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San Francisco City Attorney Dennis Herrera is joining consumer advocacy groups today in opposing the latest reorganization plan for Pacific Gas & Electric Co., the utility that filed for Chapter 11 bankruptcy in 2001. “We’re going to do everything we can to be out there swinging on this,” said Matt Dorsey, spokesman for the city attorney’s office. Herrera is scheduled to join San Francisco consumer advocacy group The Utility Reform Network; Consumers Union, the nonprofit publisher of Consumer Reports magazine; and the California Large Energy Consumers Association at a press conference today outside the California Public Utilities Commission headquarters. The event precedes the kick-off of CPUC evidentiary hearings this week, when the commissioners will take evidence on the pros and cons of the proposed plan. The CPUC and the federal bankruptcy court have the power to veto the plan, according to the city attorney’s office. The new proposal replaced two competing plans put forth by the CPUC and the utility. They’d been battling each other in federal bankruptcy court until U.S. Bankruptcy Judge Dennis Montali ordered the parties in March to undergo confidential settlement negotiations with Randall Newsome, an Oakland federal bankruptcy judge. During those talks PG&E and CPUC staff agreed on the plan that is now on the table. It would repay creditors while keeping PG&E intact and under state regulation. In announcing the plan in June, Newsome called it “a fair deal for both sides and of great benefit for all Californians.” But Herrera’s office disagrees. “Our main objection to the proposal is that it’s way too expensive for ratepayers,” said Deputy City Attorney Theresa Mueller, head of the city attorney’s energy and telecommunications unit. “It provides PG&E Corp. with more money than is necessary to provide service and make a reasonable profit.” The city is a creditor in the utility’s bankruptcy case. The CPUC seems to have decided that ratepayers should pay the cost of getting PG&E out of bankruptcy, she said. But the current plan doesn’t minimize that cost, she contends. “There are cheaper ways to do this.” The city attorney is supporting TURN’s suggestions to modify the plan, Mueller said. “It gets PG&E out of bankruptcy and it returns them to financial health, but it does it in a much cheaper way. Instead of costing about $9 billion, it costs about $6 billion over nine years.” The utility, though, argues that the TURN plan would wind up being more expensive for consumers and that it would jeopardize the company’s investment grade. That in turn would affect its ability to get loans and to land long-term contracts to buy power, the utility contends. PG&E contends it could take up to a year to put together the financing and resolve potential appeals if TURN’s proposal were adopted, said spokesman Ron Low. The utility’s fiscal analysis showed the consumer group’s scheme would save only $400 million over the nine-year plan, but that it might add $1.6 billion in interest rates if there’s a one-year delay, he said, noting that those rates are presently near a 20-year low. Mark Savage, senior attorney with Consumers Union, said the plan now before the CPUC would make PG&E shareholders “far better off than they would have been before the energy crisis.” Low said the company would be able to start paying dividends under the proposed reorganization plan, but when and how much is still undetermined. Meanwhile, PG&E is accusing objectors of engaging in delay tactics and using the bankruptcy court to further their own ends. In a joint filing with the bankruptcy court Friday, PG&E and the official creditors committee said the plan confirmation trial, which lasted an unusually lengthy four months before going into settlement talks, was needlessly prolonged due to the conduct of certain objectors. “The pace of the hearings was slowed to nearly a crawl at times by the tactics of those objectors that perceived delay to be to their tactical advantage,” the filing states. “These delays were particularly frustrating given the fact that the principal objectors have relationships with PG&E that have little or nothing to do with traditional debtor-creditor relations,” the filing continued. “Each of them appeared to be using the bankruptcy process to further unrelated non-bankruptcy agendas.” PG&E singled out the city of Palo Alto, claiming that the city’s recent discovery requests indicate that similar delay tactics are being planned for the upcoming trial. PG&E asked Judge Montali to streamline the new trial by setting time limits that would give PG&E 20 hours to present its case and examine witnesses, while giving objectors 22 hours. At a status conference Monday, Montali discounted PG&E’s allegations that objectors had intentionally delayed the first trial. Still, in an acknowledgment that the first trial had dragged on too long, the judge said he was not opposed to setting time limits for the new confirmation trial, which is tentatively slated to begin Nov. 10. Montali noted that he didn’t expect the trial to last past the end of the year. Reporter Alexei Oreskovic contributed to this story.

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