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-1- SUPPLEMENTAL STATEMENT

AND RESERVATION OF RIGHTS

XAVIER BECERRA, SBN 118517

Attorney General of California 

MARGARITA PADILLA, SBN 99966 

Supervising Deputy Attorney General 

JAMES POTTER, SBN 166992 

Deputy Attorney General 

1515 Clay Street, 20th Floor 

P.O. Box 70550 

Oakland, CA 94612-0550 

Telephone: (510) 879-0815 

Fax: (510) 622-2270 

Margarita.Padilla@doj.ca.gov 

James.Potter@doj.ca.gov 

STEVEN H. FELDERSTEIN, SBN 059678 

PAUL J. PASCUZZI, SBN 148810 

FELDERSTEIN FITZGERALD 

WILLOUGHBY & PASCUZZI LLP 

400 Capitol Mall, Suite 1750 

Sacramento, CA 95814 

Telephone: (916) 329-7400 

Fax: (916) 329-7435 

sfelderstein@ffwplaw.com 

ppascuzzi@ffwplaw.com 

Attorneys for California Air Resources Board

XAVIER BECERRA, SBN 118517

Attorney General of California 

DANETTE VALDEZ, SBN 141780 

ANNADEL ALMENDRAS, SBN 192064

Supervising Deputy Attorneys General 

455 Golden Gate Avenue, Suite 11000 

San Francisco, CA 94102-7004 

Telephone: (415) 510-3367 

Fax: (415) 703-5480 

Danette.Valdez@doj.ca.gov 

Annadel.Almendras@doj.ca.gov 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION 

- and – 

PACIFIC GAS AND ELECTRIC 

COMPANY, 

Debtors.

Bankruptcy Case

No. 19-30088 (DM) 

Chapter 11 

(Lead Case) 

(Jointly Administered) 

 Affects PG&E Corporation 

 Affects Pacific Gas and 

Electric Company 

 Affects both Debtors 

Date: February 27, 2019 

Time: 9:30 a.m. 

Place: 450 Golden Gate Avenue 

 16th Floor 

 San Francisco, CA 94102 

Judge: Honorable Dennis Montali

SUPPLEMENTAL STATEMENT AND RESERVATION OF RIGHTS REGARDING

CUSTOMER PROGRAMS MOTION 

[DOCKET NO. 16] 

Case: 19-30088 Doc# 500 Filed: 02/20/19 Entered: 02/20/19 14:11:26 Page 1 of 5
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-2- SUPPLEMENTAL STATEMENT

AND RESERVATION OF RIGHTS

The California Air Resources Board (“CARB”) hereby files this supplemental statement 

and reservation of rights with respect to the Motion of Debtors Pursuant to 11 U.S.C. §§ 105(a), 

363(b), and 507(a)(7) and Fed. R. Bankr. P. 6003 and 6004 for Interim and Final Orders (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 (the 

“Customer Programs Motion”) based on the following: 

1. CARB files this supplemental statement and reservation of rights because the 

Debtors’ descriptions of the terms “CC Costs,” and “GHG Funds” in the Customer Programs 

Motion (Docket 16, pgs. 26-27) are not accurate. CARB seeks to clarify the record on these 

issues and reserve all rights with regard to any descriptions of the Cap-and-Trade Regulation. 

2. Under California’s Cap-and-Trade Regulation (title 17, California Code of 

Regulations, sections 95801-96022), the Debtors receive a free allocation of allowances for 

ratepayer benefit. All free allowances must be placed in a Limited Use Holding Account 

(“LUHA”). The free allowances in the LUHA must be offered for sale at auction, where the free 

allowances are monetized. The proceeds from the auctioned allowances are returned to the 

Debtors’ customers as “California Climate Credits” (“CC Credits”). 

3. In the Customer Programs Motion, the Debtors define CC Credits as the credits 

returned to customers, which is accurate. However, the Debtors define the costs of CC Credits as 

“CC Costs” and funded through fees in customer rates and “revenues accrued from the 

monetization of credits by the Debtors.” This description is imprecise because it refers to the 

monetization of “credits” rather than the monetization of free allowances under the Cap-andTrade Regulation. Allowances—not credits—are monetized by the Debtors. 

4. The definition of “GHG Funds” is also incorrect. The Debtors define GHG Funds 

as “the funds collected through rates and revenues from the monetization of CC Credits and 

LCFS credits collectively.” But as explained above, CC Credits are not monetized. Free 

allowances are monetized through auction, and these auction proceeds are returned to customers 

as CC Credits. 

Case: 19-30088 Doc# 500 Filed: 02/20/19 Entered: 02/20/19 14:11:26 Page 2 of 5
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-3- SUPPLEMENTAL STATEMENT

AND RESERVATION OF RIGHTS

5. Despite the inaccurate descriptions of “CC Costs” and “GHG Funds” in the 

Customer Programs Motion, it is CARB’s position that the Debtors must continue to satisfy the 

obligations under the Cap-and-Trade Regulation and in accordance with the correct definition of 

these terms. In communications with counsel for the Debtors, the Debtors have indicated their 

intention to continue to satisfy the obligations under the Cap-and-Trade Regulation and in 

accordance with the appropriate definition of the terms “CC Costs” and “GHG Funds.” 

6. CARB files this supplemental statement and reservation of rights to clarify its 

position on these definitions in the Cap-and-Trade Regulation, notwithstanding the Debtors’ 

descriptions in the Customer Programs Motion, and reserve all rights with respect thereto. 

7. Neither this supplemental statement and reservation of rights nor any subsequent 

appearance, pleading, proof of claim, claim or suit is intended or shall be deemed or construed as: 

a. consent by CARB to the jurisdiction of this Court or any other court with 

respect to proceedings, if any, commenced in any case against or otherwise involving CARB; 

b. waiver of any right of CARB to (i) have an Article III judge adjudicate in 

the first instance any case, proceeding, matter or controversy as to which a Bankruptcy Judge may 

not enter a final order or judgment consistent with Article III of the United States Constitution, 

(ii) have final orders in non-core matters entered only after de novo review by a District Court 

Judge, (iii) trial by jury in any proceeding so triable in the Chapter 11 Cases or in any case, 

controversy, or proceeding related to the Chapter 11 Cases, (iv) have the United States District 

Court withdraw the reference in any matter subject to mandatory or discretionary withdrawal, or 

(v) any and all rights, claims, actions, defenses, setoffs, recoupments or remedies to which CARB 

is or may be entitled under agreements, in law or in equity, all of which rights, claims, actions, 

defenses, setoffs and recoupments are expressly reserved hereby; or 

c. waiver of any objections or defenses that the State of California, CARB or 

any other agency, unit or entity of the State of California may have to this Court’s jurisdiction 

over the State of California, CARB or such other agency, unit or entity based upon the Eleventh 

/ / / 

/ / / 

Case: 19-30088 Doc# 500 Filed: 02/20/19 Entered: 02/20/19 14:11:26 Page 3 of 5
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-4- SUPPLEMENTAL STATEMENT

AND RESERVATION OF RIGHTS

Amendment to the United States Constitution or related principles of sovereign immunity or 

otherwise, all of which objections and defenses are hereby reserved. 

Dated: February 20, 2019 Respectfully submitted, 

XAVIER BECERRA 

Attorney General of California 

MARGARITA PADILLA 

Supervising Deputy Attorney General 

By:/s/ Paul J. Pascuzzi_______________ 

STEVEN H. FELDERSTEIN 

PAUL J. PASCUZZI 

FELDERSTEIN FITZGERALD 

WILLOUGHBY & PASCUZZI LLP 

Attorneys for California 

Air Resources Board 

Case: 19-30088 Doc# 500 Filed: 02/20/19 Entered: 02/20/19 14:11:26 Page 4 of 5
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-5- SUPPLEMENTAL STATEMENT

AND RESERVATION OF RIGHTS

PROOF OF SERVICE 

I, Lori N. Lasley, declare: 

I am a resident of the State of California and over the age of eighteen years, and not a 

party to the within action; my business address is 400 Capitol Mall, Suite 1750, Sacramento, CA 

95814. On February 20, 2019, I served the within documents: 

SUPPLEMENTAL STATEMENT AND RESERVATION OF RIGHTS 

REGARDING CUSTOMER PROGRAMS MOTION [DOCKET NO. 16] 

By Electronic Service only via CM/ECF. 

/s/ Lori N. Lasley

Lori N. Lasley 

Case: 19-30088 Doc# 500 Filed: 02/20/19 Entered: 02/20/19 14:11:26 Page 5 of 5