obligations
under the Subordinated Note Indenture to a direct or indirect wholly-owned
subsidiary of ours; provided, that, in the event of any such assignment, we
will remain primarilyliable for all such obligations. Subject to the
foregoing, the Subordinated Note Indenture will be binding upon and inure to
the benefit of the parties to the Subordinated Note Indenture and their
respective successors and assigns.
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DESCRIPTION OF THE DEBT SECURITIES OF PACIFIC GAS AND ELECTRICCOMPANY
UNSECURED SENIOR NOTES
This prospectus describes certain general terms of the unsecured senior notes
("senior notes") that we may sell from time to timeunder this prospectus. We
will describe the specific terms of each series of senior notes we offer in a
prospectus supplement. The senior notes will be issued under an indenture
dated as of August 6, 2018 between us and The Bank of New YorkMellon Trust
Company, N.A., as trustee (the "Senior Note Indenture Trustee"). The
indenture, as amended or supplemented from time to time, is referred to as the
"Indenture." We have summarized selected provisions of the Indentureand the
senior notes below. The information we are providing you in this prospectus
concerning the senior notes and the Indenture is only a summary of the
information provided in those documents, and the summary is qualified in its
entirety byreference to the provisions of the Indenture, including the forms
of senior notes attached thereto. You should consult the senior notes
themselves and the Indenture for more complete information on the senior notes
as they, and not this prospectusor any applicable prospectus supplement,
govern your rights as a holder. The Indenture is included as an exhibit to the
registration statement of which this prospectus is a part. The Indenture has
been qualified under the Trust Indenture Act of1939, as amended, or the Trust
Indenture Act, and the terms of the senior notes will include those made part
of the Indenture by the Trust Indenture Act.
In this section, references to "we," "our," "ours" and "us" refer only to
Pacific Gas and ElectricCompany and not to any of its direct or indirect
subsidiaries or affiliates except as expressly provided.
General
The senior notes are our unsecured general obligations and will rank equally
in right of payment to all our other existing and future unsecuredand
unsubordinated obligations. The senior notes will be effectively subordinated
to all our secured debt, including our first mortgage bonds (as defined below)
to be issued from time to time under our mortgage indenture. The mortgage
indentureconstitutes a first lien, subject to permitted liens, on
substantially all of our real property and certain tangible personal property
related to our facilities. The senior notes will be entitled to the benefit of
the Indenture equally and ratablywith all other senior notes issued under the
Indenture.
The Indenture does not limit the amount of debt we may issue under it or
theamount of debt we or our subsidiaries may otherwise incur. We may issue
senior notes from time to time under the Indenture in one or more series by
entering into supplemental indentures or by resolution of our board of
directors.
Provisions of a Particular Series
Theprospectus supplement applicable to each series of senior notes will
specify, among other things:
. the title of the senior notes;
. any limit on the aggregate principal amount of the senior notes;
. the date or dates on which the principal of the senior notes is payable, including the maturity date, or themethod or means
by which those dates will be determined, and our right, if any, to extend those dates and the duration of any extension;
. the interest rate or rates of the senior notes, if any, which may
be fixed or variable, or the method or means bywhich the interest
rate or rates will be determined, and our ability to extend any
interest payment periods and the duration of any extension;
. the date or dates from which any interest will accrue, the dates on which we will pay interest on the seniornotes and
the regular record date, if any, for determining who is entitled to the interest payable on any interest payment date;
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. the place or places where the principal of (and premium, if any) and interest, if any, on such senior notes shallbe payable;
. the methods by which registration of transfer of senior notes and exchanges of senior notes may be effected, andby which
notices and demands to or upon us in respect of such senior notes may be made, given, furnished, filed or served;
. any periods or periods within which, or date or dates on which, the price or prices at which and the terms andconditions
on which the senior notes may be redeemed, in whole or in part, at our option, and any restrictions on such redemptions;
. any obligation of ours to redeem, purchase or repay the senior notes
pursuant to any sinking fund or othermandatory redemption provisions
or at the option of the holder and the terms and conditions upon
which the senior notes will be so redeemed, purchased or repaid;
. the denominations in which we will authorize the senior notes to be issued, if other than $1,000 or integralmultiples of $1,000;
. whether we will offer the senior notes in the form of global securities
and, if so, the name of the depositaryfor any global securities;
. if the amount payable in respect of principal of or any premium or interest on any senior notes may be determinedwith reference
to an index or other fact or event ascertainable outside the Indenture, the manner in which such amount will be determined;
. covenants for the benefit of the holders of that series;
. the currency or currencies in which the principal, premium, if any, and interest on the senior notes will
bepayable if other than U.S. dollars and the method for determining the equivalent amount in U.S. dollars;
. any exceptions to the provisions for legal holidays or business days in the Indenture;
. if the principal of the senior notes is payable from time to time without presentation or surrender, any methodor
manner of calculating the principal amount that is outstanding at any time for purposes of the Indenture; and
. any other terms of the senior notes.
We may sell senior notes at par or at a discount below their stated principal
amount. We will describe in a prospectus supplement materialU.S. federal
income tax considerations, if any, and any other special considerations for
any senior notes we sell that are denominated in a currency other than U.S.
dollars.
Payment
Except as may be provided withrespect to a series, interest, if any, on the
senior notes payable on each interest payment date will be paid to the person
in whose name that senior note is registered as of the close of business on
the regular record date for the interest paymentdate. However, interest
payable at maturity will be paid to the person to whom the principal is paid.
If there has been a default in the payment of interest on any senior notes,
the defaulted interest may be paid to the holders of the senior notesas of a
special record date for the payment of such defaulted interest which shall not
be more than 30 days and not less than 10 days prior to the date of the
proposed payment and not less than 25 days after the receipt by the Senior
Note IndentureTrustee of the notice of the proposed payment.
Redemption
Any terms for the optional or mandatory redemption of a series of senior notes
will be set forth in a prospectus supplement for the offeredseries. Unless
otherwise indicated in a prospectus supplement, senior notes
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will be redeemable by us only upon notice sent to the holders of senior notes
not less than 10 nor more than 60 days before the date fixed for redemption
and, if less than all the senior notes ofa series are to be redeemed, the
particular senior notes to be redeemed will be selected by the method provided
for that particular series, or in the absence of any such provision, by such
method of random selection as the registrar deems fair andappropriate;
provided, however, that with respect to global securities (as defined herein),
senior notes to be redeemed shall be selected in accordance with the
procedures of the depositary.
We have reserved the right to provide conditional redemption notices for
redemptions at our option or for redemptions that are contingent uponthe
occurrence or nonoccurrence of an event or condition that cannot be
ascertained prior to the time we are required to notify holders of the
redemption. A conditional notice may state that if we have not deposited
redemption funds with the SeniorNote Indenture Trustee or a paying agent on or
before the redemption date or we have directed the Senior Note Indenture
Trustee or paying agent not to apply money deposited with it for redemption of
senior notes, we will not be required to redeemthe senior notes on the
redemption date.
Restrictions on Liens and Sale and Leaseback Transactions
The Indenture does not permit us or any of our Significant Subsidiaries (as
defined below) to, (i) issue, incur, assume or permit to existany Debt (as
defined below) secured by a Lien (as defined below) on any of our Principal
Property (as defined below), whether that Principal Property was owned when
the Indenture was executed (August 6, 2018) or thereafter acquired, unless
weprovide that the outstanding senior notes will be equally and ratably
secured by such Liens for as long as any such Debt shall be so secured or (ii)
incur or permit to exist any Attributable Debt (as defined below) in respect
of PrincipalProperty; provided, however, that the foregoing restriction will
not apply to the following:
. any Lien existing on August 6, 2018;
. to the extent we or any Significant Subsidiary consolidates with, or merges with or into, another entity,
Lienson the property of such entity securing Debt in existence on the date of such consolidation
or merger, provided that such Debt and Liens were not created or incurred in anticipation of such
consolidation or merger and that such Liens do not extendto or cover any such Principal Property;
. Liens on property acquired after August 6, 2018 and existing at the time of acquisition, as long as the Lienwas
not created or incurred in anticipation thereof and does not extend to or cover any other Principal Property;
. Liens of any kind, including purchase money Liens, conditional sales agreements or title retention agreements andsimilar
agreements, upon any property acquired, constructed, developed or improved by us or any Significant Subsidiary
(whether alone or in association with others) which do not exceed the cost or value of the property acquired,
constructed,developed or improved and which are created prior to, at the time of, or within 12 months after such acquisition
(or in the case of property constructed, developed or improved, within 12 months after the completion of such construction,
developmentor improvement and commencement of full commercial operation of such property, whichever is later)
to secure or provide for the payment of any part of the purchase price or cost thereof; provided that the Liens
shall not extend to any PrincipalProperty other than the property so acquired, constructed, developed or improved;
. Liens in favor of the United States, any state or any foreign country or any department, agency orinstrumentality or
any political subdivision of the foregoing to secure payments pursuant to any contract or statute or to secure any
Indebtedness incurred for the purpose of financing all or any part of the purchase price or cost of constructing
orimproving the property subject to the Lien, including Liens related to governmental obligations the interest on which is
tax-exempt
under Section 103 of the
Internal Revenue Code or
any successor sectionof the
Internal Revenue Code;
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. Liens in favor of us, one or more of our Significant Subsidiaries, one or more of our
wholly owned Subsidiaries(as defined below) or any of the foregoing combination; and
. replacements, extensions or renewals (or successive replacements, extensions or renewals), in
whole or in part,of any Lien or of any agreement referred to in the first six bullet points above
or replacements, extensions or renewals of the Debt secured thereby (to the extent that the
amount of Debt secured by any such Lien is not increased from the amountoriginally so secured,
plus any premium, interest, fee or expenses payable in connection with any replacements,
refundings, refinancings, remarketings, extensions or renewals); provided that such replacement,
extension or renewal is limited to allor a part of the same property (plus improvements thereon
or additions or accessions thereto) that secured the Lien replaced, extended or renewed.
Notwithstanding the restriction described above, we or any Significant
Subsidiary may (i) issue, incur or assume Debt secured by a Liennot described
in the immediately preceding seven bullet points on any Principal Property
owned on August 6, 2018 or thereafter acquired without providing that the
outstanding senior notes be equally and ratably secured such Lien and(ii)
issue or permit to exist Attributable Debt (as defined below) in respect of
Principal Property, in either case, so long as the aggregate amount of such
secured debt and Attributable Debt, together with the aggregate amount of all
otherDebt secured by Liens on Principal Property not described in the
immediately preceding seven bullet points then outstanding and all other
Attributable Debt in respect of Principal Property, does not exceed 10% of our
Net Tangible Assets (as definedbelow), as determined by us as of a month end
not more than 90 days prior to the closing or consummation of the proposed
transaction.
Forpurposes of this subsection, the following terms have the following meaning:
. "Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination,the present value of the obligation of
the lessee for net rental payments during the remaining term of the lease
included in the sale and leaseback transaction, including any period
for which the lease has been extended or may, at the option of thelessor,
be extended. The present value shall be calculated using a discount
rate equal to the rate of interest implicit in the transaction, determined
in accordance with generally accepted accounting principles, or GAAP.
. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of theliability in respect
of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.
. "Debt" means any debt of ours for money borrowed and guarantees by us of debt for money borrowed
but ineach case excluding liabilities in respect of Capital Lease Obligations or Swap Agreements.
. "debt" of a Significant Subsidiary means any debt of such Significant
Subsidiary for money borrowed andguarantees by such Significant
Subsidiary of debt for money borrowed but in each case excluding
liabilities in respect of Capital Lease Obligations or Swap Agreements.
. "Excepted Property" means any right, title or interest of us or any of our Significant Subsidiaries
in,to or under any of the following property, whether owned on August 6, 2018 or thereafter acquired:
. all money, investment property and deposit accounts (as those terms are defined in the California Commercial Codeas in effect on
March 11, 2004 (which is the date of the indenture governing certain of the Company's outstanding senior notes)), and all cash
on hand or on deposit in banks or other financial institutions, shares of stock, interests ingeneral or limited partnerships or
limited liability companies, bonds, notes, other evidences of indebtedness and other securities, of whatever kind and nature;
. all accounts, chattel paper, commercial tort claims, documents, general intangibles, instruments,
letter-of-credit
rights and letters of credit (as those terms are defined in the
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California Commercial Code as in effect on March 11, 2004), with certain exclusions such as
licenses and permits to use the real property of others, and all contracts, leases (other than
thelease of certain real property at our Diablo Canyon power plant), operating agreements
and other agreements of whatever kind and nature; and all contract rights, bills and notes;
. all revenues, income and earnings, all accounts receivable, rights to payment and unbilled revenues, and
allrents, tolls, issues, product and profits, claims, credits, demands and judgments, including any rights
in or to rates, revenue components, charges, tariffs, or amounts arising therefrom, or in any amounts
that are accrued and recorded in aregulatory account for collection by us or any Significant Subsidiary;
. all governmental and other licenses, permits, franchises, consents and allowances including all emissionallowances (or similar
rights) created under any similar existing or future law relating to abatement or control of pollution of the atmosphere,
water or soil, other than all licenses and permits to use the real property of others, franchises to usepublic roads, streets
and other public properties, rights of way and other rights, or interests relating to the occupancy or use of real property;
. all patents, patent licenses and other patent rights, patent applications, trade names, trademarks,
copyrightsand other intellectual property, including computer software and software licenses;
. all claims, credits, choses in action, and other intangible property;
. all automobiles, buses, trucks, truck cranes, tractors, trailers, motor vehicles and similar vehicles
and movableequipment; all rolling stock, rail cars and other railroad equipment; all vessels,
boats, barges and other marine equipment; all airplanes, helicopters, aircraft engines and other
flight equipment; and all parts, accessories and supplies used inconnection with any of the foregoing;
. all goods, stock in trade, wares, merchandise and inventory held for the purpose of
sale or lease in the ordinarycourse of business; all materials, supplies, inventory
and other items of personal property that are consumable (otherwise than by ordinary
wear and tear) in their use in the operation of the principal property; all fuel,
whether or not that fuel isin a form consumable in the operation of the principal property,
including separate components of any fuel in the forms in which those components
exist at any time before, during or after the period of the use thereof as fuel;
all hand and otherportable tools and equipment; and all furniture and furnishings;
. all personal property the perfection of a security interest in which is not governed by the California CommercialCode;
. all oil, gas and other minerals (as those terms are defined in the
California Commercial Code as in effect onMarch 11, 2004) and all coal,
ore, gas, oil and other minerals and all timber, and all rights and
interests in any of the foregoing, whether or not the minerals or
timber have been mined or extracted or otherwise separated from the
land; andall electric energy and capacity, gas (natural or artificial),
steam, water and other products generated, produced, manufactured,
purchased or otherwise acquired by us or any Significant Subsidiary;
. all property which is the subject of a lease agreement other than a lease agreement that results from a sale andleaseback
transaction designating us or any Significant Subsidiary as lessee and all our, or a significant subsidiary's right, title
and interest in and to that property and in, to and under that lease agreement, whether or not that leaseagreement is intended
as security (other than certain real property leased at our Diablo Canyon power plant and the related lease agreement);
. real, personal and mixed properties of an acquiring or acquired entity unless otherwise made a part of PrincipalProperty; and
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. all proceeds (as that term is defined in the California Commercial Code as in
effect on March 11, 2004) ofthe property listed in the preceding bullet points.
. "Lien" means any mortgage, deed of trust, pledge, security interest, encumbrance, easement, lease,reservation, restriction,
servitude, charge or similar right and any other lien of any kind, including, without limitation, any conditional sale or
other title retention agreement, any lease of a similar nature, and any defect, irregularity,exception or limitation in record
title or, when the context so requires, any lien, claim or interest arising from anything described in this bullet point.
. "Net Tangible Assets" means the total amount of our assets determined on
a consolidated basis inaccordance with GAAP as of a date determined in
accordance with the Indenture, less (i) the sum of our consolidated current
liabilities determined in accordance with GAAP and (ii) the amount of our
consolidated assets classified asintangible assets, determined in accordance
with GAAP, including, but not limited to, such items as goodwill,
trademarks, trade names, patents, and unamortized debt discount and expense
and regulatory assets carried as an asset on our consolidatedbalance sheet.
. "Principal Property" means any property of ours or any of our
Significant Subsidiaries, as applicable,other than Excepted Property.
. "Significant Subsidiary" has
the meaning specified in Rule
l-02(w)
of Regulation
S-X
under the Securities Act of 1933, as amended; provided that, Significant Subsidiary shall not
include any corporation or other entitysubstantially all the assets of which are Excepted Property.
. "Subsidiary" means (i) any corporation at least a majority of the outstanding voting
stock orinterest of which is owned, directly or indirectly, by the Company or
by one or more Subsidiaries, or by the Company and one or more Subsidiaries or (ii)
any other Person (other than a corporation) of which the Company and/or one or
moreSubsidiaries has at least a majority ownership and power to direct the policies,
management and affairs. For the purposes of this definition, "voting stock" means stock
having voting power for the election of directors, whether at alltimes or only so
long as no senior class of stock has such voting power by reason of any contingency.
. "Swap Agreement" means any agreement with respect to any swap, forward, future or derivativetransaction or
option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities,
equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic,
financial orpricing risk or value or any similar transaction or any combination of these transactions.
Consolidation, Merger, Conveyance orOther Transfer
We may not consolidate with or merge with or into any other Person (as defined
below) or convey, or otherwise transfer,or lease, all or substantially all of
our Principal Property to any Person unless:
. the Person formed by that consolidation or into which we are merged or the Person which acquires by conveyance
orother transfer, or which leases, all or substantially all of the principal properties and assets is a
corporation, partnership, limited liability company, association, company, joint stock company or business trust,
organized and existing under thelaws of the United States, or any state thereof or the District of Columbia;
. the Person executes and delivers to the Senior Note Indenture Trustee a
supplemental indenture that in the caseof a consolidation, merger, conveyance
or other transfer, or in the case of a lease if the term thereof extends
beyond the last stated maturity of the senior notes then outstanding, contains
an assumption by the successor corporation of the due andpunctual payment of
the principal of and premium, if any, and interest, if any, on all senior
notes then outstanding and the performance and observance of every covenant
and condition under the Indenture to be performed or observed by us;
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. in the case of a lease, the lease is made expressly subject to termination by us
at any time during thecontinuance of an Event of Default under the Indenture;
. immediately after giving effect to the transaction and treating any indebtedness
that becomes our obligation as aresult of the transaction as having
been incurred by us at the time of the transaction, no default or Event
of Default under the Indenture shall have occurred and be continuing; and
. we have delivered to the Senior Note Indenture Trustee an officer's certificate and an opinion of counsel,each stating that
the merger, consolidation, conveyance, lease or transfer, as the case may be, fully complies with all provisions of the
Indenture; provided, however, that the delivery of the officer's certificate and opinion of counsel shallnot be required with
respect to any merger, consolidation, conveyance, lease or transfer between us and any of our wholly-owned subsidiaries.
Notwithstanding the foregoing, we may merge or consolidate with or transfer
all or substantially all of our assets to an affiliate that has nosignificant
assets or liabilities and was formed solely for the purpose of changing our
jurisdiction of organization or our form of organization or for the purpose of
forming a holding company; provided that the amount of our indebtedness is
notincreased; and provided, further that the successor assumes all of our
obligations under the Indenture.
In the case of a conveyance orother transfer of all or substantially all of
our principal properties and assets to any Person as contemplated under the
Indenture, upon the satisfaction of all the conditions described above, we (as
we would exist without giving effect to thetransaction) would be released and
discharged from all obligations and covenants under the Indenture and under
the senior notes then outstanding unless we elect to waive the release and
discharge.
The meaning of the term "substantially all" has not been definitively
established and is likely to be interpreted by reference toapplicable state
law if and at the time the issue arises and will depend on the facts and
circumstances existing at the time.
Forpurposes of this subsection, "Person" means any individual, corporation,
limited liability partnership, joint venture, trust or unincorporated
organization, or any other entity, whether or not a legal entity, or any
Governmental Authority(as such term is defined in the Indenture).
Additional Covenants
We have agreed in the Indenture, among other things:
. to maintain a place of payment for any series of senior notes;
. to maintain our corporate existence (subject to the provisions above relating to mergers and consolidations); and
. to deliver to the Senior Note Indenture Trustee an annual officer's certificate
with respect to ourcompliance with our obligations under the Indenture.
Modification of the Indenture; Waiver
We and the Senior Note Indenture Trustee may, with the consent of the holders
of not less than a majority in aggregate principal amount of thesenior notes
of each affected series then outstanding under the Indenture, considered as
one class, modify or amend the Indenture, including the provisions relating to
the rights of the holders of senior notes of the affected series. However,
nomodification or amendment may, without the consent of each holder of
affected senior notes:
. change the stated maturity (except as provided by the terms of a series of senior notes) of the
principal of, orinterest on, the senior note or reduce the principal amount or any premium payable
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on the senior note or reduce the interest rate of the senior note, or change
the method of calculating the interest rate with respect to the senior note;
. reduce the amount of principal of any discount senior note that would
be payable upon acceleration of thematurity of the senior note;
. change the coin, currency or other property in which the senior note or interest or premium on the senior note ispayable;
. impair the right to institute suit for the enforcement of any payment on the senior note;
. reduce the percentage in principal amount of outstanding senior
notes of any series the consent of whose holdersis required for
modification or amendment of the Indenture or for waiver of compliance
with certain provisions of the Indenture or for waiver of defaults;
. reduce the quorum or voting requirements applicable to holders of the senior notes; or
. modify the provisions of the Indenture with respect to modification and waiver, except as provided in theIndenture.
We and the Senior Note Indenture Trustee may, without the consent of any
holder of senior notes, modify andamend the Indenture for certain purposes,
including, but not limited to, the following:
. to evidence the succession of another Person to the Company and the assumption
by any such successor of ourcovenants in the Indenture and in the senior notes;
. add covenants or other provisions applicable to us and for the benefit of the holders of senior
notes or one ormore specified series thereof or to surrender any right or power conferred on us;
. establish the form or terms of senior notes of any series as contemplated by the Indenture;
. cure any ambiguity or to correct or supplement any provision of the
Indenture which may be defective orinconsistent with other provisions;
. make any other additions to, deletions from or changes to the provisions under the Indenture so long as theadditions,
deletions or changes do not materially adversely affect the holders of any series of senior notes in any material respect;
. change or eliminate any provision of the Indenture or add any new provision so long as the change, elimination
oraddition does not adversely affect the interests of holders of senior notes of any series in any material respect;
. change any place or places for payment or surrender of senior notes and where notices and demands to us may beserved;
. comply with any requirement in connection with the qualification of the Indenture under the Trust Indenture Act;and
. comply with the rules of any applicable securities depository.
The holders of not less than a majority in aggregate principal amount of the
senior notes of each affected series then outstanding under theIndenture,
voting as a single class, may waive compliance by us with our covenant in
respect of our corporate existence and the covenants described under
"Restrictions on Liens and Sale and Leaseback Transactions" and "Consolidation,M
erger, Conveyance or Other Transfer" and with certain other covenants and
restrictions that may apply to a series of senior notes as provided in the
Indenture. The holders of not less than a majority in aggregate principal
amount of the seniornotes outstanding may, on behalf of the holders of all of
the senior notes, waive any past default under the Indenture and its
consequences, except a default in the payment of the principal of or any
premium or interest on any senior note anddefaults in respect of a covenant or
provision in the Indenture which cannot be modified, amended or waived without
the consent of each holder of affected senior notes.
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In order to determine whether the holders of the requisite principal amount of
theoutstanding senior notes have taken an action under the Indenture as of a
specified date:
. the principal amount of a senior note that will be deemed to be outstanding will be the amount of the
principalthat would be due and payable as of that date upon acceleration of the maturity to that date; and
. senior notes owned by us or any other obligor upon the senior notes or any of
our or their affiliates will bedisregarded and deemed not to be outstanding.
Events of Default
An "Event of Default" means any of the following events which shall occur and
be continuing:
. failure to pay interest on a senior note within 30 days after the interest becomes due and payable;
. failure to pay the principal of, or sinking fund installments or premium, if any, on, a senior note when due andpayable;
. failure to perform or breach of any other covenant or warranty applicable to us in the
Indenture continuing for90 days after the Senior Note Indenture Trustee gives us,
or the holders of at least 33% in aggregate principal amount of the senior notes then
outstanding give us and the Senior Note Indenture Trustee, written notice specifying
the default orbreach and requiring us to remedy the default or breach, unless the Senior
Note Indenture Trustee is directed by the holders of a principal amount of senior
notes not less than the principal amount of senior notes the holders of which gave
thatnotice to agree in writing to an extension of the period prior to its expiration;
. certain events of bankruptcy, insolvency or reorganization; and
. the occurrence of any Event of Default as defined in any mortgage, indenture or instrument under
which there maybe issued, or by which there may be secured or evidenced, any of our Debt, whether
the Debt existed on August 6, 2018 or is thereafter created, if the Event of Default: (i) is
caused by a failure to pay principal after final maturity ofthe debt after the expiration of the
grace period provided in the Debt (which we refer to as a "payment default") or (ii) results in the
acceleration of the Debt prior to its express maturity, and, in each case, the principal amountof
the Debt, together with the principal amount of any other Debt under which there has been a payment
default or the maturity of which has been so accelerated, aggregates $150 million or more.
The $150 million amount specified in the bullet point above shall be increased
in any calendar year subsequent to 2018 by the samepercentage increase in the
urban CPI Index (as defined in the Indenture) for the period commencing
January 1, 2018 and ending on January 1 of the applicable calendar year.
"Debt" for the purpose of the bullet point above meansany debt of ours for
money borrowed but, in each case, excluding liabilities in respect of capital
lease obligations or swap agreements.
For purposes of this subsection, the following terms have the following meaning:
. "Debt" means any debt of the Company for money borrowed and guarantees by the Company of debt for moneyborrowed
but in each case excluding liabilities in respect of Capital Lease Obligations or Swap Agreements.
. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of theliability in respect
of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.
. "Swap Agreement" means any agreement with respect to any swap, forward, future or derivativetransaction or
option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities,
equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic,
financial orpricing risk or value or any similar transaction or any combination of these transactions.
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If the Senior Note Indenture Trustee deems it to be in the interest of the
holders of thesenior notes, it may withhold notice of default, except defaults
in the payment of principal of or interest or premium on or with respect to,
any senior note.
If an Event of Default occurs and is continuing, the Senior Note Indenture
Trustee or the holders of not less than 33% in aggregate principalamount of
the senior notes outstanding, considered as one class, may declare all
principal due and payable immediately by notice in writing to us (and to the
Senior Note Indenture Trustee if given by holders); provided, however, that if
an Event ofDefault occurs with respect to the specified events of bankruptcy,
insolvency or reorganization, then the senior notes outstanding shall be due
and payable immediately without further action by the Senior Note Indenture
Trustee or holders. If, aftersuch a declaration of acceleration, we pay or
deposit with the Senior Note Indenture Trustee all overdue interest and
principal and premium on senior notes that would have been due otherwise, plus
any interest and other conditions specified in theIndenture have been
satisfied before a judgment or decree for payment has been obtained by the
Senior Note Indenture Trustee as provided in the Indenture, the event or
events of default giving rise to the acceleration will be deemed to have
beenwaived and the declaration of acceleration and its consequences will be
deemed to have been rescinded and annulled.
No holder of seniornotes will have any right to enforce any remedy under the
Indenture unless the holder has given the Senior Note Indenture Trustee
written notice of a continuing Event of Default, the holders of at least 33%
in aggregate principal amount of thesenior notes outstanding have requested
the Senior Note Indenture Trustee in writing to institute proceedings in
respect of the Event of Default in its own name as Senior Note Indenture
Trustee under the Indenture and the holder or holders haveoffered the Senior
Note Indenture Trustee reasonable indemnity against costs, expenses and
liabilities with respect to the request, the Senior Note Indenture Trustee has
failed to institute any proceeding within 60 days after receiving the
noticefrom holders, and no direction inconsistent with the written request has
been given to the Senior Note Indenture Trustee during the
60-day
period by holders of at least a majority in aggregate principal amountof
senior notes then outstanding.
The Senior Note Indenture Trustee is not required to risk its funds or to
incur financial liability ifthere is a reasonable ground for believing that
repayment to it or adequate indemnity against risk or liability is not
reasonably assured.
If an Event of Default has occurred and is continuing, holders of not less
than a majority in principal amount of the senior notes thenoutstanding
generally may direct the time, method and place of conducting any proceedings
for any remedy available to the Senior Note Indenture Trustee, or exercising
any trust or power conferred upon the Senior Note Indenture Trustee; provided
thedirection could not conflict with any rule of law or with the Indenture,
and could not involve the Senior Note Indenture Trustee in personal liability
where indemnity would not, in the Senior Note Indenture Trustee's sole
discretion, beadequate.
Satisfaction and Discharge
Any senior note, or any portion of the principal amount thereof, will be
deemed to have been paid for purposes of the Indenture, and our entireindebtedne
ss in respect of the senior notes will be deemed to have been satisfied and
discharged, if certain conditions are satisfied, including an irrevocable
deposit with the Senior Note Indenture Trustee or any paying agent (other than
us) intrust of:
. money in an amount which will be sufficient; or
. in the case of a deposit made prior to the maturity of the senior
notes or portions thereof, eligible obligations(as described below)
which do not contain provisions permitting the redemption or other
prepayment thereof at the option of the issuer thereof, the
principal of and the interest on which when due, without any
regard to reinvestment thereof, willprovide monies which, together
with the money, if any, deposited with or held by the Senior Note
Indenture Trustee or the paying agent, will be sufficient; or
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. a combination of either of the two items described in the two preceding bullet points which will be sufficient;
to pay when due the principal of and premium, if any, and interest, if any,
due and to become due on the senior notes or portionsthereof.
This discharge of the senior notes through the deposit with the Senior Note
Indenture Trustee of cash or eligible obligationsgenerally will be treated as
a taxable disposition for U.S. federal income tax purposes by the holders of
those senior notes. Prospective investors in the senior notes should consult
their own tax advisors as to the particular U.S. federal incometax
consequences applicable to them in the event of such discharge.
For this purpose, "eligible obligations" for U.S.dollar-denominated senior
notes, means securities that are direct obligations of, or obligations
unconditionally guaranteed by, the United States, entitled to the benefit of
the full faith and credit thereof, or depositary receipts issued by a bankas
custodian with respect to these obligations or any specific interest or
principal payments due in respect thereof held by the custodian for the
account of the holder of a depository receipt.
Transfer and Exchange
Subject to theterms of the Indenture, senior notes of any series may be
exchanged for other senior notes of the same series of authorized
denominations and of like aggregate principal amount and tenor. Subject to the
terms of the Indenture and the limitationsapplicable to global securities,
senior notes may be presented for exchange or registration of transfer at the
office of the registrar without service charge, upon payment of any taxes and
other governmental charges imposed on registration oftransfer or exchange.
Such transfer or exchange will be effected upon the Senior Note Indenture
Trustee, us or the registrar, as the case may be, being satisfied with the
instruments of transfer.
If we provide for any redemption of a series of senior notes, we will not be
required to execute, register the transfer of or exchange anysenior note of
that series for 15 days before a notice of redemption is given or register the
transfer of or exchange any senior note selected for redemption.
Resignation or Removal of Trustee
TheSenior Note Indenture Trustee may resign at any time upon written notice to
us and the Senior Note Indenture Trustee may be removed at any time by written
notice delivered to the Senior Note Indenture Trustee and us and signed by the
holders of atleast a majority in principal amount of the outstanding senior
notes. No resignation or removal of a trustee will take effect until a
successor trustee accepts appointment. In addition, under certain
circumstances, we may remove the Senior NoteIndenture Trustee. We must give
notice of resignation and removal of the Senior Note Indenture Trustee or the
appointment of a successor trustee to all holders of senior notes as provided
in the indenture.
Trustees, Paying Agents and Registrars for the Senior Notes
The Bank of New York Mellon Trust Company, N.A. will act as the Senior Note
Indenture Trustee, paying agent and registrar under the indenture.We may
change either the paying agent or registrar without prior notice to the
holders of the senior notes, and we may act as paying agent. The Senior Note
Indenture Trustee serves as trustee under our mortgage indenture and certain
indentures ofour parent company. We and our parent company maintain ordinary
banking and trust relationships with a number of banks and trust companies,
including The Bank of New York Mellon Trust Company, N.A.
Governing Law
The Indenture and thesenior notes are governed by New York law.
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DESCRIPTION OF THE FIRST MORTGAGE BONDS
This prospectus describes certain general terms of the first mortgage bonds
("first mortgage bonds") that we may sell from time totime under this
prospectus. We will describe the specific terms of each series of first
mortgage bonds we offer in a prospectus supplement. The first mortgage bonds
will be issued under an indenture dated as of June 19, 2020 between us and
TheBank of New York Mellon Trust Company, N.A., as trustee (the "Mortgage
Trustee"), to be supplemented by a supplemental indenture to the mortgage
indenture establishing the first mortgage bonds of each series. The indenture,
as amended orsupplemented from time to time, is referred to as the "Mortgage
Indenture." We have summarized selected provisions of the Mortgage Indenture
and the first mortgage bonds below. The information we are providing you in
this prospectusconcerning the first mortgage bonds and the Mortgage Indenture
is only a summary of the information provided in those documents, and the
summary is qualified in its entirety by reference to the provisions of the
Mortgage Indenture, including theforms of first mortgage bonds attached
thereto. You should consult the first mortgage bonds themselves and the
Mortgage Indenture for more complete information on the first mortgage bonds
as they, and not this prospectus or any applicable prospectussupplement,
govern your rights as a holder. The Mortgage Indenture is included as an
exhibit to the registration statement of which this prospectus is a part. The
Mortgage Indenture has been qualified under the Trust Indenture Act of 1939,
asamended, or the Trust Indenture Act, and the terms of the first mortgage
bonds will include those made part of the Mortgage Indenture by the Trust
Indenture Act.
In this section, references to "we," "our," "ours," "us" and "the Company"
refer only toPacific Gas and Electric Company and not to any of its direct or
indirect subsidiaries or affiliates except as expressly provided herein.
General
The Mortgage Indenture constitutes a first lien, subject to Permitted Liens
(as described below), on substantially all of our realproperty and certain
tangible personal property related to our facilities. The Mortgage Indenture
does not limit the amount of debt that we may issue under it. However, we may
issue first mortgage bonds under the Mortgage Indenture only on the basisof,
and to the extent we have available, Property Additions (as described below),
retired first mortgage bonds and cash. See "-- Issuance of Additional First
Mortgage Bonds." The first mortgage bonds will be entitled to the benefit
ofthe Mortgage Indenture equally and ratably with all other first mortgage
bonds issued under the Mortgage Indenture.
The prospectussupplement applicable to each issuance of first mortgage bonds
will specify, among other things:
. the title of the first mortgage bonds and, if other than the date of its
authentication, the date of each firstmortgage bond of such series;
. any limitation on the aggregate principal amount of the first mortgage bonds;
. the date or dates on which the principal of any of the first mortgage bonds is payable, including the maturitydate,
or how to determine those dates, and our right, if any, to extend those dates and the duration of any extension;
. the interest rate or rates of the first mortgage bonds, if any,
which may be fixed or variable, or the method ormeans by which the
interest rate or rates are to be determined, and our ability to extend
any interest payment periods and the duration of any extension;
. the date or dates from which any interest will accrue, the dates on which we will pay interest on the firstmortgage bonds
and the regular record date, if any, for determining who is entitled to the interest payable on any interest payment date;
. the place or places where the principal of (and premium, if any) and interest, if any, on such first
mortgagebonds shall be payable, the methods by which registration of transfer of first mortgage
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bonds and exchanges of first mortgage bonds may be effected, and by which notices and demands to
or upon us in respect of such first mortgage bonds may be made, given, furnished, filed or served;
. any periods or periods within which, or date or dates on which, the price or prices at which and the terms
andconditions on which the first mortgage bonds may be redeemed, in whole or in part, at our option;
. any obligation of ours to redeem, purchase or repay any of the first
mortgage bonds pursuant to any sinking fundor other mandatory redemption
provisions or at the option of the holder and the terms and conditions upon
which the first mortgage bonds will be so redeemed, purchased or repaid;
. the denominations in which we will authorize the first mortgage bonds
to be issued, if other than $1,000 orintegral multiples of $1,000;
. whether we will offer the first mortgage bonds in the form of global
securities and, if so, the name of thedepositary for any global securities;
. if the amount payable in respect of principal of or any premium or
interest on any first mortgage bonds may bedetermined with reference
to an index or other fact or event ascertainable outside the Mortgage
Indenture, the manner in which such amount will be determined;
. any events of default applicable to that series of first mortgage bonds in
addition to the events of defaultdescribed under "-- Events of Default";
. covenants for the benefit of the holders of that series;
. the currency, currencies or currency units in which the principal, premium, if any, and interest on the firstmortgage bonds
will be payable if other than U.S. dollars and the manner for determining the equivalent principal amount in U.S. dollars;
. any exceptions to the provisions for legal holidays or business days in the Mortgage Indenture;
. if the principal of the first mortgage bonds is payable from time to time without presentation or surrender, anymethod or
manner of calculating the principal amount that is outstanding at any time for all purposes of the Mortgage Indenture; and
. any other terms of the first mortgage bonds.
We may sell first mortgage bonds at par or at a substantial discount below
their stated principal amount. We will describe in a prospectussupplement
material U.S. federal income tax considerations, if any, and any other special
considerations for any first mortgage bonds we sell that are denominated in a
currency or currency unit other than U.S. dollars.
Payment
Except as may be provided withrespect to a series, interest, if any, on the
first mortgage bonds payable on each interest payment date will be paid to the
person in whose name that first mortgage bond is registered as of the close of
business on the regular record date for theinterest payment date. However,
interest payable at maturity will be paid to the person to whom the principal
is paid. If there has been a default in the payment of interest on any first
mortgage bonds, the defaulted interest may be paid to theholders of the first
mortgage bonds as of a special record date for the payment of such defaulted
interest which shall not be more than 30 days and not less than 10 days prior
to the date of the proposed payment and not less than 25 days after thereceipt
by the Mortgage Trustee of the notice of the proposed payment.
Redemption
Any terms for the optional or mandatory redemption of a series of first
mortgage bonds will be set forth in a prospectus supplement for theoffered
series. Unless otherwise indicated in a prospectus supplement, first
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mortgage bonds will be redeemable by us only upon notice sent not less than 10
nor more than 60 days before the date fixed for redemption and, if less than
all the first mortgage bonds of aseries are to be redeemed, the particular
first mortgage bonds to be redeemed will be selected by the method provided
for that particular series, or in the absence of any such provision, by such
method of random selection as the registrar deems fairand appropriate;
provided, however, that with respect to global securities (as described
below), first mortgage bonds to be redeemed shall be selected in accordance
with the procedures of the depositary.
We have reserved the right to provide conditional redemption notices for
redemptions at our option or for redemptions that are contingent uponthe
occurrence or nonoccurrence of an event or condition that cannot be
ascertained prior to the time we are required to notify holders of the
redemption. A conditional notice may state that if we have not deposited
redemption funds with theMortgage Trustee or a paying agent on or before the
redemption date or we have directed the Mortgage Trustee or paying agent not
to apply money deposited with it for redemption of first mortgage bonds, we
will not be required to redeem the firstmortgage bonds on the redemption date.
Lien of the Mortgage Indenture
General
The MortgageIndenture creates a first lien, subject to Permitted Liens, on
substantially all of our real property and certain tangible personal property
related to our facilities. We refer to property that is subject to the lien of
the Mortgage Indenture as"Mortgaged Property" and property that is excepted
from the lien of the Mortgage Indenture as "Excepted Property."
The Mortgage Indenture provides that after-acquired property (other than
after-acquired property qualifying as Excepted Property) located inthe State
of California will be subject to the lien of the Mortgage Indenture (subject
to Permitted Liens); provided, however, that in the case of a consolidation or
merger (whether or not we are the surviving corporation) or the transfer or
leaseof all or substantially all of the Mortgaged Property, the Mortgage
Indenture will not be required to be a lien upon any of the properties then
owned or thereafter acquired by the successor corporation except properties
acquired from us in or as aresult of that transaction, to the extent not
constituting Excepted Property, and improvements, extensions and additions to
those properties and renewals, replacements and substitutions of or for any
part or parts thereof. In addition,after-acquired property may be subject to
liens existing or placed thereon at the time of acquisition thereof,
including, but not limited to, purchase money liens, and, in certain
circumstances, liens attaching to the property prior to the recordingor filing
of an instrument specifically subjecting the property to the lien of the
Mortgage Indenture.
The Mortgage Indenture providesthat the Mortgage Trustee shall have a lien,
prior to the first mortgage bonds, on the Mortgaged Property and on all other
property and funds held or collected by the Mortgage Trustee, other than
property and funds held in trust for the payment ofprincipal, premium, if any,
and interest on the first mortgage bonds, as security for the payment of the
Mortgage Trustee's reasonable compensation and expenses, and as security for
the performance by us of our obligation to indemnify theMortgage Trustee
against certain liabilities.
Without the consent of the holders, we and the Mortgage Trustee may enter into
supplementalindentures in order to subject additional property to the lien of
the Mortgage Indenture (including property which would otherwise be Excepted
Property). This property would thereupon constitute Property Additions (so
long as it would otherwisequalify as Property Additions as described below)
and be available as a basis for the issuance of additional first mortgage
bonds. See "-- Issuance of Additional First Mortgage Bonds."
Excepted Property
TheMortgage Indenture constitutes a first lien, subject to Permitted Liens, on
substantially all of our real property and certain tangible personal property
related to our facilities, located in the State of California, except
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for the Diablo Canyon nuclear power plant, our corporate offices, certain
specified properties as set forth in the Mortgage Indenture and the following
Excepted Property (unless otherwiseindicated in any applicable prospectus
supplement):
. all money, investment property and deposit accounts and security entitlements (as
those terms are defined in theCalifornia Commercial Code as in effect on the date of
execution of the Mortgage Indenture), and all cash on hand or on deposit in banks or
other financial institutions, shares of stock, joint ventures, interests in general or
limited partnershipsor limited liability companies, bonds, notes, other evidences of
indebtedness and other securities, commodity accounts and policies of insurance on
the lives of our officers and directors, of whatever kind and nature, in each case to
the extent notpaid or delivered to, deposited with or held by the Mortgage Trustee;
. all accounts, chattel paper, commercial tort claims,
documents, general intangibles (with certain
exclusions suchas licenses and permits to use
the real property of others), instruments,
letter-of-credit
rights and letters of credit (as those terms are defined in the CaliforniaCommercial
Code) and all contracts, leases (including, but not limited to, the lease of certain
real property at our Diablo Canyon nuclear power plant), operating agreements and
other agreements of whatever kind and nature; all contract rights,bills and notes;
. all revenues, income and earnings, all accounts receivable, rights to payment and unbilled revenues,
and allrents, tolls, issues, product and profits, claims, credits, demands and judgments,
including any rights in or to rates, revenue components, charges, tariffs, or amounts arising therefrom,
or in any amounts that are accrued and recorded in aregulatory account for collections by us;
. all governmental and other licenses, permits, franchises, consents
and allowances including all emissionallowances and greenhouse gas
allowances (or similar rights) created under any similar existing
or future law relating to abatement or control of pollution of the
atmosphere, water or soil, other than all licenses and permits to
use the realproperty of others, franchises to use public roads,
streets and other public properties, rights of way and other rights,
or interests relating to the occupancy or use of real property;
. all patents, patent licenses and other patent rights, patent applications, trade names, trademarks,
copyrightsand other intellectual property, including computer software and software licenses;
. all claims, credits, choses in action, and other intangible property;
. all automobiles, buses, trucks, truck cranes, tractors, trailers, motor vehicles and similar vehicles
and movableequipment; all rolling stock, rail cars and other railroad equipment; all vessels,
boats, barges and other marine equipment; all airplanes, helicopters, aircraft engines and other
flight equipment; and all parts, accessories and supplies used inconnection with any of the foregoing;
. all goods, stock in trade, wares, merchandise and inventory held for the purpose of
sale or lease in the ordinarycourse of business; all materials, supplies, inventory
and other items of personal property that are consumable (otherwise than by
ordinary wear and tear) in their use in the operation of the Mortgaged Property;
. all fuel, whether or not that fuel is in a form consumable in the operation of the Mortgaged
Property, includingseparate components of any fuel in the forms in which those components exist
at any time before, during or after the period of the use thereof as fuel; all hand and other
portable tools and equipment; all furniture and furnishings; and computers anddata processing,
data storage, data transmission, telecommunications and other facilities, equipment and
apparatus, which, in any case, are used primarily for administrative or clerical purposes or are
otherwise not necessary for the operation ormaintenance of the facilities, machinery, equipment
or fixtures described in the granting clauses of the Mortgage Indenture as Mortgaged Property;
. all personal property, the perfection of a security interest in which is not governed by the CaliforniaCommercial Code;
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. all oil, gas and other minerals (as those terms are defined in the California Commercial Code) and all coal, ore,gas, oil
and other minerals and all timber, and all rights and interests in any of the foregoing, whether or not the minerals or
timber have been mined or extracted or otherwise separated from the land; and all electric energy and capacity, gas(natural
or artificial), steam, water and other products generated, produced, manufactured, purchased or otherwise acquired by us;
. all property that is the subject of a lease agreement designating us as lessee and all our
right, title andinterest in and to that leased property and in, to and under that lease
agreement, whether or not that lease agreement is intended as security (including, but
not limited to, certain real property leased at our Diablo Canyon nuclear power plant);
. all property, real, personal and mixed, which subsequent to the execution date
of the Mortgage Indenture, hasbeen released from the lien of the Mortgage
Indenture, and any improvements, extensions and additions to those properties
and renewals, replacements and substitutions of or for any parts thereof;
. all property, real, personal and mixed, that is stated in the Mortgage
Indenture to not be subject to the lien ofthe Mortgage Indenture;
. all Environmental Remediation Sites;
. all Diablo Canyon Property;
. all General Office Property;
. certain hydro properties identified in the Mortgage Indenture;
. all Mitigation Property;
. all Surplus Property; and
. all proceeds (as that term is defined in the California Commercial Code) of the foregoing Excepted Property;
provided, however, that Excepted Property shall not include the identifiable
proceeds (as that term is defined in the CaliforniaCommercial Code) of any
Mortgaged Property that we have disposed of in violation of the terms of the
Mortgage Indenture.
If an Event ofDefault occurs under the Mortgage Indenture, certain of the
Excepted Property may become subject to the lien of the Mortgage Indenture.
The Mortgage Indenture permits us to create or allow to exist certain
"Permitted Liens", such as mortgages, deeds of trust, pledges,security
interests, leases, reservations, restrictions, charges, encumbrances, or other
liens on the Mortgaged Property which rank senior to the lien of the Mortgage
Indenture.
"Permitted Liens" include:
. to the extent we consolidate with, or merge into, another entity, liens on the assets of such entity in
existenceon the date of the consolidation or merger and securing debt of such entity, provided that the
debt and liens were not created or incurred in anticipation of the consolidation or merger and do not
extend to any other Mortgaged Property in existenceimmediately prior to the consolidation or merger;
. as to property acquired by us after the date of execution of the Mortgage Indenture, liens existing or placedthereon
at the time of the acquisition thereof, provided that the liens do not extend to any other Mortgaged Property;
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. liens for taxes, assessments and other governmental charges or requirements which are
not delinquent or which arebeing contested in good faith by appropriate proceedings;
. mechanics', workmen's, vendors', repairmen's, materialmen's, warehousemen's andcarriers' liens, inchoate liens, other liens
incident to construction, liens or privileges of any of our employees for salary or wages earned, but not yet payable, and other
liens, including, without limitation, liens for workers'compensation awards, arising in the ordinary course of business for
charges or requirements which are not delinquent or which are being contested in good faith and by appropriate proceedings;
. liens in respect of attachments, judgments or awards arising out of judicial or administrative proceedings(i) in an amount
not exceeding the greater of (A) $10 million to the extent in existence in calendar year 2020; provided, that, with
respect to measurement of these liens in existence in any subsequent calendar year, the amount shall beincreased by
the percentage increase in the consumer price index for all urban consumers, U.S. City average, or urban CPI, for the
period commencing on January 1, 2020 and ending on January 1 of the applicable calendar year and(B) three percent of the
principal amount of the first mortgage bonds then outstanding or (ii) with respect to which we shall (x) in good faith
be prosecuting an appeal or other proceeding for review and with respect to which we shallhave secured a stay of execution
pending the appeal or other proceeding or (y) have the right to prosecute an appeal or other proceeding for review;
. easements, encumbrances, leases, reservations, restrictions or other rights of others in,
on, over and/or across,and laws, regulations and restrictions affecting, and defects,
irregularities, exceptions and limitations in title to, the Mortgaged Property or any
part thereof; provided, however, that the easements, encumbrances, leases, reservations,
rights,laws, regulations, restrictions, defects, irregularities, exceptions and
limitations (A) do not, in our opinion, materially impair the use by us of such Mortgaged
Property for the purposes for which it is held by us or (B) have beeninsured over by
a lender's policy of title insurance in favor of the Mortgage Trustee, as mortgagee;
. conservation easements in accordance with our Settlement Agreement as modified and approved by
the PublicUtilities Commission of the State of California in its Opinion and Order of December
18, 2003 and the Stipulation Resolving Issues Regarding the Land Conservation Commitment, dated
September 25, 2003, as filed with the Public UtilitiesCommission of the State of California;
. defects, irregularities,
exceptions and
limitations in title to
real property subject to
rights-of-way
or other similar rights
in favor of us or
used or to be used
by us primarily for
right-of-way
purposes or real property held
under lease, easement, license
or similar right; provided,
however, that (i) we obtain
from the apparent owner or
ownersof the real property a
sufficient right, by the terms
of the instrument granting the
right-of-way,
lease, easement, license or similar right, to the use thereof for thepurposes for which
we acquired it, (ii) such defects, irregularities, exceptions or limitations are
subordinated to our interest in such real property, (iii) we have power under eminent
domain or similar statutes to remove the defects,irregularities, exceptions or limitations
to the extent such defects, irregularities, exceptions or limitations affect our
interest therein or (iv) the defects, irregularities, exceptions and limitations may be
otherwise remedied without undueeffort or expense; and defects, irregularities,
exceptions and limitations in title to flood lands, flooding rights and/or water rights;
. liens upon real property or rights in or relating to real property
for the purpose of the distribution ofelectricity or gas, for the
purpose of telephonic, telegraphic, radio, wireless or other
electronic communication or otherwise for the purpose of obtaining
rights-of-way,
which liens secure or evidence indebtedness
or other obligations neither created,
assumed nor guaranteed by us nor on account
of which it customarily paysinterest;
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. leases, licenses, or occupancy agreements existing at the date of execution of
the Mortgage Indenture affectingMortgaged Property owned by us at that time, and
renewals and extensions thereof; and leases, licenses, or occupancy agreements
affecting that Mortgaged Property entered into after the date of execution of the
Mortgage Indenture, or affectingmortgaged properties acquired by us after that
date which, in either case, (i) have terms of not more than 10 years (including
extensions or renewals at the option of the tenant) or (ii) do not materially impair
the use by us of theproperties for the purposes for which they are held by us;
. liens vested in lessors, licensors, franchisors or permittors
for rent or other amounts to become due or forother obligations
or acts to be performed, the payment of which rent or other
amounts or the performance of which other obligations or acts is
required under leases, subleases, licenses, franchises or permits,
so long as the payment of the rent orother amounts or the
performance of the other obligations or acts is not delinquent or
is being contested in good faith and by appropriate proceedings;
. controls, restrictions, obligations, duties and/or other burdens imposed by
federal, state, municipal or otherlaw, or by rules, regulations or orders
of governmental authorities, upon the Mortgaged Property or any part thereof
or the operation or use thereof or upon us with respect to the Mortgaged
Property or any part thereof or the operation or usethereof or with respect to
any franchise, grant, license, permit or public purpose requirement, or any
rights reserved to or otherwise vested in governmental authorities to impose
any such controls, restrictions, obligations, duties and/or otherburdens;
. rights which governmental authorities may have by virtue of franchises, grants, licenses, permits or contracts,or
by virtue of law, to purchase, recapture or designate a purchaser of or order the sale of the Mortgaged
Property or any part thereof, to terminate franchises, grants, licenses, permits, contracts or other rights
or to regulate our property andbusiness; and any and all our obligations correlative to any of these rights;
. liens required by law or governmental regulations (i) as a condition
to the transaction of any business orthe exercise of any privilege or
license, (ii) to enable us to maintain self-insurance or to participate
in any funds established to cover any insurance risks, (iii) in
connection with workers' compensation, unemployment insurance,social
security or any pension or welfare benefit plan or (iv) to share in the
privileges or benefits required for companies participating in one or
more of the arrangements described in clauses (ii) and (iii) above;
. liens on the Mortgaged Property or any part thereof which are granted by us to secure duties or
public orstatutory obligations or to secure, or serve in lieu of, surety, stay or appeal bonds;
. rights reserved to or vested in others to take or receive any part of any coal,
ore, gas, oil and other minerals,any timber and/or any electric capacity or energy,
gas, water, steam and any other products, developed, produced, manufactured,
generated, purchased or otherwise acquired by us or by others on our property;
. rights and interests of persons other than us arising out of contracts, agreements and other instruments to whichwe
are a party and which relate to the common ownership or joint use of property and all liens on the interests
of persons other than us in property owned in common by those persons and us if and to the extent that the
enforcement of those lienswould not adversely affect our interests in that property in any material respect;
. any restrictions on transfer or assignment and/or requirements of any assignee to qualify
as a permittedtransferee or assignee and/or a public utility or public service corporation;
. any liens (A) which have been bonded over for the full amount in dispute or (B)
for the payment ofwhich other adequate security arrangements have been made;
. easements, ground leases or
right-of-way
in, upon, over and/or across our property or
rights-of-way
in our favor forthe purpose of roads, pipelines, transmission lines, distribution
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lines, communication lines, railways, removal of coal or other minerals or timber,
and other like purposes, or for the joint or common use of real property,
rights-of-way,
facilities and/or equipment; provided, however, that the
grant does not materially impair the use of the property or
rights-of-way
for the purposes for which the property or
rights-of-way
are held by us;
. prepaid liens and purchase money liens, as more particularly described in the Mortgage Indenture;
. liens contemplated by PG&E Corporation and the Company and the Shareholder
Proponents' Joint Chapter 11Plan of Reorganization, dated as of June 19, 2020;
. any lien incurred in connection with the issuance of Qualified
Securitization Bonds (as such term is defined inthe Mortgage Indenture);
. any other liens which are in existence on the date of execution of the Mortgage
Indenture and the aggregateprincipal amount thereof does not exceed $30 million;
. any other liens which then outstanding principal amounts do not, in the aggregate, exceed $65 million to
theextent in existence in calendar year 2020, provided that with respect to any of these liens in existence
in any subsequent calendar year, the amount shall be increased by the percentage increase in the urban CPI
for the period commencing onJanuary 1, 2020 and ending on January 1 of the applicable calendar year; and
. the lien under the Mortgage Indenture in favor of the Mortgage Trustee with respect to the compensation
and otheramounts payable by us to the Mortgage Trustee in its capacity as Mortgage Trustee.
Issuance of Additional First Mortgage Bonds
We may issue first mortgage bonds of any series from time to time against
Property Additions, Retired Securities and cash depositedwith the Mortgage
Trustee, in an aggregate principal amount not exceeding:
. 70% of the aggregate of the net amounts of Property Additions which constitute Unfunded Property (as describedbelow);
. the aggregate principal amount of previously issued first mortgage bonds that have
been canceled or that we havedelivered to the Mortgage Trustee for cancellation
or previously issued first mortgage bonds deemed to have been paid under the
Mortgage Indenture, each of which we refer to as "Retired Securities"; or
. the amount of cash deposited with the Mortgage Trustee.
Any such additional first mortgage bonds either shall be fungible with the
original first mortgage bonds for U.S. federal income tax purposesor shall be
issued under a different CUSIP.
"Property Additions" generally include any item, unit or element of property
whichis owned by us and is subject to the lien of the Mortgage Indenture
except (with certain exceptions) goodwill, going concern value rights or
intangible property, or any property the cost of acquisition or construction
of which is properly chargeableto one of our operating expense accounts at the
time of such acquisition or construction.
The Mortgage Indenture includes limitations onthe issuance of first mortgage
bonds against property subject to liens and upon the increase of the amount of
any senior liens on Funded Property.
"Funded Property" generally means Mortgaged Property which has been used as
the basis for the issuance of first mortgage bonds or asthe basis for the
release or substitution of Mortgaged Property under the Mortgage Indenture.
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"Retired Securities" means, generally, first mortgage bonds which are no
longeroutstanding under the Mortgage Indenture, which have not been retired by
the application of funded cash and which have not been used as the basis for
the authentication and delivery of first mortgage bonds, the release of
property or the withdrawalof cash.
"Unfunded Property" generally means Mortgaged Property which has not
previously been used as the basis for theissuance of first mortgage bonds (not
otherwise retired) or as the basis for the release or substitution of
Mortgaged Property.
Release of MortgagedProperty
We may release property from the lien of the Mortgage Indenture if we deliver
to the Mortgage Trustee cash equal to theFunded Property Basis (as described
below) of the property to be released, less any taxes and expenses incidental
to any sale, exchange, dedication or other disposition of the property to be
released. Any of the following or any combination of thefollowing will be
applied as a credit against the cash we will be required to deliver to the
Mortgage Trustee:
. the aggregate principal amount of obligations secured by a Purchase Money Lien
on the property to be released,subject to certain limitations described below;
. an amount equal to the Net Cost or Net Fair Value to us (whichever is less) of certified Property
Additionsconstituting Unfunded Property after certain deductions and additions, primarily including
adjustments to offset property retirements (except that the adjustments need not be made if the
Property Additions were acquired, made or constructed within90 days before our request for release);
. an amount equal to
ten-sevenths
of the aggregate principal amount offirst mortgage bonds we would be entitled to issue on the basis of
retired first mortgage bonds (with that entitlement being waived by operation of such release); and
. an amount equal to
ten-sevenths
of the aggregate principal amount offirst mortgage bonds delivered to the Mortgage Trustee.
For purposes of this subsection, the following terms have thefollowing meaning:
. "Funded Property Basis" generally means the Net Cost of Funded Property or the Net Fair
Value to us ofthe Funded Property at the time it became Funded Property, whichever is less.
. "Net Cost" means, as of the date of calculation, the cost of the
property, less, if such property issubject to a senior lien, the lesser
of (i) the outstanding principal amount of any senior lien obligations
as of the date of calculation or (ii) the cost of the property.
. "Net Fair Value" means, as of the date of calculation, the fair value
of the property, less, if suchproperty is subject to a senior lien, the
lesser of (i) the outstanding principal amount of any senior lien obligations
as of the date of calculation or (ii) the fair value of the property.
. "Purchase Money Lien" means, generally, a lien on the property being released which is retained by thetransferor of such
property to secure all or part of its purchase price or granted to one or more other persons in connection with the
transfer or release thereof, or granted to or held by a Mortgage Trustee or agent for any such persons, and mayinclude
liens which cover property in addition to the property being released and/or which secure additional indebtedness.
We will be permitted to release from the lien of the Mortgage Indenture
Unfunded Property without depositing any cash with the MortgageTrustee or
providing any other credits if either (i) the lower of the Net Cost or Net
Fair Value to us of all Unfunded Property (excluding the property to be
released), after making certain adjustments, is at least zero, or (ii) the
lowerof the Net Cost or Net Fair Value to us of the Unfunded
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Property to be released, after making certain adjustments, does not exceed the
lower of the Net Cost or Net Fair Value of all property acquired, made or
constructed on or after 90 days before ourrequest, after making certain
adjustments. If neither (i) or (ii) in the immediately preceding sentence
applies, we will be required to deliver a
"make-up"
amount in cash. We may apply as acredit against the cash we will be required
to deliver to the Mortgage Trustee any of the items described under the bullet
points in this section.
We also will be permitted to release in a calendar year property up to the
lesser of $10 million (increased yearly by the urban CPI) or3% of the
aggregate principal amount of first mortgage bonds then outstanding without
complying with the other release provisions in the Mortgage Indenture.
However, if, upon reliance on this release provision, we release Funded
Property, we arerequired to deposit with the Mortgage Trustee, by the end of
the calendar year, cash equal to 70% of the Funded Property Basis of the
property released, net of certain credits.
The Mortgage Indenture provides simplified procedures for the release of
property taken by eminent domain, and provides for dispositions ofcertain
obsolete property and grants or surrender of certain rights without any
release or consent by the Mortgage Trustee.
Theprovisions described above permitting the release of property (except
property taken by eminent domain) will be operable only if no Event of Default
has occurred and is continuing under the Mortgage Indenture.
Withdrawal of Cash
Unless an Event ofDefault has occurred and is continuing and subject to
certain limitations, cash held by the Mortgage Trustee may, generally,
. be withdrawn by us (i) to the extent of an amount equal to the Net Cost or Net Fair Value to us (whicheveris
less) of Property Additions constituting Unfunded Property, after certain deductions and additions, primarily
including adjustments to offset retirements (except that these adjustments need not be made if the Property
Additions were acquired ormade within 90 days before our request for withdrawal) or (ii) in an amount equal to
ten-sevenths
(10/7ths) of the aggregate principal amount of first mortgage bonds
that we would be entitled to issue onthe basis of retired first
mortgage bonds (with the entitlement to that issuance being waived
by operation of the withdrawal) or (iii) in an amount equal to
ten-sevenths
(10/7ths) of the aggregateprincipal
amount of any outstanding
first mortgage bonds delivered
to the Mortgage Trustee; or
. upon our request, applied to (i) the purchase of first mortgage bonds
or (ii) the payment (or provisionfor payment) at stated maturity
of any first mortgage bonds or the redemption (or provision for
redemption) of any first mortgage bonds which are redeemable.
Evidence to be Furnished to the Mortgage Trustee Under the Mortgage Indenture
We will demonstrate compliance with Mortgage Indenture provisions by providing
written statements to the Mortgage Trustee from our officers orpersons we
select. For instance, we may select an engineer to provide a written statement
regarding the value of property being certified or released or counsel
regarding compliance with the Mortgage Indenture generally. In certain major
matters,applicable law requires that an accountant, engineer or other expert
must be independent. We must file a certificate each year with respect to our
compliance with the conditions and covenants under the Mortgage Indenture.
Consolidation, Merger, Transfer of Mortgaged Property
We may not consolidate with or merge with or into any other Person (as
described below) or convey, otherwise transfer or lease all orsubstantially
all of our Mortgaged Property to any Person unless:
. the Person formed by that consolidation or into which we are merged or the Person which acquires by
conveyance orother transfer, or which leases, all or substantially all of the Mortgaged Property
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is a corporation, partnership, limited liability company, association, company, joint stock company or business
trust, organized and existing under the laws of the United States, or any statethereof or the District of Columbia;
. that Person executes and delivers to the Mortgage Trustee a supplemental Mortgage
Indenture that in the case of aconsolidation, merger, conveyance or other
transfer, or in the case of a lease if the term thereof extends beyond the
last stated maturity of the first mortgage bonds then outstanding, contains
an assumption by the successor Person of the due andpunctual payment of the
principal of and premium, if any, and interest, if any, on all first mortgage
bonds then outstanding and the performance and observance of every covenant
and conditions under the Mortgage Indenture to be performed or observedby us;
. that Person executes and delivers to the Mortgage Trustee a supplemental Mortgage Indenture that
contains agrant, conveyance, transfer and mortgage by the successor Person confirming the lien
of the Mortgage Indenture on the Mortgaged Property and subjecting to the lien all property
(other than Excepted Property) thereafter acquired by the successorPerson that shall constitute
an improvement, extension or addition to the Mortgaged Property or renewal, replacement or
substitution of or for any part thereof and, at the election of the successor Person, subjecting
to the lien of the MortgageIndenture the other property, real, personal and mixed, then owned
or thereafter acquired by the Person as the person shall specify in its sole discretion;
. in the case of a lease, the lease is made expressly subject to termination by us at any
time during thecontinuance of an Event of Default and by the purchaser of the property
so leased at any sale of the property under the Mortgage Indenture, whether under the
power of sale conferred by the Mortgage Indenture or pursuant to judicial proceedings;
. immediately after giving effect to the transaction and treating any
indebtedness that becomes our obligation as aresult of the transaction
as having been incurred by us at the time of the transaction, no
default or Event of Default shall have occurred and be continuing; and
. we have delivered to the Mortgage Trustee an officer's certificate and an opinion of counsel, each statingthat the merger,
consolidation, conveyance, lease or transfer, as the case may be, fully complies with all provisions of the Mortgage
Indenture; provided, however, that the delivery of the officer's certificate and opinion of counsel shall notbe required with
respect to any merger, consolidation, conveyance, transfer or lease between us and any of our wholly owned subsidiaries.
Notwithstanding the foregoing, we may merge or consolidate with or transfer
all or substantially all of our assets to an affiliate that has nosignificant
assets or liabilities and was formed solely for the purpose of changing our
jurisdiction of organization or our form of organization or for the purpose of
forming a holding company; provided that the amount of our indebtedness is
notincreased; and provided, further, that the successor assumes all of our
obligations under the Mortgage Indenture.
In the case of aconveyance or other transfer of all or substantially all of
the Mortgaged Property to any other Person as contemplated under the Mortgage
Indenture, upon the satisfaction of all the conditions described above we (as
we would exist without givingeffect to the transaction) would be released and
discharged from all obligations under the Mortgage Indenture and on the first
mortgage bonds then outstanding unless we elect to waive the release and
discharge.
The meaning of the term "substantially all" has not been definitively
established and is likely to be interpreted by reference toapplicable state
law if and at the time the issue arises and will depend on the facts and
circumstances existing at the time.
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For purposes of this subsection:
. "Person" means any individual, corporation, limited liability partnership, joint venture, trust orunincorporated organization,
or any other entity, whether or not a legal entity, or any Governmental Authority (as defined in the Mortgage Indenture).
Additional Covenants
We have agreed inthe Mortgage Indenture, among other things:
. to maintain a place of payment for any series of first mortgage bonds; and
. to maintain our corporate existence (subject to the provisions above relating to mergers and consolidations).
Modification of the Mortgage Indentures; Waiver
We and the Mortgage Trustee may, with the consent of the holders of not less
than a majority in aggregate principal amount of the firstmortgage bonds of
each affected series then outstanding under the Mortgage Indenture, considered
as one class, modify or amend the Mortgage Indenture, including the provisions
relating to the rights of the holders of first mortgage bonds of thatseries.
However, no modification or amendment may, without the consent of each holder
of affected first mortgage bonds:
. change the stated maturity of, the principal of, reduce the principal amount or any premium payable on, reducethe
interest rate of, or change the method of calculating the interest rate with respect to that first mortgage bond;
. reduce the amount of principal payable upon acceleration of the maturity of that first mortgage bond;
. change the type of consideration (coin, currency or other property) used to
pay the principal of, or interest orpremium on that first mortgage bond;
. impair the right to institute suit for the enforcement of any payment on, or with respect to, that first mortgagebond;
. reduce the percentage in principal amount of outstanding first mortgage bonds of any series the
consent of whoseholders is required for modification or amendment of the Mortgage Indenture;
. reduce the percentage of principal amount of outstanding first mortgage bonds necessary for waiver
of compliancewith certain provisions of the Mortgage Indenture or for waiver of certain defaults;
. modify the provisions with respect to modification and waiver, except as provided in the Mortgage Indenture;
. reduce the quorum or voting requirements applicable to holders of the first mortgage bonds; or
. permit the creation of any lien (not otherwise permitted by the
Mortgage Indenture) ranking prior to the lien ofthe Mortgage Indenture,
with respect to all or substantially all of the Mortgaged Property
or, except as otherwise expressly permitted under the Mortgage
Indenture, release the lien of the Mortgage Indenture, terminate
the lien of the MortgageIndenture on all or substantially all of
the Mortgaged Property or deprive the holders of the first mortgage
bonds of the benefit of the lien of the Mortgage Indenture.
The holders of not less than a majority in aggregate principal amount of the
first mortgage bonds of each affected series then outstandingunder the
Mortgage Indenture, voting as a single class, may waive compliance by us with
certain provisions of the Mortgage Indenture benefiting holders of first
mortgage bonds of that series or
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the applicable first mortgage bonds. The holders of not less than a majority
in aggregate principal amount of the first mortgage bonds of any series
outstanding under the Mortgage Indenture may,on behalf of the holders of all
of the first mortgage bonds of that series, waive any past default under the
Mortgage Indenture with respect to that series and its consequences, except
defaults in the payment of the principal of or any premium orinterest on any
first mortgage bonds of that series and defaults in respect of a covenant or
provision in the Mortgage Indenture which cannot be modified, amended or
waived without the consent of each holder of affected first mortgage bonds.
We and the Mortgage Trustee may, without the consent of any holder of first
mortgage bonds, amend the Mortgage Indenture and the firstmortgage bonds for
certain reasons, including, but not limited to, the following:
. to evidence the succession of another person to us and the assumption by any such
successor of our covenants inthe Mortgage Indenture and in the first mortgage bonds;
. add covenants or other provisions applicable to us and for the benefit of
the holders of first mortgage bonds orone or more specified series thereof;
. establish the form or terms of first mortgage bonds of any series as contemplated by the Mortgage Indenture;
. cure any ambiguity;
. correct or amplify the description of the Mortgaged Property, or to subject to the lien of
the Mortgage Indentureadditional property (including property of persons other than us);
. specify any additional Permitted Liens with respect to that additional property;
. add, change or eliminate any provision of the Mortgage Indenture so long as the addition, change or eliminationdoes
not adversely affect the interest of holders of first mortgage bonds of any series in any material respect;
. change any place or places for payment or surrender of first mortgage bonds and where notices and demands to usmay be served;
. comply with any requirement in connection with the qualification of the Indenture under the Trust Indenture Act;or
. comply with the rules of any applicable securities depository.
In order to determine whether the holders of the requisite principal amount of
the outstanding first mortgage bonds have taken an action underthe Mortgage
Indenture as of a specified date:
. the principal amount of a discount bond that will be deemed to be outstanding will be the amount of the
principalthat would be due and payable as of that date upon acceleration of the maturity to that date; and
. first mortgage bonds owned by us or any other obligor upon the first mortgage bonds or
any of our or theiraffiliates will be disregarded and deemed not to be outstanding.
Events of Default
An "Event of Default" means any of the following events which shall occur and
be continuing:
. failure to pay interest on a first mortgage bond 60 days after such interest becomes
due and payable; provided,however, that no such default shall constitute an "Event of
Default" if we have made a valid extension of the interest payment period with respect to
the first mortgage bonds of such series, of which such first mortgage bond is a party;
. failure to pay the principal of or sinking fund installment, if any, or premium, if any, on, any
first mortgagebond within 3 Business Days after the same becomes due and payable; provided,
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however, that no such default shall constitute an "Event of Default" if we have made a valid extension
of the maturity of the first mortgage bonds of the series of which such firstmortgage bond is a party;
. failure to perform any other covenant or warranty applicable to us in the Mortgage Indenture continuing for 90days
after the Mortgage Trustee, or the holders of at least 25% in aggregate principal amount of the first mortgage
bonds then outstanding, give us notice of the default and require us to remedy the default, unless the Mortgage
Trustee, or theMortgage Trustee and holders of a principal amount of first mortgage bonds not less than the principal
amount of first mortgage bonds the holders of which gave that notice agree in writing to an extension of the period
prior to its expiration;provided, however, that the Mortgage Trustee, or the Mortgage Trustee and the holders
of such principal amount of first mortgage bonds, as the case may be, shall be deemed to have agreed to an extension
of such period if corrective action isinitiated by us within such period and is being diligently pursued;
. certain events of bankruptcy, insolvency or reorganization; and
. the occurrence of any Event of Default as defined in any mortgage, mortgage indenture or instrument
under whichthere may be issued, or by which there may be secured or evidenced, any of our Debt
(as defined below), whether the Debt exists on the date of execution of the Mortgage Indenture, or
shall thereafter be created, if the Event of Default: (i) iscaused by a failure to pay principal
after final maturity of the Debt after the expiration of the grace period provided in the Debt
(which we refer to as a "payment default"), or (ii) results in the acceleration of the Debt prior
toits express maturity, and in each case, the principal amount of any of that Debt, together
with the principal amount of any other Debt under which there has been a payment default or the
maturity of which has been so accelerated, aggregates$200 million or more, provided, however, that
if the Event of Default under that mortgage, Mortgage Indenture or instrument is cured or waived
or the acceleration is rescinded or the Debt is repaid, within a period of 20 days from
thecontinuation of that Event of Default beyond the applicable grace period or the occurrence of the
acceleration, as the case may be, the Event of Default described in this bullet point shall be
automatically cured; provided, further, that withrespect to any mortgage, mortgage indenture or
instrument that exists on the date of execution of the Mortgage Indenture, this provision only applies
to the extent that the obligations to pay amounts thereunder are enforceable after July 1,2020.
The $200 million amount specified in the bullet point above shall be increased
in any calendar yearsubsequent to 2020 by the same percentage increase in the
urban CPI Index (as defined in the Mortgage Indenture) for the period
commencing January 1, 2020 and ending on January 1 of the applicable calendar
year.
For purposes of this subsection, "Debt" means any debt of us for money
borrowed and guarantees by us of debt for money borrowed butin each case
excluding liabilities in respect of Lease Obligations or Swap Agreements.
"Lease Obligation" means, at the time any determination is to be made, the
amount of the liability in respect of a capital lease that would at that
timebe required to be capitalized on a balance sheet in accordance with GAAP.
"Swap Agreement" means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
byreference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combinationof these transactions.
If the Mortgage Trustee deems it to be in the interest of the holders of the
first mortgage bonds, it may withholdnotice of default, except defaults in the
payment of principal, premium or interest with respect to any first mortgage
bond.
If an Eventof Default occurs, the Mortgage Trustee or the holders of at least
25% in aggregate principal amount of the first mortgage bonds outstanding,
considered as one class, may declare all principal (or, if any of
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the first mortgage bonds are Discount Bonds (as such term is defined in the
Mortgage Indenture), such portion of the principal amount of such first
mortgage bonds as may be specified in the termsthereof) immediately due and
payable, provided, however, that if an Event of Default occurs with respect to
certain events of bankruptcy, insolvency or reorganization, then the principal
amount (or, if any of the first mortgage bonds are DiscountBonds, such portion
of the principal amount of such first mortgage bonds as may be specified in
the terms thereof) of first mortgage bonds outstanding shall be due and
payable immediately without further action by the Mortgage Trustee or holders.
Ifthe default has been cured and other specified conditions in the Mortgage
Indenture have been satisfied before any Mortgaged Property has been sold and
before a judgment or decree for payment has been obtained by the Mortgage
Trustee as provided inthe Mortgage Indenture, the event or events of default
giving rise to the acceleration will be deemed to have been cured and the
declaration of acceleration and its effect will be deemed to have been
rescinded and annulled.
No holder of first mortgage bonds will have any right to institute any
proceeding, judicial or otherwise, or for any other remedy under theMortgage
Indenture unless the holder has given the Mortgage Trustee written notice of
the Event of Default, the holders of at least 25% of the first mortgage bonds
have requested the Mortgage Trustee in writing to institute proceedings with
respectto the Event of Default in its own name as Mortgage Trustee under the
Mortgage Indenture and have offered the Mortgage Trustee reasonable indemnity
against costs, expenses and liabilities with respect to the request, the
Mortgage Trustee has failedto institute any proceeding within 60 days after
receiving the notice from holders, and no direction inconsistent with the
written request has been given to the Mortgage Trustee during the
60-day
period byholders of at least a majority in aggregate principal amount of first
mortgage bonds then outstanding.
The Mortgage Trustee is notrequired to risk its funds or to incur financial
liability if there is a reasonable ground for believing that repayment to it
or adequate indemnity against risk or liability is not reasonably assured.
If an Event of Default has occurred and is continuing, holders of a majority
in principal amount of the first mortgage bonds may establish thetime, method
and place of conducting any proceedings for any remedy available to the
Mortgage Trustee, or exercising any trust or power conferred upon the Mortgage
Trustee.
Discharge
Any first mortgage bond, orany portion of the principal amount thereof, will
be deemed to have been paid for purposes of the Mortgage Indenture, and, at
our election, our entire indebtedness in respect of the first mortgage bonds
will be deemed to have been satisfied anddischarged, if certain conditions are
satisfied, including an irrevocable deposit with the Mortgage Trustee or any
paying agent (other than us), in trust of:
. money (including funded cash not otherwise applied pursuant to the Mortgage Indenture) in an amount which will besufficient, or
. in the case of a deposit made prior to the maturity of the first
mortgage bonds or portions thereof, EligibleObligations (as
described below) which do not contain provisions permitting the
redemption or other prepayment thereof at the option of the issuer
thereof, the principal of and the interest on which when due,
without any regard to reinvestmentthereof, will provide monies
which, together with the money, if any, deposited with or held by
the Mortgage Trustee or the paying agent, will be sufficient, or
. a combination of either of the two items described in the two preceding bullet points which will be sufficient,
to pay when due the principal of and premium, if any, and interest, if any,
due and to become due on the first mortgage bonds orportions thereof.
For purposes of this subsection, "Eligible Obligations" include direct
obligations of, or obligationsunconditionally guaranteed by, the United States
of America, entitled to the benefit of the full faith and credit
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thereof, and depositary receipts or other instruments with respect to the
obligations or any specific interest or principal payments due in respect
thereof.
Transfer and Exchange
Subject to theterms of the Mortgage Indenture, first mortgage bonds of any
series may be exchanged for other first mortgage bonds of the same series of
any authorized denominations and of a like aggregate principal amount and
tenor. Subject to the terms of theMortgage Indenture and the limitations
applicable to global securities, first mortgage bonds may be presented for
exchange or registration of transfer at the office of the registrar without
service charge, upon payment of any taxes and othergovernmental charges. Such
transfer or exchange will be effected upon the Mortgage Trustee, us or the
registrar, as the case may be, being satisfied with the documents of title and
identity of the person making the request.
If we provide for any redemption of a series of first mortgage bonds in a
prospectus supplement, we will not be required to execute, registerthe
transfer of or exchange any first mortgage bond of that series for 15 days
before a notice of redemption is given or register the transfer of or exchange
any first mortgage bond selected for redemption.
Resignation or Removal of Mortgage Trustee
The Mortgage Trustee may resign at any time upon written notice to us but the
Mortgage Trustee's resignation will not take effect until asuccessor Mortgage
Trustee accepts appointment. The Mortgage Trustee may be removed at any time
by written notice delivered to the Mortgage Trustee and us and signed by the
holders of at least a majority in principal amount of the outstanding
firstmortgage bonds. In addition, under certain circumstances, we may remove
the Mortgage Trustee, or any holder who has been a bona fide holder of a first
mortgage bond for at least six months may seek a court order for the removal
of the MortgageTrustee and the appointment of a successor trustee. We must
give notice of resignation and removal of the Mortgage Trustee or the
appointment of a successor trustee to all holders of first mortgage bonds as
provided in the Mortgage Indenture.
Mortgage Trustee, Paying Agents and Registrars for the First Mortgage Bonds
The Bank of New York Mellon Trust Company, N.A. serves as Mortgage Trustee
under the Mortgage Indenture. We may change either the paying agentor
registrar without prior notice to the holders of the first mortgage bonds, and
we may act as paying agent. The Mortgage Trustee serves as trustee under our
senior note indentures. We and our parent company maintain ordinary banking
and trustrelationships with a number of banks and trust companies, including
The Bank of New York Mellon Trust Company, N.A.
Governing Law
The Mortgage Indenture and the first mortgage bonds are governed by, and
construed and enforced in accordance with, the laws of the State ofNew York
(including without limitation
Section 5-1401
of the New York General Obligations Law or any successor to such statute),
except to the extent that the Trust Indenture Act shall be applicable,provided
that the law of the jurisdiction in which the Mortgaged Property consisting of
real property is located shall govern the creation of a mortgage lien on and
security interest in, or perfection, priority or enforcement of the lien of
theMortgage Indenture or exercise of remedies with respect to, such portion of
the Mortgaged Property.
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DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK
Unless indicated differently in a prospectus supplement, this section
describes the terms of our common stock and preferred stock (together,the
"capital stock"). The following description is only a summary and is qualified
in its entirety by reference to applicable law, our amended and restated
articles of incorporation (the "Amended Articles") and amended andrestated
bylaws (the "Amended Bylaws"). In this section, references to "we", "our",
"ours" and "us" refer only to PG&E Corporation and not to any of its direct or
indirect subsidiaries oraffiliates except as expressly provided.
General
The Amended Articles authorize the issuance of 3,600,000,000 shares of common
stock and 400,000,000 shares of preferred stock. As ofFebruary 14, 2024, there
were approximately 2,611,366,666 shares of our common stock, no par value,
outstanding and no shares of preferred stock outstanding. All outstanding
shares of our common stock are fully paid and nonassessable.
Common Stock
We may issue our commonstock from time to time upon such terms and for such
consideration as may be determined by our board of directors. Such further
issuances, up to the aggregate amounts authorized by the Amended Articles,
will not require approval by our shareholders.We may also issue common stock
from time to time under dividend reinvestment and employee benefit plans.
The Amended Articles restrictour ability to
issue non-voting shares
of our capital stock to the extent prohibited by Section 1123(a)(6) of the
Bankruptcy Code for so long as such Section is in effect and applicable to
us(the "Voting Restrictions"). Except as otherwise provided by law (including
Section 703(b) of the California Corporations Code, which states that shares
of a corporation owned by its subsidiary shall not be entitled to vote on
anymatter), holders of our common stock have voting rights on the basis of one
vote per share on each matter submitted to a vote at a meeting of
shareholders, subject to any class or series voting rights of holders of our
preferred stock. Ourshareholders may not cumulate votes in elections of
directors. As a result, the holders of our common stock and (if issued)
preferred stock entitled to exercise more than 50% of the voting rights in an
election of directors can elect all of thedirectors to be elected if they
choose to do so. In such event, the holders of the remaining common stock and
preferred stock voting for the election of directors will not be able to elect
any persons to the board of directors.
Holders of our common stock, subject to any prior rights or preferences of
preferred stock outstanding, have equal rights to receive dividendsif and when
declared by our board of directors out of funds legally available therefor;
provided, however, that if any subsidiary of ours is the holder of record of
shares of our common stock as of the record date for the payment of any
dividend ofcash or property (other than a dividend of shares of PG&E
Corporation) to the holders of our common stock, that subsidiary shall not be
entitled to receive payment of any such dividend, and we shall automatically
and without any further actionbe entitled to retain any such dividend that
would otherwise be payable to our subsidiary in respect of such shares.
"Subsidiary" means a corporation shares of which possessing more than 50
percent of the voting power are owneddirectly or indirectly through one or
more subsidiaries of ours..
In the event of our liquidation, dissolution or winding up and afterpayment of
all prior claims, holders of our common stock would be entitled to receive any
of our remaining assets, subject to any preferential rights of holders of
outstanding shares of preferred stock.
Holders of our common stock have no preemptive rights to subscribe for
additional shares of common stock or any of our other securities, nordo
holders of our common stock have any redemption or conversion rights.
Additionally, the rights of holders of common stock may be materially limited
or qualified by the rights of holders of preferred stock that we may issue in
the future.
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Our common stock is listed on the New York Stock Exchange under the symbol
"PCG."
The transfer agent and registrar for our common stock is EQ Shareowner
Services, P. O. Box 64874, St. Paul, MN, 55164-0874.
Preferred Stock
Our board of directorsis authorized to issue shares of preferred stock in one
or more series up to the aggregate amounts authorized by the Amended Articles
and to fix and determine the number of shares of preferred stock of any
series, to determine the designation of anysuch series, to increase or
decrease the number of shares of any such series subsequent to the issue of
shares of that series, and to determine or alter the rights, preferences,
privileges and restrictions granted to or imposed upon any such series.Currently
there are no shares of our preferred stock outstanding.
Prior to the issuance of shares of each series of our preferred stock,our
board of directors is required to adopt resolutions and file a certificate of
determination with the Secretary of State of the State of California. The
certificate of determination will fix for each series the designation and
number of sharesand the rights, preferences, privileges and restrictions of
the shares including, but not limited to, the following:
. the title and stated value of the preferred stock;
. voting rights, if any, of the preferred stock (in accordance with the Voting Restrictions, if applicable);
. any rights and terms of redemption (including sinking fund provisions);
. the dividend rate(s), period(s) and/or payment date(s) or method(s) of calculation applicable to the preferredstock;
. whether dividends are cumulative or
non-cumulative
and, if cumulative,the date from which dividends on the preferred stock will accumulate;
. the relative ranking and preferences of the preferred stock as to dividend
rights and rights upon theliquidation, dissolution or winding up of our affairs;
. the terms and conditions, if applicable, upon which the preferred stock will be convertible into
our commonstock, including the conversion price (or manner of calculation) and conversion period;
. the provision for redemption, if applicable, of the preferred stock;
. the provisions for a sinking fund, if any, for the preferred stock;
. liquidation preferences;
. any limitations on issuance of any class or series of preferred stock ranking senior to or on a parity with theclass or
series of preferred stock as to dividend rights and rights upon liquidation, dissolution or winding up of our affairs; and
. any other specific terms, preferences, rights, limitations or restrictions of the preferred stock.
All shares of preferred stock will, when issued, be fully paid and
nonassessable and will not have any preemptive orsimilar rights.
In addition to the terms listed above, we will set forth in a prospectus
supplement the following terms relating to theclass or series of preferred
stock being offered:
. the number of shares of preferred stock offered, the liquidation
preference per share and the offering price ofthe preferred stock;
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. the procedures for any auction and remarketing, if any, for the preferred stock;
. any listing of the preferred stock on any securities exchange; and
. a discussion of any material and/or special United States federal income tax considerations applicable to thepreferred stock.
Until our board of directors determines the rights of the holders of a series
of preferred stock, wecannot predict the effect of the issuance of any shares
of preferred stock upon the rights of holders of our common stock. However,
the effect could include one or more of the following:
. restricting dividends on our common stock;
. diluting the voting power of our common stock;
. impairing the liquidation rights of our common stock; or
. delaying or preventing a change in control of us without further action by our shareholders.
Rank
If issued,the preferred stock would rank, with respect to dividends and upon
our liquidation, dissolution or winding up:
. senior to all classes or series of our common stock and to all of our equity securities ranking junior to thepreferred stock;
. on a parity with all of our equity securities the terms of which specifically
provide that the equity securitiesrank on a parity with the preferred stock; and
. junior to all of our equity securities the terms of which specifically
provide that the equity securities ranksenior to the preferred stock.
Ownership Restrictions
The Amended Articles impose certain restrictions on the transferability and
ownership of our capital stock and other interests designated as"stock" of
PG&E Corporation by our board of directors as disclosed in an SEC filing by
PG&E Corporation (such stock and other interests, the "Equity Securities," and
such restrictions on transferability and ownership, the"Ownership
Restrictions") in order to reduce the possibility of an equity ownership shift
that could result in limitations on our ability to utilize net operating loss
carryforwards and other tax attributes from prior taxable years orperiods for
federal income tax purposes. Any acquisition of our capital stock that results
in a shareholder being in violation of these restrictions may not be valid.
Subject to certain exceptions, the Ownership Restrictions restrict (i) any
person or entity (including certain groups of persons) fromdirectly or
indirectly acquiring or accumulating 4.75% or more of the outstanding Equity
Securities and (ii) the ability of any person or entity (including certain
groups of persons) already owning, directly or indirectly, 4.75% or more of
theEquity Securities to increase their proportionate interest in the Equity
Securities. Any transferee receiving Equity Securities that would result in a
violation of the Ownership Restrictions will not be recognized as a
shareholder of PG&ECorporation or entitled to any rights of shareholders,
including, without limitation, the right to vote and to receive dividends or
distributions, whether liquidating or otherwise, in each case, with respect to
the Equity Securities causing theviolation.
The application of the Ownership Restrictions, as defined in the Amended
Articles, will be determined on the basis of a numberof shares outstanding
that differs materially from the number of shares reported as outstanding on
the cover page of our periodic reports under the Exchange Act because it
excludes shares owned by the Utility. Shares of PG&E Corporation commonstock
held directly by the Utility are attributed to PG&E
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Corporation for income tax purposes and are therefore effectively excluded
from the total number of outstanding equity securities when calculating a
person's Percentage Stock Ownership (asdefined in the Amended Articles) for
purposes of the 4.75% ownership limitation in the Amended Articles. For
example, although PG&E Corporation had 2,611,366,666 shares outstanding as of
February 14, 2024, only 2,133,623,076 shares (thenumber of outstanding shares
of common stock less the number of shares held directly by the Utility) count
as outstanding for purposes of the ownership restrictions in the Amended
Articles. As such, based on the total number of outstanding equitysecurities a
person's effective Percentage Stock Ownership limitation for purposes of the
Amended Articles was 3.88% of the outstanding shares.
The Ownership Restrictions remain in effect until the earliest of (i) the
repeal, amendment, or modification of Section 382 (and anycomparable successor
provision) of the Internal Revenue Code of 1986, as amended (the "IRC"), in a
manner that renders the restrictions imposed by Section 382 of the IRC no
longer applicable to PG&E Corporation, (ii) thebeginning of a taxable year in
which our board of directors determines that no tax benefits attributable to
net operating losses or other tax attributes are available, (iii) the date
selected by our board of directors if it determines that thelimitation amount
imposed by Section 382 of the IRC as of such date in the event of an
"ownership change" of PG&E Corporation (as defined in Section 382 of the IRC
and Treasury Regulation Sections
1.1502-91
et seq.) would not be materially less than the net operating loss
carryforwards or "net unrealized
built-in
loss" (within the meaning of Section 382of the IRC and Treasury Regulation
Sections
1.1502-91
et seq.) of PG&E Corporation, and (iv) the date selected by our board of
directors if it determines that it is in the best interests of ourshareholders
for the Ownership Restrictions to be removed or released. The Ownership
Restrictions may also be waived by our board of directors on a case by case
basis.
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DESCRIPTION OF WARRANTS
This section describes the general terms of the warrants that we may offer and
sell by this prospectus. This prospectus and any accompanyingprospectus
supplement will contain the material terms and conditions for each warrant.
The accompanying prospectus supplement may add, update or change the terms and
conditions of the warrants as described in this prospectus.
General
We may issue warrants topurchase debt securities and, solely in the case of
PG&E Corporation, preferred stock or common stock. Warrants may be issued
independently or together with any securities and may be attached to or
separate from those securities. The warrantswill be issued under warrant
agreements to be entered into between us and a bank or trust company, as
warrant agent, all of which will be described in the prospectus supplement
relating to the warrants we are offering. The warrant agent will actsolely as
our agent in connection with the warrants and will not have any obligation or
relationship of agency or trust for or with any holders or beneficial owners
of warrants. A copy of the warrant agreement will be filed with the SEC
inconnection with the offering of the warrants.
Debt Warrants
We may issue warrants for the purchase of our debt securities. As explained
below, each debt warrant will entitle its holder to purchase debtsecurities at
an exercise price set forth in, or to be determinable as set forth in, the
related prospectus supplement. Debt warrants may be issued separately or
together with debt securities.
The debt warrants are to be issued under debt warrant agreements to be entered
into between us and one or more banks or trust companies, asdebt warrant
agent, as will be set forth in the prospectus supplement relating to the debt
warrants being offered by the prospectus supplement and this prospectus. A
copy of the debt warrant agreement, including a form of debt warrant
certificaterepresenting the debt warrants, will be filed with the SEC in
connection with the offering of the debt warrants.
The particular terms ofeach issue of debt warrants, the debt warrant agreement
relating to the debt warrants and the debt warrant certificates representing
debt warrants will be described in the applicable prospectus supplement,
including, as applicable:
. the title of the debt warrants;
. the initial offering price;
. the title, aggregate principal amount and terms of the debt securities purchasable upon exercise of the debtwarrants;
. the currency or currency units in which the offering price, if any, and the exercise price are payable;
. the title and terms of any related debt securities with which the debt warrants
are issued and the number of thedebt warrants issued with each debt security;
. the date, if any, on and after which the debt warrants and the related debt securities will be separatelytransferable;
. the principal amount of debt securities purchasable upon exercise of each debt warrant and the price
at whichthat principal amount of debt securities may be purchased upon exercise of each debt warrant;
. if applicable, the minimum or maximum number of warrants that may be exercised at any one time;
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. the date on which the right to exercise the debt warrants will commence and the date on which the right willexpire;
. if applicable, a discussion of United States federal income tax,
accounting or other considerations applicable tothe debt warrants;
. whether the debt warrants represented by the debt warrant certificates will be issued in
registered or bearerform and, if registered, where they may be transferred and registered;
. antidilution provisions of the debt warrants, if any;
. redemption or call provisions, if any, applicable to the debt warrants; and
. any additional terms of the debt warrants, including terms, procedures
and limitations relating to the exerciseof the debt warrants.
Debt warrant certificates will be exchangeable for new debt warrant
certificates of differentdenominations and, if in registered form, may be
presented for registration of transfer and debt warrants may be exercised at
the corporate trust office of the debt warrant agent or any other office
indicated in the related prospectus supplement.Before the exercise of debt
warrants, holders of debt warrants will not be entitled to payments of
principal, premium, if any, or interest, if any, on the debt securities
purchasable upon exercise of the debt warrants, or to enforce any of
thecovenants in the applicable indenture.
Equity Warrants
PG&E Corporation may issue warrants for the purchase of its preferred stock or
common stock. As explained below, each equity warrant willentitle its holder
to purchase equity securities at an exercise price set forth in, or to be
determinable as set forth in, the related prospectus supplement. Equity
warrants may be issued separately or together with equity securities.
The equity warrants are to be issued under equity warrant agreements to be
entered into between PG&E Corporation and one or more banks ortrust companies,
as equity warrant agent, as will be set forth in the prospectus supplement
relating to the equity warrants being offered by the prospectus supplement and
this prospectus. A copy of the equity warrant agreement, including a form
ofequity warrant certificate representing the equity warranty, will be filed
with the SEC in connection with the offering of the equity warrants.
The particular terms of each issue of equity warrants, the equity warrant
agreement relating to the equity warrants and the equity warrantcertificates
representing equity warrants will be described in the applicable prospectus
supplement, including, as applicable:
. the title of the equity warrants;
. the initial offering price;
. the aggregate number of equity warrants and the aggregate number of shares
of the equity security purchasableupon exercise of the equity warrants;
. the currency or currency units in which the offering price, if any, and the exercise price are payable;
. if applicable, the designation and terms of the equity securities with which the equity
warrants are issued, andthe number of equity warrants issued with each equity security;
. the date, if any, on and after which the equity warrants and the related equity security will be separatelytransferable;
. if applicable, the minimum or maximum number of the warrants that may be exercised at any one time;
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. the date on which the right to exercise the equity warrants will commence and the date on which the right willexpire;
. if applicable, a discussion of United States federal income tax,
accounting or other considerations applicable tothe equity warrants;
. antidilution provisions of the equity warrants, if any;
. redemption or call provisions, if any, applicable to the equity warrants; and
. any additional terms of the equity warrants, including terms, procedures and
limitations relating to the exchangeand exercise of the equity warrants.
Holders of equity warrants will not be entitled, solely by virtue of
beingholders, to vote, to consent, to receive dividends, to receive notice as
shareholders with respect to any meeting of shareholders for the election of
directors or any other matter, or to exercise any rights whatsoever as a
holder of the equitysecurities purchasable upon exercise of the equity
warrants.
Ownership of equity warrants and exercise by holders thereof may be subjectto
certain limitations in accordance with the Ownership Restrictions described in
the section entitled "Description of Common Stock and Preferred Stock--Ownership
Restrictions" in this prospectus.
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DESCRIPTION OF SECURITIES PURCHASE CONTRACTS AND SECURITIESPURCHASE UNITS
This section describes the general terms of the securities purchase contracts
and securities purchase units that wemay offer and sell by this prospectus.
This prospectus and any accompanying prospectus supplement will contain the
material terms and conditions for each securities purchase contract and
securities purchase unit. The accompanying prospectussupplement may add,
update or change the terms and conditions of the securities purchase contracts
and securities purchase units as described in this prospectus.
Stock Purchase Contracts and Stock Purchase Units
PG&E Corporation may issue stock purchase contracts, representing contracts
obligating holders to purchase from or sell to it, andobligating it to sell to
or purchase from the holders, a specified number of shares of common stock or
preferred stock at a future date or dates, or a variable number of shares of
common stock or preferred stock for a stated amount of consideration.The price
per share and the number of shares of common stock or preferred stock may be
fixed at the time the stock purchase contracts are issued or may be determined
by reference to a specific formula set forth in the stock purchase contracts.
Anysuch formula may include antidilution provisions to adjust the number of
shares of common stock or preferred stock issuable pursuant to the stock
purchase contracts upon certain events.
The stock purchase contracts may be issued separately or as a part of units
consisting of a stock purchase contract and either:
(i) senior or subordinated debt securities of PG&E Corporation; or
(ii) debt obligations of third parties, including U.S. Treasury securities,
which, in either case, may or may not serve as security for theholder's
obligations to purchase or sell the shares under the stock purchase contracts.
The stock purchase contracts may requirePG&E Corporation to make periodic
payments to the holders of the stock purchase units or vice versa, and such
payments may be unsecured or prefunded on some basis. The stock purchase
contracts may require holders to secure their obligations in aspecified manner
and in certain circumstances PG&E Corporation may deliver newly issued prepaid
stock purchase contracts upon release to a holder of any collateral securing
such holder's obligations under the original stock purchasecontract.
Ownership of stock purchase contracts and exercise by holders thereof may be
subject to certain limitations in accordance withthe Ownership Restrictions
described in the section entitled "Description of Common Stock and Preferred
Stock--Ownership Restrictions" in this prospectus.
Debt Purchase Contracts and Debt Purchase Units
We may issue debt purchase contracts, representing contracts obligating
holders to purchase from us, and obligating us to sell to the holders,a
specified principal amount of debt securities at a future date or dates. The
purchase price and the interest rate may be fixed at the time the debt
purchase contracts are issued or may be determined by reference to a specific
formula set forth inthe debt purchase contracts.
The debt purchase contracts may be issued separately or as a part of units
consisting of debt purchasecontracts and either:
(i) senior or subordinated debt securities of PG&E Corporation; or
(ii) debt obligations of third parties, including U.S. Treasury securities,
which, in either case, may or may not serve as security for theholder's
obligations to purchase the securities under the debt purchase contracts.
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The debt purchase contracts may require us to make periodic payments to the
holders of the debt purchaseunits or vice versa, and such payments may be
unsecured or prefunded on some basis. The debt purchase contracts may require
holders to secure their obligations in a specified manner and in certain
circumstances we may deliver newly issued prepaiddebt purchase contracts upon
release to a holder of any collateral securing such holder's obligations under
the original debt purchase contract.
The applicable prospectus supplement will describe the general terms of any
purchase contracts or purchase units and, if applicable, prepaidpurchase
contracts. The description in the prospectus supplement will not purport to be
complete and will be qualified in its entirety by reference to:
. the purchase contracts;
. the collateral, depositary and custodial arrangements, if applicable, relating to such purchase contracts orpurchase units; and
. if applicable, the prepaid purchase contracts and the document pursuant to which such prepaid purchase contractswill be issued.
Material United States federal income tax considerations applicable to the
purchase contracts and thepurchase units will also be discussed in the
applicable prospectus supplement.
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DESCRIPTION OF DEPOSITARY SHARES
This section describes the general terms of the depositary shares we may offer
and sell by this prospectus. This prospectus and anyaccompanying prospectus
supplement will contain the material terms and conditions for the depositary
shares. The accompanying prospectus supplement may add, update, or change the
terms and conditions of the depositary shares as described in thisprospectus.
In this section, references to "we," "our," "ours" and "us" refer only to PG&E
Corporation and not to any of its direct or indirect subsidiaries or
affiliates except as expressly provided.
We may, at our option, elect to offer depositary shares, each representing a
fraction (to be set forth in the prospectus supplement relatingto a particular
series of preferred stock) of a share of a particular class or series of
preferred stock as described below. In the event we elect to do so, depositary
receipts evidencing depositary shares will be issued to the public.
The shares of any class or series of preferred stock represented by depositary
shares will be deposited under a deposit agreement between usand one or more
depositaries selected by us. Subject to the terms of the deposit agreement,
each owner of a depositary share will be entitled, in proportion to the
applicable fraction of a share of preferred stock represented by such
depositaryshare, to all the rights and preferences of the shares of preferred
stock represented by the depositary share, including dividend, voting,
redemption and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued pursuant
to the deposit agreement. Depositary receipts will bedistributed to those
persons purchasing the fractional shares of the related class or series of
preferred shares in accordance with the terms of the offering described in the
related prospectus supplement.
The depositary shares may be subject to certain limitations in accordance with
the Ownership Restrictions described in the section entitled"Description of
Common Stock and Preferred Stock--Ownership Restrictions" in this prospectus.
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DESCRIPTION OF SUBSCRIPTION RIGHTS
This section describes the general terms of the subscription rights that we
may offer and sell by this prospectus. This prospectus and anyaccompanying
prospectus supplement will contain the material terms and conditions for each
subscription right. The accompanying prospectus supplement may add, update or
change the terms and conditions of the subscription rights as described in
thisprospectus.
In this section, references to "we," "our," "ours" and "us" refer only to
PG&ECorporation and not to any of its direct or indirect subsidiaries or
affiliates except as expressly provided.
General
We may issue subscription rights to purchase common stock. Subscription rights
may be issued independently or together with any other offeredsecurity and may
or may not be transferable by the person purchasing or receiving the
subscription rights. In connection with any subscription rights offering to
our shareholders, we may enter into backstop commitment letters or other
standbypurchase arrangements with one or more parties pursuant to which such
parties will purchase any offered securities remaining unsubscribed for after
such subscription rights offering. In connection with a subscription rights
offering to ourshareholders, we will distribute a prospectus supplement to our
shareholders on the record date that we set for receiving subscription rights
in such subscription rights offering.
The applicable prospectus supplement will describe the terms of any
subscription rights in respect of which this prospectus is beingdelivered,
including the following:
. the title of the subscription rights;
. the exercise price for the subscription rights;
. the number of the subscription rights issuable to each rightholder;
. the extent to which the subscription rights will be transferable;
. the date on which the right to exercise the subscription rights will commence
and the date on which the rightswill expire (subject to any extension);
. the extent to which the rights will include an over-subscription privilege with respect to unsubscribedsecurities;
. if applicable, the material terms of any backstop commitment letters or other standby purchase
arrangements thatwe may enter into in connection with the subscription rights offering;
. if applicable, a discussion of the material United States federal income tax
considerations applicable to theissuance or exercise of the subscription rights; and
. any other terms of the subscription rights, including terms, procedures and
limitations relating to the exchangeand exercise of the subscription rights.
Exercise of Subscription Rights
Each subscription right will entitle the holder of the subscription right to
purchase for cash such amount of shares of our common stock atsuch exercise
price as shall in each case be set forth in, or be determinable as set forth
in, the prospectus supplement relating to the subscription rights offered
thereby. Subscription rights may be exercised at any time up to the close
ofbusiness on the expiration date for such subscription rights set forth in
the prospectus supplement. After the close of business on the expiration date,
all unexercised subscription rights will become void.
Subscription rights may be exercised as set forth in the prospectus supplement
relating to the subscription rights offered thereby. Theprospectus supplement
for any issuance of subscription rights will describe the
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procedures for payment of the applicable subscription price and the settlement
of the subscription rights that are exercised, including the terms of any
applicable escrow arrangements. We maydetermine to offer any unsubscribed
offered securities directly to persons other than shareholders, to or through
agents, underwriters or dealers or through a combination of such methods,
including pursuant to backstop commitment letters or otherstandby purchase
arrangements, as set forth in the applicable prospectus supplement.
Ownership of subscription rights and exercise byholders thereof may also be
subject to certain limitations in accordance with the Ownership Restrictions
described in the section entitled "Description of Common Stock and Preferred
Stock--Ownership Restrictions" in this prospectus.
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GLOBAL SECURITIES
Book-Entry, Delivery and Form
Unless weindicate differently in a prospectus supplement, the debt securities,
common stock, preferred stock, warrants, securities purchase contracts,
securities purchase units or depositary shares initially will be issued in
book entry form and representedby one or more global notes or global
securities (collectively, "global securities"). The global securities will be
deposited with, or on behalf of, The Depository Trust Company, New York, New
York, as depositary ("DTC"), andregistered in the name of Cede & Co., the
nominee of DTC. Unless and until it is exchanged for individual certificates
evidencing securities under the limited circumstances described below, a
global security may not be transferred except asa whole by the depositary to
its nominee or by the nominee to the depositary, or by the depositary or its
nominee to a successor depositary or to a nominee of the successor depositary.
DTC has advised us that it is:
. a limited-purpose trust company organized under the New York Banking Law;
. a "banking organization" within the meaning of the New York Banking Law;
. a member of the Federal Reserve System;
. a "clearing corporation" within the meaning of the New York Uniform Commercial Code; and
. a "clearing agency" registered pursuant to the provisions of Section 17A
of the SecuritiesExchange Act of 1934, as amended (the "Exchange Act").
DTC holds securities that its participants depositwith DTC. DTC also
facilitates the settlement among its participants of securities transactions,
including transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, whicheliminates the
need for physical movement of securities certificates. "Direct participants"
in DTC include securities brokers and dealers, including underwriters, banks,
trust companies, clearing corporations and other organizations. DTCis a
wholly-owned subsidiary of The Depository Trust & Clearing Corporation
("DTCC"). DTCC is the holding company for DTC National Securities Clearing
Corporation, all of which are registered clearing agencies. DTC is owned by
theusers of its regulated subsidiaries. Access to the DTC system is also
available to others, referred to as "indirect participants," that clear
transactions through or maintain a custodial relationship with a direct
participant eitherdirectly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Purchases of securities within the DTCsystem must be made by or through direct
participants, which will receive a credit for those securities on DTC's
records. The ownership interest of the actual purchaser of a security, which
we sometimes refer to as a "beneficialowner," is in turn recorded on the
direct and indirect participants' records. Beneficial owners of securities
will not receive written confirmation from DTC of their purchases. However,
beneficial owners are expected to receive writtenconfirmations providing
details of their transactions, as well as periodic statements of their
holdings, from the direct or indirect participants through which they
purchased securities. Transfers of ownership interests in global securities
are tobe accomplished by entries made on the books of participants acting on
behalf of beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests in the global securities except under
the limitedcircumstances described below.
To facilitate subsequent transfers, all global securities deposited by direct
participants with DTC willbe registered in the name of DTC's partnership
nominee, Cede & Co, or such other name as may be requested by an authorized
representative of DTC. The deposit of securities with DTC and their
registration in the name of Cede &Co. or such other nominee do not affect any
change in beneficial ownership. DTC has no knowledge of the actual beneficial
owners of the securities. DTC's records reflect only the identity of the
direct participants to whose accounts thesecurities are credited, which may or
may not be the beneficial owners. The direct and indirect participants are
responsible for keeping account of their holdings on behalf of their customers.
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Conveyance of notices and other communications by DTC to direct participants,
by directparticipants to indirect participants and by direct participants and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any legal requirements in effect from time to time.
Beneficial owners ofsecurities may wish to take certain steps to augment the
transmission to them of notices of significant events with respect to the
securities, such as redemptions, tenders, defaults, and proposed amendments to
the security documents. For example,beneficial owners of securities may wish
to ascertain that the nominee holding the securities for their benefit has
agreed to obtain and transmit notices to beneficial owners. In the
alternative, beneficial owners may wish to provide their names andaddresses to
the registrar and request that copies of notices be provided directly to them.
Redemption notices will be sent to DTC or itsnominee. If less than all of the
securities of a particular series are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each direct participant in such
issue to be redeemed.
In any case where a vote may be required with respect to securities of a
particular series, neither DTC nor Cede & Co. (nor any otherDTC nominee) will
give consents for or vote the global securities, unless authorized by a direct
participant in accordance with DTC's procedures. Under its usual procedures,
DTC will send an omnibus proxy to us as soon as possible after therecord date.
The omnibus proxy assigns the consenting or voting rights of Cede & Co. to
those direct participants to whose accounts the securities of such series are
credited on the record date identified in a listing attached to theomnibus
proxy.
Principal and interest payments on the securities will be made to Cede & Co.,
or such other nominee as may berequested by authorized representative of DTC.
DTC's practice is to credit direct participants' accounts upon receipt of
funds and corresponding detail information from us or the paying agent in
accordance with their respective holdingsshown on DTC's records. Payments by
direct and indirect participants to beneficial owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form orregistered in "street
name." Those payments will be the responsibility of participants and not of
DTC, the paying agent or us, subject to any legal requirements in effect from
time to time. Payment of principal and interest toCede & Co. (or such other
nominee as may otherwise be requested by an authorized representative of DTC)
is our responsibility, disbursement of payments to direct participants is the
responsibility of DTC and disbursement of payments to thebeneficial owners is
the responsibility of direct and indirect participants.
Except under the limited circumstances described below,purchasers of
securities will not be entitled to have securities registered in their names
and will not receive physical delivery of securities. Accordingly, each
beneficial owner must rely on the procedures of DTC and its participants to
exerciseany rights under the securities and the applicable indenture.
The laws of some jurisdictions may require that some purchasers ofsecurities
take physical delivery of securities in definitive form. Those laws may impair
the ability to transfer or pledge beneficial interests in securities.
DTC may discontinue providing its services as securities depository with
respect to the securities at any time by giving us reasonable notice.Under
such circumstances, in the event that a successor securities depository is not
obtained, certificates representing the securities are required to be printed
and delivered. Also, we may decide to discontinue use of the system of
book-entry-onlytransfers through DTC (or a successor securities depository),
in which event, certificates representing the securities will be printed and
delivered to DTC.
We have obtained the information in this section and elsewhere in this
prospectus concerning DTC and DTC's book-entry system from sourcesthat are
believed to be reliable, but we take no responsibility for the accuracy of
this information.
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PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus from time to time:
. to underwriters or dealers for resale to the public or to institutional investors;
. through agents to the public or to institutional investors;
. directly to one or more purchasers, shareholders or holders of subscription rights;
. in "at the market offerings" to or through a market maker or into an existing
trading market, or in arights offering or a securities exchange or otherwise; or
. through a combination of any of these methods or any other method permitted by law.
This prospectus may be used in connection with any offering of our securities
through any of these methods or other methods described in theapplicable
prospectus supplement. The distribution of our securities may be effected from
time to time in one or more transactions:
. at a fixed price, or prices, which may be changed from time to time;
. at market prices prevailing at the time of sale;
. at prices related to such prevailing market prices; or
. at negotiated prices.
We may directly solicit offers to purchase securities, or agents may be
designated to solicit such offers. The prospectus supplement withrespect to
the securities we may sell will set forth the terms of the offering of such
securities, including the name or names of any underwriters, dealers or
agents, the purchase price of such securities, and the proceeds to us from
such sale, anyunderwriting discounts or agency fees and other items
constituting underwriters' or agents' compensation, any public offering price,
any discounts or concessions allowed or reallowed or paid to dealers and any
securities exchange on whichsuch securities may be listed.
If underwriters participate in the sale, such securities will be acquired by
the underwriters for theirown account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price, at market prices prevailing at the time of sale, at prices
based on prevailing market prices or atnegotiated prices.
Securities may be offered to the public either through underwriting syndicates
represented by one or more managingunderwriters or directly by one or more of
those firms. The specific managing underwriter or underwriters, if any, will
be named in the prospectus supplement relating to the particular securities
together with the members of the underwritingsyndicate, if any. Unless
otherwise set forth in the applicable prospectus supplement, the obligations
of the underwriters to purchase any series of the securities will be subject
to certain conditions precedent and the underwriters will beobligated to
purchase all of such series of securities, if any are purchased.
We may sell securities directly or through agents wedesignate from time to
time. The prospectus supplement will set forth the name of any agent involved
in the offer or sale of securities in respect of which such prospectus
supplement is delivered and any commissions payable by us to such agent.Unless
otherwise indicated in a prospectus supplement, any agent will be acting on a
best efforts basis for the period of its appointment.
Any underwriters, dealers or agents participating in the distribution of
securities may be deemed to be underwriters as defined in theSecurities Act of
1933, as amended (the "Securities Act"), and any discounts or commissions
received by them on the sale or resale of securities may be deemed to be
underwriting discounts and commissions under the Securities Act.Underwriters
and agents may be entitled under agreements entered
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into with us to indemnification against certain civil liabilities, including
liabilities under the Securities Act. Underwriters and agents and their
affiliates may engage in transactions with, orperform services for, us in the
ordinary course of business.
Each series of debt securities, preferred stock, depositary shares,warrants,
securities purchase contracts, securities purchase units and subscription
rights, will be a new issue of securities and will have no established trading
market. Any underwriters to whom securities are sold for public offering and
sale maymake a market in such securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. The debt securities, preferred stock, depositary shares, warrants,
securities purchasecontracts, securities purchase units and subscription
rights may or may not be listed on a national securities exchange.
To facilitate asecurities offering, any underwriter may engage in
over-allotment, short covering transactions and penalty bids or stabilizing
transactions in accordance with Regulation M under the Exchange Act.
. Over-allotment involves sales in excess of the offering size, which creates a short position.
. Stabilizing transactions permit bids to purchase the underlying securities
so long as the stabilizing bids do notexceed a specified maximum.
. Short covering positions involve purchases of securities in the open
market after the distribution is completedto cover short positions.
. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when securities
originallysold by the dealer are purchased in a covering transaction to cover short positions.
These activities may cause theprice of the securities to be higher than it
otherwise would be. If commenced, these activities may be discontinued by the
underwriters at any time.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution.
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LEGAL MATTERS
Certain legal matters in connection with the offered securities will be passed
upon for us by Hunton Andrews Kurth LLP, New York, New York.Certain legal
matters in connection with the offered securities will be passed on for any
agents, dealers or underwriters by their counsel named in the applicable
prospectus supplement.
EXPERTS
The financial statements, and the related financial statement schedules,
incorporated in this prospectus by reference from the PG&ECorporation's and
the Utility's Annual Reports on Form
10-K,
and the effectiveness of PG&E Corporation's and the Utility's internal control
over financial reporting have been audited byDeloitte & Touche LLP, an
independent registered public accounting firm, as stated in their reports,
which are incorporated herein by reference. Such financial statements and
financial statement schedules have been so incorporated inreliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
PG&E Corporation and the Utility file annual, quarterly and current reports,
proxy statements and other information with the SEC underFile Nos.
001-12609
and
001-02348,
respectively. The SEC maintains an Internet site that contains reports, proxy
and information statements, and other informationregarding issuers, including
PG&E Corporation and the Utility, that file electronically with the SEC at
http://www.sec.gov. PG&E Corporation's and the Utility's SEC filings are also
available at our website:http://investor.pgecorp.com. Except for documents
filed with the SEC and incorporated by reference into this prospectus, no
information contained in, or that can be accessed through, our website is to
be considered part of this prospectus.
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CERTAIN DOCUMENTS INCORPORATED BY REFERENCE
PG&E Corporation and the Utility have "incorporated by reference" into this
prospectus certain information that they file withthe SEC. This means that
PG&E Corporation and the Utility can disclose important business, financial
and other information in this prospectus by referring you to the documents
containing this information.
PG&E Corporation and the Utility incorporate by reference the documents and
information listed below and any future filings that they makewith the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than the
Current Reports on Form
8-K
or portions thereof that are "furnished" under Item 2.02 or Item 7.01 of Form
8-K)
from the date of this prospectus until the termination of each offering of
securities under this prospectus:
. PG&E Corporation's and the Utility's Annual Report on
Form
10-K
for the year ended December 31, 2023;
. PG&E Corporation's and the Utility's definitive proxy statement on Schedule 14A filed with the SEC on April 6, 2023;
and
. the description of the common stock of PG&E Corporation
contained in its Registration Statement on
Form
S-4
filed with the SEC on February 21, 1996, including any amendments
and reports filed for the purpose of updating such description.
All information incorporated by reference is deemed to be part of this
prospectus except to the extent that the information is updated orsuperseded
by information filed with the SEC after the date the incorporated information
was filed (including later-dated reports listed above) or by the information
contained in this prospectus or the applicable prospectus supplement.
Anyinformation that we subsequently file with the SEC that is incorporated by
reference, as described above, will automatically update and supersede as of
the date of such filing any previous information that had been part of this
prospectus or theapplicable prospectus supplement, or that had been
incorporated herein by reference.
We will provide without charge to each person,including any beneficial owner,
to whom a copy of this prospectus has been delivered, on the written or oral
request of that person, a copy of any or all of the documents referred to
above which have been or may be incorporated by reference in thisprospectus
other than exhibits to these documents, unless the exhibits are also
specifically incorporated by reference herein. Requests for copies should be
directed to the following address:
The Office of the Corporate Secretary
PG&E Corporation
300 LakesideDrive
Oakland, CA 94612
Email: CorporateSecretary@pge.com
Telephone: (415) 973-1000
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$
$ Floating Rate First Mortgage Bonds due 20
$ % First Mortgage Bonds due 20
ProspectusSupplement
Joint Book-Running Managers
Barclays
J.P. Morgan
MUFG
WellsFargo Securities
September, 2024
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