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PG&E's Bankruptcy Decision

April 14, 2001

Deregulation led to separating power generation from delivering that power to the consumers. The Pacific Gas & Electric management embraced deregulation and now has a separate, very profitable, generation company and a bankrupt consumer utility. Power generation offers them the greatest opportunity for growth. PG&E needed to find a means to eliminate the drag on its profits, i.e., the utility business. Bankruptcy offers a simple way to dispose of the onerous task of providing power to consumers.

For PG&E a dispersal of the utility assets (power lines, customers, etc.) to the creditors represents the optimal outcome: The parent company claims tremendous losses on its taxes and proceeds with its preferred business of producing power. By filing for bankruptcy, the company made an expected and calculated business decision that offers the best hope for its future growth at the expense of consumers and taxpayers.

KEITH PRICE

Los Angeles

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Congratulations to the shareholders of PG&E! The Bankruptcy Court will protect you from the governor's plan to shatter the electric utilities and pick up the fragments at bargain-basement prices. You may even recover part of your investment.

RUSSELL HAWKES

Los Angeles

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I wonder if PG&E's decision to file for Chapter 11 bankruptcy had anything to do with the fact that Chapter 11 will provide at least temporary protection for the struggling utility from the pending class action toxic tort lawsuit (Erin Brockovich II) that could result in the company being held liable for more than $1 billion in compensatory and punitive damages. Surely the avoidance of another Brockovich-type settlement or verdict made filing Chapter 11 more attractive to PG&E than it otherwise might have been.

SUZANNE EVANS

Manhattan Beach

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Given the new generating plants that have already been approved, what guarantee do we have the electricity generated by those plants will go to California? When California-regulated utilities owned the generating plants, the power generated by those plants came here first. The new plants are being built by the private sector. Are any steps being taken to ensure electricity generated in California will first be offered to California rather than bid up and then resold to the state?

MICHAEL SOLOMON

Los Angeles

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In order to alleviate the power crunch, why can't all new single-family residences, apartments and commercial buildings be equipped with solar panels, with the additional cost added to the construction costs? The savings would be passed along to the owners over the life of the buildings.

Or what about small neighborhood solar parks around some of the wilderness areas of the L.A. area? Or make some of the privately held open areas solar farms, forgoing the tax on the property, giving the owner a small tax-free income getting a small profit off the electricity.

RAY WILLES

Canoga Park

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