San Francisco-based Pacific Gas and Electric Co. last week filed formal objections to the state regulators’ competing reorganization plan in the utility’s ongoing Chapter 11 bankruptcy case in a federal district court. The utility outlined its major objections with an alternative reorganization plan proposed in the court proceedings by the California Public Utilities Commission.

Both plans are simultaneously being reviewed and voted on by creditors in a court-sanctioned process that is expected to end next month, prior to the judge holding what is effectively a trial on the merits of both plans. The unsecured creditors committee, representing about $5 billion of the $13 billion bankruptcy claims, recommended that creditors vote for both the utility and regulator reorganization plans.

The utility has proposed a reorganization that would break up the current company structure into four separate companies — one remaining a distribution utility and the other three divided into the power generation, transmission, and natural gas storage/transmission pipeline businesses in the state. The latter three would transfer from state to federal regulatory jurisdiction for the most part. The CPUC’s alternative would keep all the components intact and principally under its regulation.

In last Wednesday’s filing, the PG&E utility attacked the CPUC plan’s proposed sale of $1.5 billion in new utility company stock as allegedly violating bankruptcy law and “significantly diluting shareholder equity and illegally confiscating considerable shareholder value.” Further, it told the court that the CPUC plan calling for $3.8 billion in new debt offerings would “fail to restore the utility’s investment-grade credit rating.”

While stressing various reasons why it argues that the CPUC plan is infeasible, the utility’s court filing cites seven different areas where it argues the regulators’ competing plan is deficient. It states the utility’s intention to pursue witnesses and evidence from the CPUC and other sources that will prove its allegations against the alternative reorganization proposal.

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