Consumers have no say in PG&E bankruptcy, judge says

Published on

Utility had challenged trustee’s decision to allow committee

The San Francisco Chronicle

Ratepayer groups have no legal right to defend their interests in Pacific Gas and Electric Co.’s bankruptcy proceedings, the judge presiding over the case ruled yesterday.

The ruling by U.S. Bankruptcy Court Judge Dennis Montali overturns a bankruptcy trustee’s decision authorizing a committee to represent the interests of ratepayers in the debt-plagued utility’s financial reorganization. The committee was to be made up of consumer, business and government representatives.

Montali said only committees of creditors are allowed to participate directly under the federal bankruptcy code. Trustee Linda Ekstrom Stanley’s action, while well intentioned, exceeded her authority, the judge held. “Ratepayers have other means . . . to protect their interests,” Montali said.

PG&E, which had challenged the ratepayers’ committee as a consortium of “special interests,” said the bankruptcy judge’s decision will help the utility settle its debts to power generators and stabilize its finances more quickly.

The ruling brought protests from consumer organizations, however. They said decisions in the bankruptcy proceeding will help set electricity rates for years to come.

“It is unfathomable that the judge would leave ratepayers unrepresented while lawyers for PG&E and the energy companies demand that ratepayers be forced to foot the bill for their greed and incompetence,” said Harvey Rosenfield, head of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

“Obviously we disagree with the judge,” said Mindy Spatt of the Utility Reform Network, which has a representative on the committee. “We are the largest consumer utility organization in the state and we think we have an important role to play.”

Spatt said the committee will issue a further response after it reviews the decision.

Establishing a ratepayers’ committee was unprecedented in a utility bankruptcy case. Ekstrom Stanley, the Justice Department’s bankruptcy trustee for Northern California and Nevada, said the public needed a voice because the state has taken no active part in the case.

State participation could possibly jeopardize California’s defense against certain legal claims by PG&E, Montali acknowledged. PG&E contends that the Bankruptcy Court has some authority in matters such as rate-setting, a state regulatory functions.

Montali said state Attorney General Bill Lockyer might be able to skirt that problem through a court stipulation with PG&E and the creditors. PG&E praised the suggestion.

“By offering the California Attorney General’s Office the ability to participate in this proceeding on behalf of affected consumers, the court has fashioned an outcome which both is consistent with federal bankruptcy law and provides consumers with the ability to have their concerns appropriately aired,” PG&E said in a written statement.

Lockyer could not be reached for comment.

If Montali had not thrown out the ratepayers’ committee, it would have had the power to conduct investigations, comment on PG&E‘s plans to settle its debts, and offer alternate solutions.

Rosenfield said his foundation, which did not have a representative on the ratepayers’ committee, may seek to intervene in the bankruptcy case. He said that would be an “onerous and expensive burden” for ratepayer groups, but would be better than having no consumer voice at all in the bankruptcy proceedings.

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases