With the financing and regulatory steps now in place to pay off $11.7 billion to creditors, Pacific Gas and Electric Co. in three weeks should exit Chapter 11 bankruptcy protection after three years, “turning a corner to a period of significant stability,” Robert Glynn, CEO of the utility’s parent company, PG&E Corp., told a Wall Street audience Wednesday at the Morgan Stanley Global Electricity & Energy Conference.

The company filed with the federal bankruptcy court on Friday to say that “all conditions” for implementation of its reorganization plan have been satisfied. Monday (March 29) will be “the distribution record date for purposes of determining the holders of record of allowed claims who are entitled to receive payment under the plan on the effective date.” PG&E’s utility will be settling almost $12 billion of debts.

“A number of factors are converging to provide a period of very welcome stability,” said Glynn, noting that the company’s financial and regulatory worlds have not been this positive in a number of years. The PG&E utility filed for Chapter 11 bankruptcy April 6, 2001, in the midst of California’s energy crisis.

Indications by Glynn in responding to questions after his prepared remarks are that the cash levels will be higher than estimated upon the utility’s emergence from Chapter 11 during the week of April 12, and if California state legislation is passed in the next few months to create a so-called “dedicated rate component,” those cash levels could be raised further, moving up when the company’s equity level reached 52%, which is the trigger for restoration of a dividend.

In addition, PG&E’s utility does not have a lot of exposure to volatile wholesale natural gas prices in the future, Glynn said in response to a specific question. He said there is little risk to higher prices in the company’s mix of one-third of its generation from nuclear and hydro; another third from qualifying facility (QF) contracts with merchant generators that have about 80% of their natural gas costs fixed; and the last third in supplies from state Department of Water Resource (DWR) contracts, all of which have an active gas price hedging program that the utility is providing to the state agency to implement.

A combination of the bankruptcy reorganization settlement with a nine-year horizon and a 2003 general rate case settlement at the California Public Utilities Commission with a four-year time span give PG&E stability and assurances that few major utilities around the country can enjoy, said Glynn, noting that the utility now has “significant regulatory and financial assurances,” some of which have the enforceability of the federal bankruptcy court behind them.

In addition, Glynn said the utility has collective bargaining agreements in place that last through 2007 with its major unions.

“So looking at these three sets of agreements, for several years, they are in place and provide us the opportunity of focusing on the basic blocking-and-tackling of running our business better and better,” Glynn said.

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