II. Procedural History2
On April 6, 2001, PG&E filed for protection under Chapter 11 of the Bankruptcy Code. Numerous creditors and other parties, including the Commission, intervened. On September 20, 2001, PG&E and PG&E Corporation, as co-proponents, filed a plan of reorganization (PG&E Plan). The PG&E Plan provided for the disaggregation of PG&E's businesses into four companies, three of which would be regulated by the Federal Energy Regulatory Commission (FERC). The Commission opposed the PG&E Plan. The PG&E Plan was amended and modified a number of times.
On April 15, 2002, the Commission authorized the filing of its original plan of reorganization for PG&E (Original CPUC Plan). Among other things, the Original CPUC Plan would have raised funds to pay PG&E's creditors through "headroom" revenues3 and issuance of new debt and equity securities, while at the same time maintaining PG&E as an integrated utility subject to regulation by the Commission. Subsequently, the Commission and the OCC filed an amended plan of reorganization for PG&E, dated August 30, 2002 (Joint Amended Plan) (later supplemented by a "Reorganization Agreement" entered into by the Commission and PG&E).
Bankruptcy Court confirmation hearings on the competing plans of reorganization started on November 18, 2002. On November 21, 2002, during the trial on the Commission's Joint Amended Plan, PG&E made a motion for judgment against the Joint Amended Plan, on the grounds, inter alia, that the Reorganization Agreement proposed by the Commission would violate California law because it would bind future Commissions contrary to the Public Utilities Code and decisions and regulations of the Commission. On November 25, 2002, the Bankruptcy Court denied PG&E's motion, finding that the Commission did have the authority to enter into the Reorganization Agreement and to be bound by it under California and federal law. (Ex. 122, CPUC Staff/Clanon, Exhibit C.)
On March 11, 2003, the Bankruptcy Court entered an order staying further confirmation and related proceedings to facilitate a mandatory settlement process. Pursuant to orders by the bankruptcy judge, parties to the settlement discussions are prohibited from disclosing information regarding or relating to the discussions.
On June 19, 2003, as a result of the settlement process, PG&E and the CPUC staff announced agreement on a Proposed Settlement Agreement under which PG&E and the Commission agree to jointly support a new plan of reorganization in the Bankruptcy Court that embodies the terms and conditions contained in the PSA (the Settlement Plan).4 PG&E, PG&E Corporation, and the OCC as co-proponents filed the Settlement Plan and disclosure statement for the plan with the Bankruptcy Court. The PSA constitutes an integral part of the Settlement Plan and is incorporated in the plan by reference. The Bankruptcy Court has stayed all proceedings related to the Commission's Joint Amended Plan and the PG&E Plan, until a confirmation hearing on the Settlement Plan.
On July 1, 2003, PG&E filed and served the PSA, the Settlement Plan, and a disclosure statement in this proceeding. On July 9, 2003, a prehearing conference (PHC) was held to determine the scope of proceedings for the Commission to consider the PSA. After the PHC, the Assigned Commissioner issued his "Scoping Memo and Ruling of Assigned Commissioner" (Scoping Memo) establishing the scope and schedule for this proceeding. The Scoping Memo, as amended, provided that the proceeding was limited to determining whether the PSA should be approved by the Commission, including whether the settlement is fair, reasonable, and in the public interest, using the criteria encompassed in various Commission, state, and federal court decisions.5 Excluded from the proceeding were alternative plans, rate allocation and rate design, and direct access issues. Proposed modifications to the PSA were permitted to be offered, but were required to be limited. Hearings were held on September 10, 11, 12, 22, 23, 24, 25, and 26. On September 25, 2003, PG&E, the Office of Ratepayer Advocates (ORA), and certain other parties and non-parties submitted a stipulation resolving issues regarding the land conservation commitment in the PSA. Concurrent opening briefs were filed on October 10, 2003, and reply briefs on October 20, 2003, when the matter was submitted.
2 This material is taken from the record in this proceeding as well as the record in PG&E's bankruptcy proceeding, documents, and pleadings of which the Commission may take official notice. The record in PG&E's Chapter 11 proceeding is available on the website of the U.S. Bankruptcy Court, Northern District of California, http://www.canb.uscourts.gov. In addition, documents relating to the Commission's various plans and filings in the bankruptcy proceeding can be found in the record of this proceeding as well as on the CPUC website at http://www.cpuc.ca.gov/static/industry/electric/pge+bankruptcy. 3 "Headroom" is defined below. 4 The PSA and the Settlement Plan are two different documents. 5 San Diego Gas & Electric Co., Decision (D.) 92-12-019, 46 CPUC 2d 538 (1992); Dunk v. Ford Motor Co. (1996) 48 CA4th 1794, 56 Cal. Rptr. 483; Officers for Justice v. Civil Service Commission, (9th Cir. 1982) 688 F.2d 615; Diablo Canyon, D. 88-12-083, (1988) 30 CPUC 2d 189; Amchem Products v. Windsor, (1997) 521 U.S. 591.
