ML040280424
| ML040280424 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon  |
| Issue date: | 01/14/2004 |
| From: | Lumsden T FTI Consulting, Official Committee of Unsecured Creditors |
| To: | Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California |
| References | |
| SF 01-30923 DM | |
| Download: ML040280424 (35) | |
Text
1 2
3 4
5 6
7 8
9 10 11 12 Thomas E. Lumsden i
7 FTI Consulting Inc.
353 Sacramento Street FIL E D San Francisco, CA 94111 Telephone:
(415) 2834200 JAN 1 4 2004 Facsimile:
(415) 283-4266 Accountants and Financial Advisors forOfficial Committee of Unsecured Creditors UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION 13 14 15 16 17 18 19 20 21 22 23 24 25 In re PACIFIC GAS AND ELECTRIC COMPANY, a California corporation, Debtor.
Case No. SF 0 1-30923 DM Chapter 11 EIGHTH INTERIM APPLICATION OF FTI CONSULTING INC. FOR ALLOWANCE AND PAYMENT OF COMPENSATION AND REIMBURSEMENT OF EXPENSES (AUGUST 1, 2003 THROUGH NOVEMBER
.30, 2003); DECLARATION OF THOMAS E.
LUMSDEN IN SUPPORT THEREOF Hearing:
Date:
Time:
Place:
February 26, 2004 1:30 PM 235 Pine Street, 22nd Floor San Francisco, CA 27 28 V0,01
TO THE HONORABLE DENNIS MONTALI, UNITED STATES BANKRUPTCY 1
JUDGE, THE OFFICE OF THE UNITED STATES TRUSTEE, THE DEBTOR, AND OTHER PARTIES IN INTEREST:
2 3
As previously disclosed to this Court through the Eighth Supplemental Declaration of 4
Mr. Thomas E. Lumsden and FTI's retention pleadings, on August 30, 2002 (the "Closing 5
Date"), the Business Recovery Services practice (the "BRS Practice") of 6
PricewaterhouseCoopers LLP ("PwC") was transferred to FTI Consulting, Inc. ("FTI"). This 7
transfer included the business, receivables and employees comprising the BRS Practice of PwC.
8 Effective upon the Closing Date, Mr. Lumsden, as well as all of the BRS Practice professionals 9
working on behalf of the Committee in this matter became employees of FTI.
10 As disclosed in FTI's retention pleadings filed on September 27, 2002 and approved by 11 the Court on October 31, 2002, nunc pro tunc to September 1, 2002, FTI, as successor to the 12 BRS Practice, will be responsible for filing appropriate fee applications regarding previously 13 unbilled services provided by PricewaterhouseCoopers LLP ("PwC") prior to the Closing Date.
14 Further, FTI will be entitled to all payments to be made by the Debtors after the Closing Date for 15 any outstanding receivables related to BRS services. It is anticipated that FTI would assume the 16 responsibility for filing a single, final fee application for pre-Closing Date BRS services and 17 post-Closing Date FTI services at the conclusion of these proceedings. As such, as outlined 18 above, FTI respectively submits this Eighth Interim Fee Application for services rendered by FTL 19 for the period from August 1, 2003 through November 30, 2003 to the Official Committee of 20 Unsecured Creditors (the "Committee").
21 22 I.
23 INTRODUCTION 24 This is the Eighth long-fornf interim application filed by FTI for approval of 25 compensation and reimbursement of related expenses for services rendered on behalf of the 26 Committee dunring PG&E's chap'ter, i.i case. FTI submits this Eighth'Interim Aipplication in 27 accordance with Bankruptcy Code sections 330 and 331, Rule 2016 of the Federal Rules of 28 2
Bankruptcy Procedure (the "Bankruptcy Rules"), the Office of the United States Trustee for the Northern District of California Guidelines (the "UST Guidelines"), and the United States' 2
Bankruptcy Court Northern District of California Guidelines for Compensation and Expense 3
Reimbursement of Professionals and Trustee ("Court Guidelines"). Through this Eighth Interim Application, FTI seeks (i) interim approval and allowance of $640,450 in fees accrued and
$14,428 in expenses incurred for services rendered by FTI on behalf of the Committee during the 6
period August 1, 2003 through and including November 30, 2003.
7 S
During the Eighth Application Period, FTI professionals spent a total of 1,397.0 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> rendering services to the Committee in connection with the PG&E bankruptcy case at a blended 10 hourly rate of $458A5. FTI also incurred $14;428 in costs and expenses in connection with those services, for which FTI is requesti reimbursement. Accordingly, FTI seeks allowance 12 and payment of a total of $654,878 for'services rendered and reimbursement of costs and 13 expenses incurred during the Eighth Application'Pe'riod. To date, PG&E has made payments for 14 fees in the amount of $429,497 and expenses in the amount of $10,612 on account of the 15
'Monthly Cover Sheet Applications for ihe penod of August 1, 2003 through November 30, 16 2003. Thes& amounts reflect tiei &oversheet applications for August 1, 2003 through October 17 31,2003; the November 30;2003 appiicatiA haiis not yet been paid reflecting $114,886 in fees 18 and $3,888 in expenses. The services aind c6sts foi the Eighth Application Period are described 19 below and are detailed hi th~eekhibits filedcon'cuirrently herewith.
20 21
SUMMARY
OF DEVELOPMENTS IN THE CASE 22 23 On April 6, 2001 (the "Petition Dafe"), Pacific Gas and Electric Company (the 24 "Debtors") filed voluntary petitions for reorganization under Chapter 11 of title 11 of the United
.25 States Bankruptcy Code ("Bankruptcy Code"). The Debtors continue to operate their business i.and a;...uiz.h;ii prop-rties-as debtors.in-possession p. rsumit to Sections 1107(a) and 1108 of 27 the Bankruptcy Code.
28 3
1 On July 2, 2001 this Court entered an order authorizing, nunc pro tunc, employment of PwC as of April 11, 2001, as Accountants and Financial Advisors for the Committee.
On October 31, 2002, an order (the "Retention Order") was entered to extend this employment to 4
FTI as successor to the PwC BRS Practice, nunc pro tunc to September 1, 2002, 5
6 The Retention Order authorized the retention of FTI to render to the Committee the 7
following essential services, which include but are not limited to the following:
8 9
(a)
Assistance to the Committee in the review of financial related disclosures 10 required by the Court, including the Schedules of Assets and Liabilities, 11 the Statement of Financial Affairs and Monthly Operating Reports; 12 (b)
Assistance with a review of the Debtor's short-term cash management 13 practices; 14 (c)
Advice and guidance to the Committee with respect to utility accounting 15 and electric and gas utility operating elements, including elements of rate 16 making, cost recovery and the financial impact of regulatory decisions; 17 (d)
Assistance and advice: to the Committee with respect to the value of the 18 Debtor's operating assets and make recommendations regarding the 19 highest and best use, operation, and ultimate disposition of such assets; 20 (e)
Assistance in the review of financial information distributed by the Debtor 21 to creditors and others, including, but not limited to, cash flow projections 22 and budgets, cash receipts and disbursement analysis, analysis of various 23 asset and liability accounts, and analysis of proposed transactions for 24 which Court approval is sought; 25 (f)
Attendance at meetings and assistance in discussions with the Debtor, 26
-. regulators; State ageniies; mortgage i..
and other secured lenders in,"
27 28 4
this chapter 11 case, the U.S. Trustee, other parties in interest and professionals hired by the same, as requested; 2
(g)
Assistance in the review and/or preparation of information and analysis 3
necessary for the confirmation of a Plan of Reorganization in this chapter 4
11 case; (h)
Assistance to the Committee and its counsel in the preparation and 6
evaluation of potential litigation; 7
(i)
. Assistance in the discharge of the Committee's duties and functions in this case, including, but not limited to, compilation of material required for court.testimony;.and.
10 11(.G)
Render such othergenqral business consulting or such other assistance as the Committee onits~counsel may deem necessary that are not duplicative 12 1, of services priovidedby other.professionals in this proceeding.
13 14 FTI incorporates by reference the:,9yerview.,of case activity presented in the Eighth Interim Application of Milbank:Tweed Hadley,& M:1NcCloy LLP for Allowance and Payment of 16 Compensation and Reimbursement of Expenses.,The Debtor continues to operate its business, 17' and cash flow appears to be neutral pendingxregulatory decisions by the California Public 18 Utilities Commission.. Two com petingplansywere filed in the case, subsequently a Joint Plan' 19 20 was filed and a Settlement Agree:mwent Ea~yeac hed as the result of a court ordered arbitration.
The Commission approved the modified Settlement Agreement which led to the Court's order 21 confirming the debtor's Plan of Reorganizatin..
22 23 24 II.
25
SUMMARY
OF FTI'S EXPERIENCE 26 01 27 FTI, as successor to the; BRS practice of PwC, has extensive experience in financial 28 reorganizations and bankruptcy consulting services. Our professionals have provided services 5
to a wide variety of industries, and as a result, FTI has accumulated a wealth of knowledge concerning the intricacies in these matters.
2 1 In bankruptcy restructurings, the FTI has accumulated over a quarter of a century of 3
experience serving Debtors, Creditors, and Trustees in bankruptcy matters.
4 FTI has assisted numerous Debtor and Debtor-In-Possession entities involving, successful development of reorganization plans, numerous valuation projects, sales of assets in Chapter 1, 6
extensive tax consulting, and other services related to reorganization.
7 8
III.
9
SUMMARY
OF SERVICES RENDERED BY FTI 10 During the Eighth Application Period, FTI represented and advised the Committee with respect to a wide range of issues and challenges. Due to the'comprehensive nature of the 12 services rendered by FTI during the Eighth Application P'eriod, no attempt is made herein to 13 detail the totality of such services. The full scope of the services rendered by FTI is set forth in 14 detail in the billing reports filed concurrently herewith under captions entitled "Detail Reporting 1 5 by Task Code Exhibit for the Period August 1, 2003 to November 30, 2003 " (the "Billing 1 6 Reports"). However, in order to assist the Court, the United States Trustee, PG&E and other 17 parties in interest in reviewing this Eighth Interim Application, a brief summary of FTI's billing 1 8 procedures and the services rendered by FTI'during the Eighth Application Period with regard to 19 each activity code category, including certain rnd'ertakings within each category, is set forth 20 below.
21 22 A.
Summary Of FTI's Billing Procedures.
23 It is FTI's normal business practice to charge its clients in full for services rendered and 24 24 all actual and necessary out-of-pocket costs and expenses incurred by FTI in providing those 25 services.
26 27 In the ordinary course of its practice, FTI maintains records of time expended by 28 professionals in rendering services to its clients. Time records are made substantially 6
contemporaneously with the rendition of these professional services and are prepared by the 1
professionals who have rendered the services. In matters such as.this, time records are kept in 6 2
minute (.1 hour1.157407e-5 days <br />2.777778e-4 hours <br />1.653439e-6 weeks <br />3.805e-7 months <br />) increments.
3 4
This case, which was one of the ten largest bankruptcy cases filed in the United States, has involved significant interaction with outside agencies, including the Federal Energy.
6.
Regulatory Commission, the California Public Utility Commission ("CPUC"), the California 7
Energy Commission, the Department of.Water. & Power ("DWR"), the State Legislature, the 8
Governors Office, as well as taxing authorities and other reporting agencies. The activity in this 9
case has been continuous and intense as the Debtor and Creditors have moved swiftly to grapple 10 with the innumerable issues of a regulated utility in bankruptcy, and parties have sought to develop a consensual plan of reorganizatiqn3 structure. During the course of this case, we have 12 observed unprecedented action by all ofthe~ pArties noted above to address the underpinnings of 13 the energy crisis in California. These havye i-ncluded the filing of two competing plans of 14 reorganization within one year of the case's.conumencement, proceedings by the legislature and 15.
the CPUC to address hardship by the QFgenerators, proceedings by the Governor, Legislature 16 and FERC on price caps and refunds for energy. action by the Legislature and Energy 17 Commission to support development of poIwertplants, proceedings with the CPUC over the DWR
- 18.
power purchases, negotiations and legislative proceedings involving bailout measures for utilities 19 in California, issues involving the. State Trsurers office, DWR, CPUC and the Governor over 20 bond financing for the.DWR power.purchase~sinterplay among the utilities in 'California, the 21 CPUC and DWR concerning allocation of the costs of power and bond financing as it'may affect 22
- each utility, and agreement between the CPUC and Southern California Edison (SCE) on a 23 means to repay SCE's past-due obligations. The issues at stake have been monumental with 24 PG&E's reported debt and claims exceeding $13 Billion, the range of revenue at stake for their 25 electricity procurement activities varies from $2.8 Billion to $3.7 Billion per year, the proposed 26 allocation of DWR power and bond finance costs 'varying from $2.0 Billion to over $2.2 Billion per year;,.and QF pre-petition claims on executory contracts exceeding $1 Billion. During the 28 pendency of this case, we have observed electricity prices vary from hundreds of dollars per 7
Megawatt to power prices in the $15-30 range. We have seen natural gas prices vary by a factor 1
of I Ox the historic price average. Reported purchases of power by the DWR have varied from 2
over $100 million per day to under $12 million per day during this period. There have been numerous legal challenges to actions of the Debtor, CPUC and the State of California in this 4
case, resulting in pending appeals and legal action on these matters.
5 6
The Committee organization structure has been unique for this case, with greater time 7
involvement by Committee members than in most any other case. The personal commitment of 8
Committee members to actively participate on a continuous basis has matched the activity level 9
in the case with over 13,300 filings listed in thie Court docket through November 30, 2003. The 1 O Committee has participated in an unprecedented number of meetings of the Committee, advisors, 11 the Debtor and the CPUC. The Committee, in'order to address the monumental workload and 12 myriad of tasks at hand, created four distinct subcommittees: Financial, Legislative, Regulatory 13 and Plan. FTI assembled sub-teams of professionals to address the issues and work assignments 14 set forth by the Committee, subcommittees and working group. In the course of FTI's 15 representation of the Committee in this matter, it has been necessary and requested that more 16 than one or two professionals participate in meetings and conferences with the Committee 17 representatives, the CPUC or with the Debtodr. This is not normally the case for FTI in such 18 matters and has been dictated by the size of the case, the complex nature of the matters being 19 discussed, the speed with which matters are being addressed in the case, and requirement to have 20 various specialty skills represented and participating in certain key discussions. In many cases, 21 these have been high-level meetings or'key discussions with the Debtor representatives or the 22 CPUC and its advisors who are not able to make themselves available for repetitive follow-up 23 discussions. In many cases, the participation of multiple professionals by FTI has been dictated 24 by the specific specializations and backgrounds such as those of the following key professionals:
25 Michael Hamilton is FTI's senior Utility Specialist in Accounting and Regulatory 26 z
-.Matters.,
Lart.c.ipaied in-dach of th'restructurings that h, :;c; i4volVed a utility for the Firm over the past 25 years. He has unique knowledge of the regulatory and business environment 28 8
facing utilities. Mr. Hamilton has coordinated the Committee work on plan structuring, 1
regulatory matters, cash flow projections and legislative matters.
2 3 l Thomas Lumsden is one of FTI's senior bankruptcy specialists, with specialization in utilities and the California Market, having participated in development of the infrastructure for 5 ' the electricity deregulation in the State, and has operated and bought and sold electrical 6
generation facilities. Mr. Lumsden coordinated the Committee work on the financial modeling and analysis of PG&E's operations and finances, the DWR power purchases and revenue 8
requirements, the tax issues involving the Plan structure, the retained generation filings with the CPUC, the analysis of claims by class, analysis of the CPUC Plan, and development of 10 alternative plan structures, including the Joint Plan and Settlement Plan. Mr. Lumsden testified in support of the Settlement Agreement before the CPUC.,
12 M. Freddie Reiss'is a seni r'bankuptcy'specialist for FT1 with expertise in serving 13 l Committees and dealing'with intercreditor miiatlers. He has coordinated the Firm's negotiations in 14 l the areas of employee retention issues, employfiit of Debtor professionals, ordinary course 15 motions, committee goi'rnrance and plan negotiations with the Debtor and with the CPUC.
17 l Rocky Ho is now a Senior Managing Director for FTI and has been responsible for 18 coordinating staff assignments and projects forithe FTI team, review of work product, quality 19 control, and active participation in plan adJiPstrnents, and has specialized in review and 20 l coordination of all Committee response PDbito? votions and filings, litigation matters and 21 Committee consent on capital expenditwures. Mr.rPo yvas responsible for maintaining Committee 22 contacts with the CPUC staff and financial advisors.
23 Allison Young is a Director for FTI and has specialized in the financial modeling, the 24 statewide grid modeling, the cash flow analysis, the assessment of Debtor projections, the assessment of the CPUC's projections; alternative plan structures and feasibility, tax analysis of 26
.-.;.1. planproposals, andianaly&is ofcrditor c.i}r il;,.y class:
27 28 Jennifer Kitchin is a Director for FTI and has specialized in the Rating Agency analysis 9
of PG&E, the DWR power purchases and contract data.
2 Maryam Ghazi is a Director for FTI and has specialized in the analysis of the Settlement 3
Agreement and assisted in the preparation of Thomas E. Lumsden's testimony in support of the 4
Settlement Agreement.
Margery Neis is a Utilities specialist in the BRS Practice who has coordinated the review 6
and monitoring of all matters with the CPUC, the DWR power purchases and contract database and QF contracts.
An analysis of meetings with multiple FTI professionals in attendance and an explanation of the 10 role and purpose of each professionals' participation are presented in Exhibit 4 to this 11 Application.
12 B.
Summary Of Exhibits Regarding Services Rendered By FTI.
13 FTI has attached the following exhibits as support to its Application:
14 15
- 1.
Attached to the Declaration of Thomas E. Lumsden ("Lumsden Declaration") is 16 Exhibit I - A summary schedule. showing the professionals who performed the services, the 17 number of hours spent, the respective professional's billing rate, and the total fees for such 18 services; 19
- 2.
Exhibit 2 and Exhibit 2 Summary of Fees by Project Category and itemized 20 time records, in chronological order, of each 'specific service for which an award of 21 compensation is sought. The itemized record includes: (1) the date each service was rendered, 22 (2) the professional(s) who performed the service, (3) a description of the services rendered, and 23 (4) the time spent performing the service in increments of tenths of an hour for the Eighth 24 Interim Application; 25
- 3.
Exhibit 3 - Expense Summary and Expense Detail reports by individual and itemized total expanses for~which r-ibirh r ent is sought. All expenses for which 27 reimbursements are sought are disclosed in detail by"individual. It should be noted that aiy'-
28 airfare charges were incurred as a result of travel in coach class. FTI has not requested 10
reimbursement for certain out-of-pocket expenses when it would not be possible to assemble the 1
billing details for reimbursement under the Guidelines. These unbilled out-of-pocket expenses typicallyinclude telephone charges for calls placed in its offices, postage costs including Federal Express charges and copying and fhacsimile charges incurred at the Applicant's offices in connection with these cases. These unbilled out-of-pocket expenses are real costs that have been incurred by FTI and have benefited the Estate; and 6 l
- 4.
Exhibit 4 - Summary of Meetings when more than two FTI professionals 7.
attended. The summary highlights the relative importance of each team member and the purpose 8
of their involvement at the meetings.
.9 10 lNARRATIVE-
SUMMARY
OF SERVICdS'PROVIDED BY FTI.
11 12 FTI has submitted detailed listings of time incurred by professional by task for the
-4 s..-,,
.~.ta, ft.
13 monthly Cover Sheet Applications' to the Debtor, Committee, the United States Trustee and the 14 Court for the period covered by this Eighth Interim Application. FTI has reclassified some of the 15 detailed time into categories that more appropriate'ly refl ct the'work performed.
16 Reclassification was made to harmonize'the a;atdkoiizatio'n among professionals.
18
- 1.
Asset Sales/Valuation Issues (Category 01).
19 20 During the Eighth Application Period, FTI professionals spent a total of 3.9 hours1.041667e-4 days <br />0.0025 hours <br />1.488095e-5 weeks <br />3.4245e-6 months <br /> 21 -
rendering services' in this category, for which FTI seeks compensation of $1,755. A summary of 22 the FTI professionals who rendered services in this category and the corresponding amount of 23 fees requested is included in Exhibit "2." The Billing Record for this category, which sets forth 24 a detailed description of the services rendered are filed concurrently herewith.
25 Services rendered by FTI professionals in this category included:
26 27 a).
Determination of the value of the lands donated by Plb&E in. the 28 Settlement Agreement and the assessment of the tax impact on the 11
Settlement POR.
1 2
3 4
5 6
7 8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The purpose for the work performed was to enable the Committee to assess the accuracy of the values presented by PG&E as shareholder contributions.
- 2.
Bankruptcy Court Approval of Settlement Agreement (Category 02)
During the Eighth Application Period, FTI professionals spent a total of 72.2 hours2.314815e-5 days <br />5.555556e-4 hours <br />3.306878e-6 weeks <br />7.61e-7 months <br /> rendering services in this category, for which FTI seeks compensation of $40,613. A summary of the FTI professionals who rendered services in this category and the corresponding amount of fees requested is included in Exhibit "2." The Billing Report for this category, which sets forth a detailed description of the services rendered is filed concurrently herewith.
Services rendered by FTI professionals in this category included:
a)
FTI attended the Confirmation Hearings b)
FTI reviewed and analyzed various testimonies and supporting depositions presented at the confirmation hearings.
c)
FTI reviewed and analyzed trial briefs presented at the confirmation hearings.
FTI worked closely with the CPUC, its consultants-and PG&E to articulate the benefits of the agreement to all involved parties. FTI's findings were essential in obtaining OCC support of the modifications proposed for the Settlement Agreement.
- 3.
Bankruptcy Reportfng (Category 03).
D.11-ir ngthe Eighth-Application Reriod,.FTI prof'<: r.ls ineIt a total of 54.9 hours1.041667e-4 days <br />0.0025 hours <br />1.488095e-5 weeks <br />3.4245e-6 months <br /> rendering services in this category, for which FTI seeks compensation of $27,962. A summary of the FTI professionals who rendered services in this category and the corresponding 12
amount of fees requested is included in Exhibit "2." The Billing Report for this category, which 1 l sets forth a detailed description of the services rendered is filed concurrently herewith.
2 3 l Services rendered by FTI professionals in this category included:
a)
FTI reviewed and analyzed various motions and pleadings of the case, and provided comment to the committee on the financial impact of these items.
6 7
There have been innumerable motions filed in the case by the Debtor and other 8
parties which required review and assessment by FTI to assist counsel to the Committee in
. 9 determining the necessary. response. These.included motions on capital expenditures, asset sales, 10 and claim settlements, Power Exchange, lease extensions, POR transition costs, procurement l1 plans, as well as document discovery requests. In many cases, the time associated with those
.12 l motions.has been posted to a distinct'tfk 66d~e, but in other more generic cases, the time has 1 3 l been-posted to the Bankruptcy Reporting task.
14
- 4.
Cash Flow Analysis (category 04).
15.-.
1 6 During the Eighth Appli6ati6it Pe'riod, FTI professionals spent a total of 51.9 17
'hours rendering services in this categor, for which FTI seeks compensation of $23,170. A 18 summary of the FTI professionals who rendered services in this category and the corresponding 19 amount of fees requested is included in Exhibit "2." The Billing Report for this category, which 20 sets forth a detailed description of the sd-vices-rendered, is filed concurrently herewith.
21~~~~~~~~~~~~~~~~~~~.
21
~~~'Ser~vices rendered by FTI professionals in this category included:
2a)
FTI updated its analysis of the Debtors' cash flow forecasts to develop an 23 understanding of the Debtor's liquidity position and its ability to generate 24 sufficient cjsh to fund the proposed Plans of Reorganization.
25 26 b)
FTI analyzed the new capital expenditure budget and its impact on the
'277 debtors' cash flow projections.
28 13
The process was critical to understanding the financial projections, both cash based and I
operating, to evaluate the liquidity of the debtor, and its parent, to assess the Committee position 2
with respect to motions related to ordinary course expenditures, capital expenditures, payments 3 to DWR, payments to ISO, payments of Mortgage bonds due, the relationship and sensitivity of 4
the cash flows to changes in natural gas fuel prices, and the Debtor's ability to generate sufficient 5
cash flows to fund the Settlement Agreement or any proposed Plan of Reorganization.
6 7
- 5.
Claims Analysis (Category 05).
8 During the Eighth Application Period, FTI professionals spent a total of 66.0 9
hours rendering services in this category, for which FTI seeks compensation of $30,403. A 1 0 summary of the FTI professionals who rendered services in this category and the corresponding amount of fees requested is included in Exhibit "2." The Billing Report for this category, which 12 sets forth a detailed description of the services rendered is filed concurrently herewith.
13 14 Services rendered by FTI professionals in this category included:
15 a)
FTI coordinated with the Debtor to summarize and reconcile those claims 1 6 filed against the company to validate the value of potential allowed claims 1 7 that the Estate is responsible for.
1 8 19 b)
FTI reviewed and analyzed numerous claims stipulations.
20 c)
FTI reviewed the data on application of any generator and pass through' 21 claims, and evaluated the FERC ordered refunds to reduce the allowed 22 claims in the case.
23 24 This work product has involved the review of claims filed by creditors totaling in excess of $44 25 Billion; reconciling these amounts to those reported by the Debtor, and to information supplied 26S! by institutional creditors 6nd in-public.e t a,,d evaluating those claimsrwhich are su' # ; to 27 estimation or adjustment through the ISO or P2k, and those subject to CPUC review.' Work in 28 this area has resulted in validation on behalf of the Committee of a large segment of the claims in 14
this case and evaluation of key claims including those for Financial Creditors, QF's, Sempra, 1
ISO/Generators, cities, counties and other claimants where settlements have been proposed or 2
discussed.
3
- 6.
CPUC Approval of Settlement Agrcemcnt (Category 06).
During the Eighth Application period, FTI professionals spent a total of 333.6 6
hours rendering services in this category, for which FTI seeks compensation of $177,223. A 7
summary of the FTI professionals who rendered services in this category and the corresponding amount of fees requested is included in Exhibit "2." The Billing Report for this category, which 9 sets foha detailed description of the services rendered is filed concurrently herewith.
10
.11 Services rendered by FFI professionals in this category included:
a) FTI monitored the process for CPUC approval of the Settlement Agreement and analyzed testimony filed by interveners for the related CPUC hearings.
14 15 b) FTI reviewed and analyzed the OCC and PG&E trial briefs.
16
- . i
. ;..).
ii.
c) FTI attended CPUC hearings on the Settlement Agreement.
17 18 d) FTI prepared Thomas E.;Iumnsden't rebuttal testimony.
1 FfI's work:vas critical to theiassessmnnt of the reasonableness of the interveners' 20 testimonies, and their potential impact on the Settlement Agreement and Plan of Reorganization.
2 1~~~~~~~~~~~~~~~~~~~~~~~~~i FTI worked closely with the CPUC, its consultants and PG&E to articulate the benefits of the 22 agreement to all involved parties and determine the impact of proposed modifications to the Settlement Agreement. FTI's findings were essential in obtaining OCC support of the 24 modifications proposed for the Settlement Agreement and were relied on by the CPUC and 25 PG&E to validate their independent review of such modifications.
26 227..';.,}........
.28 15
- 7.
CPUC Review (Category 07).
2 During the Eighth Application period, FTI professionals spent a total of 132.0 3 l hours rendering services in this category, for which FTI seeks compensation of $57,337. A summary of the FTI professionals who rendered services in this category and the corresponding 5
amount of fees requested is included in Exhibit "2." The Billing Report for this category, which 6 l sets forth a detailed description of the services rendered is filed concurrently herewith.
Services rendered by FTI professionals in this category included:
8 9 l a)
FTI reviewed and monitored CPUC proceedings to determine the potential 10 l financial impact the proceedings could have on the Debtor.
11 b)
FTI reviewed the Debtor's, SCE's, SDG&E's, DWR's and TURN's 12 CPUC filings to determine the potential financial impact on the Debtor's 13 estate.
14 15 c)
FTI reviewed the TRA-TCBA and GMA account statements to determine 16 correlation with power process.
17 d)
FTI reviewed filings and proceedings related to the DWR refund 18 proceedings and its potential impact on PG&E's forecasted cash balance.
19 20 e)
Review an analyze materials for GRC hearings and assess impact on POR.
21 f)
Prepare the Declaration of Thomas E. Lumsden regarding the DWR rebate 22 impact on the Company's cash flow and POR.
23 24; l The work in this area is critical to the determination of future cash flow and 25 l funding of the Debtor to complete a plan of reorganization. As an integrated utility, the Debtor is 26 l regulated by the CPIUIC for all aspects of its owned generation (nuclear and hydro assets). intra-27 state gas transmission and-storage facilities, gas and electric procurement, and distribution of 28 electricity and gas to its wholesale and retail customers through its network of pipes and wires 16
throughout Northern California. The CPUC and PG&E have made filings and conducted hearings on such regulatory topics as utility retained generation rate setting, general rate case,
- 2.
DWR revenue requirement, net short procurement, 'attrition, and matters involving transition period accounting during deregulation. PG&E has been actively engaged with the CPUC during this period with the setting of the revenue requirements for its'nuclear and hydro generation 5
assets and with the revenue requirement for the DWR power purchases and bond financing. FTI 6
has monitored the CPUC hearings, testimonies and developments closely, and has prepared minutes of key hearings and modeled the range of outcomes for the Committee. FTI has also 8
performed a thorough analysis of the CPUC's settlement with SCE for the recovery of its past-due procurement related obligationsarid how'this agreement compares with the Plan proposed by 10 the CPUC forPG&E Company. FTI alsotr&saghed elements of the CPUC regulation to assess compliance of the Plan of Reorganization.
12 1 3 14
- 8.
DWR Contracts Analysis (Category 08).
15 16 During the Eighth Application Period, FTI professionals spent a total of 32.8 17 hours1.967593e-4 days <br />0.00472 hours <br />2.810847e-5 weeks <br />6.4685e-6 months <br /> rendering services in this category, for which FTI seeks compensation of $12,711. A' 18 summary of the FTI professionals who riendered services in this category and the corresponding 19 amount of fees requested is'included in ERhibit "2.": The Billing Report for this category, which 20 sets forth a detailed description of the services rendered is filed concurrently herewith.
21 '
Services rendered by FTI professionals in this category included:
22 A:
\\
A ::.
I.........*
22 23 a)
FTI calculated the Pdtenial range of future payments that will be required 24 to be remitted to the DWR by the Debtor to pay for its purchased power, 25 administrative costs, and debt service requirements.
26 c
i; b)
.F mevaluated howthe revised fDATR.revevnte requirement would impact 27 the projected financial statements 'of both Plans and the Settlement 28 17
Agreement.
2 c)
FTI reviewed updates to the DWR Revenue Requirement and the 3
underlying Navigant model and settlements amending the underlying 4
contracts.
5 Approximately 40% of the electricity that PG&E supplies to its customers has 6
been provided by the DWR through spot and contract purchases under the program initiated by ABx1. FTI has monitored the power purchases supplied by DWR to PG&E, estimated the costs 8 l of that power, as well as future costs associated with contractual commitments and spot purchases to meet PG&E's net short position, and developed estimates of those future costs.
10 This information has been compared with financial data supplied by consultants to the DWR and 12 I has also been shared with PG&E to assist in efforts to influence the structure of the allocation of 1 those costs among the utilities in California. FTI continued its review of the contracts that have 13 been completed by the DWR and updated our database model of those contracts for newly 14 obtained contracts and renegotiated contracts to enable the Committee and PG&E to estimate the 15 volume and cost of that power and its potential allocation to PG&E.
16 17
- 9.
Fee Application (Category 09).
18 1 During the Eighth Application Period, FTI professionals spent a total of 84.4 19 hours2.199074e-4 days <br />0.00528 hours <br />3.141534e-5 weeks <br />7.2295e-6 months <br /> rendering services in this category, for which FTI seeks compensation of $19,421. A 20 summary of the FT1 professionals who rendered services in this category and the corresponding 21 amount of fees requested is included in Exhibit"2." The Billing Report for this category, which 22 l sets forth a detailed description of the' services rendered are filed concurrently herewith.
23 24 l Services rendered by FTI professionals in this category included:
25 25 a)
Time spent preparing FTI's Seventh Interim Fee Application and the 26>
-- monthly C6ver Sheet Application. i-
.Oance and Payment of Interim 27 Compensation and Reimbursement of Expenses in accordance with the 28 18
1 2
3 4
5 6
7 8
9 10 11 12 13 14 15 16 17 18 19 20 21 22' 23 24 25 26
'. -.0 27' 28 requirements established by the United States Bankruptcy Code, the Court and the U.S. Trustee. Time expended preparing this Eighth Interim Application will be reported in the next interim fee statement.
- :, 10.
FERC Retie* (Category 10).
During the Eighth Application Period, FTI professionals spent a total of 116.8 hours9.259259e-5 days <br />0.00222 hours <br />1.322751e-5 weeks <br />3.044e-6 months <br /> rendering services,in this category for:which FTI seeks compensation of $44,940. A summary of the FlI professionals, who rendeqrd services in this category and the corresponding amount, of fees requested is included in Exhibit "!2." The Billing Report for this category, which sets forth a detailed de~scripti~on.of th~e.,,rendered is filed concurrently herewith.
Services rendered yFprofessionals in this category included:
a)
FTI monitored FERC proceedings to determine the potential financial impactof regu1AEtoqy p r-pedingson the Debtor's Estate, including possible,chnges.in ra tes,.generator refunds, settlement of the California PX/Generator c0a s anidprogress on the Debtor's filings requesting FERC approval for various aspects of its Plan of Reorganization.
b)
FTI reported findings and analysis on FERC proceedings to the Committee.
This analysis and monitor& g, inpqpcert with regulatory counsel for the Committee, has been critical to, assessment of p~otential refunds.on claims that may be awarded to PG&E, potentially reducing the pre-petitionobligations, and analyzing the potential claim PG&E will have from the settlement Generator claims against the now. defunct California Power Exchange.' We have also advised the Committee with respect to the impact of FERC market price caps and the impact of the retroactive application of those caps to the PX, ISO and DWR p:t-,hases as th'eymiay'affect the.wIcbtor.
- 11.
'Financial Statement Modeling (Category 11).
19
During the Eighth Application Period, FTI professionals spent a total of 67.1 1
hours rendering services in this category, for which FTI seeks compensation of $25,626. A 2
summary of the FTI professionals who rendered services in this category and the corresponding 3
amount of fees requested is included in Exhibit "2." The Billing Report for this category, which 4
sets forth a detailed description of the services rendered is filed concurrently herewith.
5 6
Services rendered by FTI professionals listed in this category included:
a)
FTI monitored and compared PG&E's actual financial results to those 8 l forecasted il FTI's models and refined assumptions in future projection periods to reflect current market conditions.
10 11 b)
FTI assessed the reasonableness of PG&E's financial projections.
12 FTI's financial modeling effort has enabled the Committee to assess the feasibility 13 of the Debtor's POR, the CPUC/OCC's Joint POR and the Settlement Agreement. This model 14 proved integral in calculating the cash flows of the alternative plans and assessing the feasibility 15 of various capital structures. The Settlement Plan submitted to the court was supported by 16 financial projections generated from FTI's financial modeling efforts.
17 18
- 12.
Financial Statements (Category 12).
19 During the Eighth Application Period, FTI professionals spent a total of 22.0 20 hours2.314815e-4 days <br />0.00556 hours <br />3.306878e-5 weeks <br />7.61e-6 months <br /> rendering services in this category, for which FTI seeks compensation of $9,541. A 2 1 summary of the FTI professionals who rendered services in this category and the corresponding 22 amount of fees requested is included in Exhibit "2." The Billing Report for this category, which 23 sets forth a detailed description of the services rendered is filed concurrently herewith.
24 25 Services rendered by FTI professionals in this category included:
26 i
s a}
O~:FJ Ireviews '
-:.~
1bwr' s historical-financial statements fi
- s3 27 period, including SEC, FERC and bankruptcy filings.
28 20
1 2'
3
'.4 5
6 7
8 9.
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
.28 b)
FTI used its research of the Debtor's historical performance in performing various financial analyses on the Debtor's financial condition and ability to reorganize, including assessment of changes in the parent financial condition.
As a regulated utility, the Debtor's financial statement filings include submissions to the SEC, FERC, and the CPUC that outline the accounting for GAAP (generally accepted accounting principals) presentation and regulatory accounting purposes. These financial statements present voluminous information on the historical performance and financial health of the Debtor.. FTI teviewed certain public filings to verify'financial projections in the plan of reorganization and to summarize the financial'perfobrance of the utility post-petition for the creditors committee.
- 13.
General Committee Matters (Category 13).
Duringlthe Eighth App16a'idii:Period; FTI professionals spent a total of 25.3 hours3.472222e-5 days <br />8.333333e-4 hours <br />4.960317e-6 weeks <br />1.1415e-6 months <br /> rendering services!in this eategory, forcbwhi`hFTI seeks compensation of $14,293. A summary of the FTI professionals'whb frnfdered services in this'category and the 'corresponding amount of fees requested is included ih Eidilbif '2." The Billing Report for this category, which sets forth a detailed description of the services rendered is filed concurrently herewith.
Services rendered by F'I professionals listed in this category included:
a)
FTI prepar6d 'fotrand attended numerous meetings and conference calls
'including the fTul Coh'mitteebon' various issues, including general case administration,' financial issies, regulatory issues, litigation issues, Plan issues, Settlement Agreement issues and confirmation hearing matters.
b)
FTI personnel prepared for and participated in various formal and informal
. a ;-.
boil& rnce calls betweon¢Committec~ine~inbeis, Committee working group members, Committee advisors and PG&E regarding the finaiicial impact 21
of various motions brought by PG&E, the Debtor's Settlement Plan of 1
Reorganization, confirmation hearings, and other issues surrounding the 2 j Debtor's estate.
3 4
c)
FTI prepared numerous presentations for distribution to the Comrittee 5
regarding the financial impact of various matters affecting the Debtor's 6
Estate, and addressed questions from individual creditors on aspects of the 7
Debtor's Plan of Reorganization and the Settlement Agreement.
8 As has been mentioned earlier, the Committee has participated in a significant number of meetings and conferences to address the volume of issues facing the Debtor and to 10 accelerate the process of reorganization of this Debtor. FTI has structured its team into subgroups with partners and staff splitting responsibility for various areas. This category 12 captures the time spent associated with the myriad of meetings and conferences that FTI has participated in which do not address any one particular task code topic. FTI has attempted to 14 minimize the participation of more than one or two professionals in these meetings and 15 conferences, but in many cases, the variety and complexity of the issues addressed, the speed l16 with which activities in the case have progressed, and the particular specialties of the FTI 1 7 professionals involved have dictated the need to have more than one or two professionals in 1 8 attendance. For meetings where more than two FTI professionals were present, Exhibit 4 1 9 summarizes the role of each team member and the purpose of their involvement at the meeting.
20 21
- 14.
Legislative Review (Category 14).
22 During the Eighth Application Period, FTI professionals spent a total of 1.6 23 hours2.662037e-4 days <br />0.00639 hours <br />3.80291e-5 weeks <br />8.7515e-6 months <br /> rendering services in this category, for which FTI seeks compensation of $6,596. A 24 summary of the FTI professionals.who rendered services in this category and the corresponding 25 amount of fees requested is included in Exhibit "2." The Billing Report for this category, which
~26: isets frth a t...cd dei.- iptiof of the services rendered isrf-
- ,ir! nily herewith.
27 28 Services rendered by FTI professionals listed in this category included:
22
a)
FTI performed a review and analysis of financial implications of potential 1
and passed legislation affecting the Debtor's estate.
2 3
This utility bankruptcy has involved not just the interplay of the Debtor, creditors an regulators, but has also drawn in the legislative element as the governor and statelegislators 5
seek a resolution to the crisis that affected the energy supply in California. FTI has monitored, in 6
concert with Saybrook Capital representatives, the various alternatives being presented by the governor and legislators to azsess if thesemay serve as a proxy for a plan of reorganization for PG&E, and to determine if any of these proposals would have detrimental impact to the Debtor or the Settlement Plan of Reorgamniaation.
10 11 12
- 15.
ProfessionalComp'en'satio'n' Matters (Category 15).
13 During the Eighth Application P~eriod,.FTI professionals spent a total of 15.8 hours9.259259e-5 days <br />0.00222 hours <br />1.322751e-5 weeks <br />3.044e-6 months <br /> 14 -
rendering services in this.category,'for which FTI seeks compensation of $5,654. A summary of 15 the FII professionals who rendered services in this category and the corresponding amount of 16 fees requested is included in Exhibit "2." The Billing Report for this category, which sets forth a 17 detailed description of the services rendered is filed concurrently herewith.
18 19 Sersvic enrded by FTI r o'f
'nals listed in this'category included:
20 C r l
- V;.
, L'a t -
a)
FTI reviewed and analyzed the Seventh Interim Fee Application of other 21 professionals and provided'input to the chairperson of the Committee.
22 23 b)
FTI attended fee'application hearings for the Seventh Interim Fee 24 Application and reviewed USt objections to various professionals' fee 25
.applications.'
26
,'1 Sett~cfent renerl-T stl13' Preparation (Category 16) 27 28
~~~~During the Eighth Application Period, FTI professionals spent a total of 211.4 23
1 2
3 4
5 6
7 8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 hours3.240741e-4 days <br />0.00778 hours <br />4.62963e-5 weeks <br />1.0654e-5 months <br /> rendering services in this category, for which FTI seeks compensation of $87,530.
A summary of the FTI professionals who rendered services in this category and the corresponding amount of fees requested is included in Exhibit "2." The Billing Report for this category, which sets forth a detailed description of the services rendered is filed concurrently herewith.
Services rendered by FTI professionals listed in thjis category included:
a) FTl preparect testimony for filing with the CPUC in support of the Settlement Agreement.
b) FTI reviewed intervener opening briefs and prepared a rebuttal testimony addressing their issues.
c) FTI reviewed and responded to various discovery requests from interveners.
d) FTI performed in-depth research to support its findings that the Settlement Agreement is in the best interest of the CPUC, PG&E, the OCC and ratepayers. In support of its findings, FTI performed the following analysis:
- Comparisons of the projected financial results of PG&E under the Settlement Agreement terms to the financial results of a comparable peer group of utilities.
Comparison of the projected financial results of PG&E to PG&E's historical performance prior to the energy crisis.
- Verify the accuracy of the "PG&E Bankruptcy Proposed Settlement Plan Data Sheet" such as (1) foregone dividends (2) value of the conservation easements or donations to public agencies of 140,000 acres of watershed lands: and (3) rate t-i han-dthe fimpact(of the Regulatory Asc.
Research the different definitions of Head Room per the Settlement 24
Agreement as it compares to the traditional definition of Head Room.
1 2
3 4
5 6
7 8
9 10 11 12 13 14 15
.16 17 18 19 20 21 22 23' 24 25
- a.
26 27 28 FTI further researched the reasonableness of other quantitative and qualitative factors of the Settlement Agreement. The 'findings from FTI's analysis were incorporated into the Testimony of Thomas E. Lumsden, which was filed in the CPUC hearings in support of the Settlement Agreement.
v
- 17.
' Settlemen't POR'and Disclo'sure Statement (Category 17)
M;During the Eighth Application Period, FTI professionals spent a total of 88.9 hours1.041667e-4 days <br />0.0025 hours <br />1.488095e-5 weeks <br />3.4245e-6 months <br /> rendering services in this category, for which FTI seeks compensation of $52,303. A summary of the FTI professionals who rendered services in this category and the corresponding amount of fees requested is included in Exhibit "'2.". The Billing Report for this category, which sets forth a detailed description of the services rendered is filed concurrently herewith.
l{.2;."
T; '.k Services rendered by FTI professionals listed in this category included:
' a) FTI reviewed and summarized key terms of the Settlement Agreement and tied these terms to numerous drafts of the Plan of Reorganization and Disclosure Statement to be filed with the court.
b) FTI reviewed and analyzed debtors proposed modifications to the FOR.
c) FTI reviewed and analyzed the hedging structure at PG&E Company.
FTI spent considerable time reviewing and agreeing terms of the Settlement Agreement to drafts of the Disclosure Statements and Plan of Reorganization documents before they were filed with the court. FTI's thorough understanding of the financial terms of the Settlement Agreement enabled to insure the filed Disclosure Statement and POR documents accurately geflectedithe:s
- 4t,-uesl;.lentissagreed in mediationand fat-the ppew\\seid. micificatior.s wvere in the best interest of all Piaities.
25
- 18.
Tax Review (Category 18) 1 2
During the Eighth Application Period, FTI professionals spent a total of 2.4 hours4.62963e-5 days <br />0.00111 hours <br />6.613757e-6 weeks <br />1.522e-6 months <br /> 3
rendering services in this category, for which FTI seeks compensation of $876. A summary of 4
the FTI professionals who rendered services in this category and the corresponding amount of 5
fees requested is included in Exhibit "2." The Billing Report for this category, which sets forth a 6
detailed description of the services rendered is filed concurrently herewith.
Services rendered by FTI professionals listed in this category included:
8 9
a)
FTI reviewed and analyzed real estate issues and transfer tax issues in 10 transferring property from PG&E to non-profit organizations.
11 FTI researched and summarized key tax issues of the Debtor's Plan of Reorganization, the Joint Plan of Reorganization and the Settlement Agreement for the 13 Committee and the tax impact of alternative plan proposals, highlighting the potential financial 14 impact on the Debtor and any potential tax liabilities to the creditor. FTI also kept the 15 Committee apprised of the status on IRS submissions and the implications of the CPUC's 16 proposed tax sharing agreement.
17 18
- 21.
Travel Time (Category 21).
19 During the Eighth Application Period, FTI professionals spent a total of 4.0 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> 20 rendering services in this category, for which FTI seeks compensation of $2,500. A summary of 21 the FTI professionals who rendered services in this category and the corresponding amount of 22 fees requested is included in Exhibit "2." The Billing Report for this category, which sets forth a 23 detailed description of the services rendered is filed concurrently herewith.
24 25 Services rendered by FTI professionals listed in this category included:
26
. a)
This ta;egory includes-the time required-for }: Ijc:ssUnals to travel to 27 case related meetings after September 11, 2001.
28 26
2 3
4-;
IV.
SUMMARY
OF ACTUAL AND NECESSARY EXPENSES INCURRED BY FT1 6
FTI maintains recordstof all actual and necessary out-of-pocket expenses incurred and typically charged in connection with tendering professional services to its clients in the 8
ordinary course of its business practice. ' As is typical of FTI's practice when 'representing creditor cbmmittees, FTI has reduced to co'st or not charged certain of these out-of-pocket 10 expenses to the estate in accordance with'the lIST Guidelines and the Court Guidelines and to ensure the reasonableness of FTI's fee and expense request. A brief explanation of certain costs 1~~~~~~~~~
2
- ., i:i.
i
'(.:-'
12 incurred and charged to the estate is set forth below:
13 14 a) 'FTI does-not carge itcliift
oto'cbying done in-house; copying done by 15
' third-party services is charged at cods; 16 b) FTI charges its clients for document retrieval services, computer research and other 17
'specialized searches and services, such as messengers and library retrievals, at cost; 18 S ->
19 c) FTI charges its clients for mileage ($0.36 per mile, if sought) and parking costs 20 '
incurred by its professionals in connectionvith services rendered, at cost; 21 d) FTI charges its clients for transportation and travel-related costs including out-of-22 town meals, excluding lunches, incurred by its professionals when working on 23 specific client matters, at cost; and 24 25 e) FTI normally charges its'clients for the cost of overtime and weekend meals and transportation when pressing client matters require the professional to work past normal office hours; however,.in accordance with the UST Guidelines and the Court 28 IGuidelines, no such charges are included in this Eighth Interim Application.
27
1 2
3 4
5 6
7 8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
- 5
- 7, 28 V.
COMPENSATION REQUESTED AND RELEVANT LEGAL STANDARD To grant a request for compensation pursuant to Bankruptcy Code section 330, the Court must find that such request is reasonable. The reasonableness of a compensation request is determined by the "lodestar" method. See In re Yernakov, 718 F.2d 1465, 1471 (9 th Cir. 1983). Under the lodestar approach, "reasonable" compensation is calculated by multiplying the number of hours reasonably expended by the hourly rate of the professional. In re Rheuban, 121 B.R. 368, 383 (Bankr. C.D. Cal. 1990). There is a strong presumption that the lodestar product is reasonable under Bankruptcy Code section 330. See In re Drexel Burnham Lambert Group. Inc. 133 B.R. 13, 22 (Bankr. S.D.N.Y. 1991).
The reasonableness of a professional's hourly rate is based on the cost for comparable services charged in the area, in non-bankruptcy matters. See In re Yernakov, 718 F.2d at 1471. The reasonableness of the hours expended on a task is based on whether the services provided were actual and necessary. See In re Nucorp Energy, Inc., 764 F.2d 655, 658 gth Cir. 1985).
FTI's fees are reasonable given the size and complexity of the bankruptcy case and are commensurate with the fees that FTI has been awarded in comparable chapter 11 cases and that accountants and financial advisors of comparable experience and expertise charge on' a regular basis to represent creditor committees in comparable chapter 11 cases. Accordingly, utilizing the lodestar method, FTI's fee and expense request is reasonable and should be allowed and paid pursuant to Bankruptcy Code section 330. See Drexel, 133 B.R. at 22.
VI.
CONCLUSION For theLreasons set for'-
- '-ove and pursuant to Bankruptcy CGode sectinP qe ani 1, 331, Bankruptcy Rule 2016, the Court Guidelines, the UST Guidelines and the standards adopted by courts in awarding accountants' and financial advisors' fees and costs, FTI submits that the 28
fees for services rendered and costs and expenses incurred on behalf of the Committee during the 1
Eighth Application Period in the total amount of $654,878 are reasonable and should be allowed 2
on an interim basis and paid in full.
4 As previously mentioned, FTI purchased all outstanding receivables of the BRS 5
Practice, including receivables related to PwC's work as accountants and financial advisors to 6
the Official Committee of Unsecured Creditors in the Pacific Gas and Electric bankruptcy case.
No agreement or understanding of any kind or nature exists between FTI and any other person or
,8 entity for the sharing, division, or payment of any portion of the compensation awarded for our 9
services rendered or expenses incurred in connection with the representation ofthe Committee in EA.
10 the bankruptcy case.
11
\\WHEREFORE FTI respectfully requests that this Court enter an order:
12 13 1 -
-'Approving thisEighth-Iterim Application in its entirety; 14 l - -
zi t
Z s
I
- ' /
a'*'
14
- 2.
Approving an interim award.of compensation in the amount of $640,450 15 for professional services rendered and reimbursement of costs and expenses incurred in the 16 amount of $14,428 for a total amount of $654,878.
17 t -,H,--i t
18
- 3.
Authorizing and directing PG&E to immediately pay to FTI the allowed 19 amounts, less any such amounts already paid prsuant to the Order Establishing Interim Fee 20 Application and Expense Reimbursement Procedure; and
.21~~~~~~~~~~~~~~~~~.
21 4.' '
Grant' gsiich othter and further relief as the Court deems just and proper 22 23 DATED: January 14, 2004 Respectfully submitted.
24 FTI CONSULTING INC 25 By:
(
Thomas E. Lumsden 27 Accountants and Financial Advisors to Official Committee 28 of Unsecured Creditors 29
CERTIFICATION 1
2 I, Thomas E. Lumsden, am the professional designated by FTI Consulting, Inc. to 3
ensure compliance with the United States Bankruptcy Court Northern District of California 4
Guidelines for Compensation and Expense Reimbursement of Professionals and Trustee ("Court 5
Guidelines"). I served as the senior managing director for FTI Consulting Inc. in connections 6
with this matter. I certify that (a) I have read the Eighth Interim Application; (b) to the best of my 7
knowledge, information and belief, formed after reasonable inquiry, the compensation and 8
expense reimbursement sought is in conformity with the Court Guidelines, except as specifically 9
noted in the Application; and (c) the compensation and expense reimbursement requested are 10 billed at rates, in accordance with practices, no less favorable than those customarily employed 11 by FTI and generally accepted by FTI's clients.
1 2 13 DATED: J
, w koo'1' 14 Thomas E. Lumsden 15 1 6 1 7 18 19 20 2 1 22 23 24 25 26 27 28 30
DECLARATION OF THOMAS E. LUMSDEN 2
I, Thomas E. Lumsden, declare:
3 4 1.
I am over eighteen years of age aid, if called upon, I could and would testify competemtly to the matters set forth herein. I am a senior managing director in the 5
professional services'firm' of FTI Consulting; Inc. ("FTI"), successor to 6
PricewaterhouseCoop&r'$ ("psC") BRS:Practice' and onse of the senior managing directors 7
responsible for FTI's services as accountant and financial advisor to the Official Comrmittee of
- 8 Unsecured Creditors ("Committee!.) :ij the 'Pacific Gas and Electric Company ("PG&E") chapter 11 case. In preparing this declaration, [lhave relied on my personal knowledge and on my 10 review of the billing records and files -maintained by FTI in the ordinary course of business and made by FTI professional staff substantially contemporaneous with that person's performance of 12 services or incurrence of costs on behalf of the Committee.
13 i;
14
- 2.
ThVi declaration is submitted in support of the "Eighth Application of FTI 15 Consulting Inc. For Allowance and Payment of Compensation And Reimbursement of Expenses 16 (August 1,2003 through November 30,2003)" (the "Eighth Interim Application"). Capitalized 17 terms not otherwise defined herein shall have the meanings ascribed to them in t~he Eighth 18 Interim Application. This Eighth Interim Application covers the period from August 1,2003 19 through and including November 30,2003 (the "Eighth Application Period"). I have read the 20 Eighth Interim Application and reviewed the exhibits thereto, and each of the facts contained.
21 therein is true and correct.
22
- 3.
FTI Consulting's Time Records Exhibit for the Period August 1,2003 to 23 November 30, 2003, filed concurrently herewith, attaches true and correct copies of records 24 maintained by FTI in the ordinarycourse of FTI's business operations and reflects entries that 25 were made substantially contemporaneously with the rendering of the services.
26 27"'
- 4.
Pursuant to the Eighth Interim Application, FTI seeks allowance of 28 compensation covering 1,397 hours0.00459 days <br />0.11 hours <br />6.564153e-4 weeks <br />1.510585e-4 months <br /> of professional time devoted to advising the Committee in 3 1
1 2
3 4
5 6
7 8
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 27 28 PG&E's bankruptcy case, resulting in the accumulation of $640,450 in fees for professional services rendered and $14,428 for expenses incurred, for a total amount of $654,878.
- 5.
It is FTI's normal business practice to charge its clients in full for services rendered and for all actual and necessary costs and expenses incurred in connection with such services.
- 6.
FTI received no pre-petition retaiio int conncction with this bankruptcy case.
- 7.
FTI has submitted monthly fee notices in accordance with the interim fee procedures that were established by the Court. FTI has received payments totaling $440,108 in connection with the Monthly Cover Sheet Applications covering the period August 1, 2003 to October 31, 2003, comprised of $429,496 in fees and $10,612 in expenses ($114,886 in fees and
$3,888 in expenses related to the November 30, 2003 Cover Sheet Application have not yet been paid amounting to a total of $118,774.)
- 8.
No agreement or understanding of any kind or nature exists between FTI and any other person or entity for the sharing, division, or payment of any portion of the compensation awarded to FTI or the BRS Practice for services rendered or expenses incurred in connection with our representation of the Committee in this chapter 11 proceeding, except as among the employees and shareholders of FTI.
- 9.
I am one of the designated professionals responsible for overseeing the billing in this matter and for assuring compliance with the Guidelines of the Office of the United States Trustee for the Northern District of California relating to-billing (the "Guidelines").
Based upon my review of the Eighth Interim Application submitted by FTI for the Eighth Application Period, I believe that the Eighth Interim Application complies with the Court Q!!idelines and the UST Guidelines.
- 10.
Attached hereto as Exhibit "1" is a summary of the total hours expended, 32
billing rate, and fees incurred by each FTI professional during the Eighth Application Period.
2 l.
Attached hereto as Exhibit "2' and "Exhibit 2-1" is a summary of each 3
category of services, setting forth the name of each professional who expended time in that 4
category and the total hours and amount billed by each professional in that category during the 5
Eighth Application Period.
6
- 12.
Attached hereto as Exhibit "3" are Expense Summary and Expense Detail 7
reports by individual and itemized total expenses for which reimbursement is sought.
8
- 13.
Attached hereto as Exhibit "4", is a summary of meetings that more than 10 two FTI professionals attended with a description of the relative importance of each team member and the purpose of their involvement at the meetings.
12
.' 14..
Attached heretoas' Exhibit "5",is a copy of the Declaration of Clara Yang 13 Strand, executed on, in'support of the'tigh'th" Inte'rim Application of FTI Consulting.
14 15 I declare under penalty of perjury under the laws of the United States of America 16 that the foregoing is true and'correct.
i:
17 x;.
Executed this 14th day of January, 2004 at San Francisco, California.
18 19 20 Thomas E. Lumsden 21~~~~~~~~~~~~~~
t !
22 23 24 25 26 27 28 33
. I 1
DECLARATION OF CLARA YANG STRAND 2
I, Clara Yang Strand, declare:
3
- l.
I am employed by Bank of America, N.A.; one of the members of the Official Committee of 4
Unsecured Creditors ("Committee") in the Pacific Gas and Electric Company ("PG&E") chapter I I 5
bankruptcy case. I am one of the Co-Chairs of the Cominittee. Except as otherwise stated, I have 6
personal knowledge of the facts set forth below, and if called upon, I could and would testify 7
competently with regard thereto. I make this declaration in support of the Seventh Interim 8
Application of FTI Consulting Inc. ("FTI") for Allowance and Payment of Compensation and 9
Reimbursement of Expenses (August l,2003 Through November 30,2003) (the "Application').
10 11
- 2.
I have reviewed the Application and FTI's invoices for August 1,2003 through November 12 30,2003.
13 14
- 3.
I believe that the fees and costs requested by FTI for the August 1, 2003 through' November 15
' 30, 2003 period are appropriate and reasonable. Based on my experience with FTI in this case, 16 their work has been done in a professional and efficient manner and has added significant value to 17 the estate for the benefit of creditors. FTI has worked effectively with the Debtor in the review and 18 analysis of the Debtor's financial projections to support its Plan of Reorganization, including 19 analysis of filed claims against the Debtor, with the CPUC in the development of an alternative 20 plan structure, and with both parties in the development of a mutually agreeable Settlement 21 Agreement. Accordingly, I believe that FTI's request for fees and reimbursement of expenses 22 should be approved.
23 I declare under penalty of perjury under the laws of the United States of America that the foregoing 24 is true and correct.
25 Executed this day of January 2004 at Los An s, California.
26 27 Clara Yang Strand 28
PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF SAN FRANCISCO I am employed in the County of San Francisco, State of California. I am over the age of 18 and not a party to the within action; my business address is 353 Sacramento Street, 18th Floor, San Francisco, California.
On January 14, 2004, 1 served on the parties listed on the attached Service List, the foregoing document(s) described as:
EIGHTH INTERIM APPLICATION OF FTI CONSULTING INC. FOR ALLOWANCE AND PAYMENT OF COMPENSATION AND REIMBURSEMENT OF EXPENSES (AUGUST 1, 2003 THROUGH NOVEMBER 30, 2003); DECLARATION OF THOMAS E. LUMSDEN IN SUPPORT THEREOF X
by placing the _ original X a true copy thereof enclosed in sealed envelopes addressed as stated on the attached service list:
(BY FEDEX OVERNIGHT DELIVERY)
X Following ordinary business practices at the San Francisco office of FTI Consulting, Inc., I placed the sealed envelope(s) for collection and mailing with Federal Express on that same day. I am readily familiar with the firm's practice for collection and processing of correspondence for mailing. Under that practice, such correspondence would be deposited with Federal Express on that same day, with postage thereon fully prepaid at San Francisco, California, in the ordinary course of business.
(FEDERAL)
I declare that I am employed in the office of a member of the bar of this court at whose direction the service was made.
Executed on January 14, 2004 San Francisco, California.
Angela Kim Type or Print Name Signature 01/14/04 IO:19AM