Court Says PG&E; Can’t Avoid Some State Laws
PG&E; Corp. can’t ignore some California laws in reorganizing Pacific Gas & Electric, California’s largest utility, an appeals court said Wednesday in a ruling that applies to an old version of the unit’s bankruptcy plan.
The U.S. 9th Circuit Court of Appeals in San Francisco said PG&E; could only avoid state laws related to the financial condition of the utility. PG&E; had sought to sidestep dozens of California laws as part of a reorganization plan it submitted to the U.S. Bankruptcy Court in 2001.
PG&E; has since modified its plan and is no longer seeking to preempt state laws, so the ruling shouldn’t affect the completion of federal bankruptcy proceedings in San Francisco. PG&E; and California regulators reached a settlement in June that calls for Pacific Gas to remain under the authority of the state Public Utilities Commission.
“The plan on the table does not preempt state law. That was a major objective of the settlement and we’re certain that will be achieved,” said Alan Kornberg, an attorney for the commission who worked on the settlement.
The ruling comes a day after an administrative law judge for the commission recommended that the agency support the financing terms of the reorganization plan. PG&E;'s shares rose to a 35-month high because of expectations that regulators will approve the plan when they vote Dec. 18. Under the plan, Pacific Gas will emerge from Chapter 11 protection early next year.
PG&E;'s shares rose 75 cents to $24.25 on the New York Stock Exchange.