August 30, 2002 PUC: 73

Media Contact: PUC Press Office, 415.703.1366, news@cpuc.ca.gov

PUC ISSUES STATEMENT ON DISTRICT COURT RULING
IN PG&E BANKRUPTCY CASE

The California Public Utilities Commission's (PUC) General Counsel, Gary Cohen, today issued the following statement in response to a U.S. District Court ruling by Judge Vaughn Walker in Pacific Gas and Electric Company's (PG&E) bankruptcy case:

"We're very disappointed in today's ruling. We plan to appeal and are confident that Judge Montali's decision will ultimately be upheld as correct.

"Judge Walker concludes that Congress, in enacting a "technical amendment" to the Bankruptcy Code, intended to permit any debtor to avoid all state and federal laws as part of a plan of reorganization. This decision, if upheld on appeal, would make bankruptcy court a safe haven for companies wanting to violate the law in order to get out of financial difficulty. Any company that wants to evade state regulation or sell off its publicly paid for assets can simply file for bankruptcy and walk away from its commitments and with the money.

"Judge Walker accepted PG&E's argument that it would be in compliance with all laws and regulations after emerging from bankruptcy. This is not true. PG&E is asking the bankruptcy court to order that it is not obligated to serve its customers, as provided by the Public Utilities Code. Since the California Department of Water Resources (DWR) will no longer be buying power after the end of this year, Judge Walker's decision, if upheld on appeal, means that there will be no entity, public or private, with the obligation to provide electricity to residents and businesses in Northern California.

"If PG&E's plan is confirmed, it will certainly mean a rate increase for Northern California's families and businesses, and it would mean that PG&E would be free to sell or permit development on its thousands of acres of priceless watershed land, which would be illegal under state law if not for the bankruptcy plan.

"We continue to believe that our Plan of Reorganization is better for PG&E and for California, and that with the support of the Creditors' Committee we will succeed in having our plan confirmed by the court."

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