ML022610357
| ML022610357 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon  |
| Issue date: | 09/11/2002 |
| From: | Maggard S Pacific Gas & Electric Co |
| To: | Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California |
| References | |
| 01-30923 DM, 94-0742640 | |
| Download: ML022610357 (7) | |
Text
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7-9 10 11 12 c -13 HOWARD RK:E
"ý"'14 o,.,.-. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JAMES L. LOPES (No. 63678)
'is JANET A. NEXON (No. 104747) 5JULIE,`B"LANDAU.(No: 162038).*
_.-/:,
HOWARD, RICE, NEMEROVSKI, CANADY,
,- FALK.& RABKIN,
. XI:..i.
A Professional Corporation Three Embaidadero Center, 7th Floor 0,.
2 Sgif Francisco, California.94111-4065 Telephone:. 41'5/434.1600.
-Facs.imile: -415/217-5910 ""
Attorneys for Debtor and Debtor in Possession PACIFIC GAS AND ELECTRIC COMPANY UNITED STATES BANKRUPTCY COURT NORTHERN DISTRI CT OF CALIFORNIA Inre PACIFIC GAS AND ELECTI COMPANY, a California corp Debtor.
Federal I.D. No. 94-0742640 SAN FRANCISCO DIVISION
Case No. 01-30923'DM uC Chapter 11 Case
- oration, Date:
October'2, 200' Time:
9:30 a.m.
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'Place-235 Pine Street San Francisco,
,22nd Floor California -:
DECLARATION OF STEPHANIE MAGGARD IN SUPPORT OF MOTION FOR AUTHORIZATION TO INCUR "ADDITIONAL MISCELLANEOUS IMPLEMENTATION EXPENSES,,
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DECLARATION OF STEPHANIE MAGGARD 1
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-28 I, Stephaiie Maggrdi declare:
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'I ahi a dIrect6rifn PG&E Corporation's finance department, and.am currentl-on iassignrlieht to Pa;caffi& Ga's and Electric Company (."PG&E") in connection with the iri~iplemn~htation ofPG fE?
p 6p6'ed Plan of Reorganization (the "Plan"),J, was, emplo6eal by PG&E from 1989 t6ý2000and, transferred to PG&E Corporation-in 2000. I held a fidnibeof pitaioPi upnmanly in,he& areas of regulation and ratermaking, A1d" "1
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... "'c ma a e for and business anhdifinand-lpranfng: Ifi'iy current assignment, I am a project manager for PG&E' s IfiplerrientAtior
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iIn this P6sition, I manage the business aspects of Plan
,mplementation, inciuding i-rsdliiti6n of businiess issues, 'orecastinig and tracking. of implementation costs, and, obtaining anyi necessary inanagement and Court approval for implementation rqjects.-
This' decar'ti6fi is'gubniitted in-support of PG&Es Motion for-Authority to Incur Additi6nal'Misce.elaitieu9 iiipleinentation Expenses (the "Motion?.). De~fined terms used herein shall have thýeumeanirig -set forth ifi-the Motion., I make this declaration based on personal knowledge, except where otherwise indicated, and if-called -as.a Witness, could and would festify b&rnpetentlthi6e Aifitt~rý s'et forth herein
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PG&E prviously filed and obtairied orders approving :11 motions' seeking' authority t6 incur c ost§ felafed{&inplerhentatibn'of the Plan In the Motion for Authority to Inu T.
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itir Eti"nd Incur Informaion iechiology Consulting Expenses and ym accompanying.declaration, filed on'July 23, 2002,ri ýbehiaf of iG&E, I 'idefitified additional implementation projects that will need to commence befre the Plan is cbnfiThned-(the."Implementation Projects") and estimated tha7t the total exp'ensrs for tlihse Implmednfation' Projects will range from $10.8 to
$17.8 million. In the Motibn for Autfiority to Incur Miscellaneouis Implementation Expenses
("Miscellaneou's Motion") filed'on August 15, 2002' a portion of the Implementation.
Projects were covered for a total egtimited cost of $ 1,397;180.. -The present Motion covers additional Im-plemefitati 'n PtoJect§for a toial'estinirated C6st of $5,602;810. PG&E anticipatesfiliig one or morenmofi6ns in Oct6ber to cover, additional Implementation Projects not covered inthe MiscellanebusMotioii or this Motion.
DECLARATION OF STEPHANIE MAGGARD 4-
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-Transactional Agreements and Schedules., Implementation of the Plan will 2
'ýrefiiire the creation of u 10to100 separate agreements, most of which will have several 31 ':kchbdules itta~hed listingor describing specific items related to the particular transaction; as 4
a'resu1t,sonrrie of~the schedules -are expecteo, to take up thousands of pages and will be 5
maintained on corfipiiter discs rather, than in paper, format'. These. agreements will cover such 6 "*'nritidal mattersias how each of the NewEntities willhe separated from PG&E and what 1 7
-assiets bekch will own. -For-example, examples ofthse qgreements include the asset transfer 18 is~ignment and assumptionlagreement (which will pqntain voluminous schedules), and the 9
"substation/switcliyard agreements. Due to-the volume of information involved, substantial 10 tinie is required to develop and review these documnents.. Each agreement and schedule 11 requires extensive research, input and review by various subject-matter experts at PG&E.
-12: -The, develd:ment.process for these dqcuments could take several months, as a result of the 11
- 3. "time involved'in assembling the -necessarinforration,and the drafting and review process.
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2' 14' There will b'e many PG&E representatives, as.,ypll.a, outside counsel, participating in the "'
15 pfrparation 6f these documepts.,
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PG&Ehas. selected ZIA Information Analysis Group, Inc. ("ZIA") to 7T
-prov-ide data management support-for thisproject.,ZIA's work on a reated project was 18 ' previously App'roved by theCourt (P91&E's MotiQn for Authority to Incur Data Management 19 Co~is ipproved by, Ordat entered op June 20, 2002). The prior motion related to ZIA's 20 development and maintenance ofan asset database-to facilitate the preparation of the asset 121
-'schedules needed for.the.a'sset transfer assignment anrd assumption documentation 22
`6ontemplated by the Plan.'.The present project relates to ZIA's development and' 23
, maintehance'of asecnievwebsite 'or all Plan-related transactional documentation in order to 24' *'facilitate the.exchang*-.ofinformation between PG&E, its outside counsel and any other
,25' Iparties assisting'with Plan implementation who will be authorized to access the website.
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-ZYA @ill also Assist with the.Qo~mpilation, organization and review of the transactional 27
'documentation, including the Jnput of-all :draft documents onto the website: PG&E estimates 28 that the cost for this work will be approximately $257,000.
S-DECLARATION OF STEPHANIE MAGGARD
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Accountin" Proces'ses and Procedures. Currently, PG&E's principal' accounting system is provided tl*6ugh a client seirýr a'pplikation' developed by SAP:
America, Inc. ("SAP"). PG&Eal-o uses more thin 80 other software applications. that:
support information recorded i the SAP aecountlng system and perform other accounting functions. These supporting accbunting systems'donsi'st 6f subsidiary. ledgers containing detail information for certain line itemns' contiarned in the geherrhl ledger, as.well assystems that perform computations`of amounts tobre rcored iii the 'general'ledger; Both manual and automated interfaces transei iifon'riationfrom the variou* accounting systems into the SAP accounting systems' Approximately*'five milliohitansactions are posted tothe SAP Y ;'-
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IT accounting system each week PG&E "sti' fat thai iploxirnately 30 percent of th~se.
transactions relate to business activities ofthe New Enititie§...
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By the Plan Efh6tive Date, the Ne-v Entitieswill requiie.accounting -,ý systems and applications that are frlly implemented and operational in order to. maintain their books and records. Each oftti fi6c6untingssyts ins dnd'applications Will require associated processes and procedures to capture, redoid and validate accounting transactions to ensure that accurate and complete ififormation is-ultifmately recorded in the general ledger.
For example, the recording of ev requireg 6 klex 1r&es~es and' procedures to:x.
capture the units sold or services prowided,1price the goodsrand sei-vicesi estimate collectible amounts, and prepare and recoridrevenue jionnal-entrieiin th6 general ledger. ':.
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Although PGE'initends to-replicate 'existing'ptocedures and processes and introduce as little chan as posbVe ie Newý Ehfitie` will be separate, new companies and
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out of necessity certain p "rocesses and procedures will ctiange.-,i addition;,it will be:.
important that employees of the-New Entities be' trained ifn the use of all accounting processes and procedures. It'will alho e critic'al that PG&E-fe'OieW its existing accounting' processes and procedures to ensufteihat these proceses and procedir.s'are not dis'rupted as a result of the separation.
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PG&E has selected Pricew'aterhouseCoopers (ý'PW "), a, global accounting and financial services firm, to assist with the devdlopment o6f accounting processes and DECLARATION OF STEPHANIE MAGGARD -1 4
1 procedures-for the New Entities. PWC has extensiveexperience in the accounting field, 2
ýin6luding the implementation of processes, procedures and internal controls associated 'vith 3
.'complex accounting systems: Specifically, this proje6t will include the f6llowing I
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' compofients: (i) an inventory of existing accounting applications, procedures and contr6ls;
-5. (ii) analysis of existing procedures and controls to determine which components can be 6
.duplicated,.duplicated with modifications, or require a new design; (iii) recommendations of S
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7' modifications to, existing processes to accommodate organizational'changes, application 8,
-configurationand other changes necessitated by formation of the New Entities; (iv) assisting
'9 PG&E in designing new.accounting prpeedures for functions that are, new or requ-ire'more 10.substantial changes; (v) estimating resource requirements, including employee requirements, 11 to perform accounting processes.,t. the New Entities and at PG&E; (vi) reviewing interfaces 12 between-field locations and centralized processing functions and between and amiong 413 accountingsystems; (vii) testing of new procedures and controls for the New' Entitie's ind a
14 PG&E; (viii) deter.trining training needs and assist in developing training materials; and (ix) 15 assisting in the implementatqon of all new accounting processes.
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-Pursuant to.the, previous Miscellaneous Motion, PG&E obtain ed atppival 17 for:application integration software and support related to the SAP system 'nd other k.y 18 systems that will bp used by the New Entities. The project described above to'be perf6rmed 19 by PWC relates to,the overall deyvelopment and implementation of accounting processes and procedures as opposed to the 1echmiql implemeptation.
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-and validate business transactions is.a critical business function that must b&
23 completed before the New Entities commence business operations. PG&E estimates'that the 24' accounting process and procedures.work-to be performed by PWC (and related work to be 25 performed by P1Q&E)ywill take approximately six months. This project is esgedl to 26 provide only the basic accounting requirements for the New Entities and PG&E'to keep 27 accurate financial records, develop.financial.statements, and perform basic fincneial'"
28 functions, such as paying employees and billing customers. PG&E estimates thatt~le'total A
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DECLARATION OF STEPHANIE MAGGARD A ~
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1 cost for PWC'sI ser(i6s V*illlbd pr6xiniately $15 milliori.
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I'ami inornedLad beheve that'PWo is'alsg approved as a professional in 3
this case as the financial advisor to the Official Cbnimittee 6fUnsecured Creditors 4
("CommitteV").' PWC has informed PG&E that the Cormmittee has no objection to PWC's 5
represdntation of PG&E fdr the limited purposes set forth above and that PWC has ethical 6
walls in place to protect the Committee's and PG&E'si cnfidlential information. I ain also 7,
informed and believe that PWC is filing a' Supplemental Declaration of Michael Hamilton
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provided to PG&E.
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The cost estimates set forth in paragraphs 5 and 11 above are based on 11 PG&E's initial scoping of the project requirements and negotiations with the consultants 12 who have been selected to perform the work. For each of the consulting firms described M
13 above, PG&E's standard contractual provisions in place with these firms (or to be included HOW*ARD G
14 in any contracts to be executed hereafter) do not guarantee future work or any minimum 15 amount of revenue. PG&Ei1l also maintain the right to terminate the work at any time 16 without cause, in which case PG&E is liable' bnly for work performed to the date of 17 termination plus costs reasonably incurred by the consultant in terminating any work in 18 progress.
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The work described in Section D of the Motion (General Implementation 20 Expenses) was not specifically described in my previous declaration, but PG&E his recently 21 become aware of the necessity of these projects and costs. PG&E anticipates that itwill stay 22 within its previous cost estimates for the Implementation Projects, notwithstanding this 23-additional category of implementation work..I 24 25 26
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28 "DECLARATION OF STEPHANIE MAGGARD I
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DECLARATION OF STEPHANIE MAGGARD HOAMR Hc7ANi RCD I declare under penalty of perjuryvof the lawvs of the United States that the
-.foregoing is true and correct, and that this declaration was,executed at San Francisco, California on-Septmbcrl 1, 2002:.-....
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