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Pacific Gas & Electric Co.’s plan to emerge from Chapter 11 bankruptcy won a major victory Friday, when the bankruptcy court issued a decision tentatively approving the plan. The 44-page decision by Judge Dennis Montali found that PG&E’s reorganization plan is legal and enforceable. Montali overruled a raft of objections that claimed the plan illegally surrendered the state’s ratemaking authority and that it would improperly bind future state regulators to its terms. The decision puts PG&E’s fate in the hands of the California Public Utilities Commission, which must ratify a settlement agreement at the heart of the plan for the plan to be confirmable. The CPUC’s five commissioners are expected to vote on the agreement Thursday. Most of the commissioners have expressed reservations about certain aspects of the plan and have issued their own alternative versions of the agreement. PG&E filed for bankruptcy protection in April 2001, during the state’s energy crisis, with more than $12 billion in debts. “The settlement agreement will not change state law,” Montali wrote, “but it will assure that PG&E gets the benefit of its bargain.” Montali’s decision is unsigned, pending approval by the CPUC and the boards of directors of PG&E and parent PG&E Corp. “We’re very pleased that Judge Montali found our settlement plan confirmable and rejected all objections in his thorough and well-reasoned opinion,” James Lopes, the lead attorney for PG&E said in an e-mail.

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