PRESS RELEASES 2001 RELEASE
FOR IMMEDIATE RELEASE
December 12, 2001
Contact: News Department (415) 973-5930
EDITORS: Please do not use "Pacific Gas and Electric" or "PG&E" when referring to PG&E Corporation or its National Energy Group. The PG&E National Energy Group is not the same company as Pacific Gas and Electric Company, the utility, and is not regulated by the California Public Utilities Commission. Customers of Pacific Gas and Electric Company do not have to buy products or services from the National Energy Group in order to continue to receive quality regulated services from Pacific Gas and Electric Company.

CHAPTER 11 UPDATE: PG&E SEEKS COURT AUTHORIZATION TO SETTLE PRE-PETITION CLAIMS UNDER $100,000

SAN FRANCISCO - Pacific Gas and Electric Company has filed a motion in U.S. Bankruptcy Court asking for permission to proceed with the investigation, negotiation and settlement of certain pre-petition claims, including all of those under $100,000.

Approximately 12,800 claims have been filed, with about 80 percent of them for less than $100,000 and the remaining 20 percent for amounts in excess of $100,000. In the filing, the utility asks for approval to resolve the following categories of claims without seeking review and approval for settlements reached from either the Official Creditors' Committee or the Bankruptcy Court:

  • Any claim where the allowed amount settled on is $100,000 or less.

  • Any claim where the proposed allowed amount exceeds $100,000, but is no more than $5 million, and is the lesser of (a) 110 percent of the amount of such claim as scheduled by PG&E in the Amended and Restated Schedules, and (b) $500,000 more than the amount of such claim as set forth on the Schedules. (For example, where the Scheduled Amount of a claim is $4 million, and the creditor has filed a proof of claim for $5 million, if the parties reach a settlement whereby the claim would be allowed at $4.4 million, no Court or Committee review would be required.)

Settled claims would be paid pursuant to the plan of reorganization. Where PG&E and the claimant cannot reach a mutually agreeable settlement, the claim will be resolved by the Court. Since the company expects that settlement can be reached on most claims, the procedures proposed will facilitate the efficient resolution of the vast majority of the claims in this case. The utility has obtained concurrence from the Creditors' Committee for the proposed settlement authority.

In a separate filing with the Court, the utility asked for permission to make grouped objections to claims on the basis that they are, for example, duplicative, already satisfied or otherwise resolved, without waiving its right to assert subsequent claim-specific objections to the same claims if necessary.

Upon a preliminary analysis, the company found that billions of dollars of claims filed were duplicative and unsubstantiated. For example:

  • Identical duplicates - Over $1 billion worth of claims are exact duplicates. As a result, such claims are redundant.

  • Electric Generation Claims - The California Independent System Operator (CAISO) and the California Power Exchange (PX) have filed billions of dollars in claims for all of the electricity allegedly provided to PG&E pre- and post-petition through the markets they operated. However, the electricity generators have also, in most cases, protected their interest by filing claims for the same electricity allegedly provided to PG&E through the CAISO and PX markets. Such duplication is approximately $4 billion.

  • Multiple Claimants Asserting Duplicative Identical Claims in Separate Proofs of Claim - Multiple proofs of claim have been filed by multiple claimants in respect of the same claim.

  • Amended or superseded claims - Certain claims are amendments to previously filed claims, which are apparently intended to supersede the proof claims, but the original and amended claims both appear on the same claims register. Such redundancy is over $1 billion.

  • Bondholders' claims - Indenture trustees under various indentures for holders of pollution control bonds, mortgage bonds, and medium term notes, among others, have filed billions of dollars in claims on behalf of the holders under such indentures. However, the individual bondholders and mortgage holders have, in many cases, also filed claims based on the same financial instruments. Such redundancy is over $3 billion.

By asking the court for this approval, the utility believes it can resolve a very large number of disputed claims with a minimum of judicial time and estate resources.

The Bankruptcy Court is scheduled to hear both motions on December 27, 2001.


 

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