PG&E Judge Wary of Push for Official Voice for Ratepayers in Bankruptcy Court
May 09 2019 - 7:47PM
Dow Jones News
By Peg Brickley
PG&E Corp. ratepayers Thursday faced tough questioning from
a bankruptcy judge as they sought to gain an official voice in the
California utility's bankruptcy.
Judge Dennis Montali said he would rule later on a request to
order the appointment of an official committee to speak for
ratepayers, as PG&E tries to resolve damage claims from
wildfires that are estimated at $30 billion or more.
Customers fear PG&E's bankruptcy will end in higher rates
for electricity, said Cecily Dumas, lead lawyer for the official
committee of wildfire victims.
The fire victims' committee took no position on the request for
a ratepayers committee, but is "sympathetic to the concerns of the
ratepayers particularly in the event that this turns out to be an
estate that is insolvent and the cost of the wildfire losses get
passed to the ratepayers," she said.
PG&E's damages could prove to be higher than $30 billion,
the fire victims have said in court papers. With more than $24
billion owed to bondholders, lenders and other creditors, PG&E
might have to raise rates if it wants to emerge from chapter 11
with all its debts paid.
Moody's Investors Service, in a report earlier this year, also
cited the possibility that PG&E's customers will see higher
bills because of the utility's fire damages.
Judge Montali indicated skepticism about the ratepayers' request
for a committee, which met with opposition from PG&E, federal
bankruptcy watchdogs and the official committee that represents the
unsecured financial creditors in the case, including investors
owning $17 billion in bond debt.
"What they are concerned about is rates going forward," said
Stephen Karotkin, lawyer for PG&E. Ratepayers can make their
case to hold the line on electricity charges before the California
Public Utilities Commission, Mr. Karotkin said.
Nora Sheriff, lawyer for an association that represents
industries that are large power customers, said ratepayers haven't
received an answer yet from the CPUC on requests "for increased
transparency and clarity" on PG&E's financial stress test and
an investigation into the company's safety culture.
Official committee status would entitle ratepayers to hire
professionals, and send the bill to PG&E. In addition to its
own lawyers and advisers, PG&E in bankruptcy is required to pay
for lawyers and advisers for other official committees.
Ratepayers said their payments to PG&E are funding the
bankruptcy. Timothy S. Laffredi, a lawyer representing U.S. Trustee
Andrew Vara, said that didn't entitle them to official committee
status.
The chapter 11 proceeding that began in January is PG&E's
second bankruptcy. During PG&E's first bankruptcy, Judge
Montali disbanded a ratepayers committee, on the grounds ratepayers
don't count as creditors.
The Utility Reform Network, a consumer advocacy group that led
the drive for a committee for this case, said ratepayers are
entitled to refunds from PG&E, and that gives them creditor
status.
Judge Montali said PG&E is likely to issue credits for those
refunds. Once that happens, the judge said, the ratepayers would no
longer qualify as creditors under the bankruptcy code, and wouldn't
be entitled to seats on an official committee.
Write to Peg Brickley at peg.brickley@wsj.com
(END) Dow Jones Newswires
May 09, 2019 19:32 ET (23:32 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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