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Pacific Gas & Electric Co. filed a $4.1 billion claim against the state on Wednesday, saying that by forcing its hydroelectric dams to remain under state regulatory authority, lawmakers broke a promise to the company that was part of California's 1996 electricity deregulation law.

The claim was filed exactly one year after Gov. Gray Davis signed into law the bill that put the state into the electricity-buying business, and a week after California Attorney General Bill Lockyer filed a lawsuit charging that PG&E broke promises it made to the state when PG&E formed a holding company.

The bill -- passed last year to adjust to a worsening electricity situation -- barred PG&E from selling its power-producing dams to corporate affiliates, or anyone else, because the state wanted to keep regulatory authority over the rates charged for electricity from those power plants.

PG&E claims that provision breached a regulatory contract in the original electricity restructuring law, which opened the state's wholesale electricity markets to competition and encouraged utilities to sell off fossil-fuel power plants.

"The state failed to hold up its end of the bargain, and it prevented us from being able to sell the power under FERC regulation," said PG&E spokesman Ron Low.

State representatives responded angrily to the latest move by the San Francisco-based company, which also is seeking through bankruptcy proceedings to move its power plants out from under state authority.

Gov. Gray Davis' spokesman, Steve Maviglio, called PG&E's newest filing "another salvo against the taxpayers of this state."

Gary Cohen, general counsel for the state Public Utilities Commission, which regulates PG&E, called the development "a frivolous act of desperation."

"Once it became clear that deregulation meant vastly higher costs of electricity to California consumers and businesses, the legislature wisely stepped in to prevent PG&E from selling off any more of its generation assets, particularly its extensive hydroelectric facilities," Cohen added. "PG&E has become a corporate scofflaw, completely indifferent to the interests of the people and businesses who it is obligated to serve."

The claim was filed just before a one-year statute of limitations was set to expire in the State Victim Compensation and Government Claims Board. The board has 45 days to act, after which PG&E would be allowed under state law to file a lawsuit against the state.

PG&E's claim is based on its estimate of the market value of its hydroelectric facilities -- $4.1 billion -- although those same dams are included in a portfolio of assets that PG&E's bankruptcy plan will shift among corporate affiliates in exchange for $1.2 billion.

Low said the different valuations reflected the difference in the nature of the transactions. "You're confusing transfers and sales," Low said. "To emerge from the bankruptcy and pay the creditors, we have to transfer the assets."

Also Thursday, PG&E got a boost from Wall Street, where Standard & Poor's, a leading bond-rating firm, said the regulated and unregulated businesses that would emerge from the breakup of PG&E's regulated utility could achieve investment grade ratings for $9.5 billion in debt that they plan to issue.

That's crucial, because PG&E's plan to emerge from bankruptcy-- which counts on the bankruptcy judge to end state regulation of the hydroelectric dams and some other assets -- includes a guarantee that creditors won't be left holding junk bonds.

Both moves, the PG&E claim and the S&P announcement, came after a rough day for PG&E in bankruptcy court, where the judge signaled some reservations about the viability of PG&E's plan to pay creditors and bring its utility unit out of bankruptcy.

But the S&P note gave a thinly veiled warning to opponents of PG&E's plan. While the bankruptcy judge indicated a willingness to consider an alternative plan from state regulators, "any material deviation from (PG&E's) proposed plan could result in a lower rating," the rating firm said.

Low, the PG&E spokesman, said the S&P note "demonstrates the viability and credibility of PG&E's plan."

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