With calls for more details in its bankruptcy court filing of a company-wide reorganization, Pacific Gas and Electric Co. last week went on the offensive in trying to clarify what it called “myths” about its proposal. A major myth or criticism of the plan unveiled last month is that the parent company, PG&E Corp., is trying to hide major generation and transmission assets from state regulation, for which PG&E officials openly have expressed a lot of distaste this year.

A status conference in the bankruptcy court last Tuesday in San Francisco showed that a number of parties, including the California Public Utilities Commission, will have objections and questions about the PG&E utility reorganization plan in the disclosure statement phase of the case. The judge set Dec. 19 for the hearing on the disclosure statement, and a deadline for objections being filed of Nov. 27.

“PG&E’s reorganization plan in a very broad way is reaching very far to try to escape as much regulatory authority as they possibly can,” said California Public Utilities Commission member Carl Wood during a press briefing Tuesday in San Francisco. Earlier, the CPUC president, Loretta Lynch, had called it a “regulatory jail break.”

John Nelson, the PG&E utility spokesperson in San Francisco, said the reorganization proposal “maintains the current regulatory authority for virtually all aspects of the business. There is no reduction in regulatory oversight.” Nelson Tuesday distributed a five-page background paper, citing six myths the company wanted to address, the regulatory issue being one.

While critics are accusing PG&E of attempting to make an end-run around state regulation to achieve some corporate strategies it has pursued for a number of years prior to bankruptcy, the utility’s prepared background information contends the company’s plan is an “asset transfer” from the utility to other subsidiaries in the corporate family.

A new state law passed in the depth of the state’s power crisis last January (AB 6X) prohibits the sale of California private-sector utility assets until 2006. PG&E contends the law was designed to keep the assets dedicated to serving California, and in the bankruptcy plan the generation and electric/natural gas transmission assets all would continue to serve the state’s consumers.

Electric and gas transmission already is federally regulated in every other state, PG&E’s statement said, noting that only in California is it “voluntarily” under the state. Power generation was to revert to federal regulation after March 2002, under California’s electricity restructuring law.

PG&E appears to be gearing up for arguments by consumer organizations and state officials that the utility’s valuable infrastructure assets belong, at least in part, to ratepayers who have paid for them through the monopoly retail utility charges they pay. Thus, they cannot be moved under the corporate umbrella without state approvals.

Citing that customers will get a good deal because they “sacrifice nothing, face no risks and will be protected from rate increases,” PG&E clarified that only its shareholders own the utility assets, and in any event, there was no “sale” of them contemplated, but only a transfer from one PG&E Corp. subsidiary to another.

The utility said the energy crisis has been with us now for nearly a year-and-half, during which time the utilities, regulators and legislators have been only partially successful in reaching a broad-based solution. Thus, “the bottom line,” PG&E stated in its background paper “is that (the utility) plan works. It protects customers from volatility and rate increase, it doesn’t ask for a state bailout, and it pays off the company’s debts.”

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