Contra Costa Times

WALNUT CREEK, Calif. _ The public relations gurus behind California’s anti-smoking campaign have signed on a major new client — the committee representing Pacific Gas & Electric Co.’s tens of thousands of creditors.

While the bankrupt utility doesn’t object to footing the bill for the $1,800-an-hour media handlers, consumer advocates and the U.S. trustee who appointed the committee are outraged.

“The creditors shouldn’t be hiring a PR person to spin what they’re doing,” trustee Linda Ekstrom Stanley said Friday. “We don’t want their actions filtered by a public relations firm.”

The 11-member committee filed a motion in U.S. Bankruptcy Court last week seeking to employ Rogers & Associates, a Los Angeles firm whose clients include the White House drug czar, AT&T Wireless and the state health department.

Under bankruptcy code, a creditors committee may employ attorneys, accountants or other professionals to assist the panel in its duties. The debtor pays for such services.

But Stanley, in a motion filed Thursday, argues the committee has shown no reason why its members and attorneys need help communicating with their constituents: “Creditors are entitled to the unvarnished truth from the committee.”

The judge overseeing the PG&E case has not set a hearing on the matter.

Committee members agreed their main concern in hiring a public relations agency was to handle voluminous media inquiries about the PG&E case, the third-largest bankruptcy in U.S. history.

“We decided as a group that we don’t want to respond individually to the press about issues relating to what the committee’s doing,” said member Tom Milne, the chief investment officer for the state of Tennessee.

Chris Carter of Rogers & Associates said his firm will also provide support and information for PG&E‘s creditors, or those who believe they’re owed part of the $14.4 billion in debt the utility amassed before filing for bankruptcy April 6.

“The biggest challenge from a communications standpoint is ensuring the messages are consistent and that you have a committee speaking with one voice,” Carter said.

Rogers & Associates, which already has set up a telephone hotline for reporters and creditors, estimates a team of at least eight people, including the firm’s CEO, will work on the committee’s account. That team bills a combined $1,875 an hour, according to court records.

PG&E, which has vowed to fully repay each of its creditors, doesn’t object to the cost. “It’s our understanding that in large bankruptcy cases, public relations firms are needed to assist in communications,” spokesman Ron Low said.

Consumer advocates are worried the committee ultimately will use the high-powered PR firm to sell a PG&E reorganization plan that will pay off creditors by raising customers’ electricity rates.

“Of course, PG&E supports this,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights. “They see it as an opportunity to push for a public bailout.”