Copley News Service
Federal regulators on Wednesday refused to reconsider their decision to allow PG&E Corp. to transfer assets of several subsidiaries to a new company, a move that critics said was designed to shield the assets from creditors in case of a bankruptcy by PG&E\’s utility arm.
The Federal Energy Regulatory Commission (FERC) rejected arguments from California Attorney General Bill Lockyer and others that the original decision was made without proper public notice and that the corporate restructuring would harm competition and interfere with possible claims by creditors.
The restructuring is \’\’consistent with the public interest,\” FERC said in a 2-1 decision. Commissioner William Massey, who opposed the original approval of the restructuring in January, cast the dissenting vote.
San Francisco-based PG&E Corp. is the parent company of the Pacific Gas & Electric utility, which provides power to 13 million people in northern and central California. The utility has been pushed to the brink of bankruptcy because of soaring wholesale electricity costs in California\’s deregulated power market. It is unable to recover the full cost of the electricity from consumers under state law.
On Jan. 12, FERC ruled that PG&E Corp. could transfer to a new entity National Energy Group (NEG) LLC the assets of non-utility subsidiaries, including those that trade and sell electricity. The move, described only as a \’\’stock transfer\’\’ in FERC\’s initial public notice of the request, surprised California officials and power companies that are owed billions of dollars by the utility.
Lockyer complained that it was \’\’a stealth move to shield assets.\’\’
But PG&E spokesman Shawn Cooper said the intent was to bolster NEG\’s finances so it could secure lines of credit and build power plants.
\’\’Everything was above board,\’\’ Cooper added, saying the company notified the California Public Utilities Commission when it initially sought approval for the plan in December.
In its decision Wednesday, FERC said \’\’all interested parties were provided reasonable notice and opportunity to comment\’\’ on the restructuring.
The commission majority also said it was \’\’not persuaded that the internal corporate reorganization has or will adversely affect competition.\’\’
Arguments by opponents that the restructuring could deter suppliers from selling power to PG&E, and thus aggravate California\’s electricity shortage, are \”only speculation,\” the commissioners said. In fact, by improving NEG\’s creditworthiness, \’\’the reorganization may increase the likelihood that lenders will finance PG&E\’s electric generation construction projects in California,\’\’ they added.
Consumer activists were unpersuaded.
\’\’I just think it was a blatant effort by PG&E to escape responsibility for the deregulation disaster that it created\’\’ by backing the move toward an open power market in California, said Harvey Rosenfield, executive director of the Foundation for Taxpayer and Consumer Rights.
Asked whether the move would indeed shield the subsidiaries from creditors, Cooper said, \’\’I\’m sure a court will decide that.\’\’
