Bankruptcy
May 31, 2001
Trustee Wants Ratepayer Panel OK
SAN FRANCISCO - A Justice Department attorney, claiming U.S. Bankruptcy Judge Dennis Montali was misled by Pacific Gas and Electric Co., formally asked Montali on Tuesday to reconsider his decision barring a ratepayer panel.
The move by U.S. Trustee Linda Ekstrom Stanley was supported by the nine-member committee that Stanley appointed in May to represent the interests of ratepayers in PG&E's multi-billion dollar bankruptcy. Montali on May 18 rejected the committee, ruling that bankruptcy law does not give customers standing in the case.
"PG&E's ratepayers have the largest financial stake in this Chapter 11 case," Stanley said in a written statement Tuesday. "It is manifestly unjust to exclude their perspective."
Such a panel could have wide-ranging powers in the bankruptcy proceeding, including the ability to hire its own attorney at PG&E's expense and to conduct independent investigations of the company's affairs.
In Tuesday's motion, Stanley's office argued that PG&E "misled the court on two important areas of law" supporting the ratepayers' claims.
Stanley disputed statements made by PG&E's general counsel, Roger Peters, regarding ratepayer refunds and the company's liability in the wake of rolling blackouts. Peters spoke during the May 18 hearing that preceded Montali's decision and the judge cited his comments in his final ruling against the committee.
In contrast to Peter's remarks, Stanley said both present and former customers of the company could get refunds and that ratepayers could well claim that the company faced liability for its inability to supply electricity during certain times because of its actions before the bankruptcy.
"Ratepayers may argue PG&E's pre-petition transfers to its parent corporation were wrongful, allegedly leaving the utility undercapitalized and leading to the breach of its utility obligation to supply power," said the trustee's motion, which was written by Assistant U.S. Trustee Patricia Cutler.
The motion also argued that Montali was wrong to prevent the attorney for the ratepayer committee from speaking at the hearing. The committee, which includes members from business, agriculture and consumer groups, is represented by Nevada lawyer Kaaran Thomas.
The committee itself also asked Montali to reverse his decision, saying the judge disallowed the panel without proper notice and a chance to be heard; that if the court allows the sale of PG&E assets, some proceeds may rightfully belong to customers; and that ratepayers have numerous interests that need to be determined on a case-by-case basis.
"Ratepayers have a number of important claims against PG&E that could be affected by this case," said David Byers, chairman of the ratepayer committee and attorney for the California City County Street Light Association. "We believe strongly that unless ratepayers are given a voice in this proceeding, their interests will not be represented."
PG&E, however, appeared unmoved.
"We believe that the court has properly determined there was no basis for the formation of a ratepayers committee in the bankruptcy code," said utility spokesman Ron Low. "PG&E does not object to the ratepayers having a voice in matters where they have standing."
An attorney for the committee representing PG&E's creditors, including the power wholesalers to whom the utility owes billions of dollars, could not be reached for comment Thursday. However, the committee has opposed the formation of a panel representing ratepayers.
Committee lawyer Robert Jay Moore, of the Los Angeles office of Milbank, Tweed, Hadley & McCloy, told Montali at the May 18 hearing that ratepayers are "sources of revenue and not liabilities of the company."
Dennis Pfaff
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