Regulators Approve PG&E; Recovery PlanCalifornia regulators approved...

Regulators Approve PG&E; Recovery Plan

California regulators approved a plan to pull Pacific Gas & Electric Co. out of bankruptcy. By a 3-2 vote, utility commissioners decided that PG&E;’s ratepayers -- and not shareholders of parent PG&E; Corp. -- would shoulder the bulk of the utility’s financial burden from skyrocketing power costs during the energy crisis of 2000-01.

Proponents pegged the cost of the nine-year reorganization plan, based on a settlement crafted by PG&E; lawyers and the Public Utilities Commission, at $7.2 billion. Detractors said the tab could top $9 billion.

The plan, which must be approved by the Bankruptcy Court, would pay PG&E; creditors all $12 billion they are owed. The plan relies on $8 billion in new debt financing and $4 billion in cash. Although the reorganization’s overall cost to ratepayers promises to be hefty, they are likely to see lower electricity bills in the years ahead. That’s because rates shot up to unprecedented levels during the crisis.

The plan would let PG&E; exit bankruptcy early next year with an investment-grade rating on its debt, which currently is considered speculative “junk” by Wall Street credit raters.

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Court Rejects Subpoenas Used by Music Industry

A federal appeals panel handed a victory to privacy advocates and a costly setback to major record companies, ruling that copyright holders can’t use subpoenas to identify Internet users suspected of illegal file sharing.

The decision by the U.S. Court of Appeals for the District of Columbia won’t stop record labels from suing file sharers, but it may impede efforts to convince the public that unauthorized file sharing is wrong.

The decision by the Court of Appeals throws a wrench into the Recording Industry Assn. of America’s efforts to deter piracy by suing users of file-sharing networks. The RIAA had used subpoenas to force Internet service providers to reveal the names and addresses of customers whose accounts allegedly were used to share large amounts of copyrighted music.

RIAA President Cary Sherman said the decision won’t stop the labels’ lawsuits. It will just make them more expensive and time-consuming. The labels will have to file “John Doe” suits against unknown file sharers, then use a different kind of subpoena to obtain their identities.

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Supermarket Workers Said to Offer Concessions

The union representing striking and locked out supermarket workers offered substantial concessions on health benefits in an effort to end the 10-week old labor dispute, sources said.

The United Food and Commercial Workers also suffered a strategic blow as the Teamsters union prepared to send its members back to work at nine supermarket distribution centers on Monday. Nearly 8,000 Teamsters were pulled off the job Nov. 24, in a move that both unions had hoped would force the chains to back down from their demands for cuts in benefits and a lower wage scale for new hires.

That did not happen. This month, the markets -- Vons, Pavilions, Ralphs and Albertsons -- made a new offer that further cut health care contributions.

Supermarket representatives did not return calls for comment.

Details of the union’s offer were sketchy; the two sources who discussed it did so on condition that their names not be used. Federal mediator Peter Hurtgen has asked parties to abide by a news blackout.

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Grocery Health Fund May Run Out of Money

The health fund for union supermarket workers could be empty by the end of the year because the supermarket companies in the labor dispute have not made payments to the fund for November and December -- about $40 million a month -- according to trustees who oversee the joint union-company plan.

Administrators of the fund are negotiating with HMOs and other medical providers to avert a disruption of coverage. The United Food and Commercial Workers union has filed a federal lawsuit to force the grocery chains to pony up millions of dollars to keep the fund solvent.

The union claims that the chains -- Albertsons Inc., Kroger Co.’s Ralphs and Safeway Inc.’s Vons and Pavilions -- are obligated to make contributions through Dec. 31. A Vons spokeswoman said, “We feel we have met our obligation under the current contract.” Albertsons and Ralphs wouldn’t comment.

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SEC Approves Reforms for the Big Board

The Securities and Exchange Commission approved an overhaul of the New York Stock Exchange after the Big Board pledged to split the jobs of chairman and chief executive.

In a unanimous vote, the SEC endorsed a set of reforms that interim NYSE head John S. Reed proposed in an attempt to repair an image battered by scandal and a furor over former Chairman Richard Grasso’s $187.5-million pay package.

Under the reform plan, the stock exchange’s board of directors will be reduced from 27 members to six to 12.

The NYSE also will set up a 20- to 25-member board of executives that will include the exchange chairman and representatives of Wall Street firms and NYSE-listed firms. The panel will serve as an advisor to the board of directors. The SEC is expected to revisit Reed’s governance plan next year as part of a broader review of U.S. markets.

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NYSE Names Goldman Executive as Chief

The New York Stock Exchange picked John A. Thain, the president of investment banking powerhouse Goldman Sachs Group Inc., as its chief executive, entrusting an industry insider with rehabilitating the exchange’s fractured image.

A low-key executive with expertise in finance and stock trading, Thain succeeds John S. Reed, the NYSE’s interim leader. He will assume his post Jan. 15. Unlike former chief Richard Grasso, Thain will not serve as chairman of the exchange, a key position that will be filled later.

Detractors said the naming of a Wall Street insider perpetuated the NYSE’s reputation as a cliquish enclave that has little regard for the interests of individual investors.

Reed introduced Thain at a news conference, saying he could pull the exchange out of its tailspin. Thain, 48, proclaimed the NYSE a “vital nerve center” and said he was “deeply honored to accept this call to service.”

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U.S. Reaches Central American Trade Deal

The United States concluded a free-trade agreement with four Central American countries, boosting the Bush administration’s trade agenda but setting the stage for a bruising ratification battle in Congress.

Although commercially modest, the Central American Free Trade Agreement with El Salvador, Honduras, Guatemala and Nicaragua looms large in symbolic terms. Its conclusion follows a string of trade policy setbacks for the U.S., and administration officials hope it will help revive momentum for further liberalization.

But it will be difficult to persuade lawmakers to ratify the pact during an election year in which the legacy of NAFTA and other trade pacts have become hot-button political issues.

CAFTA is drawing fire from U.S. sugar and textile interests, which would face more competition under its provisions, as well as from unions, environmentalists and other critics of the administration’s approach to trade expansion.

The administration wants to win congressional approval of CAFTA in 2004. If approved by Congress, CAFTA would remove tariffs and reduce other barriers to trade in a wide range of goods and services between the U.S. and the four countries.

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RealNetworks Files Suit Against Microsoft

Saying that Microsoft Corp. continues to illegally eat away at its share of the market for digital entertainment software, RealNetworks Inc. filed a $1-billion antitrust suit against the software giant.

The suit, in federal court in San Jose, accuses Microsoft of illegally bundling its Media Player with its dominant Windows operating systems. It contends Microsoft improperly protected its operating system monopoly from a potential RealNetworks threat. The suit seeks an injunction that effectively bars Microsoft from shipping Media Player bundled with Windows.

After years of threatening PC makers that wanted to install Real’s player at the factory and using other strong-arm tactics, Microsoft “poses a dangerous probability of creating a monopoly in the digital media markets,” the suit claims.

“Computer manufacturers are free to install and promote any media player on new PCs,” said a Microsoft spokesman.

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Tenet Signs Contract With Nurses Union

Santa Barbara-based Tenet Healthcare Corp. said it had signed a pact with California’s largest registered nurses union, a move aimed at buying labor peace and helping the hospital company meet the mandates of a new state law on nurse staffing.

Under the accord, nurses represented by the California Nurses Assn. at Tenet hospitals in the state would receive pay raises of 8% in the first year and 7% in the next two years.

In exchange, the nurses union agreed to a six-year no-strike provision and mandatory arbitration of disputes.

Terms will take effect immediately at five Tenet hospitals represented by the CNA and apply to other Tenet hospitals in the state that the nurses’ association organizes. The CNA has filed petitions to unionize 19 Tenet hospitals in California; the labor pact essentially paves the way for their organizing.

For a preview of this week’s business news, please see Monday’s Business section.