BAILOUT WATCH: Keeping an eye on the energy industry and the politicians
Bailout Watch #80 – Sep 21, 2001
PG&E to California: We’re above the law. The Pacific Gas & Electric Company, which put itself into Chapter 11 U.S. Bankruptcy protection in April, filed a proposal Thursday to reorganize its company and pay off its creditors. One problem (among many): the plan is illegal. PG&E, which has already taken billions from ratepayers by siphoning cash from the utility, now proposes to transfer most of its productive assets (power plants, transmission lines, gas lines) to unregulated corporate affiliates within the PG&E family of companies, and, in exchange for escaping state regulation over rates, the company will pay off 100% of its debt. But Section 377 of the California Public Utilities Code states clearly that: "Notwithstanding any other provision of law, no facility for the generation of electricity owned by a public utility may be disposed of prior to January 1, 2006." Simply put, the Bankruptcy Judge would have to ignore the PUC (which he has said he will not do) and ignore state law in order to approve this plan. There’s no reason to believe that he will do that. In the meantime our elected officials, starting with Governor Davis, Attorney General Lockyer and the state Public Utilities Commission must act immediately to protect California by preventing this illegal transfer of power plants.
PG&E’s Oedipal Complex. When PG&E made its reorganization proposal public it was clear to anyone who read it that this company was dreaming. And, of course, all dreams have deeper psychological meanings. The executives at PG&E clearly have an Oedipal Complex, in which the child (the PG&E holding corporation formed in 1996) wants to kill its father (the century-old utility) and impregnate its sister (the unregulated affiliates) with new power plants — the sister part is a slight deviation from Sophocles’ tale, but we’ll leave that for the Freudians to analyze. In this tale, the corporation is trying to use its Chapter 11 status to further its own desire to be free from the rules and structure of regulated society. PG&E doesn’t need a bankruptcy judge, it needs a shrink.
PG&E has the money to bail itself out. One thing is clear as a result of this proposal: PG&E — like Edison — has the money to solve its own financial problems. The utility has $3 billion in cash on hand and says that, if it gets their regulatory jailbreak, it will go ahead and pay off its debts mostly in cash (where has that been hiding?). The logical response is that, instead, they should pay off their debts without a bailout and without this jailbreak. Remember, PG&E and Edison got us into this disaster in the first place by crafting the foolish deregulation law.
Rated XXX. Rumors are swirling that Edison and Governor Davis are trying to use this PG&E proposal to scare legislators back to Sacramento for a third extraordinary session to bail out Edison. Instead of pushing for an obscene bailout (the Governor’s proposed special session would be denoted as Session Triple-X), the Governor should turn his attention to stopping this PG&E plan.
Judgment Day – 409 Days Until November 5, 2002
