Court Rejects PG&E; Appeal of State Case

PG&E; Corp. on Monday lost a U.S. Supreme Court appeal aimed at thwarting California’s effort to recoup $5 billion transferred by the company’s Pacific Gas & Electric utility unit before its 2001 bankruptcy filing.

The justices, without comment, refused to consider PG&E;’s arguments that California Atty. Gen. Bill Lockyer could press his case only through the U.S. Bankruptcy Court process and not in state court.

Lockyer contends San Francisco-based PG&E; violated California’s unfair competition law by accepting money from the utility during the state’s 2000-01 energy crisis while Pacific Gas & Electric was losing billions of dollars. Lockyer is seeking to have the money refunded to customers.

In letting the case go forward in state court, the San Francisco-based U.S. 9th Circuit Court of Appeals pointed to an exception in federal bankruptcy law that lets government agencies press cases under their “police or regulatory power.”

Pacific Gas & Electric, California’s largest utility, filed for bankruptcy protection in April 2001 after accruing $9 billion in losses by buying power for more than it could charge customers.

It emerged from bankruptcy protection in 2004 as the result of a settlement with the California Public Utilities Commission. The utility paid creditors $10.2 billion using customer payments and money raised from bond sales.