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Attorney General Lockyer Asks Federal Court to Reject PG&E Bankruptcy Reorganization Plan

Criticizes Utility's Proposal As End-Run to Avoid State Regulatory Oversight
Tuesday, January 8, 2002
Contact: (415) 703-5837

(SAN FRANCISCO) – Attorney General Bill Lockyer today on behalf of 20 state agencies asked the federal bankruptcy court to reject Pacific Gas & Electric's reorganization plan as an illegal attempt to evade state laws designed to protect the public health, safety and welfare interests of Californians.

"The California Public Utilities Commission is working on an alternative reorganization plan which could be submitted to the bankruptcy court," Lockyer said. "Alternatives would be worth considering if they provide full payments to PG&E creditors without interfering with the state's ability to protect the public health, safety and welfare of Californians."

In criticizing the utility's reorganization plan, the Attorney General told the court that PG&E is seeking to use the bankruptcy court to skirt over 40 state laws, regulations, rules and state agency decisions that cover no less than 155 state and local agencies. He noted that the relief from state and local regulatory oversight, which are buried in over 350 pages of documents filed with the bankruptcy court, have been rejected several times in state forums and "having failed each time because such relief is contrary to the public health, safety and welfare, the plan proponents now cleverly seek the relief in the context of a plan of reorganization."

The PG&E bankruptcy reorganization plan would, among other things, end the ability of the California Public Utilities Commission to ensure that public utilities have sufficient assets to serve the public and to prevent harm caused to the environment by the transfer of utility assets. PG&E's plan would also have the Federal Energy Regulatory Commission rather than the California Public Utilities Commission and other state agencies review its activities.

"By attempting to circumvent state regulatory approval of significant transfers of assets, permits, easements and licenses on the grounds of preemption, the plan proponents effectively eliminate the state's ability to protect the public health, safety and welfare and its ability to govern its sovereign lands and waters," the Attorney General told the court. "Moreover, the proposed plan makes the bankruptcy court a ‘one-stop permitting shop' for state and local permits and licenses for the sole convenience of the plan proponents."

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