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.
FOR FEDERAL REGULATORY APPROVAL OF BANKRUPTCY PLAN OF REORGANIZATION
SAN FRANCISCO - Pacific
Gas and Electric Company today filed applications with the Federal
Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission
seeking regulatory approval of important elements of the utility's
plan to emerge from Chapter 11 bankruptcy protection.
On September 20, Pacific
Gas and Electric Company and PG&E Corporation jointly filed a Plan
of Reorganization (Plan) in U.S. Bankruptcy Court which would enable
the utility to leverage its own assets to pay all valid creditor
claims, thereby avoiding a need for a rate increase to emerge from
bankruptcy. The Plan identifies several important regulatory approvals
that must be obtained in order for the Plan to be implemented and
the utility to emerge from bankruptcy no later than December 31,
As promised in the Plan
and its accompanying Disclosure Statement, the utility submitted
six separate applications to FERC today, seeking Commission approval
of several elements of the Plan. These filings, while voluminous
(comprising more than 20,000 pages), are consistent with FERC precedent
and aligned with national energy policy.
These FERC applications
represent a significant step forward in the effort to cure the energy
market disruptions of the past 18 months. The applications present
evidence of the significant public policy benefits that result from
the Plan. Specifically, implementation of the Plan will:
Align regulatory and
business environments so that wholesale assets are federally
regulated and retail assets (70 percent of the current utility
assets) remain regulated by the State of California, through
the California Public Utilities Commission.
Create financially healthy
companies able to provide needed infrastructure investment and
able to continue to meet service obligations, including a framework
to position Pacific Gas and Electric Company to resume the portion
of electric power procurement which is currently provided by
the State of California.
Further the formation
of Western Regional Transmission Organizations.
Ensure that the interstate
natural gas pipeline system is capable of responding to current
and future increases in demand.
Continue sound environmental
stewardship policies in connection with power generation and
Provide retail customers
with a reliable power portfolio from existing hydroelectric
and nuclear generation assets under a long-term fixed price
Retain skilled employees
with the relevant assets under comparable terms of employment,
honoring our obligations under all labor agreements.
Require neither a rate
increase nor a state bailout.
of the reorganization and restructuring elements needed from FERC
include approval of the transfer of assets, contracts between the
new Gen and GTrans companies and the utility (for electric power
and natural gas transportation and storage, respectively), as well
as a variety of other Plan components. The FERC applications seek
these regulatory approvals under provisions of the Federal Power
Act and Natural Gas Act, as follows:
Section 203 of the
Federal Power Act - Seeks approval of the restructuring and
reorganizing of Pacific Gas and Electric Company and PG&E Corporation,
and the spin-off of the utility. The application also reaffirms
the commitment by ETrans to join a multi-state Western regional
transmission organization (RTO), while continuing to participate
in the CAISO until FERC approves such an RTO.
Section 204 of the
Federal Power Act - Seeks authorization for the reorganized
utility, as well as the new business units (ETrans, GTrans, and
Gen), to issue securities and assume liabilities necessary for
these business lines' service as public utilities.
Section 205 of the
Federal Power Act - Seeks FERC approval of a 12-year bilateral
contract between Gen and Pacific Gas and Electric Company for
the 7,100 megawatts of power generated from Diablo Canyon, hydroelectric
facilities, and irrigation district agreements. The contract will
provide the utility's customers a stable source of power at reasonable
prices - averaging 5 cents per kilowatt-hour over the life of
Section 8 of the Federal
Power Act - Requests approval to transfer the 26 FERC-licensed
hydro projects to Gen and the 11 transmission line-only licenses
to ETrans. FERC currently regulates the operations of Pacific
Gas and Electric Company's hydroelectric generating assets. The
transfer of these licenses will allow Gen to continue operating
the hydroelectric facilities in the same safe and environmentally
sound manner they have been run for more than 100 years.
Section 7 of the Natural
Gas Act - Seeks approval from FERC to transfer Pacific Gas
and Electric Company's natural gas transmission and storage assets
to GTrans. GTrans will operate approximately 6,300 miles of transmission
pipelines and three gas storage facilities. The filing also allows
GTrans or the utility to purchase 2.6 miles of the PG&E Gas Transmission
Northwest pipeline near the California-Oregon border, creating
a new market center that will facilitate competition and eliminate
additional fees charged to move gas between pipelines. Through
a long-term contract with GTrans, Pacific Gas and Electric Company
will be able to secure gas transmission and storage capacity ensuring
it will be able to continue serving its core customers. Customers
will also benefit through GTrans' ability to expand the gas transmission
system outside California in order to tap into Canadian gas supplies
and other markets. GTrans will operate the gas transmission system
as part of FERC's seamless interstate pipeline system and participate
in integrated expansion projects.
Pacific Gas and Electric
Company has requested an expedited review and approval process of
these applications. It is anticipated that these approvals will
be obtained in time to allow the Plan to be implemented by December
As stated in the Plan Disclosure
Statement, Pacific Gas and Electric Company also today submitted
a request to the Nuclear Regulatory Commission for Plan-related
regulatory approvals under the Atomic Energy Act. In the coming
weeks, the company will also submit a request to the Securities
and Exchange Commission for necessary Plan-related regulatory approvals
under the Public Utility Holding Company Act.