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Dennis F. Dunne (admitted pro hac vice) 

Samuel A. Khalil (admitted pro hac vice) 

MILBANK LLP 

55 Hudson Yards 

New York, New York 10001-2163 

Telephone: (212) 530-5000 

Facsimile: (212) 530-5219 

and 

Gregory A. Bray (SBN 115367) 

Thomas R. Kreller (SBN 161922) 

MILBANK LLP 

2029 Century Park East, 33rd Floor 

Los Angeles, CA 90067 

Telephone: (424) 386-4000 

Facsimile: (213) 629-5063 

Counsel for the Official Committee 

of Unsecured Creditors

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION 

 -andPACIFIC GAS AND ELECTRIC 

COMPANY, 

 Debtors. 

Case No. 19-30088 (DM) 

Chapter 11 

(Lead Case) 

(Jointly Administered)

☐ Affects PG&E Corporation 

☒ Affects Pacific Gas and Electric Company 

☐ Affects both Debtors 

* All papers shall be filed in the Lead Case, 

No. 19-30088 (DM) 

PRELIMINARY STATEMENT OF THE 

OFFICIAL COMMITTEE OF 

UNSECURED CREDITORS IN 

OPPOSITION TO LIFT STAY MOTION 

FILED BY THE CITY AND COUNTY OF 

SAN FRANCISCO 

Date: May 9, 2019 

Time: 9:30 a.m. (Pacific Time) 

Place: United States Bankruptcy Court 

 Courtroom 17, 16th Floor 

 San Francisco, CA 94102 

Re: Docket No. 1535 

Case: 19-30088 Doc# 1813 Filed: 05/02/19 Entered: 05/02/19 15:55:28 Page 1 of

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The Official Committee of Unsecured Creditors (the “Creditors’ Committee”) 

appointed in the chapter 11 cases of the above-captioned debtors in possession (the “Debtors”), by 

its attorneys, Milbank LLP, hereby submits this preliminary statement (this “Statement”) in 

opposition to the Motion by the City and County of San Francisco for Determination that 

Automatic Stay Does Not Apply Under § 362(b)(4) or in the Alternative, for Relief from the 

Automatic Stay Under § 362(d)(1) and Memorandum of Points and Authorities in Support (the 

“Lift Stay Motion”) [Docket No. 1535] filed by the City and County of San Francisco (the “City”).1 

The Committee reserves its rights to amend, supplement, or otherwise modify this Statement prior 

to or during the preliminary hearing on the Lift Stay Motion and to assert such other and further 

objections prior to the final adjudication of the matter. 

1. By the Lift Stay Motion, the City seeks a determination that either: (i) the 

automatic stay does not apply to certain actions initiated by the City and pending before FERC 

that relate to the Debtors’ provision of wholesale distribution services under their Wholesale 

Distribution Tariff (“WDT”); or (ii) the automatic stay is lifted in order to permit those actions to 

continue. As described by the City, the pending FERC disputes (collectively, the “SF FERC 

Actions”), in which the City seeks to take action “can be grouped into three general categories: 

(1) disputes related to the scope of San Francisco’s eligibility for service under the terms of the 

WDT and Federal Power Act, (2) disputes related to PG&E’s quarterly filings to FERC about 

particular points of delivery under the WDT, and (3) disputes related to PG&E’s refusal to provide 

wholesale distribution service at secondary voltage levels consistent with the terms of its WDT.” 

Lift Stay Motion at 3. 

2. The City first argues that the automatic stay does not apply to the SF FERC 

Actions by virtue of the police and regulatory power exception set forth in Bankruptcy Code 

section 362(b)(4). Section 362(b)(4) specifically provides that a bankruptcy petition “does not 

 

1

 Capitalized terms not defined herein have the meanings ascribed to them in the Lift Stay 

Motion. 

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44553.00001

operate as a stay . . . of the commencement or continuation of an action or proceeding by a 

governmental unit . . . to enforce such governmental unit’s or organization’s police and regulatory 

power.” 11 U.S.C. § 362(b)(4). To determine whether the exception is triggered, the Ninth Circuit 

has developed two tests: (1) the pecuniary purpose test and (2) the public policy test. 

3. In order to satisfy the pecuniary purpose test, the government action must 

“relate primarily” to “matters of public safety and welfare,” rather than the “protection of the 

government’s pecuniary interest in the debtor’s property.” In re Universal Life Church, 128 F.3d 

1294, 1297 (9th Cir. 1997). In order to satisfy the public policy test, the government action must 

“effectuate public policy,” rather than “adjudicate private rights.” Id. 

4. Courts only invoke the police and regulatory power exception if both of 

these tests are satisfied. In re Dingley, 852 F.3d 1143, 1147 (9th Cir. 2017). 

5. Here, the City is not acting in its police or regulatory capacity. Rather, the 

City is seeking to protect and prosecute its interests as a competing utility serving customers within 

the same territory in which the Debtors operate. At its core, the Lift Stay Motion is a vehicle 

which, if granted, would allow the City to pursue its economic interests and potentially obtain 

cheaper and more favorable services, as well as damages, from the Debtors. See Lift Stay Motion 

at 6 (“PG&E’s actions force San Francisco to incur unnecessary and excessive costs to serve its 

loads.”); id. at 5–6 (“The complaint also seeks refunds of the excess costs incurred by San 

Francisco as a result of PG&E’s improper demand for excessive equipment.”); id. at 6–7 (“Finally, 

due to the costs and delays PG&E has unreasonably imposed on WDT services to San Francisco, 

PG&E has been able to take certain of San Francisco’s customers as its own by offering those 

customers PG&E retail service on cheaper and quicker terms.”). Because the City is acting in its 

capacity as a utility, rather than utilizing its police and/or regulatory powers, neither the pecuniary 

purpose test nor the public policy test is satisfied, and the City therefore is not entitled to utilize 

the exception to the automatic stay found in section 362(b)(4).

6. That leaves the City with the burden of establishing that the Court should 

grant relief from the automatic stay “for cause” to allow the SF FERC Actions to proceed. See 11 

U.S.C. § 362(d)(1). Although the Committee does not dispute FERC’s ultimate jurisdiction over 

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44553.00001

the underlying regulatory issues involved in the WDT disputes and believes that it is appropriate 

for FERC to decide those issues in due course, the Committee does not take a position on whether 

the Court should lift the stay at this time to permit FERC to adjudicate those issues on a go-forward 

basis. Given the early stage of the bankruptcy cases, the Committee defers to the Debtors to 

identify any prejudice that might arise from having to litigate the disputes before FERC at this 

time. 

7. The Committee does object to the stay being lifted, however, to the extent 

that it would permit FERC to issue any rulings with respect to any claims for damages against the 

Debtors. Such rulings should continue to be stayed because the Bankruptcy Court (and not FERC) 

is the proper forum for determining the validity, priority or amount of any damages resulting from 

the FERC actions. If the stay is lifted and the proceedings are adjudicated to completion before 

FERC, the Bankruptcy Court will effectively lose control over part of the claims administration 

process, which should more appropriately play out in a single forum—the Bankruptcy Court—

such that all creditors are on an equal playing field. 

 

DATED: May 2, 2019 MILBANK LLP 

 /s/ Thomas R. Kreller 

DENNIS F. DUNNE 

SAMUEL A. KHALIL 

GREGORY A. BRAY 

THOMAS R. KRELLER 

Counsel for the Official Committee of Unsecured 

Creditors 

Case: 19-30088 Doc# 1813 Filed: 05/02/19 Entered: 05/02/19 15:55:28 Page 4 of

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