California state attorney general Bill Lockyer has filed a substantial lawsuit against Pacific Gas & Electricity Corp alleging fraudulent business practices driving its utility subsidiary PG & E Co into bankruptcy. The lawsuit, filed in San Francisco Superior Court, seeks damages of $600 million to $4 billion plus any additional penalties that might be imposed.
Lockyer says that PG&E drained the assets of PG&E Co and put billions of dollars in unregulated affiliates in order to achieve its objective of becoming one of the largest unregulated power generators in the nation.
In so doing it failed in its promise to state regulator CPUC, when it formed the holding company in 1996, to protect energy customers and ensure a healthy operation of its utility; at that time it was subject to 22 conditions set by the CUPC to protect customers from the potential risks and abuses of a holding company structure. Again, according to Lockyer, PG&E has engaged in unfair and deceptive practices and deliberately failed to disclose to, or misled, regulators to gain their approval of the holding company. But after it was formed, cash flowed in one direction only, away from the utility to the parent corporation.
