CPUC Unveils PG&E Bankruptcy Proposal

Published on

Energy Daily

The California Public Utilities Commission (CPUC) Monday unveiled its version of how PG&E Corp. should get itself out of bankruptcy, using $2.7 billion in power payment overcollections, $1.6 billion in foregone dividends, issuing $1.75 billion in shares of its utility business and borrowing $3.86 billion.

State regulators are fighting a PG&E bankruptcy plan that would move assets from the utility to unregulated new businesses, effectively freeing the company from state regulation in favor of federal oversight.

PG&E‘s plan is illegal and is never going to happen,” Gary Cohen, general counsel for the CPUC, stated bluntly.

The bankruptcy judge informed PG&E in February that he could not accept the company’s “across-the-board” preemption strategy that would ignore several state laws and CPUC regulations in moving the assets to unregulated business units. Instead, Judge Dennis Montali asked the company to resubmit a plan and invited state regulators to propose their own method to allow PG&E to emerge from bankruptcy.

Under the CPUC’s plan, creditors will be paid in full in cash by the end of January 2003- one month after PG&E proposed to pay off its debts.

The regulator’s proposal would subject PG&E to cost-of-service rates for its generation facilities, rather than the long-term fixed-price contracts called for in the company’s plan. The CPUC also proposes the issuance of stock in Pacific Gas & Electric Co., the utility subsidiary of PG&E.

Shares in Pacific Gas & Electric have not been traded since PG&E created its holding company formation in the 1990s.

“When PG&E comes out of bankruptcy…it will meet the characteristics of an investment-grade utility,” Cohen told reporters.

“The state of California in all respects certainly supports keeping PG&E as a regulated utility, instead of the jailbreak the company has proposed,”said CPUC President Loretta Lynch.

Creditors will be able to vote on the plans in June, assuming a Superior Court challenge by a consumer advocacy group does not derail the CPUC’s efforts.

The Foundation for Taxpayer and Consumer Rights argues the CPUC plan still demands too much ratepayer money to bail out PG&E. According to the CPUC, the proposal will ask $4.7 billion of the state’s ratepayers, as compared to $16.2 billion it estimates the PG&E plan would cost ratepayers.

Consumer Watchdog
Consumer Watchdoghttps://consumerwatchdog.org
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