After a closed-door discussion, the three California Public Utilities Commission members who approved the Pacific Gas & Electric bankruptcy deal rejected requests to rehear the bankruptcy settlement agreement. At the March 16 CPUC meeting, the two commissioners who opposed the secret deal worked out by PG&E and CPUC staff abstained from voting on the rehearing petitions filed by San Francisco, Palo Alto, and two consumer representatives. They continued, however, to rail against the commission?s PG&E bankruptcy decisions for being rushed while vital information was kept from the regulators. ?We are not in a position to vote one way or another, nor could we properly deliberate because we were not given legal advice we were entitled to under state law,? said commissioner Carl Wood, who, with CPUC member Loretta Lynch, refused to cast a vote this week. He said the settlement approved last December puts them between a rock and a hard place, subjecting them to penalty of contempt if they don?t go along with the deal. ?The bankruptcy court has deprived us of our decision-making discretion and?until that order is vacated or stayed?will continue to deprive us and our successors of our ability to comply with various state laws to make decisions without any preimposed conditions,? Wood and Lynch said in a joint statement. The city and county of San Francisco, along with Palo Alto, the Aglet Consumer Alliance, and the Office of Ratepayer Advocates, challenged the PG&E decision approved by commissioners Michael Peevey, Susan Kennedy, and Geoffrey Brown (see <i>Circuit<\/i>, Jan. 23, 2004). The deal allowing the investor-owned utility to emerge from bankruptcy will cost ratepayers up to $8 billion over its nine-year life. This week?s 3-0 decision rejected the rehearing petitions on grounds they lacked merit. It dismissed arguments that the deal improperly binds current and former commissioners, is unjust, constitutes illicit ratemaking, creates an excessive regulatory asset, and lacks support in the record, and that its being changed at the 11th hour constitutes a denial of due process. Allegations that Peevey, who was involved in the closed-door settlement talks at the federal bankruptcy court, should have been disqualified from voting on the decision were also seen as groundless, largely because the issue was not previously raised. This week?s decision states that the settlement, not the decision itself, binds the commission and that the deal thus complies with state law. It also concludes that the decision was not improper ratemaking because it set only the ?parameters, not actual amounts,? and only for the regulatory asset, which represents 5.4 percent of PG&E?s bundled 2004 rate. It upheld the 11.22 percent return on equity to shareholders on the $2.2 billion regulatory asset because it is part of the rate base and ?not a capital contribution by ratepayers.? It also refused to offset the asset by $96 million, the cost of canceling the gas hedging contracts because of PG&E?s lack of creditworthiness. In addition, ?there are no constitutional due process rights involved? in this ratemaking proceeding, it concluded. James Weil, head of the Aglet Consumer Alliance, said the commission made up its mind months ago and ?seems to have stuck to its guns.? Weil is considering filing a court appeal. ?Unfortunately for consumers, the commission?s process was anything but careful,? added San Francisco attorney Dennis Herrera. A lawsuit by Lynch and Wood challenging the decision is before the Federal District Court of Northern California (see <i>Circuit<\/i>, Jan. 9, 2004). The complaint first landed in federal bankruptcy court before moving to district court. PG&E and the commission filed a motion to get the complaint tossed out, which is currently pending.