Secret Deal for PG&E Bailout In Works
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Jun 12, 2002

CONTACT: Doug Heller - 310-392-0522 x309

Secret Deal for PG&E Bailout In Works

Group That Sued Agency Demands PUC Halt Private Negotiations With PG&E Creditors
Santa Monica, CA -- The Foundation for Taxpayer and Consumer Rights (FTCR), which has sued the CPUC in the California Supreme Court for making secret deals with utility companies in violation of state law, said that the agency was now negotiating a utility bailout with PG&E creditors. Citing a memorandum from the unsecured creditors committee, FTCR in a letter today called on CPUC President Loretta Lynch to make public information about any meetings or communications between officials with the California Public Utilities Commission and representatives of creditors in the PG&E bankruptcy case. The group also demanded an end to private negotiations on rate matters.

According to the document, the CPUC is trying to win creditors' support for its bankruptcy reorganization plan, which is competing with one developed by the utility itself. The document suggests that in the private negotiations CPUC has discussed a rate agreement that would force ratepayers to pay off PG&E's debt. The 1996 deregulation law prohibits such a ratepayer bailout and state law further requires all rate matters to be considered through public hearings, not in secret meetings, as FTCR pointed out in its lawsuit filed in April.

"Once again, we must object to the CPUC's refusal to respect California laws, which provide the public and ratepayers with due process," wrote FTCR today. "It is your legal obligation, as President of the CPUC, to immediately cease all private negotiations concerning electricity rates between state officials and representatives of the PG&E creditors committee or other interested parties.

Secret Moves Belie Assurances CPUC Made to Supreme Court

Responding to FTCR's lawsuit, the CPUC announced it would hold a hearing on its bankruptcy plan and then assured the Supreme Court in April that the reorganization proposal was subject to full public scrutiny and a hearing as required by law. In its letter today, FTCR said the evidence of secret negotiations "further reveals that the CPUC's assurances to the California Supreme Court that the CPUC reorganization plan would be subject to public hearings and is not to be considered a final decision of the Commission are simply lies."

The memo to PG&E creditors from representatives of the creditors committee details arguments for and against both the PG&E and PUC plans for reorganization. In the memo, the creditors appear to have had discussions with the PUC concerning "objective mechanisms" for ensuring the payment of PG&E's self-inflicted deregulation debts. Although the memo notes that the PUC has rejected the offer "thus far," the memo also notes that the creditors will seek a "consensual resolution of the disputes" and, in tone, indicates that the CPUC plan would be favorable if the PUC would agree to make certain promises.

"The CPUC cannot be engaging in private negotiations with PG&E''s creditors in order to shore up a public bailout of the utility. It is a corruption of the public process by which the commission is required to operate," said FTCR's senior consumer advocate Doug Heller.

A copy of the letter to Pres. Lynch and the 14 -page memo to PG&E creditors is available from FTCR.

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