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California regulators must provide more detail about how their reorganization plan would reimburse creditors if claims against bankrupt Pacific Gas & Electric Co. exceed the $13.5 billion currently estimated, a bankruptcy judge said Thursday. U.S. Bankruptcy Court Judge Dennis Montali of the Northern District of California gave the California Public Utilities Commission until Wednesday to address the financial question. The CPUC said it would comply. Energy suppliers who said they are owed money by PG&E raised the issue during a bankruptcy proceeding, prompting Montali’s ruling. An estimated $44 billion in claims were filed against PG&E when it filed for Chapter 11 protection in April 2001. PG&E said it expects to pay an estimated $13.5 billion. For its part, the utility has not outlined a method to repay claims if they exceed $13.5 billion, maintaining that the claim amount will not rise. The amount of claims is essentially a moving target until the bankruptcy court confirms a reorganization plan, at which time a final amount is declared. The CPUC’s plan was the focus of the day’s hearing. State regulators hope their disclosure statement will win court approval to proceed by Wednesday. The CPUC, which won the right to submit a reorganization plan for PG&E, calls for the San Francisco-based utility to repay creditors with a combination of cash, dividends and new equity. The CPUC’s plan competes with PG&E’s own reorganization plan, which seeks to sidestep more than 35 state laws. That arrangement would allow PG&E to break the utility into four companies, with three of them — hydroelectric and nuclear power generation, natural gas transmission and power transmission — falling under federal, rather than state, jurisdiction. Both plans likely will face difficult hurdles. The CPUC plan may fail to satisfy creditors if it does not provide clear guidance on how it intends for PG&E to repay them. PG&E’s plan could trip up over questions about whether it can pre-empt state laws to divide its assets. Creditors could begin voting on the separate plans as early as June 17. California’s largest utility, PG&E filed for bankruptcy after racking up $9 billion in losses. It attributed the bankruptcy to buying power at prices higher than state law allowed it to charge customers. PG&E, a unit of San Francisco-based Pacific Gas & Electric Corp., said it intends to emerge from bankruptcy by January. Copyright (c)2002 TDD, LLC. All rights reserved.

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