USA: UPDATE 1-Calif. bankruptcy ripples through utilities shares.
Reuters English News Service, 04/06/2001

Pacific Gas and Electric Company Files for Chapter 11 Reorganization
Business Wire, 04/06/2001


USA: UPDATE 1-Calif. bankruptcy ripples through utilities shares.

04/06/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, April 6 (Reuters) - Shares of utilities companies paused, plummeted 
then pared losses after news on Friday that Pacific Gas & Electric, 
California's largest investor-owned utility, filed for voluntary bankruptcy, 
a victim the state's flawed deregulation law. 
Trade in shares of parent company PG&E Corp. were halted before the filing. 
When trading resumed, they fell 37.96 percent to $7.06, off $4.32, below its 
modern stock low of $8.50.
Shares in Edison International , California's other financially strapped 
utility, lost almost 30 percent of its value to trade down $3.72 at $8.92. 
Stocks of wholesale power suppliers with money owed to them at risk as a 
result of the California power crisis also fell sharply on the news but 
recovered slightly in later trade. 
"California is a problem that's going to be with us for quite some time, but 
these guys are going to benefit from the fact that rates were increased there 
recently and going forward they will benefit from power prices that are high 
relative to historical norms and eventually they are going to get paid on 
some of these receivables as well," said Dain Rauscher Wessels analyst Mark 
Easterbrook. 
Easterbrook said Duke Energy Corp. , Dynegy Corp. , Reliant Energy Inc. and 
Williams Cos. Inc. each had outstanding amounts of $100 million or more owing 
to them as a result of the California power crisis, including a significant 
but as yet unquantified portions owed by Pacific Gas & Electric. 
Duke was down 4.74 percent or $2.01 at 40.39 while Dynegy was off $2.27 or 
4.46 percent to 48.65, up from its low of $46.35. 
"The market has taken than $1 billion - more than threefold - off Dynegy's 
market capitalization even though its exposure to reserves is $265 million," 
said James Yanello, analyst at UBS Warburg. 
Williams Cos. was down 96 cents or 2.32 percent lower at $40.89 but off its 
low of $39.60. 
"Enron, Williams and El Paso's exposure is very limited." said Yanello. 
Enron Corp. shares were down 2.6 percent or $1.45 at $54.25, off its low of 
$53.20. 
"It's unfortunate that the state's largest utility was forced to turn to the 
court for a resolution. Solutions to the state's energy crisis have been 
available for months that would have avoided this scenario, but Governor 
Davis and the legislature lack the bold leadership to take swift, decisive 
action," spokesman Vance Meyer said. 
El Paso shares moved off its intraday low of $63.03 to trade up 7 cents at 
$63.10. 
Reliant Energy edged back up to $43.51 or down 4.06 percent or $1.84 after 
hitting an intraday low of $42.65. (-Janet McGurty, New York Equities, +1 212 
859 1765 janet.mcgurty@reuters.com).
Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 



Pacific Gas and Electric Company Files for Chapter 11 Reorganization

04/06/2001
Business Wire
(Copyright (c) 2001, Business Wire)

SAN FRANCISCO--(BUSINESS WIRE)--April 6, 2001--Pacific Gas and Electric 
Company, the utility unit of PG&E Corporation (NYSE: PCG), today filed for 
reorganization under Chapter 11 of the U.S. Bankruptcy Code in San Francisco 
bankruptcy court. The company said it is taking this action in light of its 
unreimbursed energy costs which are now increasing by more than $300 million 
per month, continuing CPUC decisions that economically disadvantage the 
company, and the now unmistakable fact that negotiations with Governor Gray 
Davis and his representatives are going nowhere. 
Neither PG&E Corporation nor any of its other subsidiaries, including its 
National Energy Group, have filed for Chapter 11 reorganization or are 
affected by the utility's filing.
"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, Jr., Chairman of Pacific Gas and Electric Company. "The 
regulatory and political processes have failed us, and now we are turning to 
the court." 
Glynn added, "Our objective is to move through the Chapter 11 reorganization 
process as quickly as possible, without disruption to our operations or 
inconvenience to our customers. Throughout this crisis, our 20,000 employees 
have been and remain committed to providing safe and reliable service to the 
13 million Californians who depend on us to deliver their gas and 
electricity." 
Pacific Gas and Electric Company decided to file for the protection of 
Chapter 11 primarily due to: 

-- Failure by the state to assume the full procurement 
responsibility for Pacific Gas and Electric's "net open 
position" as was provided under AB1X. This has the result of 
increasing financial exposure to unreimbursed wholesale energy 
procurement costs, which the utility estimates to be 
approximately $300 million or more per month. 

-- The impact of actions by the California Public Utilities 
Commission (CPUC) on March 27, 2001, and April 3, 2001, that 
created new payment obligations for the company and undermined 
its ability to return to financial viability. 

-- Lack of progress in negotiations with the state to provide 
recovery of $9 billion in wholesale power purchases made by 
the utility since June 2000, which have not been recoverable 
in frozen rates. 

-- The adoption by the CPUC of an illegal and retroactive 
accounting change that would appear to eliminate our true 
uncollected wholesale costs. 

"In addition, despite Pacific Gas & Electric's best efforts to work with the 
State of California to reach a consensual, responsible, fair and 
comprehensive solution to California's energy crisis, no agreement has been 
reached with the Governor and the Governor's representatives have 
dramatically slowed the pace and the progress of discussions over the past 
month. 
"Furthermore since last fall, we have filed comprehensive plans for resolving 
this matter with the CPUC, but they have not acted affirmatively on them," 
said Glynn. 
On October 4, 2000, Pacific Gas and Electric sought emergency rate action by 
the CPUC. In November 2000, we filed our rate stabilization plan, which, if 
adopted, would have increased electric prices by an initial 25 percent, 
compared with the 46 percent recently adopted by the CPUC. Neither request 
was acted upon. Had the state acted at that time: 

-- Pacific Gas and Electric would have been kept creditworthy; 

-- Pacific Gas and Electric would have been able to enter into 
long-term power purchase contracts at prices lower than those 
announced by the state; 

-- The state would not have had to almost exhaust the state's 
budget surplus by spending billions of dollars to purchase 
power for the utility's customers; 

-- The state would not now need to issue billions of dollars in 
bonds to cover these power purchases; and 

-- The state would not now be advancing a proposal to spend 
billions of dollars to purchase the state's three 
investor-owned utility's electric transmission systems. 

"This year, the state has spent more than $3 billion on power purchases and, 
with the CPUC, has arranged to be reimbursed for these expenses," noted 
Glynn. "In contrast, since June Pacific Gas and Electric Company has spent $9 
billion in excess of revenues to pay for power for its customers and 
exhausted its ability to continue borrowing, but there has been no progress 
on a plan to reimburse it for those expenditures as provided by law. 
"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. However, these 
statements have not been followed up by constructive actions, and a 
reorganization in Chapter 11 is now the most feasible means of resolution." 
The utility will utilize existing resources to continue operating its 
business during bankruptcy, including paying vendors and suppliers in full 
for goods and services received after the filing. The utility will pay 
electric commodity suppliers as provided by law. The utility intends to 
continue normal electric and gas transmission and distribution functions 
during the Chapter 11 process. Employees will continue to be paid. Health 
care plans and other benefits for employees and most retirees will continue. 
The utility's qualified retirement plans for retirees and vested employees 
are fully funded and protected by federal law. 

Notice 

A media teleconference will be held today at 10:15 A.M. Pacific Daylight Time 
to discuss this announcement. Pacific Gas and Electric Company Chairman 
Robert D. Glynn, Jr., and Pacific Gas and Electric Company President and CEO 
Gordon R. Smith will be available for questions. The dial-in number is 
888/469-2078, and the password for access is "media." An investment community 
conference call to discuss Pacific Gas and Electric Company's Chapter 11 
filing has been scheduled for 11:15 A.M. Pacific Daylight Time today. A 
real-time webcast of this conference call can be accessed at www.pgecorp.com.

CONTACT: PG&E Corporation News Department 415/973-5930 
12:34 EDT APRIL 6, 2001 

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.