[GreenYes] PG&E filed for bankruptcy today

[Gary Liss <gary@garyliss.com>]

Apologies for Cross-Postings

Pacific Gas and Electric Company Files for Chapter 11 Reorganization

FOR IMMEDIATE RELEASE April 6, 2001
CONTACT: PG&E News Department (415) 973-5930

San Francisco, CA -- Pacific Gas and Electric Company, the utility
unit of PG&E Corporation (NYSE: PCG), today filed for reorganization
under Chapter 11 of the U.S. Bankruptcy Code in San Francisco bankruptcy
court. The company said it is taking this action in light of its
unreimbursed energy costs which are now increasing by more than $300
million per month, continuing CPUC decisions that economically
disadvantage the company, and the now unmistakable fact that negotiations
with Governor Gray Davis and his representatives are going nowhere. 
Neither PG&E Corporation nor any of its other subsidiaries, including
its National Energy Group, have filed for Chapter 11 reorganization or
are affected by the utility's filing. 
"We chose to file for Chapter 11 reorganization affirmatively
because we expect the court will provide the venue needed to reach a
solution, which thus far the State and the State's regulators have been
unable to achieve," said Robert D. Glynn, Jr., Chairman of Pacific
Gas and Electric Company. "The regulatory and political processes
have failed us, and now we are turning to the court."
Glynn added, "Our objective is to move through the Chapter 11
reorganization process as quickly as possible, without disruption to our
operations or inconvenience to our customers. Throughout this crisis, our
20,000 employees have been and remain committed to providing safe and
reliable service to the 13 million Californians who depend on us to
deliver their gas and electricity."
Pacific Gas and Electric Company decided to file for the protection of
Chapter 11 primarily due to:

·       

Failure
by the state to assume the full procurement responsibility for Pacific
Gas and Electric's "net open position" as was provided under
AB1X. This has the result of increasing financial exposure to
unreimbursed wholesale energy procurement costs, which the utility
estimates to be approximately $300 million or more per month.

·       

The
impact of actions by the California Public Utilities Commission (CPUC) on
March 27, 2001, and April 3, 2001, that created new payment obligations
for the company and undermined its ability to return to financial
viability.

·       

Lack
of progress in negotiations with the state to provide recovery of $9
billion in wholesale power purchases made by the utility since June 2000,
which have not been recoverable in frozen rates.

·       

The
adoption by the CPUC of an illegal and retroactive accounting change that
would appear to eliminate our true uncollected wholesale costs.
"In addition, despite Pacific Gas & Electric's best efforts to
work with the State of California to reach a consensual, responsible,
fair and comprehensive solution to California's energy crisis, no
agreement has been reached with the Governor and the Governor's
representatives have dramatically slowed the pace and the progress of
discussions over the past month. 
"Furthermore since last fall, we have filed comprehensive plans for
resolving this matter with the CPUC, but they have not acted
affirmatively on them," said Glynn.
On October 4, 2000, Pacific Gas and Electric sought emergency rate action
by the CPUC. In November 2000, we filed our rate stabilization plan,
which, if adopted, would have increased electric prices by an initial 25
percent, compared with the 46 percent recently adopted by the CPUC.
Neither request was acted upon. Had the state acted at that time:

·       

Pacific
Gas and Electric would have been kept creditworthy;

·       

Pacific
Gas and Electric would have been able to enter into long-term power
purchase contracts at prices lower than those announced by the state;

·       

The
state would not have had to almost exhaust the state's budget surplus by
spending billions of dollars to purchase power for the utility's
customers;

·       

The
state would not now need to issue billions of dollars in bonds to cover
these power purchases; and

·       

The
state would not now be advancing a proposal to spend billions of dollars
to purchase the state's three investor-owned utility's electric
transmission systems. 
"This year, the state has spent more than $3 billion on power
purchases and, with the CPUC, has arranged to be reimbursed for these
expenses," noted Glynn. "In contrast, since June Pacific Gas
and Electric Company has spent $9 billion in excess of revenues to pay
for power for its customers and exhausted its ability to continue
borrowing, but there has been no progress on a plan to reimburse it for
those expenditures as provided by law.
"Statements by the Governor and other public officials since last
September gave us reason to believe that a solution could be reached
outside the context of Chapter 11 that would restore the utility's
financial viability and enable it to meet its financial obligations
equitably. However, these statements have not been followed up by
constructive actions, and a reorganization in Chapter 11 is now the most
feasible means of resolution."
The utility will utilize existing resources to continue operating its
business during bankruptcy, including paying vendors and suppliers in
full for goods and services received after the filing. The utility will
pay electric commodity suppliers as provided by law. The utility intends
to continue normal electric and gas transmission and distribution
functions during the Chapter 11 process. Employees will continue to be
paid. Health care plans and other benefits for employees and most
retirees will continue. The utility's qualified retirement plans for
retirees and vested employees are fully funded and protected by federal
law.
Notice
A media teleconference will be held today at 10:15 A.M. Pacific
Daylight Time to discuss this announcement. Pacific Gas and Electric
Company Chairman Robert D. Glynn, Jr., and Pacific Gas and Electric
Company President and CEO Gordon R. Smith will be available for
questions. The dial-in number is (888) 469-2078, and the password for
access is "media." An investment community conference call to
discuss Pacific Gas and Electric Company's Chapter 11 filing has been
scheduled for 11:15 A.M. Pacific Daylight Time today. A real-time webcast
of this conference call can be accessed at
www.pge.com.

Gary Liss

916-652-7850

Fax: 916-652-0485