Pacific Gas Nears Exit From Chapter 11

A federal judge rejected a last-ditch effort by two state regulators to delay Pacific Gas & Electric Co.’s bankruptcy reorganization, clearing the way for the state’s largest utility to emerge from Chapter 11 as early as Monday.

After a hearing in San Francisco, U.S. District Judge Vaughn R. Walker denied a request by California Public Utilities Commission members Loretta M. Lynch and Carl Wood to block the company’s departure from Bankruptcy Court. Walker said any delay would cause “significant harm” to PG&E;, its shareholders, creditors and customers.

The electric utility, a subsidiary of San Francisco-based PG&E; Corp., filed for Bankruptcy Court protection in early 2001 after racking up losses during the California energy crisis.

Lynch and Wood challenged a settlement between PG&E; and the PUC, which had to approve the bankruptcy reorganization. Lynch and Wood argued that certain provisions violated state law and overly burdened PG&E; ratepayers.

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Elizabeth Douglass