PUC’s President Defends PG&E; Deal

I am compelled to respond to Michael Hiltzik’s “PG&E;’s Recovery Stifles Oversight” (Golden State, April 8) regarding Pacific Gas & Electric Co.’s emergence from bankruptcy protection. Mr. Hiltzik would have your readers believe this is a tragic event; however, the settlement approved by the California Public Utilities Commission that allowed PG&E; to emerge from bankruptcy has numerous benefits for Californians.

The settlement gets PG&E; out of bankruptcy and back under regulation by the people’s representatives in California, the PUC.

The settlement plan is costly, but that is the unfortunate result of the electricity crisis. We cannot undo the past to a time before wholesale power generators manipulated California’s electricity market; we can only move forward and make things better from here on out.

To that end, the PUC has already lowered PG&E;’s rates by $800 million, with further decreases expected next year. PG&E;’s shareholders (which include pension funds) did not receive a dime in dividends for 3 1/2 years and counting.

The settlement pays PG&E;’s creditors -- it had to, otherwise the Bankruptcy Court would not have approved it. To proceed in Bankruptcy Court would have been more costly to California, and PG&E;’s consumers would not have a creditworthy utility for a long time to come, an imperative -- if not, who would lend to utilities in the state ever again? How would we keep the lights on then?

In addition to lowering rates and getting PG&E; creditworthy, the settlement preserves 140,000 acres of PG&E;’s beautiful watershed lands forever. The next time your readers and their children visit the Sierra watershed preserved in perpetuity by the settlement agreement, I hope they will think of the overall outcome of the settlement in a more charitable light.

When I assumed leadership of the commission, PG&E; was entering its third year of bankruptcy protection, and the costs of the litigation in federal courts and Bankruptcy Court continued to mount. There was no resolution in sight. This is no longer the case.

Attacks on the settlement by dissenting PUC commissioners as constraining the PUC are blatantly wrong -- this is the PUC acting boldly using its authority to end the crisis, providing all the benefits we can for Californians. The PUC doesn’t give up its authority over PG&E;’s rates and service, as PG&E; wanted when it declared bankruptcy; rates are coming down; the capital markets look on California utilities favorably; the lights will stay on; pristine land is preserved; California gets to regulate its own utility; and we close another chapter on the energy crisis.

Michael R. Peevey

President, California Public Utilities Commission

San Francisco