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	From:  "Ronald Carroll" <rcarroll@bracepatt.com>                           
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Subject: Fwd: Reuters - FERC Won't Reconsider PG&E Reorg. Plan


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Date: Wed, 21 Feb 2001 14:33:19 -0600
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Subject: Reuters - FERC Won't Reconsider PG&E Reorg. Plan
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Wednesday February 21, 11:21 am Eastern Time

FERC Won't Reconsider PG&E Reorg. Plan
By Patrick Connole

WASHINGTON (Reuters) - The Federal Energy Regulatory Commission on Wednesday 
upheld a plan by utility PG&E Corp (NYSE:PCG - news) to shield assets of its 
unregulated subsidiaries from creditors, denying objections raised by 
California state officials and by other companies.

The utility's plan, first approved by FERC last month, was widely seen as a 
way to protect some PG&E subsidiaries if the parent company was driven to 
bankruptcy by the California power crisis.

PG&E and Edison International (NYSE:EIX - news), California's two biggest 
utilities, have been drained of billions of dollars by runaway wholesale 
prices for electricity. Under the state's 1996 deregulation law, the 
companies cannot pass through higher wholesale costs to consumers.

On Wednesday, FERC voted 2-to-1 at a regularly scheduled meeting to deny 
requests for a rehearing on PG&E's plan.

FERC said reorganization by PG&E -- which has annual revenues of more than 
$20 billion -- would promote construction of new power generating plants in 
the energy-starved state.

PG&E plans to create a limited-liability unit, NEG LLC, for its non-regulated 
companies. Included in the new unit will be Athens Generating Co., Badger 
Generating Co., Hermiston Generating Co., Lake Road Generating Co., La Poloma 
Generating Co., Liberty Generating Co., Madison Windpower, Mantua Creek 
Generating Co., PG&E Dispersed Generating Co., PG&E Energy Trading-Power, 
Pittsfield Generating Co., and USGen New England Inc.

``This reorganization would insert NEG in the ownership chain between PG&E 
Corp and its direct, wholly-owned subsidiary NEG,'' FERC said in its order. 
``The stated purpose of this reorganization was to facilitate NEG's credit 
rating and future financings, either by NEG or on behalf of the 
subsidiaries.''

FERC rejected claims raised by California officials and companies that the 
corporate reorganization plan would hurt competition.

``There is only speculation that the transaction will increase the 
possibility of non-payment by PG&E and deter non-affiliate suppliers from 
selling power to PG&E, thus resulting in diminished power supplies in 
California,'' the FERC order said.

The majority of commissioners said they believed the opposite to be true.

``By improving the ability of the NEG companies to obtain higher credit 
ratings, the reorganization may increase the likelihood that lenders will 
finance PG&E's electric generation construction projects in California,'' the 
order said.

FERC also said the utility's financial problems pre-date the corporate 
reorganization.

Commissioner William Massey voted in favor of a rehearing but was overruled 
by FERC chairman Curtis Hebert and Linda Breathitt. Massey previously 
objected to PG&E's plan, expressing concern that such a corporate 
reorganization might hurt ratepayers and competitors.

The NEG LLC's companies are not subject to the Federal Power Act.

California lawmakers have been trying to work out a detailed plan to provide 
immediate and long-term relief to both utilities.

FERC is a five-member independent agency that regulates interstate 
electricity, natural gas and hydropower issues. Two seats are currently 
vacant.