California utility files for Chapter 11 bankruptcy

April 11, 2001 —

PACIFIC GAS AND Electric Co., the utility for northern California and Silicon Valley, filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in San Francisco bankruptcy court, company officials confirmed on Friday.

The utility will continue operating its business during bankruptcy, including paying vendors and suppliers, officials said. PG&E said the organization's objective is to speed through the Chapter 11 reorganization process as quickly as possible without disrupting operations and service to customers.

Officials at San Francisco-based PG&E said the move was a result of unreimbursed energy costs that are ballooning by more than $300 million per month, continuing California Public Utility Commission decisions that economically disadvantage the company, and the "unmistakable fact that negotiations with California Governor Gray Davis and his representatives are going nowhere," according to a statement released by the utility.

Neither the utility's parent organization, PG&E Corp., nor any of its other subsidiaries, including its National Energy Group, have filed for bankruptcy protection or are affected by the utility's filing, officials said.

"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, in a statement. "The regulatory and political processes have failed us, and now we are turning to the court."

The company hopes the Chapter 11 process will restore the utility's financial viability and allow it to meet its financial obligations equitably.

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