City News Service

PG&E‘s announcement today that it has filed for Chapter 11 bankruptcy protection was derided by the mayor of Los Angeles and a Santa Monica public watchdog group — and questioned by a PUC commissioner.

Los Angeles, through its quasi-independent Department of Water and Power, did not sell its generators under deregulation as Pacific Gas & Electric and Southern California Edison did, and has actually been selling surplus power to $ % the state’s grid operator for months.

Mayor Richard Riordan has been at loggerheads with David Freeman, head of the DWP for months, believing that the city’s utility chief has been too relaxed in the prices that he has been charging the California Independent System Operator for electricity on the open market.

But Freeman also has been enlisted by Gov. Gray Davis to negotiate power deals for the state, and has continued to say that he is selling the juice to the Cal-ISO — which makes it available to other utilities — for cost, plus 15 percent.

Riordan was not happy to hear about the latest move by PG&E, given the DWP’s position as a supplier of surplus electricity, and its own desire to pay $ % down its debt load. It is believed to be owed about $200 million by the Cal- ISO for surplus electricity sold so far.

He called the filing ”just a ploy … to help negotiate (its debts) with the state. Creditors are not allowed to sue them right now, but I don’t think they cared much about that anyway.

”What it tells me is that the city of Los Angeles is going to be very lucky to get 10 cents on the dollar (for the power it has sold to the Cal-ISO) $ % … I’ve been fighting with David Freeman for four months on this subject. I think we should have got tough back in December.”

But Chief Legislative Analyst Ron Deaton said the city provided power to the state’s Independent System Operator, not directly to PG&E.

”I think that we would look to the ISO for repayment. The only way PG&E‘s bankruptcy could affect us is that it affects ISO,” he said.

”None of our power ended up in the PG&E service area. If it did, it was minor. For the most part, the power we provided was to the Edison service area. Edison hasn’t declared bankruptcy. I don’t know what this portends for Edison.”

Edison International Chairman John Bryson spoke for the Rosemead-based holding company’s subsidiary.

”We at Southern California Edison continue to believe that working out a comprehensive solution to our current crisis is a preferable course to take, ” Bryson said. ”PG&E‘s decision today does not change our position.”

He did call it ”a sad day for California … PG&E has had a proud history of service to our state for more than a century.”

Geoffrey Brown, a member of the California Public Utilities Commission, questioned the move, during an interview with KCAL.

He said it could derail both his commission’s plan to deal with the crisis, and the governor’s laid out last night in a speech televised statewide.

”It means two things,” Brown told Channel 9. ”It could mean higher rates, in other words a bankruptcy judge may order the State of California to allow PG&E to charge customers more.

”Secondly, and more seriously, it may cause PG&E to get a larger share of the rate money that comes into … their collection every month.

”For example, now they have to split that money that they collect from the customers with the (state) Department of Water Resources. And a bankruptcy judge may allow them to take a greater share of that collection.”

The Santa Monica-based Foundation for Taxpayer and Consumer Rights ripped the move.

”PG&E brought this upon itself,” the FTCR said. ”It’s a consequence of the company’s greed and the deregulation scheme … This is a way to protect their parent corporation at the expense of the Northern California ratepayer who built their company.”

The FTCR said that after ”reaping the rewards of deregulation, PG&E is now paying the price for this foolish plan that they created, supported and from which they received billions of dollars from consumers.

”The PG&E parent corporation is likely to walk away scot-free on this, after sacrificing their firstborn, the only part of their company that actually services the people of Northern California.

”I don’t think the lights will go out because of bankruptcy,” said Doug Heller of the FTCR. ”They will go out because of the same reason they did in January.

”The power generators want to charge extortionate prices. And they will use rolling blackouts as a way to increase profits. This is unrelated to PG&E‘s bankruptcy.”

Assembly Speaker Robert Hertzberg, D-Van Nuys, called the events ”troubling. The bankruptcy of Pacific Gas & Electric will surely heighten the $ % uncertainty Californians already feel. We will continue to do all that we can to protect the interests of consumers and to maintain the reliability of our power system.”

Sen. Barbara Boxer, D-Calif., was concerned ”for the taxpayers and ratepayers of California. I am worried about the reliability and cost of their energy.”

She proposed to provide maximum stability in electricity markets to assure reliable service for consumers, reorganizing PG&E in a form that assures rates paid by California consumers are reasonable and fair, protecting PG&E workers’ jobs and benefits, recovering assets transferred from PG&E to its parent

company and recovering funds from power generators whose ”excessive wholesale prices played an important part in creating this crisis.”

Southern California Edison provides power to much of the Southland, but not ‘ San Diego, the city of Los Angeles or to some other communities served by municipally owned utilities.

PG&E said it did what it did because of unreimbursed energy costs, which are increasing by more than $300 million a month, and due to continuing decisions by the California Public Utilities Commission that economically disadvantage the company.

The company also said it was due to the ”now unmistakable fact that negotiations with Governor Gray Davis and his representatives are going nowhere.” Channel 9 reported that no negotiations between those parties have occurred in the past three weeks.

Neither PG&E Corp. nor any of its other subsidiaries, including its National Energy Group, have filed for Chapter 11 reorganization or are affected by the utility’s filing, the company said.

”We chose to file for Chapter 11 reorganization affirmatively because we expect the court will provide the venue needed to reach a solution, which thus far the state and the state’s regulators have been unable to achieve,” said Robert D. Glynn, Jr., chairman of PG&E. ”The regulatory and political processes have failed us, and now we are turning to the court.”

Glynn said the company’s objective ”is to move through the Chapter 11 reorganization process as quickly as possible, without disruption to our operations or inconvenience to our customers. Throughout this crisis, our 20,000 employees have been and remain committed to providing safe and reliable service to the 13 million Californians who depend on us to deliver their gas

and electricity.”