PG&E doesn’t want to pay for energy to avert blackouts |

PG&E doesn’t want to pay for energy to avert blackouts

SAN FRANCISCO (AP) – Pacific Gas & Electric Co. told a bankruptcy judge Tuesday that it should not have to pay for what could amount to billions of dollars in spot-market energy costs to avert blackouts.

The company’s position was one of two developments that emerged Tuesday as the bankrupt utility tries to cope with fallout from California’s power crisis. The other development saw a group of creditors that PG&E owes billions endorse $17.5 million in bonuses for PG&E top managers.

The San Francisco-based utility filed for bankruptcy protection in April after racking up an $8.9 billion debt which under state law it could not recoup from customers.

Tuesday’s court dispute centered on who pays for energy bought at the last minute to avoid blackouts.

PG&E said an April federal regulatory decision requires that electricity can only be sold to those with the ability to pay electricity generators. The state is the only player with such ability, said PG&E attorney Jerome Faulk, who argued that the utility shouldn’t have to pay the $330 million in monthly spot-market energy bills.

Judge Dennis Montali said he may craft such an order. But he said the order would not preclude the state from suing PG&E to recover the cost.

In a separate but related development, a committee charged with devising a payment plan for those creditors owed billions by PG&E said it will sign off on the utility’s plan to pay $17.5 million in bonuses to PG&E’s management team.

Attorney Allan Marks, who represents the committee, said such payments are normal during large bankruptcy cases. Under the agreement, which Montali will consider at a June 18 hearing, the company must quickly produce a debt payment plan that passes judicial muster.

The utility said it needs the bonuses for a ”management retention program.”

Marks agreed. While the $17.5 million leaves less for creditors, without a financial incentive PG&E’s key top brass may not be willing to cooperate with a payment plan, Marks said.

”The main goal for the creditors’ support here is to move the bankruptcy as quickly and smoothly as possible,” Marks said.

The Utility Reform Network, a consumer watchdog group, says PG&E is simply rewarding managers of a failed business effort.

”They’re just showering money on the same people who got them in this mess,” said TURN’s Mike Florio.

The proposed bonuses would come on top of $50 million in bonuses and raises PG&E awarded just before the April 6 bankruptcy filing.

The case is In Re Pacific Gas & Electric Co., 01-30923 DM.

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