ML023080041

Declaration of William A. Utic in Support of Third Motion for Authority to Incur Miscellaneous Implementation Expenses

ML023080041
Person / Time
Site:	Diablo Canyon
Issue date:	10/18/2002
From:	Utic W 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, 94-0742640
Download: ML023080041 (6)

Text

"-1 JAMES L. LOPES (No. 63678) '--f JANET A. NEXON'(No.' 104747) 2 'JULIEB. LANDAU (No. 162038) U HOWARD, RICE, NEMEROVSRI; CANADYj C

3 -FALK& RABKIN .

--AProfessional Coiaoiftion 4 Three Embarcadero Center, 7th Floor '. ""- -.

San Francisco, California 94111-4065 .

5 Telephore: 415/434-1600" Facsimiile:'415/0.t7-5910 -:"

6

'Attomreys for Debtoi and Debidr in Po6session 7 PACIFIC GAS AND ELECTRIC COMPANY-8

-9 "".NITED STATES BANKRUPTCY COURT. .

,- NORTHERNDISTRICT OF CALIFORNIA "10.

11 SAN FRANCISCO DIVISION,,- .

I 12 In re Case No. 01-30923 DM SHOWARD 13 PACIFIC GASAND ELECTRIC -, Chapter 11 Case iEma RIK 14 COMPANY, a California corporation, Date: '-November 822002

&RAnN(I Debtor.' Time: 1:30'p.m.

,,,g. 15 -Place: . - 235 Pine Street, 22nd Floor Federal I.D. No. 94-0742640 San Francisco, California 16 17 DECLARATION OF WILLIAM A. UT'IC IN4SUPIPORT OF 18 THIRD MOTION,FOR AUTHORITY-TO INCUR "MISCELLANEOUS IMPLEMENTATION EXPENSES 19 i

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. DECLARATION OF WILLIAM A. UTIC 00ok

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1. I, William Utic, declare:

2 1. I have been employed by Pacific Gas and Electric Company (ý'PG&E")

3 since 1979. Since October.2001, [ have held th'e position of Manager of Property Planning 4 andTransactioiisu: Previous;to 2001, I theld vari6us-mianageriaI positions within-PG&E,..

5 including responsibility for building operations, building design; engineering and 6 construction project management. - . .. . '

7 2. This~declaration is submitted-in suppbrtobfPG&E'sThird Motion for' 8 Authority to Incur Miscellaneous Implementation Expenses (the "Motion"?). Defined terms 9 used herein shall hve-the meaings-set'forth in'the.M6tion I-make thig declaration based 10 on personal knowledge, 'eiccept'wher*' 6the'rise in'dicaied; anid if called as a witness, could 11 and'would testify competently to tfie matters,6t fdrth herein.

12 - 3 To irn~plei"&nt th Plan, PG&E antkipate that sdVen new buildings will be 13 16ased and' pre'pared for 'occupancy and'30 existing-PG&E-ox'ned biiildings riiuisf b6 rq 14 niodifi:d for use by PO&E hnd the NerO Enfities.: These"facilities atre needed to l~rovide& .

15 separate-vorking ire'as for field'employeei of PG&E'ahdeach:`of th6.New-Ehtities by'the' 16 Plan Effei'tive Date.' For examtli, PG&E -firrentI2-haý'sbiintion rhaintenafice facilities that 17, include both'distribution* and electric transmissidn, functions; vhich PGr&E bdlieVes canfiot

,18 be o6rated, eff&tiv'elyý finess th'ehimiiloy6es dofPG&E-afid-effiloyees of ETrans are '

i9 Physically'separated.'-Sin~e PG&E and ETrans-vilibe sepa-'ratelfegal entities, it is inportint 20 that there be-rio'confusidn*-about employee superVisibii itfid:bornipliance with legal and,'

21 business i'equirernienis. Another ieason for th6-rie'*w buildings and existing building 22 modifications is thaf the New Entities will individ6iily'be'snm'lf-r companies, with feweri 23 empi ,'tliari pehen"f day PG&E. in-order for 'the New'Entities to maintain properly-22 24 supervised work sitfs,'it is necessary to modify "existihg-w6rk'sites or'to firidnew spade that 25 will acco'mmodat6-the regda f6r cons6lidated-work'sites. This-project will not provide for-the S,26 separation of all employe~s of PG&E and the New Eniities by the Plan Effectiv-e Date!;,

27 ,rather, the separation described heiein only covers a p'ortion of the facility separation work, 28 specifically the portion that PG&E has deemed 'i'itical to co-ffiplete by the Plan Effective '.

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1 - .. '. DECLARATION OF WILLIAM A. UTIC

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1 Date. The remaining facility separation work will be'corpleted ,after the Plan Effective

_)Date. .

3 Although PG&E:hasi'dentified the'need 'for new space to be leased and for

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'certain cc'nstructi6n work to be terforrne'd,-PG&E Will not-ehtet, ihtoany'leases or, a 5 commince any constructofi work until after Plani confirmatioi- (and after obtdining Court 6 approval). T*he projects set forth below'involve pr'elimiriiry'_Wv-o'k-thairxiitst begin promptly a7 Jirorder for PG&E-to be'prepared to. 'omnrieice-cohstriiction Wok'following Plan" confirmation.r' ... . '. - *"

-9 . .-5 Constructioin'rProject-Managers'Ian ordei toprep'are-the new buildings for 10 *occupancy, "anidmditfy the 'ekistifig buildings t6 servemgiltiple companiesPG&E seek to hire construction project managers-to-manage-the r6qquired construction work. Although 12 ,PG&E has in-house expertise in"this area, PG&E does not'believedit has the'capacity t 'o:

a 13 perform the -workin-hOuse-due to currenit wofkl6ads.- PG&E intefids~to'delay any necessary HOAR.

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,KEIA* 14., construction,work until -after Jthe Planýhas been confirmied. ",However, in'order to assess the EUK Ao.dQ* 15 ,constructiqn needs and plan- forthe construction work; itis necessary to hire the construction

-16 managers promptly to, ierform prelimin.y work pi-ior to.confirmation, 'This.preliminary

17 "workwill include the following tasks:i),determiningthe scop'e of.work tg'be performed on 18 eac*hbuilding;1(ii) preparing.and 'submitting 166albuildingperriiit and copnditional use permit

, 19. applications; 1(iii) dev~eoping detailed,- site-specific pork sdhedul6s; and (iy) preparing 20 Scontract specifications;'selecting jqualjlfied.contractors, and negotiating'contract terms.

21 -6. Ba~sed ujop its experience with similar projects,' PG&E estimates that 22 approximately seien 'onstruction managers will be.required to manage the building projects 23 .'at a total estimatd ,cost,of approximately $425,000. ,The conistru~ctionmanagers-will be S' a e. a ' of' E ' y- S- ea- ic ' 'c" 24, 'hired on 'a emporary basis through Source Cahfomi Energy Servies, In.

25 7 '-. Permits, Engineering'afid OtherP-e-C6fistruction Costs. With respect to 26 both the buildings to be leased and the existing PG&E-o,*fied biiildings, certain pr6e 27 construction -osts need to b' incurred beginniiigin NoVember 2002 f6r'such -items as 28 conditional 1use and construction permits, preliminary engineering and design work, and "DECLARATIONOF WILLIAM A. UTIC 1 environmental assessments. For example, in the case, of a building that PG&E-intends to 2 lease for use as.a Materials- Distribution Center-for the-New Entities,1 there are currently 3 estimated costs of$3,6,4Q0, comprisedof the, following components: (i) $2,000 for a 4 -conditional, use.Perrnit~to operate the site as.a utility warehouse and distribution center;.(ii) 5 $2,000 for a construiction permitirelated to necessary-facility modifications; (iii),$24,900 for 6' design, seismic analysis, fire protection design andpermits related, to the installation of 7 materials racking (the vendor for~this part, of the project isCrown Lift Trucks Company, a

8. -supplier of materials handling products, storage solutions and.support services related to 9 ;warehousing. and-materials distribution. systems as well-as alcertified fire engineering and 10 design firm); and (iv) $7;50Q for a Phase 1 Environmental.Site-Assessment..o-11 - 8.- *.G&E,4nticipates-that similarexpenses ,will b.e incurred-with respect to the

. 12 other buiilding§s(provided that a Phase.I-will only be conducted with respect to the properties 13 Jto~be leased.) Until the gonstructionproject managers desqribed- in Section 1 above begin F 14 work; PG&E will not have a precise estimate of the total pre:construction costs. Currently, -,

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15 it is anticipated' that Phase I assessments will be conducted with respect to all, leased - -.

16 properties at a cost,of.approximately $7,500 each;, PG&B.also:seeks authority to incur up to

-17 $100,000in additional, pre-construction, expenses.to covet.permits- and engineering costs.

18 -WhilePG&E will haye a:more precise estimale oftlhese pre-construction expenses within 19 the next, month and expects that theseexpenses willexreed $100,000, it is important that the 20 projects not be delaiyed while PG&E is.determining.the.fiAlextent of,this work and can bring 21 another motiort for Court approval. Based on PG&E'spastexperience in preparing 22 . . .. ... ... ° At page 9 of the Motion for Auihority to Incur Mispellaneous Implementation',

23. Expenses, filed -odn Ai'igus't 15, 2002, PG&E explairied its, inteht to have the Newv EntitiesZ share PG&E's existing warehouses until a new Materials Distribution Center ("Centei")

24 could be set-up.- PG&E-has now decided to set u 'the-new Centef by the Plan Effective Date in lieu of implementing shared warehouse procedures. This decision is based, in part, on the 25 availability of a suitable building for the fnew Center, which canbe prepared for occupancy by the Plan Effective Date. This will also avoid the difficulties of having the New Entities 26 temporarilyshai'e'warehouse space with PG&E.' Ttiý $30;000 in con'sulting feesjpreviously approved for the has management ofto thedevelopment materials distribution 27 of the project simpiy'shifted of the newproject Centerisinstill lieuneeded; the focus of a facility 28 sharing strategy.

DECLARATION OF WILLIAM A. UTIC 3/4

'1 buildings fdr-occupancy and the estimates that have been developed for the Materials

.2 Distribution Center, PG&E believes that it can~begin certain -critical:or time-sensitive pre 3 construction work with th&authoriiy to incur up to.$100'060 at this time. 'Therefore, PG&E "4 seeks authority to incur a total of $181,400.in' pre-c6nstruction"Ubsts, including: (i) $36,400

--in connection'with the -Materials Distribution Center, as described above,-(ii) an additional 6 $45;00O for Phase-I assessments for 6.tdditional properties to be leased, and (iii) an

"-additional $100,000 for permit' and engineering costs. "

S 8 9. -. PG&E believes'that it-must begin to incur these expenses prior to Plan.

confirmation for ihe following reasons. :Thb-permits can take, as long as two months to-.

10 process;'therefore, as soon as the project managers identifya need for a permit, an application will be submitted to the appropriatelocal 'government entity. Although PG&E

- '1-11 2 may request permits in advancedf leasing the p-rolperties,' it -isanticipated that the building HOWARD owners will consent to the'permit-applications. The preliminary engineering work must'.

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-14 begin prior to confirmation so thai the actual'construction work can begin promptly

.*.* 15 following confirmation; also; 6ertain-preliminary engineering work is often -required in; 16 connection with the-preparation'ofconstructionor cinditional use permit applications.

17 Finally; an-environmental assessment of.any property to be'leased must be tompleted'prior

• o18 to the time PG&E enters into the leases so that PG&E can be fullyI'nformed -about any

• '19  !.environmental hazards ;associated With'thb'bihilding and have a'baseliiie aggessment of the 20 condition of ihe building.prior'toPG&E's occupjancy;.:." .. "' ""

21, "10. , PG&E's standard contractual prcvisions in place '(or to be included in any 22 contracts to be executed) with the construction managers--described above and any

• 23. engineering. firms to be utilized wiI.I n'ot guarantee future'w rk br aiym'ininimnum amount of

• 24 revenue. PG&E'will also maintairthe'right t-'terminate the wOik at,anyitlme without cause,

" 25, ifi which ease PG&E 'is liable ornly' for work peiformed to the date of termination plus costs S .

26 reasona~bly inctirred by thle consultant'in terminating any work in progress.

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- ,DECLARATION OF WILLIAM A UTIC

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1 I declare under penalty of perjury under the laws of the United States of America 2 that the foregoing is true and correct and that this Declaration is executed this 18th day of 3 October, 2002, at San Francisco, California. I I I tk"-ý.I 4

5 WILLIAM A. UTIC 6 WD 101702/1-1419905/1030566/vi 7

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10 11 12 HOWRD 13 14

&RAIZUN Apýo-4Cr_ 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF WILLIAM A. UTIC