PG&E; Ends 3 Years Under Chapter 11
Pacific Gas & Electric Co. ended three years under U.S. Bankruptcy Court protection Monday, closing an abysmal chapter in California’s power crisis.
The 99-year-old utility, a unit of PG&E; Corp., distributed $10.2 billion to hundreds of creditors owed since it filed for Chapter 11 on April 6, 2001, near the height of an electricity debacle marked by rolling blackouts and recurring market manipulation.
The fallout will add to power bills for years to come.
The rehabilitation is expected to cost PG&E;'s 4.8 million electricity customers $6.2 billion to $8.2 billion in above-market prices through 2012. That works out to about $1,300 to $1,700 per customer.
Although the utility’s bankruptcy filing is over, the threat of future power problems still looms over California.
Energy experts worry that the state has neither lined up adequate electricity supplies nor adopted the proper market controls to meet rising power demands.
“I think we are more vulnerable than ever,” said California Public Utilities Commissioner Loretta M. Lynch.
PG&E;, based in San Francisco, began its bankruptcy odyssey with more than $12 billion in debt that piled up as the cost of wholesale electricity soared beyond the retail prices established under a state power deregulation plan introduced in 1998.
Bankruptcy triggered even more bills. PG&E;'s legal and professional expenses in the case totaled $412 million through December, the most recent accounting available. The utility also is responsible for $23.2 million in bills run up by the state PUC during the case.
PG&E; simply was looking out for its best interests, said company spokesman Dan Richard, who added: “I don’t think we had any other choice. Our company was being melted down” as its daily losses surpassed $10 million.
That trend began to reverse shortly after PG&E; filed for bankruptcy protection as wholesale power prices began to plummet. Through February, the utility had earned $4.8 billion on revenue of $30.7 billion since the bankruptcy filing.
PG&E; Corp. shareholders saw their stock dive from more than $33 a share in 1999 to less than $7 shortly after the bankruptcy filing. But the shares have since recovered most of their losses: The stock closed at $29.43 on the New York Stock Exchange on Monday, down 45 cents for the day.
PG&E; Corp.'s stock rebound assured that the bankruptcy would benefit management. PG&E; last year distributed $84 million in bonuses to 17 current and former executives for sticking through the tough times.
Chairman Robert D. Glynn Jr. was awarded $17 million, and Gordon Smith, who runs the utility unit, received $10 million.
Shareholders, meanwhile, still aren’t receiving cash dividends. The Bankruptcy Court required PG&E; Corp. to suspend its quarterly dividend in the first quarter of 2001. Payments won’t be restored until the second half of next year.
By then, the company estimates, its shareholders will have relinquished about $1.7 billion in dividends.