Group Throws Wrench in PG&E Plan

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The San Francisco Recorder

A consumer advocacy group has sued the California Public Utilities Commission in state Supreme Court, threatening the commission’s plan to restructure the bankrupt Pacific Gas & Electric Co.

The move comes less than a week before the CPUC is scheduled to file an alternative bankruptcy reorganization plan for PG&E Co. and comes on the same day that U.S. Bankruptcy Court Judge Dennis Montali tentatively approved PG&E‘s disclosure statement for its own reorganization plan.

“The PUC is out of control and must be forced to obey the law,” said Harvey Rosenfield, president of the Foundation for Taxpayer & Consumer Rights, in a statement. The group filed the lawsuit Thursday.

“What we have here is a renegade state agency.”

The CPUC won the right to propose its own, alternative reorganization plan in the PG&E bankruptcy case in February after Montali ruled that the utility had lost its right to exclusivity. That plan is slated to be filed in bankruptcy court Monday.

Under the most recent schedule established by Montali, the two competing bankruptcy reorganization plans are to be submitted to creditors for a vote in mid-June.

But Thursday’s suit by the FTCR throws a major wrench into the works. The suit contends that “the PUC‘s expenditure of taxpayer funds to propose or consent to a PG&E bankruptcy reorganization plan that violates AB 1890 and Article III, Section 3.5, of the California Constitution is improper, wasteful and illegal.”

In a statement, CPUC General Counsel Gary Cohen said the suit was without merit and will be denied. “If the Foundation’s lawsuit were to succeed, the inevitable result would be that PG&E‘s deregulation plan would be approved.”

According to Doug Heller, a consumer advocate at the FTCR, the purpose of the suit is not to prevent the commission from proposing a bankruptcy reorganization plan for PG&E, but simply to ensure that the commission files one that complies with state law.

The commission’s plan is illegal, said Heller, because it violates a state law that requires all rate-making decisions to occur at a public hearing. Moreover, the use of ratepayer money to pay down PG&E‘s deregulation-related debts is barred under California’s energy deregulation law.

Meanwhile, PG&E won a small but important victory in its effort to advance its own reorganization plan. At a hearing in federal bankruptcy court Thursday morning, Montali tentatively approved the company’s disclosure statement, subject to certain revisions that are due next week.

The court’s endorsement means that PG&E‘s plan is now insulated from further objections and is ready for the creditors to review it.

“We’re pleased that the bankruptcy court has tentatively approved our disclosure statement,” said PG&E spokesman Ron Low. It’s a “significant milestone in our continued progress through the bankruptcy process.”

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