Credit Crisis Threatens PG&E Feb Nat. Gas Friday December 29, 4:05 PM EST SAN FRANCISCO (Reuters) - Pacific Gas and Electric said Friday it has enough natural gas to supply its customers next month but is uncertain whether it will be able to secure sufficient supplies for February. "The month of January we have enough natural gas...to meet customer needs. For February the question is whether suppliers will continue to sell to us because of creditworthiness," company spokesman Ron Low said.

Low said 15 to 20 suppliers, representing about one-third of market participants, have so far declined to sell to the utility unless payment is made up front.

Last week credit ratings agency Standard & Poor's said that two California utilities, Southern California Edison and Pacific Gas and Electric, risk running out of cash "within a matter of weeks" and warned it could downgrade debt ratings to junk status unless urgent action was taken.

Low was speaking to reporters at hearings called by California regulators to consider allowing the utilities to raise their customers' electricity rates.

Pacific Gas and Electric for the month of January has in storage and in pre-purchased long-term contracts 2.1 billion cubic feet of natural gas per day, Low said.

He noted given current weather forecasts for the month, average usage is seen at 1.5 billion cubic feet per day.

The utilities have run up billions of dollars in power purchase costs this year which they have been unable to pass on to customers due to a rate freeze with the consequent cash crisis taking them to the brink of bankruptcy.

At the end of November, the shortfall stood at $7.7 billion, comprising $3.2 billion for Edison International (EIX) unit Southern California Edison and $4.5 billion for PG&E Corp. (PCG) subsidiary Pacific Gas and Electric.

Low said normally 70 percent of natural gas supplies come from storage and pre-purchased contracts, 20 percent from the forward market and 10 percent from spot market.

The California Public Utilities Commission is holding the hearings in preparation for a meeting on January 4 when they are expected to lift the price freeze and decide the level of any increase in electricity rates.

Wholesale power prices in California started to soar in late spring with supplies struggling to keep pace with surging demand linked to a buoyant economy.

California's power problems are also rooted in the absence of any significant new plants during the last decade, partly due to uncertainty connected with the deregulation of the state's electricity industry. ©2000 Reuters Limited.

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-- Martin Thompson (mthom1927@aol.com), December 29, 2000