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TIMOTHY S. LAFFREDI (WI SBN 1055133) 

Assistant United States Trustee

CAMERON M. GULDEN (MN SBN 310931)

Trial Attorney

MARTA E. VILLACORTA (NY SBN 4918280)

Trial Attorney

United States Department of Justice

Office of the United States Trustee

450 Golden Gate Avenue, Suite 05-0153

San Francisco, CA 94102

Telephone: (415) 705-3333

Facsimile: (415) 705-3379

Email: cameron.m.gulden@usdoj.gov

Attorneys for Andrew R. Vara, Acting United States Trustee for Region 31

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

In re:

PG&E CORPORATION,

- and -

Bankruptcy Case

No. 19-30088 (DM)

Chapter 11

(Lead Case)

(Jointly Administered)

Date: May 8, 2019

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

Place: Hon. Dennis Montali

450 Golden Gate Avenue

16th Floor, Courtroom 17

San Francisco, CA 94102

PACIFIC GAS AND ELECTRIC 

COMPANY,

Debtors.

 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)

UNITED STATES TRUSTEE’S OBJECTION TO MOTION

BY TURN FOR APPOINTMENT OF COMMITTEE OF RATEPAYER CLAIMANTS

PURSUANT TO 11 U.S.C. §§ 1102(A)(2) AND 105 

Andrew R. Vara, Acting United States Trustee for Region 3 (the “United States Trustee”),

by and through his undersigned counsel, hereby files this objection (“Objection”) to the Motion of 

The Utility Reform Network (“TURN”) for Appointment of Official Committee of Ratepayer 

 

1

Andrew R. Vara, Acting United States Trustee for Region 3, is acting in this appointment for 

Tracy Hope Davis, United States Trustee for Region 17, who has recused herself.

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Claimants Pursuant to 11 U.S.C. §§ 1102(a)(2) and 105(a) (ECF No. 1324, “Motion”).2 This

Objection is supported by the following memorandum of points and authorities and any argument 

the Court may permit.

I. MEMORANDUM OF POINTS AND AUTHORITIES

A. Introduction

Despite the fact that this Court has previously held, in a case involving the same entity, that 

“[t]here is no authority for creation of the Ratepayers Committee,” the Motion requests the Court 

direct the United States Trustee to appoint an official committee of ratepayer claimants. The 

United States Trustee understands the importance of these proceedings to the many affected 

parties, including ratepayers. That does not, however, establish a legal entitlement for any group 

of interested parties to be represented by an official committee under section 1102(a)(2). TURN’s 

attempt to distinguish the earlier PG&E case with this one and to establish that, this time, the 

ratepayers are actually “creditors” fails, and the Motion must therefore be denied. In the 

alternative, TURN has failed to show that the ratepayers are not adequately represented. 

Moreover, the ratepayers enjoy certain protections with regard to rate increases under section 

1129(a)(6).

B. Background Facts and Procedural Posture

1. On January 29, 2019, the Debtors commenced the above-captioned cases by filing 

voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. ECF No. 1. 

2. No trustee has been appointed in the Debtors’ cases. See generally Case Dockets.

3. On February 12, 2019, the United States Trustee appointed an Official Committee 

of Unsecured Creditors (“OCC”). ECF No. 409. On February 15, 2019, the United States Trustee

appointed an Official Committee of Tort Claimants. ECF No. 453.

 

2 The United States Trustee requests that the Court take judicial notice of the pleadings and

documents filed in these cases pursuant to Federal Rule of Bankruptcy Procedure 9017 and Federal

Rule of Evidence 201.

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4. By letter dated February 6, 2019, TURN requested the United States Trustee 

appoint an official committee of ratepayer claimants. See ECF No. 1327. After review and 

analysis, the United States Trustee responded that he had concluded that appointment of such a 

committee would be outside the United States Trustee’s statutory authority. ECF No. 1327-1. 

Specifically, the United States Trustee stated that “Section 1102(b)(1) requires that the United 

States Trustee appoint persons who hold claims against the debtor to serve on official committees. 

To be eligible for appointment, prospective members must qualify under the Bankruptcy Code as 

‘persons’ and must ‘hold claims against the debtor.’ See 11 U.S.C. §§ 101(10) and (41).” Id.

5. TURN again requested the United States Trustee form a ratepayers committee, and 

by letter dated March 21, 2019, the United States Trustee once again declined, indicating that his 

position remained the same and that, accordingly, no action would be taken. ECF No. 1327-2.

6. TURN filed the Motion on April 10, 2019. ECF No. 1324.

7. The Motion requests “the Court for an order pursuant to 11 U.S.C. §§ 1102(a)(2) 

and 105(a) directing the United States Trustee to appoint an official committee of ratepayer 

claimants.” Id. According to the Motion, “the U.S. Trustee has failed to follow controlling law, 

refusing to appoint a committee on the ground that ratepayers are not persons with pre-petition 

claims against the debtors herein.” Id.3

8. Certain other parties filed joinders to TURN’s motion, each expressing a 

willingness to serve on an official committee of ratepayer claimants. ECF No. 1476, 1477.

 

3 To be clear, the United States Trustee never based the denial of the committee request on a 

conclusion that ratepayers are not “persons.” Although most governmental ratepayers would not 

be “persons” under 11 U.S.C. § 101(41), most private ratepayers are persons. But “personhood” 

does not by itself entitle one to be represented by an official committee. The person must be either 

a creditor or an equity security holder. The United States Trustee concluded that the ratepayers are 

not creditors.

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OBJECTION

I. The Statutory Framework: Section 1102 Confers Important, but Different, Authority 

on Bankruptcy Courts and U.S. Trustees with Respect to Official Committees.

Section 1102(a) of the Code governs the formation, appointment, and modification of 

official committees of creditors and equity security holders. It provides under what circumstances 

the court and the United States Trustee may act and under what standard. Congress gave the 

United States Trustee and bankruptcy courts important, but divergent, authority with respect to 

committees in chapter 11. As to the United States Trustee’s role (outside of North Carolina and 

Alabama), the United States Trustee appoints all official committees and, as appropriate, monitors 

membership and occasionally modifies their composition. 11 U.S.C. § 1102(a)(1) and (2).

Section 1102 also confers important, but different, authority on bankruptcy courts with 

respect to official committees. A court’s authority over committee formation and membership is 

limited. A court may, if requested:

• order the United States Trustee to appoint additional committees if necessary to 

assure adequate representation; 

• order the United States Trustee to change committee membership if necessary to 

ensure adequate representation; 

• order that a committee not be appointed in a small business case; or

• order the United States Trustee to increase membership to include a creditor that is 

a small business concern. 

11 U.S.C. § 1102(a)(1)-(4). “Those are the only powers over committees the Code gives the court. 

There are no others.” In re Caesars Entertainment Operating Co., 526 B.R. 265, 268 (Bankr. N.D. 

Ill. 2015). 

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II. As This Court Has Previously Held, There is No Authority in the Bankruptcy Code 

for the Appointment of a Ratepayers Committee Because Ratepayers Are Not 

Creditors. 

TURN cannot obtain the relief it seeks because such a committee can represent only 

creditors or equity security holders. As this Court has specifically ruled, ratepayers — customers 

of PG&E who pay money to the entity for gas and electrical services — are not creditors. See In 

re Pacific Gas & Electric Co., Case No. 01-30923, Memorandum of Decision Regarding Motion 

for Order Vacating Appointment by U.S. Trustee of Official Comm. of Ratepayers (Bankr. N.D. 

Cal. May 18, 2001, ECF No. 599 at 8) (finding that “having an interest in a particular result (as all 

ratepayers do) does not rise to the level of having a claim as defined in the Bankruptcy Code”). 

The Court noted that section 1102 of Bankruptcy Code authorizes the appointment of one 

creditors’ committee and additional creditors’ committees “if necessary to assure adequate 

representation of creditors,” (i.e., holders of prepetition claims). Id. at 5. The Court also noted 

that “ratepayers have other means and other fora to protect their interests,” such as the Official 

Committee of Unsecured Creditors and the Attorney General’s Office. Id. at 2. 

TURN’s attempt to distinguish current ratepayers from ratepayers during the prior case 

fails. TURN argues that because PG&E customers are entitled to receive a small credit on their 

bills twice a year, “[e]very ratepayer within PG&E’s service area is a creditor in these cases.” 

ECF No. 1324 at 8-9. While TURN is correct that 11 U.S.C. § 101(5)(A) defines “claim” as a 

“right to payment,” ratepayers do not have a right to payment. In fact, the Public Utilities 

Commission of the State of California specifically rejected the idea of paying customers directly 

via an off-bill rebate check in favor of an on-bill credit. ECF No. 1326-1 at 121. All current 

customers receive the small credit in April and October, id. at 122, a minor, automatic4 statement 

adjustment that does not rise to the level of transforming all gas and electric customers into 

creditors of PG&E. The adjustment is simply a reduction in the amounts owed by ratepayers that 

is reflected on their April and October statements.

 

4 Contrary to what TURN argues, ratepayers do not, in fact need a committee to “ensur[e] their 

claims are paid as and when due . . . .” The rebates are provided automatically every six months. 

ECF No. 1326-41 at 124.

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Finally, even if ratepayers may end up partially funding (directly or indirectly) a plan of 

reorganization proposed by the Debtors, there simply is no debtor-creditor relationship between 

PG&E and its customers that would give rise to creditor status. TURN’s argument proves too 

much. Almost every operating chapter 11 debtor will have key customers who purchase its 

products or services. The maintenance of relationships with those customers will likely be vitally 

important to the successful rehabilitation of the debtor. Indeed, the proceeds of the customers’ 

purchases of products or services will, at least to some degree, fund the plan. But the customers 

are not creditors of the debtor. To the contrary, they are more likely to be obligors to the debtor.5

 

The Bankruptcy Code definition of “creditor” simply cannot bear the weight of TURN’s expansive 

interpretation. Because TURN seeks the appointment of a committee of interested parties who are 

not creditors, the Motion should be denied. 

III. Even if this Court Were to Find that the Ratepayers are Creditors, an Additional 

Committee is Not Warranted. 

“The party moving for an order directing the appointment of an additional committee has 

the burden of establishing that it is not adequately represented.” In re Nat'l R.V. Holdings, Inc., 

390 B.R. 690, 695 (Bankr. CD Cal. 2008); In re Residential Capital, LLC, 480 B.R.550, 557

(Bankr. SDNY 2012). Even if the ratepayers are somehow able to establish that they have a “right 

to payment” or that PG&E owes a “debt” to them, they must further show that the ratepayers are 

not adequately represented. TURN cannot meet this burden, because “the requirement that the 

moving party show that such a committee is ‘necessary to assure adequate representation’ has been 

described as ranging from a ‘high standard’ to requiring a showing that an additional committee is 

‘absolutely required,’ ‘essential,’ or ‘indispensable.’” In re Residential Capital, LLC, 480 B.R. at 

 

5 Similarly, ratepayers are not “involuntary creditors” merely because their money may be used to 

fund a chapter 11 plan in the future.

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558 (internal cites omitted). The remedy TURN seeks is “extraordinary,” and not supported by 

the facts and circumstances of the case. In re Nat'l R.V. Holdings, Inc., 390 B.R. at 695. 

On February 12, 2019, the United States Trustee appointed the OCC. ECF No. 409. The 

OCC is composed of a broad and diverse group of legitimate unsecured creditors, including, as 

noted by TURN, “a Fortune 200 energy generator, an integrated security company specializing in 

the provision of security and related services, two bond indenture trustees, and one of the unions 

for PG&E employees.” ECF No. 1324 at 9. The OCC, the committee already in place, is the 

voice for all unsecured creditors in these bankruptcy cases. See In re SPM Mfg. Corp., 984 F.2d 

1305, 1315 (1st Cir. 1993) (finding that “a creditors’ committee and its members must act in 

accordance with the provisions of the Bankruptcy Code” and that “the committee is a fiduciary for 

those whom it represents, not for the debtor or the estate generally”). Any argument by TURN

that the OCC is not or cannot adequately represent all unsecured creditors is unsupported and 

without merit. If ratepayers are somehow found to be “creditors,” their interests as creditors are 

represented by the OCC; if ratepayers are not creditors, they do not belong on any official 

committee at all.6

One additional consideration should bear on the entitlement of ratepayers to an additional 

official committee. TURN is not actually seeking protection for the ratepayers’ interests as 

creditors. Instead, it appears that TURN seeks to use this hypothetical creditor status to obtain an

official committee to represent the ratepayers’ overall concerns in these cases. Although those 

 

6 TURN suggests individuals from numerous entities that it believes should be appointed to a 

ratepayers’ committee, ECF No. 1324 at 1-2, though in the event the Court orders the formation of 

such an additional committee, any members would selected by the United States Trustee. See 11 

U.S.C. § 1102(a)(2). 

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concerns are undoubtedly important and deserve due consideration, the Code remedy of an official 

committee is not available to represent the ratepayers’ non-creditor interests in the cases.

Furthermore, it bears noting that the ratepayers have other options available to them to 

protect their interests. Bankruptcy Rule 2018(b) permits the Attorney General of the State of 

California to appear and be heard on behalf of consumer creditors as long as the court determines 

that the appearance is in the public interest. And section 1109(b) gives a “party in interest,” 

including various enumerated entities, the right to appear and be heard on any issue in a case. See 

In re Pacific Gas & Electric Co., Case No. 01-30923, ECF No. 599 (discussing Rule 2018(b) and 

section 1109(b)).

IV. Ratepayers Are Protected by 11 U.S.C. § 1129(a)(6) Because Any Potential Rate 

Change Would Need to Be Approved By the Regulatory Commission.

Section 1129(a)(6) states that a court may only confirm a plan if “[a]ny regulatory 

commission with jurisdiction, after confirmation of the plan, over the rates of the debtor has 

approved any rate change provided for in the plan, or such rate change is expressly conditioned on 

such approval.” See, e.g., In re Cajun Elec. Power Co-op., Inc., 230 B.R. 715, 741 (Bankr. M.D. 

La. 1999) (finding that proposed plan satisfied section 1129(a)(6) where it provided that debtor 

would “seek all necessary approval” for any rate change).

So, while TURN argues that a “separate committee is required to allow the millions of 

ratepayers affected by these cases to speak with a single voice . . .,” ECF No. 1324 at 10, no plan 

can be confirmed that does not comply with section 1129(a)(6). Therefore, if any future plan 

included a rate change, PG&E would first have to have full approval from the California Public 

Utilities Commission, and any ratepayer or entity would have the opportunity to be heard by the 

regulatory agency during any such consideration. Or, put another way, section 1129(a)(6) 

specifically allows for a rate change subject to regulatory commission approval. See In re Pacific 

Gas and Electric Co., 304 B.R. 395, 410 (Bankr. N.D. Cal. 2004) (finding that “[s]ection

1129(a)(6) specifically allows confirmation of a plan containing a rate change as long as the rate 

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change is approved by the commission having jurisdiction over those rates”). Therefore, the 

primary concern of the movants here is better and more appropriately addressed during plan 

formulation and confirmation, not by forming another committee in a case where unsecured 

creditors are already adequately represented.

CONCLUSION

WHEREFORE, the United States Trustee requests the Court deny the Motion.

Dated: April 24, 2019 Andrew R. Vara

Acting United States Trustee, Region 3

By: /s/ Cameron M. Gulden

 CAMERON M. GULDEN

Trial Attorney

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