Interesting.  What right does the PG&E creditor committee have to either 1) ask PG&E whether it's begun talks--informal or otherwise--with the PUC, and/or 2) request that PG&E begin talks?  I'm assuming that there may be some chance for #1, but very little, if any, for #2.  Thanks.
Best,
Jeff
Edison pact could point way for PG&E 
The multibillion-dollar settlement between Southern California Edison and California regulators could ultimately ripple well beyond homes and businesses in the south state. 
It might form rough outlines for a deal that could pull Pacific Gas and Electric Co. out of bankruptcy without removing its assets from state regulation. 
The pact between Edison and the California Public Utilities Commission also might presage a nimbler PUC, one likelier to strike closed-door deals without its typical months of testimony, briefs and hearings. 
Along with its statewide impacts, which may not fully unfold for years, the settlement with the state's second-largest utility also raises uncertainties for its customers, who will pay billions to retire its debts. 
One week after a federal judge approved the $6.35 billion pact to restore Edison to financial health after wholesale power costs spiraled out of control, it is becoming increasingly clear that much of the cost will be born by south state consumers. 
From the start, the Edison rescue plan was a stealth settlement. 
It was negotiated in secret, approved in a closed meeting and so murky that days afterward, even some PUC analysts were still debating just how much money was involved. 
"It's definitely ambiguously worded," said Steve Linsey, a supervisor in the PUC's semi-independent Office of Ratepayer Advocates. On his first review of the deal, he thought about $1.7 billion would be paid by customers through future electric rates. But that figure will be at least $3.3 billion and probably higher, according to Edison and those who negotiated the deal for the PUC. 
"There seems to be a lot of off-the-books interpretation in a direction that is unfavorable to ratepayers," Linsey said. 
The PUC settlement emerged after the Senate and Assembly deadlocked over how much money should flow to Edison and what other benefits should be included for the company and some of its customers. 
In addition, the PUC gave Edison permission to use small and large customers' rates to collect much of the money to pay off back debts, bypassing legislative bargaining to shield residential consumers. 
And the PUC settlement took a much broader view of Edison's finances, sweeping in old debts and cash on hand, and then basically authorized a blueprint to pay off $6.35 billion in debts. 
About three-fourths of that amount -- $4.9 billion -- appears to come from the utility's customers. 
Edison's investors will pick up $1.5 billion -- $1.2 billion through eliminating shareholder dividends for three years, and $300 million as a company contribution. 
The clearest-cut customer contribution flows into a $3.3 billion pot to be filled by future electric bills, probably through the end of 2003. But that's not their only contribution. 
Another $1.6 billion would come from Edison's cash on hand, which includes money already collected from rates and loans that will eventually be repaid by customers. 
"In the end, you're right, the vast sum of money here comes from ratepayers," said Brian Bennett, Edison vice president of external affairs. 
But if Edison had won its suit, Bennett said, it would have been entitled to the full $6.35 billion, without its shareholders taking any hit at all. 
No one can know who would have won the Edison suit. Both sides say they had compelling legal arguments. So why did the PUC, after maintaining publicly for months that it would prevail, chose to settle? 
Partly, the commission was getting gloomy forecasts from the law firm it had hired, said PUC commissioner Richard Bilas. But he and others said there was another, looming fear. 
The PG&E bankruptcy reorganization plan, filed Sept. 20, called for shifting utility assets, including the company's hydroelectric plants, nuclear plant, and gas storage and pipeline network, to a firm free from state regulation. 
"People's calculus was shaken up by what PG&E did," said Mike Florio, an attorney for The Utility Reform Network, a consumer group. "It was just in the ether that 'oh God, there's something really ugly out there. We don't think they can get away with it, but we're not entirely sure.'" 
The reorganization plan would leave a new PG&E company free to set its own rates for power that its plants produce. 
That prospect horrifies regulators and lawmakers who have watched unregulated generators set market prices so high they crippled PG&E and Edison. 
They plan to fight PG&E's efforts, and one of their key tools could be showing the judge that the PUC has been able to salvage Edison while keeping it regulated. 
"They could say, 'judge, you don't have to do this bad deal that PG&E wants. We can work it out,'" said Randy Chinn, an adviser to state Sen. Debra Bowen, D-Marina del Rey. 
For its part, PG&E maintains that the PUC should have helped it out last fall with something similar to the Edison deal. But now, the utility said, it prefers its bankruptcy reorganization plan. 
PUC chief counsel Gary Cohen predicts that if the utility's efforts are rejected by the bankruptcy judge, PG&E will have to begin consultations with regulators for some sort of solution. 
"I think it would be smarter to be talking now," he said. 
A PG&E rescue wouldn't follow the Edison settlement exactly because PG&E's debts and costs are higher, Cohen said, but the PUC's goal would be the same goal it held for Edison: a healthy, regulated utility. 
Consumer groups have blasted the settlement for funneling money to Edison after the utility was allowed to essentially pad its bills during the late 1990s to position itself for deregulation. A PUC majority took a similar stance for more than a year -- until the Edison settlement. 
"We finally got to the point where we said look, we've seen the alternatives, and the alternatives are something like what PG&E is trying to do, or having the state take over the business of buying power," Cohen said. 
Most people at the commission, he said, concluded that a regulated utility looks much more appealing than unregulated power plants or the state Department of Water Resources, which has been buying power for cash-strapped utilities since January. 
Cohen, who orchestrated the Edison settlement negotiations, said they had to be kept quiet for fear that a leak could trigger a bankruptcy filing. Bilas said if it had leaked, so many people would have tried to stop the deal that it likely would have been torpedoed. 
At a closed session before approving it, he said, every commissioner worried aloud that they were sidestepping their own frequent calls for due process, full information and proper hearings. 
It is far too early to say whether more closed door deals will follow. Bilas, Florio and others predict the current PUC has little taste for them. But the five-member commission continues to evolve each time a term expires and the governor appoints a new commissioner. 
"It scares the hell out of me what a really pro-utility commission would do with this," said Florio, the consumer advocate. "This could be the beginning of something really ugly." 
In addition, if utilities see federal suits as way to slice through time-consuming PUC procedures, a flurry of suits could follow, said Linsey of the Ratepayer Advocates' Office.