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The long-running battle over what a reorganized Pacific Gas & Electric Co. will look like when it emerges from Chapter 11 bankruptcy shifted Tuesday to a settlement conference by the federal judge overseeing the case. In an eight-page ruling, U.S. Bankruptcy Court Judge Dennis Montali ordered attorneys from various parties involved in the case to report to Judge Randall Newsome’s courtroom on Monday. The hearing, which will be to determine whether or not to proceed with a settlement conference, is off the record and closed to the public. PG&E, the California Public Utilities Commission and numerous creditors are locked in a battle to confirm one of two competing reorganization plans for the utility. PG&E is backing one plan, while the CPUC and the creditors’ committee are pushing a rival “joint plan.” Citing the approaching two-year anniversary of the case, the “staggering expense to be incurred by all parties as a result of further delay, and the fact that the two competing plans pay creditors in full,” Judge Montali ruled that there is “little to be lost, and potentially much to be gained, by ordering a judicially supervised settlement conference.” The order comes a few days after Judge Montali put the plan confirmation trial on hold until early April. The one-month-plus suspension of the trial came as a result of recent modifications to PG&E’s reorganization plan. While the PG&E plan and the CPUC plan have significant differences, it’s possible that the settlement could lead to a third plan that incorporate elements of both. Roberta Kaplan, an attorney at Paul, Weiss, Rifkind, Wharton & Garrison who represents the CPUC in the trial, said the commission continues to support all settlement initiatives. A spokesman for PG&E said the company planned to comply with the bankruptcy court’s order and attend the pre-settlement conference. Judge Newsome, who presides over federal bankruptcy court in Oakland, will effectively serve as a mediator: He has no authority to make any decisions affecting the case but will attempt to bring the two sides closer together. This isn’t the first time that Judge Montali has tried to force PG&E and the CPUC to resolve their differences. Last year, the judge ordered the two parties to undergo out-of-court mediation. That process ended in May 2002 with a terse court filing by mediator Antonio Piazza that read simply, “The mediation has terminated.” But some of the parties involved in the case believed the latest effort at rapprochement might prove more fruitful. “What’s happened since then is that the CPUC plan has mostly been tried, and about half of PG&E’s presentation has occurred. So there’s a lot more out on the table now than there was before,” said Larry Engel, a partner at Morgan, Lewis & Bockius representing the city of Palo Alto.

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