PG&E troubled by Californian debts

30 March 2001

Pacific Gas & Electric (PG&E) stand to lose substantial assets as a result of its multi-billion dollar debt to the State of California.

The Californian administration is pushing for the acquisition of land assets, including property near Diablo Canyon, as part of PG&E’s repayment. During the recent energy crisis the utility spent $8.2 billion more on buying electricity than it collected from its customers.

PG&E is fighting the administration’s demands for property, its transmission system and power from a generator currently under construction, and is even considering declaring bankruptcy as an alternative. Another Californian utility, Southern California Edison, has recently agreed to a framework for a similar deal, although its debt is $2.8 billion smaller than PG&E’s.

If PG&E agrees to the proposed deal, the company stands to lose significant future revenue as well as about 130,000 acres of property. The State wants power from the 1048MWe La Paloma plant scheduled for completion by November. In addition, by agreeing to sell its transmission grid, PG&E will lose about 14% of its annual profits and asset base.

Regarding the property surrounding Diablo Canyon, PG&E would retain a security buffer zone around the plant should they agree to the transfer.

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