PG&E Opts for Appeal and Tweaks Bankruptcy Plan By Michelle Logsdon - February 22, 2002Pacific Gas & Electric Co. (PG&E) will appeal U.S. Bankruptcy Judge Dennis Montali’s ruling that the utility cannot sidestep state laws in order to emerge from Chapter 11. But the utility will also consider the judge’s concerns about their bankruptcy reorganization plan and modify the document where they see fit.
“The Court’s ruling allowed us to both move forward with the plan of reorganization and file an appeal. We are taking advantage of both options,” Ron Low, a PG&E spokesman, told the Los Angeles Times.
The decision to appeal was submitted Feb. 21, the same day the official PG&E creditor committee announced that the plan submitted by the California Public Utilities Commission (CPUC) was inadequate and urged the commission to retool its plan as well. The creditor committee claims CPUC’s plan would not bring PG&E to creditworthiness as promoted.
During a press conference, Kent Harvey, senior vice president and chief financial officer for PG&E, said the CPUC plan overestimates the amount of cash-on-hand available to pay the utility’s creditors. He said the term sheet fails to take into account tax payments and other costs such as the $1 million a week PG&E is spending on lawyers and accountants during this litigation.`
The CPUC plan would keep PG&E’s assets under state control and purports to have the company creditworthy by January 2003. PG&E’s plan takes longer and costs more but is more realistic according to PG&E officials. The utility’s plan would transfer $8.3 billion of its power plant and transmission line assets to its parent corporation creating three new, federally regulated subsidiaries. It would then borrow against those assets to pay off creditors.
That move is the biggest sticking point in the utility’s own plan because those assets include thousands of acres of watershed in the Sierra Nevada. Gov. Gray Davis and several environmental groups have spoken out against PG&E’s desire to move that land out of California jurisdiction.
PG&E has submitted a request to Judge Montali asking for a four-month window to promote its own plan without any competitors. The judge has scheduled a status conference for Feb. 27 at which time he will say whether the CPUC plan can be presented as an alternative. |