Bankruptcy Pacific Gas and Electric Company

in 1998, change in regulation of california s public utilities, including pg&e, began. california public utility commission (cpuc) set rates pg&e charge customers , required them provide power customers wanted @ rates set cpuc.

in summer of 2001 drought in northwest states , in california reduced amount of hydroelectric power available. pg&e buy cheap hydroelectric power under long term contracts bonneville dam, etc. drought , delays in approval of new power plants , market manipulation decreased available electric power generation capacity generated in state or bought under long term contracts out of state. hot weather brought on higher usage, rolling blackouts. etc.

with little excess generating capacity of own pg&e forced buy electricity out of state suppliers without long term contracts. because pg&e had buy additional electricity meet demand suppliers took advantage of requirement , manipulated market creating artificial shortages , charged high electrical rates. cpuc refused adjust allowable electric rates. unable change rates , sell electricity consumers cost them on open market pg&e started hemorrhaging cash.

pg&e company (the utility, not holding company) entered bankruptcy under chapter 11 on april 6, 2001. state of california tried bail out utility , provide power pg&e s 5.1 million customers under same rules required state buy electricity @ market rate high cost meet demand , sell @ lower fixed price, , result, state lost significant amounts of money.

the crisis cost pg&e , state somewhere between $40 , $45 billion. there evidence crisis played important part in eventual recall of california governor gray davis.

pg&e company, utility, emerged bankruptcy in april 2004, after paying $10.2 billion hundreds of creditors. part of reorganization, pg&e s 5.1 million electricity customers have pay above-market prices several years cancel debt.