US bankruptcy judge sets deadline for PUC alternative to PG&E plan

By the OGJ Online Staff

HOUSTON, Jan. 16, 2002 — The US bankruptcy judge overseeing Pacific Gas & Electric Co.’s reorganization plan Wednesday gave California regulators until Feb. 13 to come up with “specific and credible evidence” for a viable alternative.

The utility unit of PG&E Corp. filed for Chapter 11 bankruptcy protection in April 2001 and submitted its reorganization plan to the court for approval in September. The California Public Utilities Commission asked the court for permission to submit an alternative reorganization plan earlier this month, after calling Pacific Gas & Electric’s proposal a “regulatory jailbreak of a scope never before attempted in a bankruptcy case.”

That plan would split parent PG&E Corp. and its utility into stand-alone companies, including the transfer of its hydroelectric plants, the Diablo Canyon nuclear power plant, and gas and electric transmission grids to unregulated units of the parent company. As a result, some assets of the company presently subject to state regulation would become subject to federal oversight instead.

Others presently subject to both state and federal oversight would no longer be subject to state regulation. Wednesday, the California Municipal Utilities Association said it opposed the portion of the PG&E reorganization plan that calls for the divestiture of the hydroelectric generation system.

Executive Director Jerry Jordan said the California market structure hasn’t eliminated the ability of generators to exercise market power. Until market corrections are made, Jordan said California shouldn’t allow more power plants developed in the public trust to sell their output at market rates, Jordan said.

Wednesday, the court ordered PG&E, the PUC, and the state to provide comments by Jan. 25 on whether a third party should be appointed to try and attempt to resolve conflicts over PG&E’s plan. The company said it has worked “diligently” to emerge from bankruptcy by developing a reorganization plan that pays all valid claims in full with interest, without selling assets, or asking the court to raise rates or the state for a bailout.

PG&E said it is “skeptical” the PUC would become a constructive party because regulators have had “ample” opportunity to resolve these problems, but has failed to do so. The company said its creditworthiness was eliminated as a direct result of the PUC’s failure to heed warnings from the financial community.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at

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