PUC Seeks OK to File New PG&E; Reorganization Plan
State utility regulators asked a federal bankruptcy judge Tuesday for permission to file an alternative plan for reorganizing financially ailing Pacific Gas & Electric Co., saying it could reduce electricity rates for millions of Northern and Central California consumers by early 2003.
The California Public Utilities Commission’s plan would block PG&E;’s attempt to transfer generation and transmission facilities to new corporate entities and would keep the utility’s operations under PUC regulation. It also calls for fully repaying the company’s creditors within a year.
The PUC outlined its plan while opposing a PG&E; request to extend the period during which its reorganization blueprint would be the sole one considered in the case.
“PG&E; has had nine months to be the only game in town,” PUC President Loretta M. Lynch said in Sacramento. “It is time to put out an alternative that is less draconian.”
In a statement, PG&E; said the PUC’s action “is simply the latest in a series of efforts to delay PG&E;’s emergence from bankruptcy. The PUC, whose actions and inactions were a major cause of the state’s energy crisis and PG&E;’s bankruptcy, has tried to obstruct our efforts to resolve the case.”
The state attorney general’s office and consumer groups have joined the PUC in criticizing PG&E;’s plan as an attempt to escape meaningful state regulation to maximize its profits.
In a court filing, Atty. Gen. Bill Lockyer said PG&E; is trying to skirt more than 40 state laws and regulations involving 155 state and local agencies. He said alternative plans, such as the PUC’s, deserve consideration “if they provide full payments to PG&E; creditors without interfering with the state’s ability to protect the public health, safety and welfare.”
Environmental Defense economist Nancy Ryan applauded the PUC’s proposal, saying it would provide better scrutiny of the environmental impact of shifting PG&E;’s hydroelectric facilities and watershed to entities unregulated by the PUC.
But Doug Heller of the Foundation for Taxpayer and Consumer Rights in Santa Monica said the PUC’s plan amounted to a “bailout.” He said it is unfair that PG&E; customers would continue paying record electricity rates for at least a year when wholesale prices have declined.
“Californians are paying the highest rates in our history to cover costs that no longer exist,” Heller said. “The PUC [plan] is keeping rates much higher than they should be, just so PG&E; can skim the money off the top and pay back its debt.”
PG&E; filed for Chapter 11 protection from creditors last April, saying it had run up billions of dollars in debts because it could not collect the full cost of supplying electricity to its customers.
The company’s reorganization plan will be the only one considered for a specified period. PG&E; received an extension to Feb. 4, but has requested another extension until June 30, citing the complexity and size of the case involving more than 13,000 creditors and billions of dollars in assets.
The PUC argues that PG&E; has failed to make substantial progress on its plan, although the company has reached agreement with an official committee of creditors.
Dozens of parties have filed objections to PG&E;’s disclosure statement, and the PUC said the utility has not formally discussed its plan with state regulators.
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