State power regulators protest PG&E bankruptcy plan

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The Associated Press

SACRAMENTO (AP) – California’s largest utility has amassed $4.9 billion in cash and should use that money to pay its debts and emerge from bankruptcy, the state Public Utilities Commission said Tuesday in a filing in U.S. Bankruptcy Court.

The PUC filed its objections to the reorganization plan proposed by Pacific Gas and Electric Co., in which the utility would spin off its generating plants, transmission lines and natural gas distribution system into separate companies.

The commission said it was preparing an alternative reorganization plan that it will file, if U.S. Bankruptcy Judge Dennis Montali allows it.

PG&E has requested that its period of exclusivity – the time in which the debtor is the only party that can offer a plan of reorganization – be extended from February until the end of June. Montali is scheduled to hear that issue next week in San Francisco.

The PUC filing aims to keep state oversight of the utility, while still letting PG&E pay off billions in debts, said Commission President Loretta Lynch.

Lynch said Tuesday the PG&E plan was unnecessarily complicated, pitting state and federal laws against each other in an attempt to “deregulate itself.”

Under PG&E‘s plan, filed in September, the utility would split from its parent company, PG&E Corp., and transfer generating and electric and gas transmission assets to form three new companies.

Restructuring would allow the utility and the new companies, all to operate under the parent PG&E Corp., to pay its debts by raising $13.2 billion in cash and loans.

PG&E officials said Tuesday they plan to ask Montali to deny the PUC‘s request.

“The CPUC, whose actions and inactions were a major cause of the state’s energy crisis and PG&E‘s bankruptcy, has tried to obstruct our efforts to resolve the case,” PG&E said in a written statement.

Nettie Hoge, executive director of The Utility Reform Network, countered that the utility “is so awash in money” it shouldn’t be in bankruptcy court.

“They have $4.9 billion cash on hand with the likelihood of getting more,” she said. “They have no business being in bankruptcy court or stealing our most valuable assets and marking up the product and selling it back to us at a higher profit.”

The PUC plan uses “headroom” in the rates – the difference between what the utility currently charges customers and what it pays for wholesale energy – to get pay PG&E‘s debts, said Hoge.

That’s “using ratepayers’ money to pay off historic debt and the PUC has said you can’t do that,” Hoge said.

If the PUC pursues that plan, she said, the ratepayers should get something in return – the utility’s generating assets.

Consumer advocate Doug Heller, of the Foundation for Taxpayers and Consumers Rights, called the PUC plan “ludicrous” and said it echoed a deal the PUC cut with Southern California Edison to have ratepayers pick up the tab for much of that utility’s debt.

“The world view of PG&E and state officials seems to be limited to different ways to make the public pay for their mistakes,” he said.

Also Tuesday, a PUC administrative law judge released a draft decision outlining how PG&E, Southern California Edison and San Diego Gas & Electric Co., will share revenue with the Department of Water Resources.

The draft adopts a proposal by TURN, which is based on a per-customer basis. PG&E had objected to an earlier proposal, saying it shifted $500 million to their customers and let the Southern California utilities off the hook for those debts.

The plan calls for PG&E customers to pay $4.7 billion, Edison to pay $3.7 billion and SDG&E to pay $1.6 billion through the end of next.

PG&E spokesman Ron Low said utility officials were reviewing the new draft decision, but that it appeared to use a “fair allocation method.”

After a 30-day public comment period, the commission could vote on the plan in February.

On the Net:

The California Public Utilities Commission:

Pacific Gas and Electric Co.:

The Utility Reform Network:

The Foundation for Taxpayers and Consumers Rights:

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