Bid for PG&E restitution on track
for Superior Court
By Julia Cheever, Bay City News Service
October 3, 2006
SAN FRANCISCO (BCN) - A lawyer for the city of San Francisco
said today the last roadblock to a Superior Court trial on a city
and state bid to win more than $4 billion in restitution from
PG&E Corp. appears to have been lifted by a U.S. Supreme Court
action on Monday.
The high court declined to take up the corporation's appeal of
a federal appeals court ruling that said the case could be heard
in San Francisco Superior Court rather than federal bankruptcy
Deputy City Attorney Theresa Mueller said, "This removes
any question that restitution is appropriate as an outcome of
California Attorney General Bill Lockyer and City Attorney Dennis
Herrera filed parallel lawsuits in early 2002, claiming that PG&E
Corp., the parent corporation of the PG&E Co. utility, illegally
transferred more than $4 billion from the utility to itself.
The transfers allegedly took place in the four years before PG&E
Co. filed for Chapter 11 bankruptcy in April 2001, citing $9 billion
in debt from wholesale energy costs during the state's energy
crisis in 2000 and 2001. The utility emerged from the bankruptcy
Mueller, who heads the city attorney's energy and telecommunications
team, said pretrial evidence gathering will continue in the court
of San Francisco Superior Court Judge Richard Kramer. She said
she did not know how soon the two lawsuits would come to trial.
Brian Herzog, a spokesman for PG&E Corp., said the legal
dispute concerned only the venue where the claims will be heard
and not the merits of the claims.
He said the corporation maintains the revenue transfers were
legal and were investigated and found to be within the rules by
both the state Public Utilities Commission and the Legislature
in late 2000 and early 2001.
"We think there is absolutely no basis for the claims,"
Mueller said that restitution, if awarded by the court, "could
happen in a number of ways," such as consumer rate reductions
channeled through the utility or possibly direct payments to customers.
In the ruling unsuccessfully appealed by PG&E Corp., the
9th U.S. Circuit Court of Appeals in San Francisco said in January
that the city and state lawsuits fell into an exception to the
rule that most lawsuits against a bankrupt company must be transferred
to federal bankruptcy court.
The exception is for lawsuits related to government police or
The federal appeals court said, "Restitution will benefit
the public welfare by penalizing past unlawful conduct and deterring
The court continued, "In these circumstances, the restitution
claim fits comfortably within (the state's) police or regulatory
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