Calif. Utility Seeks Chap. 11 Bankruptcy

SAN FRANCISCO -- -

SAN FRANCISCO -- Pacific Gas & Electric Company has sought bankruptcy protection after executives decided there was no immediate end in sight to California's electricity crunch. PG&E, a unit of PG&E Corporation, filed for Chapter 11 reorganization in San Francisco due to debts totaling around $300 million per month for power purchases that the company is not allowed to pass on to its customers. "We chose to file for Chapter 11 reorganization affirmatively because we expect the court will provide the venue needed to reach a solution, which thus far the state and the state's regulators have been unable to achieve," said Robert D. Glynn, Chairman of Pacific Gas and Electric Co. "The regulatory and political processes have failed us, and now we are turning to the court." PG&E and the state's other largest utility, Southern California Edison, have been on the brink of bankruptcy for the past several months due to wholesale power prices that have risen well above the retail price they are allowed to charge their customers under the state's deregulation rules. The mounting unpaid tab crippled the utilities' credit and forced the state to step in to buy electricity on behalf of the companies. Glynn said that PG&E had been waiting for the state to come up with a workable plan to increase the cash flow into the utilities' coffers. However, he accused the state of dragging its feet to the point that the window of opportunity to avoid bankruptcy had closed. "Statements by the governor and other public officials since last September gave us reason to believe that a solution could be reached outside the context of Chapter 11 that would restore the utility's financial viability and enable it to meet its financial obligations equitably," Glynn said. "These statements have not been followed up by constructive actions, and a reorganization in Chapter 11 is now the most feasible means of resolution." Gov. Gray Davis announced Thursday evening he was backing a proposed retail rate hike for Edison and PG&E that will average more than 25 percent and is targeted at consumers that use higher-than-average amounts of power.