Judge rules ratepayers won’t be able to participate in PG&E’s bankruptcy

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Contra Costa Times

SAN FRANCISCO _ Ratepayers won’t have their own seat at the table during Pacific Gas & Electric Co.’s bankruptcy, a federal judge ruled Friday, disbanding a committee that represented the utility’s 4.8 million customers.

Judge Dennis Montali, in a written order, said U.S. Trustee Linda Ekstrom Stanley “acted with good intentions” but abused her discretion in appointing the nine-member panel.

PG&E had challenged the unprecedented committee, arguing its formation had no basis under federal law. The judge agreed, ruling ratepayers are not creditors and, therefore, not entitled to special representation.

“I’m disappointed,” Stanley said. “I do believe I was within my authority in appointing the ratepayers. They have a financial stake in this case.”

Stanley said she’s unlikely to pursue a time-consuming appeal, despite the precedent the ruling sets. She will, however, consider adding ratepayers to the committee of unsecured creditors she appointed last month.

PG&E praised Montali’s decision in a written statement, noting the utility “does not object to ratepayers having a voice in the process relating to matters where they have an interest.”

The proper forum for ratepayers’ grievances, Montali agreed, is the California Public Utilities Commission. Furthermore, the judge noted, the utility’s customers may be represented in court by the state attorney general.

To date, however, California Attorney General Bill Lockyer has not entered the bankruptcy case, partially out of concern that doing so would waive the state’s sovereign immunity. PG&E has agreed Lockyer can represent ratepayers without compromising the state’s sovereignty.

Lockyer’s staff was reviewing the judge’s ruling Friday and wouldn’t say whether the attorney general will take up the ratepayers’ case.

“There are certainly other forums, other than the one PG&E has chosen, in which to look after the interests of California’s ratepayers,” said Sandra Michioku, the attorney general’s spokeswoman.

Stanley appointed the committee two weeks ago, saying PG&E‘s ratepayers didn’t have a voice in the utility’s $14.4 billion bankruptcy. The panel included representatives from The Utility Reform Network, the California School Board Association and the Consumers Union.

PG&E argued the panel was dominated by special interest groups that were trying to subvert the judicial proceedings for political gain.

But Montali said he was unconcerned about the committee’s makeup, saying he only would rule on its legality: “Whether they are lobbyists or disruptive or have a hidden agenda is not for me to decide,” the judge said.

Consumer groups blasted the ruling.

“Taxpayers and consumers will be asked to pay higher utility rates every month without having the right to be represented in court,” aid Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights. “This is taxation without representation.”

Consumer Watchdog
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