EXHIBIT 12.2 PACIFIC GAS AND ELECTRIC COMPANY COMPUTATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS - -------------------------------------------------------------------------------- Year ended December 31, ------------------------------------------------ (dollars in millions) 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------- Earning68 Net income $ 788 $ 729 $ 768 $ 755 $1,339 Adjustments for minority interests in losses of less than 100% owned affiliates and the Company's equity in undistributed losses (income) of less than 50% owned affiliates - - - 3 4 Income tax expense 648 629 609 555 895 Net fixed charges 637 673 628 683 716 ------ ------ ------ ------ ------ Total Earnings $2,073 $2,031 $2,005 $1,996 $2,954 ====== ====== ====== ====== ====== Fixed Charges: Interest on long- term debt, net $ 523 $ 585 $ 485 $ 574 $ 616 Interest on short term borrowings 81 50 101 75 83 Interest on capital leases 3 2 2 3 3 AFUDC debt 7 12 17 8 11 Earnings required to cover the preferred stock dividend and preferred security distribution requirements of majority owned trust 24 24 24 24 3 ------ ------ ------ ------ ------ Total Fixed Charges $ 638 $ 673 $ 629 $ 684 $ 716 ------ ------ ------ ------ ------ Preferred Stock Dividends: Tax Deductible dividends $ 9 $ 9 $ 10 $ 10 $ 11 Pretax earnings required to cover non-tax deductible preferred stock dividend requirements $ 27 $ 31 $ 39 $ 39 $ 100 ------ ------ ------ ------ ------ Total Preferred Stock Dividends $ 36 $ 40 $ 49 $ 49 $ 111 ------ ------ ------ ------ ------ Total Combined Fixed Charges and Preferred Stock Dividends $ 674 $ 713 $ 678 $ 733 $ 827 ====== ====== ====== ====== ====== Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends 3.08 2.85 2.96 2.72 $ 3.57 - ------------------------------------------------------------------------------- Note: For the purpose of computing Pacific Gas and Electric Company's ratios of earning to combined fixed charges and preferred stock dividends, "earnings" represent net income adjusted for the minority interest in losses of less than 100% owned affiliates, cash distributions from and equity in undistributed income or loss of Pacific Gas and Electric Company's less than 50% owned affiliates, income taxes and fixed charges (excluding capitalized interest). "Fixed charges" include interest on long-term debt and short-term borrowings (including a representative portion of rental expense), amortization of bond premium, discount and expense, interest on capital leases, interest of subordinated debentures held by trust, and earnings required to cover the preferred stock dividend requirements of majority owned subsidiaries. "Preferred stock dividends" represent pretax earnings which would be required to cover such dividend requirements.