ML022460320

Debtor'S Notice of Motion & Motion for Order Authorizing Refund of Certain Project Deposits; Supporting Memorandum of Points & Authorities

ML022460320
Person / Time
Site:	Diablo Canyon
Issue date:	08/23/2002
From:	Nexon J Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Pacific Gas & Electric Co
To:	Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California
References
01 30923 DM, 97-0742640
Download: ML022460320 (6)

Text

1 JAMES L. LOPES (No. 63678)

JANET A. NEXON (No. 104747) .

2 GARY M. KAPLAN (No. 155530)

HOWARD, RICE, NEMEROVSKI, CANADY, 3 FALK & RABKIN A Professional Corporation 4 Three Embarcadero Center, 7th Floor San Francisco, California 94111-4065 5 Telephone: 415/434-1600 Facsimile: 415/217-5910 6

Attorneys for Debtor and Debtor in Possession 7 PACIFIC GAS AND ELECTRIC COMPANY 8

9 UNITED STATES BANKRUPTCY COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 SAN FRANCISCO DIVISION 12 In re No. 01 30923 DM 13 PACIFIC GAS AND ELECTRIC Chapter 11 Case HOWARD1 14 COMPANY, a California corporation,

. M" a Date: September 16, 2002 Debtor. Time: 1:30 p.m.

Place: 235 Pine Street, 22nd Floor

. 15 San Francisco, California Federal I.D. No. 94-0742640 16 17 18 v DEBTOR'S NOTICE OF MOTION AND MOTION FOR ORDER AUTHORIZING REFUND OF CERTAIN PROJECT DEPOSITS; 19 SUPPORTING MEMORANDUM OF POINTS AND AUTHORITIES 20 [DECLARATION OF DAVID W. PHILLIPS IN SUPPORT HEREOF FILED SEPARATELY]

21 22 23 24 25 26 27 28 MPA ISO MOT. TO REFUND PROJECT DEPOSITS

1 NOTICE OF MOTION AND MOTION 2 PLEASE TAKE NOTICE that on September 16, 2002, at 1:30 p.m., or as soon 3 thereafter as the matter may be heard, in the Courtroom of the Honorable Dennis Montali, 4 located at 235 Pine Street, 22nd Floor, San Francisco, California, Pacific Gas and Electric 5 Company, the debtor and debtor in possession in the above-captioned Chapter 11 case 6 ("PG&E" or the "Debtor"), will and hereby does move the Court (the "Motion") for entry of 7 an order authorizing PG&E to refund certain pre-petition project deposits to customers in 8 accordance with PG&E's project deposit refund policies.

9 This Motion is made pursuant to Section 105(a) of the United States Bankruptcy 10 Code (11 U.S.C.§ 105(a)), and is based on the facts and law set forth herein (including the 11 accompanying Memorandum of Points and Authorities beginning on the next page), the 12 Declaration of David W. Phillips filed concurrently herewith (hereinafter referred to as the at or prior to the HOMM 13 "Phillips Declaration"), the record of this case and any evidence presented cm 42 . 14 hearing on this Motion.

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, 15 PLEASE TAKE FURTHER NOTICE that pursuant to Rule 9014-1 (c)(2) of the 16 Bankruptcy Local Rules for the Northern District of California, any written opposition to the 17 Motion and the relief requested therein must be filed with the Bankruptcy Court and served 18 upon appropriate parties (including counsel for PG&E, the Office of the United States 19 Trustee and the Official Committee of Unsecured Creditors) at least five (5) days prior to the 20 scheduled hearing date. If there is no timely objection to the requested relief, the Court may 21 enter an order granting such relief without further hearing.

22 23 24 25 26 27 28 MPA ISO MOT. TO REFUND PROJECT DEPOSITS 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 INTRODUCTION 3 PG&E hereby moves this Court for an order authorizing PG&E to pay all 4 amounts currently owed to customers pursuant to outstanding pre-petition project deposits, 5 in an aggregate amount of approximately $3,700,000.

6 I.

7 FACTUAL BACKGROUND' 8 PG&E performs construction work for its customers that is generally related to 9 the overall provision of gas and electric service (in addition to line extension construction 10 work). For example, PG&E may relocate or rearrange PG&E-owned facilities, such as poles 11 or electric or gas lines, for the convenience of the customer, convert overhead facilities to 12 underground, perform maintenance or construction work on customer-owned facilities if a 13 private contractor is not available, or connect facilities such as streetlights. Because of its RIE m 14 expertise and specialized equipment, PG&E is often the first, if not the only, choice for this

&PAHON A,.*-,a&n- 15 work.

16 Usually this work requires advance engineering, and PG&E will collect an 17 advance or deposit for the engineering work, on the understanding that the deposit will be 18 v returned to the customer at the completion of the engineering work, or credited against any 19 project-related construction work the applicant asks PG&E to do. The advance is also called 20 a "project deposit." The typical advance or project deposit is $5,000 or less.

21 PG&E currently holds approximately 3,700 outstanding pre-petition project 22 deposits, totaling approxiniately $5 million. PG&E estimates that, of that number, 2,880 of 23 the project deposits are for completed projects which are due to be returned to the customer.

24 These project deposits aggregate approximately $3.7 million. The average amount owed 25 with respect to these project deposits is approximately $1,300.

26 27 the facts set forth in this Motion are contained in

'The evidentiary basis and support forconcurrently 28 the Declaration of David W. Phillips filed herewith.

MPA ISO MOT. TO REFUND PROJECT DEPOSITS 1 II.

2 DISCUSSION 3 This Court Should Authorize Payment Of The Pre-Petition Project 4 Deposits Pursuant To Section 105(a) And The Court's Inherent Powers.

5 PG&E requests that this Court authorize the payment of all outstanding project 6 deposits pursuant Section 105(a) of the Bankruptcy Code and the Court's inherent powers.

Sections 105 authorizes this Court to "issue any order, process, or judgment that is necessary 8 or appropriate to carry out the provisions of this title." The purpose of Section 105 is "to 9 assure the bankruptcy court's power to take whatever action is appropriate or necessary in 10 aid of the exercise of their jurisdiction." 2 Collier on Bankruptcy, §105.01 at 105-06 (15th 11 ed. Rev. 2000).

12 Although payment of pre-petition claims prior to confirmation of a plan in a HOVAM PIKE 13 Chapter 11 case is generally not allowed, Section 105(a) confers the power to authorize

..CN rUK 14 payments irrespective of priorities2 where circumstances so warrant. See, e.g., Crafts

.. *.,z 15 Precision Indus, Inc. v. U. S. Healthcare, Inc. (In re Crafts Precision Indus., Inc.), 244 B.R.

16 178, 183 (B.A.P. 1st Cir. 2000) (affirming authorization of vacation payments "pursuant to 17 § 105, irrespective of them being non-priority obligations"); In re Equalnet Communications 18 ., 258 B.R. 368, 369 n.2 (Bankr. S.D. Tex. 2000) (exceptions to general rule against 19 pre-confirmation payment of pre-petition claims "arise primarily out of common sense and 20 the presence of a legal or factual inevitability of payment"). For instance, pursuant to 21 Section 105(a), courts have authorized immediate redemption of pre-petition retail coupons, 22 the honoring of credit card debits, credits or chargebacks by retail stores, and the issuance of 23 billing credits to retail customers in connection with pre-petition telephone services. See id.

24 at 369. Such claims are allowed to aid reorganization, prevent the loss of the Debtor's 25 customer base, and to prevent "potential harm to... 'silent' or unrepresented 26 constituencies" such as the individual customers affected by PG&E's project deposit 27

- 2Many of these project deposits may constitute priority claims pursuant to Section 28 507(a)(6).

MPA ISO MOT. TO REFUND PROJECT DEPOSITS 1 policies. Id. at 370 n.4.

2 The logic of these cases applies with special force in the current context. The 3 Debtor's continued inability to return the project deposits may impose hardships on the 4 Debtor's customers. Although the amount of money the Debtor requests to pay represents a 5 very small percentage of the Debtor's total assets, the average per customer outstanding 6 project deposit refund amounts to $1,300. Denying refunds to those customers who happen 7 to qualify for but do not receive refunds prior to the Petition Date may inflict undue hardship 8 and is fundamentally unfair.

9 In addition, the affected customers were required to submit these deposits in 10 connection with what has come to be recognized as a basic necessity in today's economy.

11 See Nunemaker v. P.T.&T. Co., Nos. 8735 & 8770, 1969 WL 18575 at *7, 70 C.P.U.C. 38 12 (Cal. C.P.U.C. Aug. 26, 1969) ("Water, gas, electric and telephone service have come to be HOMA 13 regarded largely as public necessities, and they may not be denied even to the impecunious

"" 14 or to the financially irresponsible members of the public."). Customers needing PG&E's

, 15 engineering and construction services have little choice but to submit deposits and do so 16 with the understanding that their money will be preserved and repaid.

17 Finally, this Court has authorized the return of a number of different types of 18 deposits in this case, including service deposits (see Order Granting Debtor's Emergency 19 Motion For Authority To Refund Pre-Petition Security Deposits To Residential And Non 20 Residential Customers filed on April 10, 2001 (Docket No. 62)) and main line extension 21 deposits (s Order Authorizing Debtor To (1) Assume Executory Main Line Extension 22 Contracts and (2) Pay Outstanding Amounts Due Under Non-Executory Main Line 23 Extension Contracts, filed on March 25 2002 (Docket No. 5547)), in each case in amounts 24 far exceeding the $3.7 million in project deposits that Debtor seeks to refund in connection 25 with this Motion.

26 In sum, equitable considerations mitigate in favor of authorizing the Debtor to 27 refund pre-petition project deposits consistent with its project deposit refund policies. The 28 Debtor therefore requests authority to refund all customer project deposits as and when such MPA ISO MOT. TO REFUND PROJECT DEPOSITS 1 deposits become refundable consistent with such policies.

2 3 III.

4 CONCLUSION 5 For all of the foregoing reasons, PG&E respectfully requests that this Court make 6 and enter an order authorizing PG&E to refund pre-petition project deposits to 7 customers consistent with PG&E's project deposit refund policies.

8 DATED: August,,', 2002.

9 HOWARD, RICE, NEMEROVSKI, CANADY, 10 FALK & RABKIN A Professional Corporation 11 12 By: \JZ.- Aý- &--,

JANET A. NEXON HowR 13 PIEI ma 14 Attorneys for Debtor and Debtor in Possession PACIFIC GAS AND ELECTRIC COMPANY

&RAHMIN A ,*,,,z. 15 16 17 18 19 20 21 22 23 24 25 26 27 WD 08120211-1419905/120/1015294/vl 28 MPA ISO MOT. TO REFUND PROJECT DEPOSITS