EDITORS: Please do not use
"Pacific Gas and Electric" or "PG&E" when
referring to PG&E Corporation or its National Energy Group.
The PG&E National Energy Group is not the same company as Pacific
Gas and Electric Company, the utility, and is not regulated by the
California Public Utilities Commission. Customers of Pacific Gas
and Electric Company do not have to buy products or services from
the National Energy Group in order to continue to receive quality
regulated services from Pacific Gas and Electric Company.
PACIFIC GAS
AND ELECTRIC COMPANY AND PG&E CORPORATION FILE PLAN OF REORGANIZATION
Plan Pays Claims in Full,
Does Not Call for Retail Rate Increases or State Bailout
(San Francisco, CA)- PG&E
Corporation (NYSE: PCG) and its utility unit Pacific Gas and Electric
Company jointly filed a Plan of Reorganization in U.S. Bankruptcy
Court today that enables Pacific Gas and Electric Company to pay
all valid creditor claims in full and emerge from Chapter 11 bankruptcy
proceedings. The official creditors' committee supports the plan.
"This plan is an achievable
solution that will enable Pacific Gas and Electric Company to move
out of Chapter 11 as a financially strong business positioned to
continue safe, reliable and responsive delivery of gas and electricity
to its customers, pay all valid creditor claims in full, and do
so without asking for a rate increase or a state bailout," said
Robert D. Glynn, Jr., Chairman of Pacific Gas and Electric Company
and Chairman, CEO and President of PG&E Corporation. "And, the plan
will enable us to provide long-term growth prospects to shareholders."
The plan reorganizes Pacific
Gas and Electric Company and PG&E Corporation into two separate,
stand-alone companies no longer affiliated with one another. The
reorganized Pacific Gas and Electric Company will continue to own
and operate the existing retail electric and natural gas distribution
system. The electric generation, electric transmission, and natural
gas transmission operations currently under Pacific Gas and Electric
Company will be part of PG&E Corporation. The common shares of the
reorganized Pacific Gas and Electric will be distributed to PG&E
Corporation shareholders.
The electric generation,
electric transmission and gas transmission operations, when reorganized
as new businesses under PG&E Corporation, will have the ability
to issue debt that will be combined with new financing at Pacific
Gas and Electric and used to help pay creditors' claims. The plan
also restructures certain existing debt and uses $3.3 billion in
cash on hand to satisfy creditor claims.
Under the plan, all valid
creditor claims will be paid in full, using a combination of cash
and long-term notes. In total, the plan will provide creditors with
about $9.1 billion in cash and $4.1 billion in notes. The vast majority
of creditors-those with allowed claims of $100,000 or less-will
receive cash payments for the full amount of their allowed claims
on the effective date of the plan. Most secured creditors will also
receive 100 percent of their allowed claims in cash. Finally, unsecured
creditors with allowed claims in excess of the $100,000 threshold
will be paid 60 percent in cash and 40 percent in notes.
Following the restructuring,
Pacific Gas and Electric Company and PG&E Corporation will be organized
as follows:
-
Pacific Gas and Electric
Company will be a separate California corporation focused on
providing electric and natural gas distribution service to its
customers in Northern and Central California. It will hold 70
percent of the current utility assets (in terms of book value)
and will employ 16,000 people. Pacific Gas and Electric Company
will continue to provide the full range of utility services
to one out of every 20 Americans.
-
PG&E Corporation, in
addition to its existing National Energy Group business, will
have three new businesses that will own and operate the electric
generation, electric transmission and gas transmission operations
formerly under Pacific Gas and Electric Company.
The new electric generation
business will be a California company established to own and operate
the hydroelectric and nuclear generation assets and associated lands,
and to assume the power contracts with irrigation districts, now
held by the utility. In total, the unit will have approximately
7,100 megawatts of generation. The facilities will be operated in
accordance with all current FERC and Nuclear Regulatory Commission
licenses, and in keeping with sound environmental stewardship policies.
The generating business will sell its power back to the reorganized
Pacific Gas and Electric Company under a 12-year contract at a stable,
market-based rate.
The new electric transmission
business will be a California company established to own and operate
the transmission system currently operated by the utility. The system
comprises 18,500 circuit miles of electric transmission lines and
cables.
The new gas transmission
business will be a California company established to own and operate
the natural gas transmission assets currently operated by the utility,
including 6,300 miles of transmission pipelines and three gas storage
facilities.
Following the reorganization,
the California Public Utilities Commission will continue to regulate
the reorganized Pacific Gas and Electric Company, including retail
electric and natural gas rates. The Federal Energy Regulatory Commission
(FERC) will continue to have jurisdiction over the licenses for
the hydroelectric assets, and the rates, terms and conditions of
service provided by the electric transmission business. FERC will
also assume jurisdiction over rates for the power generated by the
Diablo Canyon Nuclear Power Plant, and over the rates, terms and
conditions of service for the gas transmission system, which will
become an interstate pipeline.
Glynn said, "This plan,
without raising retail rates, provides a safe, reliable and long-term
electric supply to California customers. It enables our company
to maintain a qualified workforce. And it enables us to keep our
generating assets intact and integrated, rather than selling them
piecemeal to pay creditors."
The company expects that
roles and responsibilities for the vast majority of its workforce
will be unaffected by the plan. The reorganized Pacific Gas and
Electric Company and the newly established entities will employ
essentially the same people who operate the various assets under
the current organization.
"We envision essentially
the same experienced, dedicated team continuing to do their jobs
with a comparable level of pay and benefits programs," said Glynn.
"We believe these businesses should be operated and maintained by
the people who know how to run them best."
In addition to resolving
creditors' claims and maintaining stability for customers and employees,
the plan also provides long-term benefits to the state. It provides
the state with a path to exit the business of buying power for customers,
by identifying conditions under which Pacific Gas and Electric Company
would be financially able to re-assume the procurement responsibility
that is currently being fulfilled by the state Department of Water
Resources.
The Chapter 11 process requires
that the plan of reorganization ultimately be confirmed by the Bankruptcy
Court before it can be implemented.
Paul Aronzon, legal counsel
for the Official Committee of Unsecured Creditors, said "This plan
provides a comprehensive and responsible framework to resolve creditors'
claims and restore PG&E's creditworthiness. It has our full support,
and we look forward to an expeditious resolution of the Chapter
11 process."
"With this plan filed,"
said Glynn, "we are now focused on bringing the Chapter 11 process
to completion, reaffirming the financial health and creditworthiness
of our operations through this reorganization, restoring customers'
confidence, and rebuilding value for our shareholders."
At 10:00 AM Pacific Time
today, PG&E Corporation and Pacific Gas and Electric Company will
discuss the plan of reorganization on a conference call for members
of the media. The dial-in numbers for the call are 877-691-0877
OR 800-521-5461, pass code 7234. For New York or International callers,
the dial-in numbers are 973-321-1020 OR 303-267-1007, pass code
7234. A replay of the call will be available through September 27
at 877-690-2096 for domestic callers and 402-220-0652 for New York
and International callers, no pass code is needed.
At 11:30 AM Pacific Time
today, PG&E Corporation and Pacific Gas and Electric Company will
discuss the plan on a conference call for members of the financial
community. The call will be webcast. To access the webcast, go to
www.pgecorp.com.
On Monday, September
24, at 5:00 AM Pacific Time, PG&E Corporation and Pacific Gas and
Electric Company will make a presentation to financial analysts
on the plan. The presentation will be webcast. To access the webcast,
go to www.pgecorp.com.
Please visit our websites:
www.pgecorp.com and www.pge.com