Noting that the California Public Utilities Commission must still make the ?business judgment? on propriety for ratepayers, federal bankruptcy judge Dennis Montali December 12 found that provisions in the settlement negotiated between bankrupt Pacific Gas & Electric and the commission staff are legal. When the commission votes on the PG&E bankruptcy settlement and its five alternatives, now set for December 18, it has the responsibility to determine ?whether those provisions are too burdensome for ratepayers and too generous for PG&E; whether they are appropriate to relieve PG&E from its financial crisis; whether any particular terms or provisions of the settlement agreement should be replaced by some other terms or conditions; and whether there are acceptable alternatives,? Montali wrote. ?This court overrules all objects to confirmation of the plan and challenges to the settlement agreement,? the judge continued. Opponents, primarily municipalities, have argued that certain provisions?such as what munis say is the settlement?s inherent ability to make rates in and of itself?were sufficient grounds to ditch the deal. But Montali said that the commission?s ratemaking authority remains separate from the settlement, and so it passes legal muster. Another major contention, this time championed by the state attorney general, is that the settlement apparently would keep utility parent PG&E Corp. from being pursued by the state and the city of San Francisco for receiving $5 billion from the utility prior to the bankruptcy filing. Montali said that the language in the settlement ?releasing? PG&E Corp. from claims is in the interest of creditors. While clearly finding case law to support the facets of his decision, Montali did leave one issue open to interpretation. The settlement calls for regulators to uphold PG&E?s investment grade status once the deal is conferred. Bob Glynn, PG&E Corp. chief executive officer, testified that it is ?mandatory? that the ?parties to the settlement will do <i>everything<\/i> in furtherance of that goal.? (Emphasis added by court.) Montali said, however, that the agreement ?can be read not to bind future commissions beyond what is permitted by California law.?