PG&E Applies For Federal Regulatory Approval Of Bankruptcy Plan Of Reorganization


SAN FRANCISCO - Pacific Gas and Electric Company today filed applications with the Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission seeking regulatory approval of important elements of the utility's plan to emerge from Chapter 11 bankruptcy protection.

On September 20, Pacific Gas and Electric Company and PG&E Corporation jointly filed a Plan of Reorganization (Plan) in U.S. Bankruptcy Court which would enable the utility to leverage its own assets to pay all valid creditor claims, thereby avoiding a need for a rate increase to emerge from bankruptcy. The Plan identifies several important regulatory approvals that must be obtained in order for the Plan to be implemented and the utility to emerge from bankruptcy no later than December 31, 2002.

As promised in the Plan and its accompanying Disclosure Statement, the utility submitted six separate applications to FERC today, seeking Commission approval of several elements of the Plan. These filings, while voluminous (comprising more than 20,000 pages), are consistent with FERC precedent and aligned with national energy policy.

These FERC applications represent a significant step forward in the effort to cure the energy market disruptions of the past 18 months. The applications present evidence of the significant public policy benefits that result from the Plan. Specifically, implementation of the Plan will:

  • Align regulatory and business environments so that wholesale assets are federally regulated and retail assets (70 percent of the current utility assets) remain regulated by the State of California, through the California Public Utilities Commission.

  • Create financially healthy companies able to provide needed infrastructure investment and able to continue to meet service obligations, including a framework to position Pacific Gas and Electric Company to resume the portion of electric power procurement which is currently provided by the State of California.

  • Further the formation of Western Regional Transmission Organizations.

  • Ensure that the interstate natural gas pipeline system is capable of responding to current and future increases in demand.

  • Continue sound environmental stewardship policies in connection with power generation and transmission facilities.

  • Provide retail customers with a reliable power portfolio from existing hydroelectric and nuclear generation assets under a long-term fixed price contract.

  • Retain skilled employees with the relevant assets under comparable terms of employment, honoring our obligations under all labor agreements.

  • Require neither a rate increase nor a state bailout.

Regulatory approvals of the reorganization and restructuring elements needed from FERC include approval of the transfer of assets, contracts between the new Gen and GTrans companies and the utility (for electric power and natural gas transportation and storage, respectively), as well as a variety of other Plan components. The FERC applications seek these regulatory approvals under provisions of the Federal Power Act and Natural Gas Act, as follows:

Section 203 of the Federal Power Act - Seeks approval of the restructuring and reorganizing of Pacific Gas and Electric Company and PG&E Corporation, and the spin-off of the utility. The application also reaffirms the commitment by ETrans to join a multi-state Western regional transmission organization (RTO), while continuing to participate in the CAISO until FERC approves such an RTO.

Section 204 of the Federal Power Act - Seeks authorization for the reorganized utility, as well as the new business units (ETrans, GTrans, and Gen), to issue securities and assume liabilities necessary for these business lines' service as public utilities.

Section 205 of the Federal Power Act - Seeks FERC approval of a 12-year bilateral contract between Gen and Pacific Gas and Electric Company for the 7,100 megawatts of power generated from Diablo Canyon, hydroelectric facilities, and irrigation district agreements. The contract will provide the utility's customers a stable source of power at reasonable prices - averaging 5 cents per kilowatt-hour over the life of the contract.

Section 8 of the Federal Power Act - Requests approval to transfer the 26 FERC-licensed hydro projects to Gen and the 11 transmission line-only licenses to ETrans. FERC currently regulates the operations of Pacific Gas and Electric Company's hydroelectric generating assets. The transfer of these licenses will allow Gen to continue operating the hydroelectric facilities in the same safe and environmentally sound manner they have been run for more than 100 years.

Section 7 of the Natural Gas Act - Seeks approval from FERC to transfer Pacific Gas and Electric Company's natural gas transmission and storage assets to GTrans. GTrans will operate approximately 6,300 miles of transmission pipelines and three gas storage facilities. The filing also allows GTrans or the utility to purchase 2.6 miles of the PG&E Gas Transmission Northwest pipeline near the California-Oregon border, creating a new market center that will facilitate competition and eliminate additional fees charged to move gas between pipelines. Through a long-term contract with GTrans, Pacific Gas and Electric Company will be able to secure gas transmission and storage capacity ensuring it will be able to continue serving its core customers. Customers will also benefit through GTrans' ability to expand the gas transmission system outside California in order to tap into Canadian gas supplies and other markets. GTrans will operate the gas transmission system as part of FERC's seamless interstate pipeline system and participate in integrated expansion projects.

Pacific Gas and Electric Company has requested an expedited review and approval process of these applications. It is anticipated that these approvals will be obtained in time to allow the Plan to be implemented by December 31, 2002.

As stated in the Plan Disclosure Statement, Pacific Gas and Electric Company also today submitted a request to the Nuclear Regulatory Commission for Plan-related regulatory approvals under the Atomic Energy Act. In the coming weeks, the company will also submit a request to the Securities and Exchange Commission for necessary Plan-related regulatory approvals under the Public Utility Holding Company Act.


Shareholder Information

EQ Shareowner Services
Transfer Agent

PG&E Shareholder Services

Investor Relations Contact Info

Receive Email Alerts