Responding to comments from last week’s bankruptcy hearings, Pacific Gas and Electric Co. on Wednesday filed second revisions to its disclosure statement and reorganization plan, which are under increased pressure now that California has been allowed to offer its competing plan to the federal bankruptcy court in San Francisco.

While responding to detailed criticisms of its earlier filings, the PG&E utility has steadfastly stuck with its basic proposal to spin off all of the nondistribution electricity and natural gas assets to three separate subsidiaries under its parent company, PG&E Corp. The effect is to move its power and gas generation, transmission and storage operations under federal regulatory jurisdiction, effectively cutting out California regulation for everything other than the “wires and pipes” utility distribution to end-use customers.

Environmental groups intervening in the Chapter 11 bankruptcy argued that moving the PG&E utility hydro-electric system, the largest private-sector hydro system in the nation, would endanger 132,000 acres of pristine watershed. The utility countered that only the land directly related to the network of power plants would be transferred — an estimated 78,000 acres.

While the environmental groups want detailed environmental assessments required before the assets can be transferred, PG&E utility officials contend that the California Public Utilities Commission is not an environmental agency, per se, although many of the utilities’ adversaries in bankruptcy court want the regulators to act like one.

Outside of court, California state legislators have indicated that the newly formed state power authority (California Consumer Power and Conservation Financing Authority), which has the power of eminent domain, was created last year partially as a check against utility generation assets being spun off to nonutility companies. As such, they say an ultimate counter to the PG&E utility bankruptcy reorganization move is to have the power authority take the PG&E hydro and nuclear generating assets, a move that would kick off a legal and political brouhaha of earthquake proportions.

In other news last week, Pacific Gas and Electric Co. is making its 2001 franchise fee and franchise fee surcharge payments — on time and in full — totaling $145 million to the 290 California cities and counties in which it operates. The payments total $72.3 million for gas and $73.1 million for electric service franchises and surcharges. The 2001 franchise fee and franchise fee surcharge payments represent a 44% increase over the 2000 payments. These increases are primarily due to the extremely high wholesale energy costs that were part of the 2001 energy crisis.

A franchise fee is a percentage of gross receipts that the utility pays cities and counties for the right to use public streets to carry gas and electric service. The franchise fee surcharge is a percentage of the transportation and energy costs to customers choosing to buy their energy from third parties. PG&E serves as the collection agent for the surcharges and passes the amounts to the cities and counties.

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