January 10, 2002 PUC: 03
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PUC PRESIDENT COMMENTS ON LAWSUIT FILED BY ATTORNEY GENERAL'S OFFICE AGAINST PG&E CORPORATION
California Public Utilities Commission (PUC) President Loretta Lynch issued a statement expressing support for the lawsuit against PG&E Corporation filed today by Attorney General Bill Lockyer.
"I am pleased that Attorney General Lockyer has acted promptly to follow up on the Commission's actions yesterday, which provided a basis to claim that PG&E Corporation is violating conditions established by the Commission when it authorized PG&E Corporation to be formed as a holding company for Pacific Gas and Electric Company, the public utility," President Lynch said.
The Commission ruled yesterday that one of those conditions, which requires that the holding company give "first priority" to the capital needs of the utility, prohibits a holding company's acquisition of the assets of its utility subsidiary for inadequate consideration, and a holding company's acquisition of such assets at any price, if such transfer would impair the utility's ability to fulfill its obligation to serve, or to operate in a prudent and efficient manner.
"The Attorney General's lawsuit, which alleges that PG&E Corporation's acquisition of PG&E's assets pursuant to their proposed Plan of Reorganization in Bankruptcy Court would be a violation of California's unfair competition law, is based on establishing that PG&E Corporation is violating conditions imposed by the Commission, as interpreted in yesterday's decision," President Lynch noted. "This case will enable the question to be determined by a California state court of whether PG&E Corporation is taking advantage of PG&E's financial distress to acquire its assets at fire sale prices."
President Lynch added that under California law, the Attorney General is given the authority to bring suit to enforce the provisions of the Business & Professions Code, while the Commission is responsible for prosecuting violations of the Public Utilities Code and Commission decisions and orders. The Commission intends to join in a suit against PG&E Corporation on these issues, based on the Commission decisions issued yesterday, President Lynch said.