Edison sells lines to state, PG&E in bankruptcy court
SAN FRANCISCO (AP) – While California’s largest utility nursed its billion-dollar wounds in bankruptcy court, the state’s second-largest utility agreed Monday to sell the state its transmission lines to avoid a similar fate.
Pacific Gas and Electric, which filed for Chapter 11 protection last Friday, asked U.S. Bankruptcy Judge Dennis Montali to issue a temporary restraining order against the state Public Utilities Commission – a request that PUC General Counsel Gary Cohen called a ”declaration of war” against the commission and its authority to regulate the utility.
PG&E says the PUC is miscalculating by saying the utility owes the state more than $8 billion for electricity that the Department of Water Resources has bought on behalf of the utility’s customers since January.
PG&E already has asked the PUC to extend the deadline for filing a payment plan, but hopes the bankruptcy judge will grant it more time to reassess what it considers an illegal PUC request, said PG&E spokesman Ron Low.
Cohen said the PUC believes its regulatory authority remains in force.
”I think they’re asking the judge to say they do not have to comply with orders of the California Public Utilities Commission,” Cohen said outside the meeting.
Gov. Gray Davis spent the day nailing down the state’s bid to buy Southern California Edison transmission lines, hoping to keep that cash-starved utility from also filing for bankruptcy.
Davis has agreed to pay the utility $2.76 billion for its share of the state’s transmission grid. The money would help Edison restructure its debt.
Davis had been negotiating with PG&E to buy its power lines as well, until the utility filed for bankruptcy protection. The company said the bankruptcy filing will not disrupt power for the 13 million Californians it serves.
During the weekend, the governor and PG&E traded barbs over the utility’s decision to award more than $50 million in bonuses and merit raises to about 6,000 managers and non-union staffers the day before filing for bankruptcy protection.
Consumer advocate Harvey Rosenfield said the PG&E bankruptcy filing put immense pressure on Davis to cut a deal with Edison, to keep California’s power crisis from growing worse.
”He’s trying to redeem himself with Wall Street,” said Rosenfield, president of the Foundation for Taxpayer and Consumer Rates.
Edison was expected to file an update on its financial condition with the Securities and Exchange Commission.
Edison and PG&E say they have lost more than $13 billion since June because of skyrocketing wholesale power prices they cannot fully pass on to customers under the state’s 1996 deregulation law.
PG&E’s bankruptcy also may have an impact on the state’s tax base. It wasn’t immediately clear whether PG&E would meet its Tuesday deadline to pay $80 million in property tax payments to 49 counties. PG&E and Edison annually pay more than a quarter-billion dollars in taxes. Edison has said it intends to meet the deadline.
Los Angeles Mayor Richard Riordan said Monday the two utilities owe the city about $200 million, and he’s not optimistic about seeing the money.
”If things go as they are going, we’ll be lucky to get 10 percent of that,” Riordan said. ”I’m very, very angry that (the Los Angeles Department of Water and Power) didn’t take tough, immediate action.”
PG&E has other legal challenges. Companies who sold electricity to the utility have filed at least a dozen lawsuits, seeking to be released from contracts so they can sell power elsewhere.
Gas suppliers such as El Paso Merchant Energy asked Montali that PG&E continue to make regular gas payments, despite its bankruptcy protection.
Montali assured gas suppliers in attendance that if PG&E does go into default, ”we’ll deal with it as we do with all emergencies, quickly.”
Montali said PG&E can continue to use its gas revenues to back its purchases of natural gas, in an attempt to assure suppliers they will be paid.
Unlike electricity costs, PG&E has been able to pass along soaring natural gas costs to its customers. PG&E attorney James Lopes said despite that cash flow, ”gas suppliers were concerned about our liquidity.”
Outside the bankruptcy court hearing, about 20 protesters chanted in support of public power and waved hand-made signs.
One sign read ”Pure Greed & Extortion,” and another ”Spare change for PG&E? God bless ’em they need it.”
Judge Montali plans to hold another bankruptcy hearing Tuesday to continue determining which creditors will be paid, and in what order.
The bankruptcy court hearing came at the start of a busy week, with federal and state officials planning hearings on the growing power crisis.
Representatives of 11 Western states will gather in Boise, Idaho, on Tuesday to discuss regional energy issues. The gathering is sponsored by the Federal Energy Regulatory Commission.
California lawmakers plan to press FERC to cap Western wholesale prices, a move that has gained urgency following a commission ruling last week.
FERC’s ruling that the state power grid’s operator must have creditworthy buyers for the last-minute power it acquires to fill gaps in the supply could add $5 million to $8 million more a day to the state’s power purchases for Edison and PG&E, Davis spokesman Steve Maviglio said.
The Davis administration has not decided whether to appeal the ruling, Maviglio said.
On the Net:
Pacific Gas and Electric Co.: http://www.pge.com
California Public Utilities Commission: http://www.cpuc.ca.gov
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