PG&E Bankruptcy Appeal Could Send Costs Soaring

By Published On: April 10, 2004

Pacific Gas & Electric, creditors, and three California Public Utilities Commission members asked the U.S. District Court in Northern California to toss a challenge to the PG&E bankruptcy deal brought by commission members Loretta Lynch and Carl Wood. Allowing the dissenting commissioners to stall the deal?which otherwise would become effective on April 12?would cost the utility $2 million a day in additional interest costs and cause ?incalculable? harm to PG&E, its creditors, ratepayers, and watershed land slated for protection, the utility stated in an April 8 brief. Commissioners Lynch and Wood were the minority against the bankruptcy settlement. They filed a motion to stay its implementation March 30. If that motion is denied, PG&E is expected to emerge from bankruptcy April 12 (see <i>Circuit</i>, April 2, 2004). PG&E dismissed Lynch?s and Wood?s contentions that the settlement would violate their First Amendment rights or subject them to costly contempt litigation if they speak out against the deal, causing them irreparable harm. ?Appellants are not precluded from expressing their opinion in any forum and face no risk of contempt if they should do so,? according to PG&E. The utility asserts the two commissioners lacked standing because they cannot speak for the CPUC, but only as individuals. Commission lawyers representing the majority voters added that Lynch and Wood lack standing because they have no financial interest in the outcome. CPUC attorneys also claim that Lynch and Wood are not barred from entering into a contract limiting the commission?s future discretion on PG&E?s proceedings. The motion to stay would interfere with PG&E?s recent $6.7 billion in bond financing, payment to creditors, and an additional rate reduction of $100 million, racking up a bill as high as $4.7 billion if implementation of the agreement is delayed six months, the utility argued. Earlier this month, the CPUC rejected the petition filed by the cities of San Francisco and Palo Alto and consumer representatives seeking a rehearing on the bankruptcy decision, which will cost ratepayers up to $8 million (see Circuit, March 19, 2004). PG&E did add a bit of a threat in its filing. It noted that any harm arising from a denial of the Lynch-Wood motion to stay the settlement only creates ?the mere possibility that PG&E or the commission could one day institute proceedings against them for violations of the terms of the settlement agreement.? At any rate, that threat?albeit ?speculative??does not meet the requisite irreparable harm or standing burden required for a stay.

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