PG&E;’s Restructuring to Protect Assets Angers Consumer Groups

Consumer groups said Monday that Pacific Gas & Electric Corp.’s restructuring should make lawmakers and Gov. Gray Davis think twice before considering a bailout for troubled utilities.

The Federal Energy Regulatory Commission gave permission Friday for PG&E; to change its corporate structure, effectively insulating the bulk of its assets from the credit problems of its utility.

In response, PG&E; created the National Energy Group, the business arm of PG&E; Corp. that will own power generating facilities and natural gas projects.

“It enables the National Energy Group to finance its own projects, not dependent on the rating of the PG&E; Corp. or any other companies,” said Greg Pruett, spokesman for PG&E; Corp., the parent company.

Creating the new company also lessens the financial risk for PG&E; Corp., Pruett said. He said the corporation won’t have to act as a backer for new projects such as the construction of power plants in California and Arizona.

But critics said the reorganization puts the parent company’s assets further out of reach of the utility’s creditors.

“The PG&E; Corp. put a big barbed-wire fence around the generating assets,” said Nettie Hoge, executive director of the Utility Reform Network.

She said the restructuring makes the utility seem financially worse off than it is and thus gives what she said is a false impression that it needs the state’s financial help.

Pruett said that even without the restructuring, PG&E; Corp.’s unregulated assets couldn’t be tapped to cover the utility’s debts.

“Under the Public Utility Commission’s regulation, it’s very specific in stating that PG&E; and any sister companies had to have a brick wall between them to protect consumers,” Pruett said. “You couldn’t have the utility coming in and bailing out another company. And it couldn’t work the other way.”

The PUC has asked for an audit of the entire corporation’s holdings.