IN RE PACIFIC GAS ELECTRIC COMPANY, (Bankr.N.D.Cal. 2003)

DENNIS MONTALI, United States Bankruptcy Judge

At a hearing before this court on February 27, 2003, certain parties requested the undersigned to order Pacific Gas and Electric Company ("Debtor"), the California Public Utilities Commission ("CPUC") and other objecting parties to a judicially supervised settlement conference in the interest of exploring whether there could be a resolution of the various differences that stand in the way of confirmation of a Chapter 11 Plan Of Reorganization on a consensual basis.

The court has considered those requests and has reflected on the history of this case (which reaches its second anniversary on April 6th), the staggering expense to be incurred by all parties as a result of further delay, and the fact that the two competing plans pay creditors in full and that the proponents of those plans differ primarily about the environment within which the Debtor or the disaggregated entities will function in a post-confirmation world. The court is quite aware of the philosophical differences that separate Debtor and its parent from CPUC and the other non-private objectors in particular.

While a prior mediation was unsuccessful, there is little to be lost, and potentially much to be gained, by ordering a judicially supervised settlement conference. That being said, the volunteer settlement judge needs first to assess whether such a conference should be attempted.

Accordingly, the court orders the following:

1. On March 10, 2003, at 2:00 P.M., in Courtroom 220, at 1300 Clay Street, Oakland, California, Hon. Randall L. Newsome, United States Bankruptcy Judge, will preside over a pre-settlement conference meeting (the "March 10 meeting").

2. The following counsel — and no others — are directed to attend the March 10 meeting on behalf of their clients, as shown:

The court is well aware that numerous other parties have pending objections to confirmation and their and their counsels' presence at a settlement conference no doubt would be very helpful. No offense is intended by their omission from this list. The court has intentionally limited the number of parties who will be represented by counsel at this first session to those who have been active in the recent phases of the confirmation trial in order to present Judge Newsome with a manageable number of counsel to begin with. He will decide later whether others should be invited or ordered to participate.

Debtor:

Mr. Neal

Mr. Lopes

If desired by Debtor, one other attorney from Cooley, Godward and one of Debtor's in-house counsel.

PGE Corporation:

Mr. Kessler

CPUC:

Ms. Kaplan

Mr. Kornberg

If desired by CPUC, Mr. Cohen or one other member of the CPUC legal staff

Official Committee of Unsecured Creditors:

Mr. Aronzon

California Attorney General:

Mr. Pascuzzi

If desired by the Attorney General, a Deputy Attorney General.

City of Palo Alto:

Mr. Engel

Northern California Power Agency:

Mr. Gorton

City and County of San Francisco:

Mr. Baker

Various California Counties:

Mr. Crane

Merced Irrigation District:

Mr. Ginter or Mr. Carroll

Any request to have a substitute counsel attend the March 10 meeting must be made to the undersigned no later than Thursday, March 6, with a written explanation of why the designated counsel is not able to attend, and who is named to attend in place of the designated person. This court reserves the right to approve any such request.

3. Except for in-house counsel named above, client representatives are not to attend the March 10 meeting.

4. Judge Newsome will be familiar with the background of the case and the main issues dividing the parties. No written statements should be filed prior to the March 10 meeting.

5. The March 10 meeting will be closed to the public and will be off the record. At that meeting Judge Newsome will decide whether to proceed with a settlement conference. If he makes that determination, he will then establish all procedures for submission of settlement conference statements, participation in further conferences by client representatives, the timing and location of any such conferences, and the conduct of those conferences. He will also determine which parties other than those named in paragraph 2 should participate and any other matters pertaining to the settlement conference.

6. The March 10 meeting and any subsequent settlement conference will not conclude absent leave of the Judge Newsome, who may continue the conference from time to time at his discretion. He may issue any order deemed appropriate to facilitate settlement or the expeditious resolution of the disputes. Parties and their counsel should be prepared to remain beyond normal business hours if necessary; travel arrangements should be flexible and alternative arrangements should be made for routine personal and family commitments. Judge Newsome will not normally excuse parties or counsel except in the case of emergency or extreme inconvenience.

7. Other than directing the attendance at the March 10 meeting and approving any substitutions regarding attendance, this court will not participate in the March 10 meeting or any subsequent conferences. It will not discuss the conduct of those conferences with Judge Newsome or be advised of anything other than the ultimate outcome of such settlement conference. The court remains available to confer with Judge Newsome regarding background matters, including prior rulings, and the schedule of future hearings in the case, including the scheduled resumption of the confirmation trial on April 8, 2003.

8. Failure to comply with the terms and spirit of this order may lead to the imposition of sanctions under Bankruptcy Rule 7016 and Rule 16(f), Fed.R.Civ.P.

9. Debtor's counsel is directed to serve a copy of this order on counsel for all parties with pending objections to either plan other than those whose names appear in the accompanying proof of service.