PG&E bankruptcy in 2019 may have parallels to its 2001 bankruptcy

SAN JOSE, Calif. (KGO) -- It has been 18 years since PG&E filed for bankruptcy, losing millions of dollars monthly due to billions of dollars in energy contracts it couldn't cover.

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The 2001 PG&E bankruptcy differs from what's developing now because the crisis then was rooted in California's deregulated energy market.

Market manipulation by Enron and others had caught PG&E locked into very expensive power contracts it couldn't pay. However, PG&E could face an identical credit crunch now, as it did then, due to downgrades in its credit rating.

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Catherine Sandoval at Santa Clara University Law School was a state public utilities commissioner for six years under Governor Jerry Brown.

"Even where you still have PG&E as both an electric and a gas utility, some of the natural gas sellers, who would normally sell to PG&E on credit, are already expressing concern about selling on credit because of the credit crunch that PG&E is in," she said.

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The state might, once again, need to step in and issue bonds to keep PG&E operating as it did in 2001. Those Department of Water Resources bonds are part of your PG&E bill today.

"We could end up in exactly that situation with the state through the DWR having to buy power again, and once again, the DWR bond charge goes on for another 20-plus years," said Sandoval.

San Jose is launching its own clean energy service in three weeks. PG&E will deliver the power and handle billing.

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"They are the customer service agent. They handle all the distribution of the electricity, so we absolutely need a distribution partner in PG&E to be successful," said Zachary Struyk, deputy director of account management and marketing.

PG&E has told San Jose it will be business as usual. However, Catherine Sandoval isn't as certain.

"Even if you are a customer of a community choice aggregator (another name for community-based clean energy providers), it doesn't insulate you from this problem because we all depend on the infrastructure."

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