SAN FRANCISCO - Pacific Gas and Electric Company
has reached a significant milestone in its Chapter
11 case, with the conclusion of the public evidentiary
hearings on the proposed settlement agreement between
PG&E and the California Public Utilities Commission
(CPUC) staff. The CPUC hearings were completed on
Friday, September 26, 2003, on the schedule established
by Administrative Law Judge (ALJ) Robert Barnett.
On Thursday, PG&E and a number of organizations
representing federal, state and local governments, environmental
groups, resource conservation, agricultural and water
organizations entered into a comprehensive stipulation,
which resolves most, if not all, of the environmental
issues pertaining to the proposed settlement agreement.
During the nine days of hearings, the witnesses presented
by PG&E and the CPUC staff testified extensively
about the structure, benefits and financing aspects
of the proposed settlement agreement.
PG&E completed extensive cross-examination of the
TURN witnesses who were suggesting an alternative plan
involving a designated rate component. PG&E maintains
that the proposed alternative is not feasible as a practical
matter, will not generate savings for ratepayers commensurate
with the added cost of delay and risk of non-execution,
and cannot be done in any case without specific statutory
authorization. The company feels its position on this
matter was borne out in the hearings.
In response to comments by ALJ Barnett at the close
of the hearings that he did not believe the CPUC can
bind future Commissions and that it should not subject
itself to Bankruptcy Court on-going jurisdiction -
two elements of the settlement agreement - the company
believes that this legal issue already has been resolved
by the CPUC and the Bankruptcy Court in previous decisions.
Significantly, the CPUC has previously asserted, in
filings and sworn testimony in federal Bankruptcy Court,
that the Commission could and would bind itself to any
agreement implementing a plan of reorganization. Bankruptcy
Judge Dennis Montali agreed with the Commission's position
on this issue in a ruling last November. The California
Supreme Court recently affirmed that the CPUC has authority
under state law to enter into a binding settlement agreement,
in the Southern California Edison case.
In addition, during the just-concluded evidentiary
hearings, the CPUC staff and TURN witnesses testified
that the CPUC does have the legal authority to bind
itself and future commissions to implement a plan of
Finally, inasmuch as this issue is fundamental to the
CPUC's ability to propose any plan of reorganization,
PG&E believes the Commission will resolve this issue
The CPUC approval process is expected to proceed on
schedule, with briefs due on October 10, a proposed
decision by the ALJ on November 18, 2003 and a final
Commission decision in late December 2003.