PG&E; Files a Revised Version of Its Bankruptcy Recovery Plan

Pacific Gas & Electric Co. on Thursday filed a revised version of its plan to emerge from bankruptcy, a month after a federal bankruptcy judge rejected its first attempt.

The judge had rejected PG&E;’s earlier argument that the Bankruptcy Code allows it to disregard dozens of state regulations and laws on its path to reorganization.

The new plan’s hallmarks remain largely the same from the utility’s initial disclosure statement filed in December. California’s largest utility still hopes to transfer $8billion of transmission lines, power plants, hydroelectric dams and other assets into three new, federally regulated companies, ending state oversight of many key functions.

PG&E; claims this will allow it to borrow more money against those assets, raising enough to pay the $13.2-billion debt it claimed the day it filed for Chapter 11, plus interest.

The state Public Utilities Commission and consumer advocates say PG&E; is using bankruptcy as an excuse to duck state regulation and charge more for the power it produces. PG&E; denies that and claims its plan is the fastest and best way to become credit-worthy and resume buying electricity.

One key change is that 33,000 to 78,000 acres of pristine land would remain under the utility’s ownership, said Ron Low, a PG&E; spokesman. Environmental groups, farmers, hikers and the federal government worried that stewardship of the land would decline and that access to land and the water flowing from Sierra Nevada rivers running through that land would diminish if owned by PG&E;’s parent corporation.

With this revision, PG&E; also hopes to convince U.S. Bankruptcy Judge Dennis Montali that breaking dozens of California laws and regulations--including a recent law barring utilities from selling or transferring ownership of power plants until 2006--is an economic necessity that won’t harm public safety.

PG&E; also wants to convince its thousands of creditors that its plan will get them paid with the least delay before they see the full version of a competing plan from the PUC, which regulates PG&E.;

The state’s plan calls for PG&E; to use cash it has on hand to pay its debts. Both sides have called the other’s plan flawed, and the tension between regulator and regulated has grown so thick they plan to negotiate through a professional mediator at Montali’s request.

*

Shares of PG&E; closed off 1 cent at $22.60 on the New York Stock Exchange, before news of the new plan was announced.