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UNITED STATES BANKRUPTCY COURT

 NORTHERN DISTRICT OF CALIFORNIA

In re

PG&E CORPORATION, 

and

PACIFIC GAS AND ELECTRIC

COMPANY,

Debtors. 

9 Affects PG&E Corporation

X Affects Pacific Gas and Electric Co.

9 Affects both Debtors

* All papers shall be filed in 

 Lead Case, No. 19-30088-DM.

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Chapter 11

Bankruptcy Case 

No. 19-30088-DM (Lead Case)

Bankruptcy Case

No. 19-30089-DM

(Jointly Administered)

MEMORANDUM DECISION ON MOTION

TO APPOINT A RATEPAYERS’ COMMITTEE

On May 9, 2019, this court held a hearing on the motion filed

by The Utility Reform Network (“TURN”) for appointment of an

official committee of ratepayer claimants (the “TURN Motion”). 

Having considered arguments made at the hearing and in TURN’s

moving papers and reply, in various joinders,1 and in oppositions

1 The following entities filed joinders, non-oppositions, or

statements in support of the TURN Motion: Northern California Power

Agency; City and County of San Francisco; California Large Energy

Consumers Organization; California Farm Bureau Federation; the

Public Advocates Office at the California Public Utilities

Commission; and the SLF Fire Victim Claimants. Another joinder was

filed, but subsequently withdrawn.

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Signed and Filed: May 28, 2019

________________________________________

DENNIS MONTALI

U.S. Bankruptcy Judge

Entered on Docket 

May 28, 2019

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

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filed by PG&E Corporation (the “Corporation”) and Pacific Gas and

Electric Company (the “Utility”) (collectively, “Debtors”), the

Official Committee of Unsecured Creditors (“OCUC”), and Andrew R.

Vara, Acting United States Trustee for Region 3 (the “UST”), the

court concludes that the ratepayers do not have a “claim” for which

separate representation by a committee is necessary and will enter

therefore an order denying the TURN Motion.

I. REQUESTED RELIEF

Contending that neither the OCUC nor the Official Committee of

Tort Claimants (“OCTC”) “can speak on behalf of the ratepayers who

will fund any plan” (TURN Motion, Dkt. 1324 at 5:12-14), TURN

asserts that a separate committee for “focusing the views and

opinions of all ratepayers” is essential. Instead of proposing

that individual and small business ratepayers act as committee

members, TURN suggests that representatives of various non-creditor

special interest groups serve on its proposed ratepayer committee

(Id. at 5:27 – 7:13). These entities include TURN itself, the

Public Advocates Office of the California Public Utilities

Commission (“CPUC”), Energy Policy of California Farm Bureau

Federation, California Large Energy Consumer Advocates, AARP

California, and the Greenlining Institute (Id. at 6:1-5). 

II. GOVERNING LAW

The Bankruptcy Code provides that the UST “shall appoint a

committee of creditors holding unsecured claims and may appoint

additional committees of creditors or of equity security holders as

the United States trustee deems appropriate.” 11 U.S.C. §

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1102(a)(1).2 Section 1102(b) governs committee appointments and

composition. To be eligible for appointment, prospective members

must qualify as creditors or equity interest holders. 11 U.S.C. §

1102(b)(1) and (2). TURN contends that ratepayers are “creditors”

entitled to representation by their own committee apart from the

OCUC.3

 Section 101(10) defines “creditor” as an 

(A) entity that has a claim against the debtor that

arose at the time of or before the order for relief

concerning the debtor;

(B) entity that has a claim against the estate of a

kind specified in section 348(d), 502(f), 502(g),

502(h) or 502(i) of this title; or

(C) entity that has a community claim.

11 U.S.C. § 101(10). A “claim,” in turn, includes a “right to

payment.” 11 U.S.C. §§ 101(5). 

III. DISCUSSION

A. Ratepayers Are Not Creditors

As required by section 1102, the UST appointed the OCUC to

represent the interests of unsecured creditors. Under section

1102(a)(2), the court may (but is not required to) appoint

additional committees of creditors. TURN contends that ratepayers

are creditors because they are entitled to receive a semiannual

2 Unless otherwise indicated, all chapter, section and rule

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

to the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.

3

 Despite the contention that ratepayers are entitled to

representation by their own committee, TURN proposes that special

interest groups that are not creditors or typical ratepayers

themselves be members of the committee. TURN has not demonstrated

that these entities or persons owe financial fiduciary duties to,

or maintain agency relationships with, the ratepayers they would

purport to represent.

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credit on their bills stemming from auctions of greenhouse gas

(“GHG”) allowances. It further alleges that at the time its motion

was filed, the Utility owed $324,538,000 to residential, small

business and emission-intensive trade-exposed retail customers,

plus another $128,975,630 to gas ratepayers. TURN Reply, dkt. 1820

at ECF pg. 8, l. 12-15.4

 According to TURN, this right to

semiannual refunds constitutes a “right to payment” under section

101(5) that entitles ratepayers to assert creditor status for the

purposes of section 1102. As discussed below and at the hearing,

the court disagrees. 

First, the semiannual credit is applied automatically and the

court has already entered an order permitting Debtors to continue

applying those credits going forward. The court therefore rejects

the contention that this automatic, on-going and court-approved

right to an on-bill credit renders a ratepayer a “creditor”

entitled to separate representation by a committee.5 Even if these

4 TURN also asserts in its reply that the CPUC is currently

conducting two investigations into the Utility’s prepetition

conduct that “could result in remedies owed to ratepayers.” TURN

Reply, dkt. 1820 at ECF pg. 9, l. 2-3. According to TURN, such

remedies “could take any form, including credits to ratepayers

against revenues[.]” Id. at lines 9-14. The CPUC is investigating

the Utility’s conduct, and will determine the any liability and the

appropriate remedy. It will impose and enforce any such liability

in its regulatory capacity. The bankruptcy court has no role to

play in this matter, and committee representation of ratepayers is

thus unnecessary.

5 The objections filed by the UST, the OCUC and Debtors also

persuasively reject the position that ratepayers are persons who

hold claims against the Debtor and are thus eligible to serve on an

official committee under section 1102(b)(1):

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

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on-bill credits did represent unsecured debts, the OCUC provides

adequate representation for customers who may assert a prepetition

claim for missed credits. A separate committee is not necessary to

protect the customers’ entitlement to the credits. 

Second, as noted by Debtors in their objection, the GHG

credits have been and continue to be credited against the rates,

and will continue to be credited in accordance with the CPUC’s

directive and state law. In fact, this court has granted Debtors’

motion to continue certain customer programs, including the

postpetition provision of the GHG credits. See Order (i)

Authorizing Debtors to (a) Maintain and Administer Customer

Programs, Including Public Purpose Programs, and (b) Honor any

Prepetition Obligations Relating Thereto, and (ii) Authorizing

Financial Institutions to Honor and Process Related Checks and

Transfers entered on March 12, 2019 (Dkt. 843). Any credits

arising prepetition will be paid soon, if not already. 

Consequently, any “claims” that existed as of the petition date

(January 29, 2019) will be gone very soon.

Moreover, the ratepayers do not have “claims” for such funds

apart from the CPUC’s directive, so even if PG&E did default, the

CPUC can compel payment under its regulatory powers. The

right to payment. In fact, the [PUC] 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,

automatic statement adjustment that does not rise to the

level of transforming all gas and electric customers into

creditors of PG&E. 

UST Objn. at dkt. 1651 at 5:16-25; see also OCUC Objn. at dkt.

1653, ¶¶ 16-18; Debtors’ Objn. at 10:19 – 12:1-14. 

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entitlementto credits are therefore not “claims” that should be

classified and treated/modified under a chapter 11 plan. More

importantly, the CPUC has already determined that these credits are

NOT “refunds.” CPUC Decision No. 18-03-017 (“GHG allowance proceeds

are not analogous to the funds found to qualify as “rate

refunds[.]”).

Finally, the formation of a committee of interested parties

based on a “right of payment” that the court has already recognized

and for which the court has authorized ongoing payment is not

supported by the language and intent of Bankruptcy Code section

1102.

B. The Relief Sought in The TURN Motion is Unnecessary

The TURN Motion seeks appointment of a ratepayers committee to

serve the interests of the ratepayers as ratepayers and future

customers, and not their interests as nominal creditors. In

enumerated paragraph 2 of the motion (TURN Motion, dkt. 1324 at 5),

TURN argues that the existing committees cannot “speak on behalf of

the ratepayers who will fund any plan.” “The members of each

respective official committee are fiduciaries for the general

unsecured and tort claimants in this case. None can be expected to

separately assert and advocate for the interests of ratepayers as

regards future rate increases that will necessarily be required to

confirm the plan.” (Id. at 10:1-4). 

 The Bankruptcy Code, however, does not provide for the

creation of a separate committee to protect the interests of future

consumers or customers of a debtor. As the court noted in its

Memorandum Decision Regarding Motion for Order Vacating Appointment

of Committee of Ratepayers in the prior PG&E case (Case No. 01-

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30923 at dkt. 599) (the “2001 Decision”), “there is no authority in

the Bankruptcy Code for the appointment of [a] Official Committee

of Ratepayers.” Id. at 1-2. Further, “ratepayers have other means

and other fora to protect their interests. Id. at 2. The court’s

holding in 2001 that the appointment of a ratepayers committee did

not assure “adequate representation of creditors” is equally

applicable in 2019.

In addition, the ratepayers’ interests arising from their

ratepayer status are protected by section 1129(a)(6), which

provides that a plan is confirmable only 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) (proposed plan providing that

the debtor would “seek all necessary approval” for any rate change

satisfied section 1129(a)(6)). 

Any plan proposed by Debtors or another party must comply with

section 1129(a)(6). Therefore, if any future plan includes a rate

change, the Utility would first have to obtain full approval from

the CPUC, and any ratepayer or entity would have the opportunity to

be heard by the regulatory agency during any such consideration.

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 change is approved by the commission having jurisdiction

over those rates”). Creation of a committee not contemplated under

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the Bankruptcy Code to represent ratepayer interests with respect

to future rates is thus unnecessary.

 IV. CONCLUSION

 TURN has not demonstrated that the appointment of a third

official committee is required to adequately represent ratepayer

interests given that the CPUC can do so. It has not shown why the

OCUC cannot represent whatever interests ratepayers hold as

unsecured creditors, assuming they are indeed unsecured creditors. 

It has not shown how their ability to voice concerns to the CPUC

regarding future rate adjustments have been impaired. As section

1129 requires any future rate increases to be approved by the CPUC,

TURN and ratepayers can fight any rate increases in that forum. A

separate ratepayer committee is therefore not justified under

section 1102. Consequently, the court will enter a separate order

denying the Turn Motion.

 *** END OF MEMORANDUM DECISION ***

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