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Attorney General Lockyer Says PG&E Bankruptcy Settlement Will Not Stop State's Lawsuit to Recover Billions of Dollars for Utility's Ratepayers

Thursday, December 18, 2003
Contact: (415) 703-5837, agpressoffice@doj.ca.gov

(SACRAMENTO) – Attorney General Bill Lockyer today stressed the bankruptcy settlement approved by the California Public Utilities Commission will not stop the lawsuit filed by his office that seeks to reimburse ratepayers for some $4 billion in assets Pacific Gas & Electric Co. transferred to its parent company while the utility was losing billions of dollars during the height of the Energy Crisis of 2000-01.

"The upstreaming of this money may have helped the parent company's investors, but it inflicted substantial harm on PG&E's customers," said Lockyer. "From a legal perspective, the transfers violated state law, as well as CPUC rules that allowed PG&E to form a holding company in the first place. Today's decision specifically states it will not stop us from pursuing justice for ratepayers."

The City and County of San Francisco has filed a similar lawsuit. "It's clearly in the public interest for these lawsuits to continue," said San Francisco City Attorney Dennis J. Herrera. "State law protects utility ratepayers from such abuses by the parent company."

Lockyer filed his lawsuit in January 2002 in San Francisco Superior Court, naming the parent company, PG&E Corporation, and its directors as defendant. In addition to restitution for ratepayers, the complaint seeks at least $500 million in civil penalties and injunctive relief.

U.S. bankruptcy Judge Dennis Montali has indicated he will approve the settlement and PG&E's bankruptcy reorganization plan. But he has said his approval order will make clear the settlement will not bar lawsuits brought by the state and other third parties against non-debtors, including the parent company and its directors.

U.S. Judge Vaughn Walker, Northern District of California, has ruled that the state's remedies for civil penalties and injunctive relief can be decided in state court. But he ruled the restitution remedy, in effect, belonged to the utility, and could not be brought in state court. Lockyer has appealed that decision to the U.S. Ninth Circuit Court of Appeals. If the Ninth Circuit reverses, Lockyer's case will proceed fully intact in the San Francisco Superior Court.

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