Features

SAN FRANCISCO — California’s largest utility is finding that the state Public Utilities Commission remains among the tallest of obstacles standing between it and a speedy resolution of its bankruptcy woes. 

Lawyers for Pacific Gas and Electric Co. met in court Tuesday with a federal bankruptcy judge, state representatives and lawyers representing thousands of creditors to craft a timeline of the process by which the utility could emerge from bankruptcy and pay its debts. 

During the nearly three-hour meeting, critics of PG&E’s bankruptcy plan repeatedly asked U.S. Bankruptcy Judge Dennis Montali to delay allowing the utility to file a disclosure statement — an explanation of how it plans to pay debts and restructure its company — until it is clear whether the utility must wait for state approval before moving forward. 

Organizations such as The Utility Reform Network, the PUC and the city and county of San Francisco told Montali that, without more time, parties would file objections to a case that could be overhauled if Montali allows the state to have a say in PG&E’s reorganization. 

“People are being asked to review very quickly something that would be a dramatic change,” said Steve Johnson, an attorney with the office of the U.S. Trustee, which oversees the administration of bankruptcy cases. 

“I don’t want to waste people’s time sending out a disclosure statement on a plan that is not lawful.” 

PG&E released its reorganization plan nearly three weeks ago, calling for the utility to break itself up and transfer its hydroelectric dams, nuclear power plants and natural gas pipelines to a federally regulated subsidiary. 

Critics say the utility is trying to remove much of the company from state regulation, allowing it to charge more for electricity it now sells at low prices. 

PG&E says moving its assets to PG&E Corp., its parent company, will allow it to issue bonds and raise $13.2 billion in cash and loans – enough money to pay every creditor. 

PG&E attorney Jim Lopes said the utility does not need PUC approval of its plan. He told Montali that speed is key to making the utility healthy, and said the court shouldn’t wait for a resolution with the PUC before having parties begin filing possible objections. 

“They only way we’re going to know what they are is to have people file pleadings,” Lopes said. 

In June, Montali refused to overrule a PUC decision ordering PG&E to make accounting changes the utility said prevented it from collecting the full cost of power from customers, which would have helped it avoid its debt. PG&E filed for federal bankruptcy protection April 6. 

On Tuesday, Montali refrained from saying whether he would overrule the PUC and other state officials who say PG&E’s plan violates a recent state law that prohibits utilities from selling their power plants. 

Without Montali’s approval to preempt state law, PG&E’s proceedings could stall as it wrangles with the state for the right to rearrange its holdings, forcing diverse creditors such as the state of California, banks, power sellers, restaurants and tree trimmers to wait still longer before their bills are paid. 

The utility now plans to issue a disclosure statement in late December, which will explain the reorganization plan as it then stands and how it will affect parties involved. Creditors then will vote on the plan. 

Montali also gave PG&E his blessing to sell a power plant in Kern County to a company that can take over operations and resume sending 180 megawatts of electricity to the state’s power grid. 

Gov. Gray Davis publicly approved the sale earlier this summer, calling for all available power plants to pump out electricity and help the state avoid rolling blackouts. The PUC objected, and PG&E now must work with the PUC before the deal can go through. 

——— 

On the Net: 

Federal bankruptcy court: http://www.canb.uscourts.gov 

PG&E: http://www.pge.com 

Public Utilities Commission: http://www.cpuc.ca.gov