The sharply divided California Public Utilities Commission Thursday approved the accounting steps Pacific Gas and Electric Co. needs to put its reorganization plan in effect for its scheduled April 12 exit from three years in Chapter 11 bankruptcy. The five-member CPUC’s vote was 3-0 with two dissenting members abstaining.
One of the dissenting members, Loretta Lynch, tried to have the item held, but by a 3-2 vote CPUC President Michael Peevey had the attempt overridden, and then proceeded to get the item passed. Lynch and her dissenting colleague, Carl Wood, abstained from the vote, claiming to vote might put them in violation with a court order.
The two opposing commissioners filed a motion last Tuesday in the U. S. appeals court in San Francisco seeking to stay the implementation of the PG&E utility reorganization plan, reiterating their allegations that the settlement between the CPUC and the utility leading to the bankruptcy exit plan is illegal because it binds future state regulators over the nine-year life of the settlement, giving the federal bankruptcy court the right to override the state regulators.
The accounting plan approved by the CPUC Thursday establishes accounts covering electric utility ratemaking for distribution, generation, financial amortization and other utility operations.
Last Tuesday, the PG&E utility’s senior vice president and chief counsel, Roger J. Peters, called for the dismissal of the CPUC members’ motion in federal district court for a stay, alleging that the two commissioners’ joint motion was “without merit and unlawful.”
“It is regrettable Ms. Lynch and Mr. Wood have chosen to file their motion for stay asking a federal district court to prevent Pacific Gas and Electric Company from emerging from Chapter 11 as a financially healthy utility,” Peters said in a prepared statement issued late Tuesday. “The U.S. bankruptcy court and the CPUC addressed their arguments over three months ago.
“These bodies repeatedly determined that the Bankruptcy Court’s confirmation order and the settlement agreement between PG&E and the CPUC are consistent with state law and enforceable under federal law. As a result, we firmly believe this motion is without merit and the U.S. District Court, like the U.S. Bankruptcy Court, should refuse to stay the confirmation order.”
Calling the dissident regulators “irresponsible,” Peters said the legal move puts the utility customers at risk to pay tens of millions of dollars in higher financing costs that would result from a stay in the wake of PG&E’s utility receiving a resumption of investment-grade credit ratings and selling $6.7 billion in bonds as part of the financing to pay off nearly $12 billion to creditors as it emerges from Chapter 11.
The CPUC commissioners’ move could prevent the utility from taking advantage of what Peters called “historically low interest rates” for borrowing.
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