PG&E 2012 Annual Report Download - page 56

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such needs. Following the San Bruno accident, PG&E Corporation has issued a material amount of equity to fund its
equity contributions to the Utility as the Utility has incurred costs and expenses it cannot recover through rates.
PG&E Corporation forecasts that it will continue to issue additional material amounts of equity as the Utility
continues to incur costs that it cannot recover through rates, such as costs under its pipeline safety enhancement
plan, to improve electricity and natural gas operations, and to pay penalties. PG&E Corporation may also be
required to access the capital markets when the Utility is successful in selling long-term debt so that PG&E
Corporation can contribute equity to the Utility as needed to maintain the Utility’s authorized capital structure.
PG&E Corporation’s and the Utility’s ability to access the capital and credit markets and the costs and terms of
available financing depend on many factors, including the amount of penalties imposed on the Utility in connection
with the matters described above under ‘‘Natural Gas Maters;’’ changes in their credit ratings; changes in the federal
or state regulatory environment affecting energy companies generally or PG&E Corporation and the Utility in
particular; the overall health of the energy industry; volatility in electricity or natural gas prices; disruptions,
uncertainty or volatility in the capital and credit markets; and general economic and market conditions. If PG&E
Corporation’s or the Utility’s credit ratings were downgraded to below investment grade, their ability to access the
capital and credit markets could be negatively affected and could result in higher borrowing costs, fewer financing
options, including reduced access to the commercial paper market, additional collateral posting requirements, which
in turn could affect liquidity and lead to an increased financing need.
If the Utility were unable to access the capital markets, it could be required to decrease or suspend dividends to
PG&E Corporation. PG&E Corporation also would need to consider its alternatives, such as contributing capital to
the Utility, to enable the Utility to fulfill its obligation to serve. If PG&E Corporation is required to contribute
equity to the Utility in these circumstances, it would be required to seek these funds from the capital or credit
markets. To maintain PG&E Corporation’s dividend level in these circumstances, PG&E Corporation would be
further required to access the capital or credit markets. PG&E Corporation may need to decrease or discontinue its
common stock dividend if it is unable to access the capital or credit markets on reasonable terms.
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