Bankruptcy: Customers would pay $4.7 billion to help restore utility’s fiscal health. The firm, activists are both critical
The Los Angeles Times
SAN FRANCISCO: State regulators unveiled a reorganization plan for Pacific Gas & Electric Co. on Monday that calls for customers to pay $4.7 billion–or $1.4 billion more than the stockholders would–to restore the company to financial health.
But the California Public Utilities Commission contends that its plan filed in federal Bankruptcy Court avoids $13.5 billion in higher energy and other costs associated with PG&E‘s own plan.
PG&E issued a statement saying that the PUC plan is unworkable and tries to illegally suspend stockholder profits for more than two years, harming company retirees.
PUC officials said they hope their plan passes muster with Bankruptcy Judge Dennis Montali and is allowed to compete for the votes of creditors in June.
Commission General Counsel Gary Cohen said the plan would repay creditors in full, return PG&E to financial viability by January and help the state get out of the power-buying business. “There should be enough room under the current rates for a [rate] decrease in early 2003,” he said.
High Rates Would Continue
Although wholesale electricity prices have receded, both plans maintain the record high customer rates the PUC established a year ago during the energy crisis. And that has consumer groups furious.
“Is it the responsibility of consumers to restore this company to creditworthiness?” said Mindy Spatt, spokeswoman for the Utility Reform Network. “The answer is no.”
The PUC plan says PG&E‘s customers would pay $2.7 billion more than the cost of providing their power through January. The customers also would pay $2 billion in interest costs associated with new debt acquired by PG&E, and PG&E stockholders would contribute $3.35 billion, including $1.6 billion in earnings from the utility and $1.75 billion from the sale of PG&E stock.
The stock sale, the PUC said, would dilute the ownership stake of PG&E‘s parent company in the utility.
PG&E Wants to Shift Assets
PG&E filed for Chapter 11 protection from creditors last April, saying that it had run up $9 billion in energy-related debts.
The company’s reorganization plan would shift transmission and generation assets to other subsidiaries of its parent, PG&E Corp.
Last week, the Foundation for Taxpayer and Consumer Rights filed suit in the state Supreme Court, alleging that the PUC was violating state law by submitting a reorganization plan that uses ratepayer money to pay for previous energy purchases.
On Monday, the Santa Monica-based group condemned the PUC plan as a $4.7-billion bailout.
