The head of the California Public Utilities Commission, Loretta Lynch, last week blasted the Pacific Gas and Electric Co. proposed bankruptcy reorganization plan as a “regulatory jailbreak” in which the utility is attempting to complete a failed deregulation plan that was blocked earlier by regulators and legislators. She encouraged the bankruptcy court judge to reject the proposal.

“I think it is an attempt to use the bankruptcy court as a ploy to finish the deregulation experiment that they couldn’t finish through this commission or the legislature,” Lynch said. “And it does not address the central issue — which is how do they get their back-debt paid for?

“Instead, in what amounts to a regulatory jailbreak and a corporate shell game, they try to create corporate entities to avoid state regulation. So they have gone far beyond any conception of the purpose of bankruptcy court, and they have gone beyond it for an improper purpose.”

She noted that the court should treat the plan as attempting to circumvent the state.

In response to questions about the perception that PG&E’s utility contends no rate increases will be caused by its reorganization plan, Lynch strongly disagreed. “They are assuming that their chunk of generation is going to be sold to ratepayers at five cents/kwh, and that is not the assumption in the DWR model, which assumes the utilities are going to get cost-of-service prices, and in many cases this is much less than five cents.’

Thus, she said the assumption of no rate increases is on a “shaky foundation.”

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