Pacific Gas & Electric bondholders that are pitching a competing reorganization plan for the company in bankruptcy court are attempting to become parties in several PG&E-related proceedings at the California Public Utilities Commission—a move that utility attorneys have strongly criticized in filings with the agency.

The ad hoc committee of senior unsecured noteholders—which on Oct. 17 filed a reorganization plan that will compete with PG&E's own strategy to exit bankruptcy, and has been endorsed by a committee of wildfire victims—filed a series of Oct. 21 motions with the CPUC to become party to eight proceedings that directly concern PG&E. In the motions, the bondholders noted that their plan will compensate victims of the wildfires without burdening ratepayers. They also said the outcomes of the regulatory proceedings are critical to PG&E's long-term viability, leading to their "substantial interest" in the rulemakings.

But attorneys for PG&E pushed back in filings on Oct. 23 and Oct. 24, saying the bondholders are trying to get the commission to consider their plan under those proceedings.

"The [ad hoc committee] consists primarily of financial institutions with interests in PG&E debt, and AHC members hold in excess of $10 billion of funded debt claims against PG&E. The AHC has launched a hostile takeover bid via a competing plan of reorganization in PG&E's chapter 11 proceeding," PG&E attorneys said in an Oct. 24 filing.

The ad hoc committee is seeking party status in the CPUC's investigation into PG&E's locate-and-mark practices, announced in December 2018; a proceeding to determine the utility's cost of capital; the commission's overview of the utility's safety culture, launched in the aftermath of the 2010 San Bruno natural gas pipeline explosion; a proceeding to create protocols over pre-emptive power shut-offs; the wildfire mitigation plan proceeding; and the CPUC's investigation into possible violations committed by PG&E with respect to the 2017 North Bay wildfires.

In a motion in the locate-and-mark investigation, the bondholders committee said its interest stems from the fact that any fines or penalties imposed on PG&E could affect its reorganization plan. Similarly, any fines levied by the CPUC as part of its investigation into the 2017 fires could have consequences for PG&E's bankruptcy proceeding.

But in an Oct. 23 reply in the wildfire mitigation plan proceeding, PG&E said the motion is "untimely and unnecessary." The utility's attorneys noted that the rulemaking was launched in October 2018, and parties had conducted multiple workshops, comments and other procedures. The bondholders' participation would not help the CPUC in any way, they said.

The utility also objected to the bondholders' participation in the safety culture proceeding, saying in an Oct. 24 filing that the committee is not a stakeholder trying to contribute to the proceeding but "a bloc of debtholders that has launched a hostile takeover bid via a competing plan of reorganization in PG&E's Chapter 11 proceedings." Likewise, the bondholders should not be granted party status in the cost-of-capital proceeding since it did not involve any bankruptcy-based cost of capital, they said.

The ad hoc committee responded to PG&E's assertions in two proceedings. In an Oct. 28 filing in the stress test proceeding, the bondholders said compensation for the 2017 and 2018 wildfire victims is a "foundational issue" of the bankruptcy, and a concern for both the noteholder committee and the tort claimants committee. They noted that the bondholders are potential equity investors in PG&E as well as bankruptcy claimants.

In an Oct. 25 response in the de-energization rulemaking, the bondholders said the CPUC's actions regarding PG&E's recent spate of power shut-offs could impact the company's eventual bankruptcy plan as well as its long-term viability.

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Kavya Balaraman covers the California Public Utilities Commission and PG&E Corp. for California Energy Markets. She has reported on climate policy and science in Washington, D.C. and graduated from Columbia University's Graduate School of Journalism.