Federal Government uses UPLAN model to examine price volatility in ERCOT

LCG, October 11, 2022--The U.S. Energy Information Administration, or EIA, released its latest supplement to the Short-Term Energy Outlook (STEO) in the Texas market, assessing various possible scenarios using LCG’s UPLAN NPM model, with a special focus on the effects on wholesale power prices and market conditions.

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Michigan Governor Supports Reopening Palisades Nuclear Facility

LCG, September 16, 2022--The Governor of Michigan last week sent a letter to the U.S. Department of Energy (DOE) in support of Holtec International’s application for a federal grant under the Civil Nuclear Credit (CNC) program to save the Palisades Nuclear Facility in Southwest Michigan. The federal grant could result in restarting the baseload, carbon-free, nuclear power plant.

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Industry News

The Judge and the Bankruptcy Law Facing PG&E

LCG, April 9, 2001Judge Dennis Montali was appointed to the bankruptcy court by the Ninth U.S. Court of Appeals eight years ago and has, since, heard mostly cases involving individuals seeking bankruptcy protection, but he is no stranger to the more complex cases involving businesses.

Before being appointed to the bench, the 61-year-old Montali was one of the best-known bankruptcy lawyers in the West, heading that department at the huge San Francisco law firm of Pillsbury, Madison & Sutro.

Donald Gaffney, a Phoenix-based contemporary, said that when Montali was with Pillsbury "he was someone who was involved in large matters, large cases. He's a very sophisticated and highly regarded judge."

Another lawyer, who has known Montali for 20 years, said "Reality tends to come out" in his courtroom because he does not allow lawyers to evade his questions.

Montali did his undergraduate work in English at Notre Dame. Commissioned in the U.S. Navy, he served on two destroyers and taught at the Navy Reserve Officers Candidate School in Newport, R.I. After leaving the service, he entered Boalt Hall at the University of California, receiving his law degree in 1968.

Montali has been elected to the National Bankruptcy Conference and the American College of Bankruptcy, elite bodies open only to those at the top of the discipline.

By filing for Chapter 11, Pacific Gas & Electric Co. will get some time to reorganize and work out a plan to pay its debts. The law will temporarily shield the utility from creditors' claims, including those of bondholders. They cannot sue, seek to foreclose or take other action to collect money owed them.

Judge Montali will issue "first day" orders to keep the business running smoothly. These cover day-to-day matters, such as honoring employees' vacation days and sick time. Current management will be allowed to remain in place and run the business "as usual," but any extraordinary transactions such as sale of an asset would have to be approved by the court.

The bankruptcy court has, in fact, already granted the utility authority to pay $50 million in bonuses to about 6,000 employees, news of which sparked a hue and cry from state officials and consumer watchdogs. Senior management did not see a dime of the bonuses.

The court will appoint a creditors committee to closely monitor the company's actions and proposals.

Eventually, PG&E must devise a plan to pay its debts either in full or in part and creditors must approve the plan. If the court approves the plan, the company emerges from bankruptcy. The process could be over in a few months or it could take several years.

Federal law specifies the order in which creditors are paid. Lawyers and court costs are paid first, and those who lend money or supply goods and services after the bankruptcy filing are ordinarily paid before other creditors. Shareholders come last and could see their stock cancelled.

Secured creditors come first among the creditors. These include holders of mortgage and revenue bonds, and banks that lent money for plant and equipment. They are covered only to the extent of their secured collateral.

These are followed by firms that lend money to keep the business afloat during the bankruptcy period, and then providers of goods and services during the bankruptcy period. This includes employees, lawyers, vendors and suppliers.

Next comes taxes.

After taxes come unsecured creditors who supplied goods and services before the bankruptcy filing. This would include power producers and holders of unsecured bonds.

Next to last is PG&E Corp., the utility's parent holding company.

And, as noted, last come the owners of the company shareholders who have already lost up to three-quarters of their investment. The typical utility shareholder is an old guy who slowly accumulated his shares over his working life, because utilities are safe investments and pay a decent dividend that will make life easier in retirement.

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