SAN FRANCISCO — California regulators approved a plan Thursday to pull Pacific Gas & Electric Co. out of bankruptcy, leaving ratepayers to foot most of the bill for the state's ill-fated experiment with power deregulation and drawing the curtain on one of the darkest episodes of the energy crisis.
PG&E jolted financial markets when it sought bankruptcy protection in April 2001, becoming the largest utility to do so up to that time. It also drew the wrath of then-Gov. Gray Davis, who had gone on statewide television the night before to reassure the public that he had the energy crisis in hand. "They have dishonored themselves" by moving into U.S. Bankruptcy Court, Davis declared.
Company predictions of a speedy exit from bankruptcy proceedings proved elusive as the utility and the Public Utilities Commission fell into a bitter legal battle, each devising its own plan for the company to pay its debts. In the end, both sides made many compromises.
"This decision is the beginning of the end of a very difficult period of time for California, this commission and PG&E," PUC President Michael R. Peevey told a standing-room-only crowd at the agency's headquarters here Thursday. "Today we have improved the business climate of the state and assured affordable electricity for millions."
By a 3-2 vote, utility commissioners decided that PG&E's ratepayers -- and not shareholders of parent company PG&E Corp. -- would shoulder the bulk of the utility's financial burden from skyrocketing power costs. Those were triggered, in large part, when Enron Corp. and other energy wholesalers manipulated the market.
The total cost of the nine-year reorganization plan, based on a settlement crafted by PG&E lawyers and PUC staff, was pegged at $7.2 billion by proponents. Detractors said the tab could top $9 billion.
The reorganization plan, which still must be approved by the Bankruptcy Court, would pay PG&E's creditors all of the $12 billion they are owed -- an unusual outcome in the world of large corporate bankruptcies. Typically, creditors aren't made whole. Much of the money that PG&E owes is for power purchases.
The plan relies on $8 billion in new debt financing and $4 billion in cash that the utility already has collected, thanks to big rate increases granted during the energy crisis.
In addition, some maintained, the settlement would hand the utility several financial windfalls to be paid by customers. These payouts, critics noted, would far exceed anything won by Southern California Edison in the rescue package it hammered out with the PUC in 2001.
