PG&E; Seeks OK for Reorganization
Financially ailing Pacific Gas & Electric Co. sought the approval of federal regulators Friday for a reorganization plan that still is pending in federal Bankruptcy Court and is hotly contested by the state of California.
PG&E; filed several applications with the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission in Washington that would permit the company to transfer its transmission and generation assets and take other steps to reorganize as part of its Chapter 11 bankruptcy plan.
The utility and its parent, PG&E; Corp., say the reorganization would allow the company to pay off creditors with interest and avoid rate increases for more than 8 million gas and electric customers in Northern and Central California.
State officials say the plan is a blatant attempt to preempt the regulatory authority of the California Public Utilities Commission and place PG&E;’s generation assets entirely under federal regulators, who cannot provide the same degree of scrutiny and consumer protection.
PUC President Loretta M. Lynch said the federal filings were inappropriate because a bankruptcy judge here has not approved PG&E;’s reorganization plan and, if it is rejected, alternative plans will be considered. “My position is that it is premature,” she said.
Lynch said she and PG&E; executives were in Washington this week talking separately with federal officials about the upcoming filings.
In an interview, she accused PG&E; of trying to use federal regulators to gain leverage in the bankruptcy case for a plan that is being challenged by the PUC, the state attorney general and a dozen other parties.
PG&E; spokesman Ron Low said the federal filings should come as no surprise to the PUC because the utility disclosed its timetable for seeking federal regulatory approvals when its reorganization blueprint was announced Sept. 20.
Low said approvals from the Federal Energy Regulatory Commission and other agencies are expected to take up to nine months, so the company needed to apply now so it can emerge from bankruptcy as planned by Dec. 31, 2002. “We are working on parallel paths,” he said.
PG&E; said it requested an expedited review of the FERC filings. Officials at FERC could not be reached for comment.
Sandra Michioku, spokeswoman for state Atty. Gen. Bill Lockyer, said her office needs time to review Friday’s filings, which amounted to about 20,000 pages. “We have expressed concern about the state’s ability to have oversight [under the PG&E; plan] and about the transfer of assets to the parent company,” she said.
California’s largest utility filed for federal bankruptcy protection from creditors in April, saying that it had plunged billions of dollars in debt during the energy crisis. It blamed state regulators for preventing the company from capturing the full cost of supplying electricity to its customers in the volatile wholesale energy market.
The reorganization plan would shift the company’s vast gas and electric transmission facilities and its electrical generation facilities, including its hydroelectric plants, to affiliates of PG&E; Corp. PG&E; itself would be an independent, publicly traded utility that would distribute gas and electricity to customers and would be regulated by the PUC.
Among other things, the company sought FERC approval for three new business units--for electricity transmission, gas transmission and generation. It also sought approval for a 12-year contract between the generating company and PG&E; for power generated from the Diablo Canyon nuclear power plant, hydroelectric facilities and irrigation district contracts.
