A modified compromise on Pacific Gas and Electric Co.’s proposed bankruptcy settlement should be worked out before next Thursday’s crucial vote by the California Public Utility Commission. The revised deal probably will win the approval of the creditors’ committee and bankruptcy court judge, one of the five CPUC commissioners told NGI during an interview Thursday in the state panel’s Los Angeles offices.

The five commissioners, all appointees of ousted former Gov. Gray Davis, will meet in closed session next Tuesday to try to hash out differences among the six proposed PG&E settlement decisions. They are scheduled to vote on the settlement and several other critical issues that have been simmering for months, including future power-buying by the three major private-sector electric utilities.

“I hope we can at least bring a majority together so we can settle this thing, and that we can come to some resolution next week,” said Geoffrey Brown, a former elected City of San Francisco Public Defender who has served on the CPUC for almost three years. “The question is will there be a consensus formed on the commission? I hope there is; we’re trying to forge one right now.”

Does he expect appeals no matter what the decision? “You never avoid litigation; there is always going to be someone who is litigating something that we do,” he said, stressing that if PG&E and the creditors’ committee accept a modified settlement, and the bankruptcy judge puts his “seal of approval on it, that is a very strong legal position to be in.” Brown doesn’t expect the bankruptcy judge to do anything that would affect the CPUC’s upcoming actions on the proposed settlement.

The range of alternatives vary from a totally unchanged settlement akin to what the PG&E utility and CPUC staff agreed to last June; an administrative law judge’s decision that modifies the settlement’s environmental and future rate-setting provisions; and varying degrees of other modifications up to one proposal that would essentially reject the settlement. Brown thinks the ALJ’s proposal and outright rejection (by Commissioner Loretta Lynch) have no hope of getting three votes.

“The real question is how we get this company (PG&E) solvent and at the same time assure that ratepayers are adequately protected,” said Brown, promoting his own alternate that would shorten the payback period for retail utility consumers from nine to five years. “This would shorten the time period over which the utility is subject to the supervision of the bankruptcy court.

“I wanted the shorter period for several reasons. You save money, although initially the rate decreases are not as dramatic as they are under the proposed settlement. It is kind of like the difference between a 30- and 15-year mortgage. If you pay off the mortgage faster, you’re paying more in monthly, but a lot less in interest. I also think it is imperative that we not extend the period of ‘regulatory limbo’ in which the PUC has controlled jurisdiction.

“What we want to do is shorten the period and get this company back to normal regulation. Nine years is a little far out. And I think we’ll eventually prevail on that point.”

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