Hearings began this week at the California Public Utilities Commission on the proposed bankruptcy settlement between Pacific Gas & Electric and the CPUC staff. Meanwhile, proceedings at the Federal Bankruptcy Court in downtown San Francisco continued to move ahead on a parallel track. A third front on the controversial tentative deal was opened and shut at the Capitol. A bill (SB 772) was heard and rejected that would have given the commission clear authority to approve bonds backed by ratepayer revenue in place of the proposed $2.2 billion ?regulatory asset.? PG&E considers the regulatory asset a key part of the proposed agreement it reached late June. Much of the controversy over the plan of late has focused on the borrowing mechanism used to allow PG&E to cover its debts from the unprecedented wholesale power costs incurred in 2000 and 2001. The tentative settlement would create a $2.2 billion regulatory asset?a stand in for a real asset like a power plant that allows a rate-of-return and principal payback?and in turn the utility would not fight to get out from under CPUC authority. Consumer groups are pushing to replace that borrowing scheme with a $2.2 billion ratepayer-backed bond to reduce the hit on consumers. At a September 9 commission meeting, administrative law judge Robert Barnett warned the numerous attorneys representing the utility, commission, Office of Ratepayer Advocates, California Attorney General, cities, and consumer and business organizations about harassing witnesses and dragging out cross examinations. The judge noted he was supposed to conduct an ?expeditious hearing,? adding, ?If I start falling asleep, you know it is too much testimony.? During the hour-plus hearing, Barnett ironed out some procedural issues, ordering the long list of witnesses and hefty exhibit list. He also excluded some testimony, including that which challenged the settlement provision allowing PG&E to create a nonprofit company to manage watershed lands along its vast hydropower system in the Sierras. The deal includes PG&E setting aside its watershed holdings in perpetuity. Attorney Scott Rafferty objected to being cut out of the CPUC hearing process and he attempted to challenge ?delegating its responsibility over the environment to a corporation.? Barnett was not moved; he said the testimony was duplicative and excluded it. Witnesses from the Office of Ratepayer Advocates, the commission and PG&E gave testimony this week. Earlier, in bankruptcy judge Dennis Montali?s courtroom, the gaggle of attorneys argued about procedural matters, which included the timing of objections aimed at knocking out all or part of the tentative settlement. A pretrial hearing has been set for October 8. The trial on the proposed reorganization plans will begin November 10 and is expected to continue into December.