PG&E Files for Bankruptcy Protection

SAN FRANCISCO-California’s largest utility, Pacific Gas & Electric Corp., filed for protection Friday under chapter 11 of the U.S. Bankruptcy Code. Citing upward of $9 billion in debt, it is the third largest reorganization in U.S. history behind Texaco in 1987 and Financial Corp. of America in 1998.

The company, which serves better than one out of every three Californians, has been suffering since last summer, when the price of wholesale electricity began to rise further and further above the price it was allowed to charge customers as required by the state’s 1996 deregulation plan. According to the filing, PG&E had $2.6 billion in cash and $4.4 billion in outstanding bills as of March 29.

The day before the filing, Gov. Gray Davis went on television to allay concerns and reveal his proposal for a rate increase smaller than requested by the state’s private utilities. In announcing the filing, PG&E officials said the filing was necessary because the state has heretofore been unable to drum up a better solution.