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.
RESPONSE TO PREEMPTION AND ELEVENTH AMENDMENT IMMUNITY OBJECTIONS
TO ITS BANKRUPTCY PLAN
Federal Law Gives Bankruptcy
Courts the Ability to Preempt State Law; Utility Seeks to Preempt
the Fewest Number of State Laws Necessary to Get Plan Approved
SAN FRANCISCO - As requested
by the U.S. Bankruptcy Court, Pacific Gas and Electric Company today
filed its response to preemption and Eleventh Amendment immunity
objections to its Disclosure Statement submitted by the California
Public Utilities Commission (CPUC), the California Attorney General
and six other parties. On January 25, the Court is scheduled to
hear oral arguments on these issues.
Federal law gives the Bankruptcy
Court the authority to preempt applicable state laws in order to
confirm a plan of reorganization and allow the debtor to pay creditors
and emerge from Chapter 11. The Bankruptcy Code also allows a plan
to transfer assets without approval of state agencies.
"Congress has deliberately
withheld from state regulators the very veto power over public utility
reorganizations that the CPUC seeks to wield in this case: Congress
has expressly determined that only a 'rate change provided for in
the plan' of reorganization is subject to state regulatory pre-approval,"
PG&E stated in its filing. "PG&E plan does not call for such a change
Under PG&E's plan of reorganization,
all valid claims would be paid in full by borrowing against the
full value of the assets, the utility would regain its creditworthy
status and the state could get out of the energy business.
PG&E's plan asks the Court
to preempt some 37 CPUC regulations and state laws, out of the thousands
of laws and regulations under which the utility operates, in order
to complete the transfer of certain assets and establish three new
California-based companies. PG&E's plan of reorganization seeks
to preempt the minimum amount of laws and regulations necessary
to allow it to emerge from bankruptcy.
The plan does not ask the
Court to exempt PG&E from the ordinary regulatory oversight of the
CPUC and other state agencies. Following the adoption of the plan,
all of the businesses will continue to be subject to all applicable
federal, state and local public health, safety and environmental
laws and regulations.
"Having succeeded in precipitating
the bankruptcy, the CPUC now seeks to prevent PG&E from solving
its financial problems through the orderly reorganization process
established by federal law by arguing at the threshold that the
Bankruptcy Court is powerless to confirm the plan of reorganization,"
the utility said.