Features

Groups excluded from PG&E bankruptcy filing

The Associated Press
Saturday May 19, 2001

A committee of nine ratepayer groups will not be allowed to take part in the proceedings involving the bankruptcy filing of Pacific Gas and Electric Co., a judge ruled Friday. 

U.S. Bankruptcy Judge Dennis Montali agreed with PG&E that the ratepayer groups did not have a legal right to join other creditor committees in participating in the Chapter 11 case. 

U.S. Trustee Linda Eckstron Stanley, whose role is to appoint creditor committees in such cases, had taken the unusual step of appointing a committee of ratepayers – giving them legal standing and the ability to voice opinions. 

“While the UST no doubt acted with good intentions and with the interests of ratepayers in mind, she abused her discretion by going beyond the authority given her in the Bankruptcy Code, erring as a matter of law,” Montali wrote in his ruling. 

The judge agreed with PG&E that ratepayers do not qualify as creditors under bankruptcy law, and noted that the ratepayers have other venues to protect their interests. 

The utility argued ratepayers already have the ability to voice any concerns before the state’s Public Utilities Commission. 

“That is their forum. This is not their forum,” James Lopes, a PG&E attorney, told the judge during final arguments Friday. 

The judge also agreed with PG&E that the state Attorney General can represent ratepayer interests in the court process. 

“Pacific Gas and Electric Company is pleased that the court determined there was no basis in the Bankruptcy Code for the creation of a Ratepayers’ Committee. This decision allows for the continuation of an orderly and efficient reorganization process that the Bankruptcy Code provides,” PG&E officials said in a statement. 

The state, however, has hesitated to become involved in the case for fear it will lose the right to regulate PG&E. 

Gov. Gray Davis strongly denounced Monatli’s decision. 

“Bankruptcy proceedings are neither ‘efficient and organized’ as PG&E claims. They produce years of uncertainty,” Davis said in a statement released late Friday. 

“Today’s decision proves my point. Bankruptcy courts could care less about ratepayers.” 

Consumer and ratepayer advocates were also outraged by the ruling. 

“The judge has told us this is a rich man’s court,” said Robert Gnaizda, policy director of the Greenlining Institute, a coalition of minority groups.  

“The group that has the biggest morale authority to criticize PG&E is no longer involved, and you’ll have rich groups (of creditors) deciding how to split the spoils and then they’ll make the ratepayers pay for it.” 

Gnaizda said he will be asking the state Attorney General to reconsider getting involved. 

Stanley, the U.S. Trustee, maintained her decision to include ratepayers as creditors was allowed under the law, but said she will not file an appeal because it would take too long and the bankruptcy case would have to move forward in any case. 

She said she will meet with U.S. Trust attorneys next week to consider other options to include ratepayers in the bankruptcy proceeding. 

 

RIVERSIDE — Cities with their own power plants connected to the California power grid want exemption from rolling blackouts, saying their customers shouldn’t be deprived to help others. 

A group of California cities, all of them generating plenty of power to weather the summer energy crunch, faced a Friday deadline to ask the federal government to relieve them from blackouts. 

While most Californians pay large utilities like Southern California Edison Co. for power, about 25 percent of state households are billed for electricity by cities, counties or local districts with their own power plants. 

Four serving Los Angeles, Burbank, Glendale and the Imperial Valley are independent of the power grid and don’t face outages. But about two dozen others are required by contract to give electricity back to the grid-controlling Independent System Operator by participating in rolling blackouts. 

“We believe our power was purchased for the citizens of Riverside and that we don’t have the right, nor does anyone else, to take it away from them when they need it,” Riverside utilities director Tom Evans said. 

“Our customers are being denied something that they are fundamentally entitled to.” 

The cities seeking exemptions argue that they are suffering for the ill-fated decisions made when California’s electricity market was deregulated. 

“It makes them wonder why they went out and did their jobs,” California Municipal Utilities Association attorney Tony Braun said. 

The exemption campaign is led by Vernon, a small city five miles south of downtown Los Angeles. Vernon filed a complaint last week asking the Federal Energy Regulatory Commission to exempt it from rolling blackouts. 

Vernon’s utility has 2,000 customers, most of which are industrial operations such as glass manufacturers and meatpacking plants. The city power distribution system was designed to lure industry with low electric rates, spokesman Jorge Somoano said. 

FERC set a Friday deadline for other city utilities to support the campaign and up to half, including Riverside, were expected to either file their own complaints or documents supporting Vernon, said attorney Bonnie Blair, who represents municipal utilities in Azusa, Banning and Colton. 

FERC is expected to decide on the issue by mid-June, Blair added. 

“The obligation to share in (rolling blackouts) did not contemplate situations where some utilities were not meeting their basic obligation to provide resources to serve their customers,” Blair said. “If they are forced to participate in rolling blackouts, the effect is that the ISO is taking energy that has been bought and paid for by some customers and effectively giving it to somebody else that has been unable to buy it.” 

Cal-ISO vice president of operations Jim Detmers said they will fight the exemptions.  

 

He said excluding municipal utilities from blackouts would increase the share of those events shouldered by communities that do not have their own electricity distribution. 

Ronald Nunnally, Edison’s director of federal regulations and contracts, said the municipal utilities have an obligation to uphold the integrity of the power grid to which they are connected. 

“The ability to use the grid requires to keep it whole, if you will, under all circumstances,” he said.