ML040720415

Opposition of Midway Sunset Cogeneration Company to Debtors Motion for Extension of Time to Object to Certain Proofs of Claim and for Related Relief; Supporting Declaration of Kimberly S. Winick

ML040720415
Person / Time
Site:	Diablo Canyon
Issue date:	02/24/2004
From:	Winick K Mayer, Brown, Rowe & Maw, Midway-Sunset Cogeneration Co
To:	Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California
References
01-30923 DM
Download: ML040720415 (10)

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10 12 13 14 15 16 17 91 19 20 21 22 23 24 25 26 27 28 MAYER, BROWN, ROWE & MAW LLP KIMBERLY S. WINICK (SBN 120363) 350 South Grand Avenue, 25th Floor Los Angeles, CA 90071.1503 Telephone:

(213) 229-9500 Facsimile:

(213) 625-0248 Attorneys for Creditor Midway-Sunset Cogeneration Company 50-2 7-5 aa3 In Re:

PACIFIC GAS AND EL COMPANY, a Californi Debto UNITED STATES BANKRUPTCY (ZOURT NORTHERN DISTRICT OF CAL ORNIA SAN FRANCISCO DIVISION CASE NO. 01.30923 DM

.ECTRIC Chapter pNuntr: 11.

a corporation, OPPOSITION OF MIDWAY SUNSET r,

COGENERATION COMPANYTO DEBTOR'S hMOTION FOR EXTENSION OF TIME TO OBJECT TO CERTAIN PROOFS OF CLAIM AND FOR RELATED RELIEF; SUPPORTING DECLARATION

,OF KIMBERLY S. WINICK Date:

N;l1rcb 5,2004 Time:

Ii30 p.m.

Place:

235 Pine Street, 22'd Floor Son Francisco, California Judge:

lion. Dennis lMlontali

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1.

MSCC and the Debtor are parties to a power purchase agreement (the WPPA").

2.

Pursuant to this Court's order of December 20,2002 (the "Order"), the Debtor assumed the PPA. A true and correct copy of the Order is attached hereto as Exhibit 1.

3.

The Order provides for the Debtor to assume the PPA pursuant to the Agreement attached to the Order (the 'Agreement"). and provides that all cure amounts are entitled to administrative expense pritxity. Agreement, I 3(g). Paragraph 4 of the Agreement provides the method for calculating the final cure amounts, and retains jurisdiction in this Court to resolve any disputes relating to that calculation. The purpose of the Agreement was to resolve the Debtor's objection to MSCC's proof 9f claim, which is registered as Claim No.6738, and to provide i instead for the allowed amount of that Claim, which is subject to adjustment upon resolution of issues pending before FERC, to be allowed as an administrative claim consistent with the cure requirements of II U.S.C. § 365.

4.

Although the Order and Agreement provide for MSCC to have an administrative expense claim equal to the agreed cure amount, and to waive and withdraw any proofs of claim relating to the period before April 6,2001, the Motion identifies MSCC as holding a Class 5 Claim. Motion, Ex. 2. MSQC holds no Class 5 Claim and does not wish to have its claims under the Order and Agreement treated as Class 5 Claims.

S.

The Order provided for MSCC to file an actual withdrawal of any claims it filed in the bankruptcy case, other than the administrative claims provided for in the Agreement. MSCC was to perform this ministerial act during the 2002 Christmas holidays (between December 23 and 30, 2002). It appears that MSCC inadvertently did not make the formal filing to withdraw Claim No.6738. However, if this oversight is the basis for PG&E's inclusion of MSCC in the Motion as a Class 5 creditor, it would have been more expedient simply to request that MSCC file the withdrawal at this time, which MSCC will be pleased to do.

6.

MSCC submits that, but for this ministerial oversight, MSCC and PG&E have performed in all respects as contemplated by the Order and the Agreement, and MSCC will continue to do so.

WHEREFORE, MSCC respectfully requests an order of the Court:

.2-TO TIlE HONORABLE DENNIS MONTALI, TIlE DEBTPR, AND ITS ATTORNEYS:

Midway Sunset Cogeneration Company ("MSCC") hereby opposes the Debtor's Motion For Extension Of Time To Object To Certain Proofs Of Claim And For Related Relief (the "Motion"), and requests that that Motion be denied insofar as it perains to MSCC. In support of this opposition, MSCC respectfully represents as follows:I 2104322.1 01t42025 TWIM~TOw

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T IE TO OtECT ro CERTAN PRooF OFCLM (&)

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1.

Directing that MSCC's claims relating to the penl prior to April 6,2001, shall be calculated and allowed as administrative expense claims in accordance with the Order and the Agreement;

2.

Denying the Motion insofar as it pertains to the claims of MSCC as provided for in the Order and the Agreement and

3.

Granting such further relief as may be just and proper.

Dated:

teHiv

.2004 MAYER, BROWN, ROWE & MAW LLP 1Kimberly SNflick Attorneys forCreditor Midway-Sunset Cogeneration Company I3.

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.26 27 28 IiE<LARATION OF KIMBERLY S. WINICK 1, Kimberly S, Winick, declare:

I.

I am counsel to the firm of Mayer, Brown, Rowe & Maw LLP. In that capacity, Il am responsible for representing Midway Sunset Cogeneration Company ("MSCC") in the chapter II case of Pacifc Gas and Electric Company (the 'Debtor"). I have personal knowledge of the facts set forth below and could and would testify competently with respect to those facts.

2.

MSCC and tI. Debtor are parties to a power purchase agreement (the 'PPA").

3.

Pursuant to I is Court's order of December 20,2002 (the "Order'), the Debtor, assumed the PPA. A true and correct copy of the Order is attached hereto as Exhibit I.

4.

The Order provides for the Debtor to assume the PPA pursuant to the Agreement attached to the Order (the "Agreement"), and provides that all cure amounts are entitled to administrative expense priority. Agreement, I 3(g). Paragraph 4 of the Agreement provides the method for calculating the final cure amounts, and retains jurisdiction in this Court to resolve any disputes relating to that calculation. The purpose of the Agreement was to resolve the Debtor's objection to MSCC's proof of claim, which is registered as Claim No.6738, and to provide instead for the allowed amount of that Claim, which is subject to adjustment upon resolution of issues pending before FERC, to be allowed as an administrative claim consistent with the cure requirements of II U.S.C. § 365.

5.

Although the Order and Agreement provide for MSCC to have an administrative expense claim equal to the agreed cure amount, and to waive and withdraw any proofs of claim relating to the period before April 6,2001, the Motion identifies MSCC as holding a Class 5 Claim. Motion, Ex. 2. MSCC holds no Class 5 Claim and does not wish to have its claims under the Order and Agreement treated as Class 5 Claims.

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6.

The Order provided for MSCC to file an actual withdrawal of any claims it filed in the bankruptcy case, other than the administrative claims provided for in the Agreement. MSCC was to perform this ministerial act during the 2002 Christmas holidays (between December 23 and 30,2002). It appears that MSCC inadvertently did not make the formal filing o withdraw 4

29604322.101t42021S TIME TO OBJECT TO CERTAIN PROOFS OF CLAIM I

2t60322.01t4021 I1' MurruzilluN lUMUlnAruK r-AltNalurr w TiME TO OBJECT TO CEITA( PROOFS OF CLAM

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10 I I 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Claim No. 6738. However, if this oversight is the basis for PG&E's inclusion of MSCC in the Motion as a Class 5 creditor, it would have been more expedient simply to request that MSCC file the withdrawal at this time, which MSCC will be pleased to do.

7.

4MSCC submits that, but for this ministerial oversight, MSCC and PG&E have performed in all respects as contemplated by the Order and the Agreement, and MSCC will continue to do so.

I declare under penalty of perjury that the foregoing is trMe and correct.

Executed this 246 day of February, 2004.

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14 16 17 18 19 20 21 22 23 24 25 26 27 28 Inre PACIFIC GA COMPANY.

JAMES L LOPES (No. 63678)

WILLIAM J. LAFFERTY (No. 120814)

KIMBERLY A. BUSS (No. 207857)

HOWARD. RICE. NEMEROVSKI, CANADY.

FALK & RABKIN I

A Professional Corporation Three Enbarcadero Center 7th Floor San Francisco, California 94111-4065 Telephone-415/434-1600 '

Facsimile 415f2 74 91.

Attorneys for Debtor and Debtor in Possession PACIFIC GAS AND ELECTRIC COMPANY UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA.

SAN FRANCISCO DIVISION Case No. 01-30923 DM S AND ELECTRIC Chapter 11 Case a California corporation.

STIPULATION AND ORDER (FILED Debtor.'

PURSUANTTO THE COURTS DECEMBER 21.2001 ORAL ORDER)

AUTHORIZING ASSUMPTION OF POWER PURCHASE AGREEMENT AND COMPROMISE OF CLAIMS WITH MIDWAY SUNSET COGENERATION COMPANY No. 94-0742640 INO HEARING REQUESTED]

FILED

'{02EC23 Mll 9:24 U.S. BAUKRUPTCY COURT v NORTHERN DIST. OF CA.

S.4" rRANCISCO. CA.

Federal l.D. I I'

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TIME TO OnIreT TO CERTAIN PROOf5O1' a.AJM STIP. AND OJE'LA UTHORIZING ASSULMJllON OF PA ND COMPROMISE WP CAIMS WITH MDWAY SUNSET

I, EXHHIT-I PAIL -C, 2UMs2LI e184202S TIME T~O O~r=E TO CERTAN POF F LI

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• w13 tl2-JAII-U3 1I:65MA iil-ADfiM.1ROililEIE Al,416 il 7l-Sit1l 414152175616 T-504t P.6tUIS F-456 WHEREAS, on December 21. 20012 the Court granted Pacific Gas and Electric 2

Company's Motion For Authority To Compromise Clims Between Estate And Various 3

Qualifying Facilities, and entered an order approving "Supplemental Agreemcents" betwcen 4

Pacific Gas and Electric Company ("PG&E"), the 'debtor and debtor and possession herein, 5

and several qualifying facilities or their successors-in-interest; I 6

WHEREAS, on December 21, 2001. the Court ordered that substantially similar 7

Supplemental Agreemcats with other qualifying facilities couldc presected to the Court for 8

approval by Stipulation and Order between ihe Official Committee of Unsecured Creditors 9

(the "Committce") and PG&E.,

t0 WHEREAS, PG&E now seeks authorization toentrI into the Agreement atta bed 1I hereto as Exhibit I with Midway Sunset Cogeneration Company (-QF");

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WHEREAS, the Agreement attached hereto is substantially similar to the 13 Supplemental Agreements approved by the Court on December 21 2001, except for the 14 following additional provisions agrecd to by the QF and not objected to by the Comnittee:

-15 (a) the assumption of the QF's Power Purchase Agreement ("PPA) pursuant to 16 11 U.S.C. Section 365 and Rules 6006 and 9019 of the Federal Rules of Bankruptcy 17 Procedure; 18 (b) the QF's waiver of its entitlement for scni-monthly (as opposed'to 19 monthly) payment for deliveries of energy under the QF'sPPAs; 20 (c) the QF's withdrawal, within seven days of a bankruptcy court order.

21 approving the Agreement, of any claims the QF has filed in the bankruptcy case, other 22 than the Section 503 administrative expense claims provided for in the Agreemaent with 23 respect to PG&E's prepetition defaults (the "Payables') under the PPA and interest 24 theteon;

-l 25 (d) the QF's representation that it is the sole holder of all right, title and interest 26 to the Payables; and 27 (e) the payment of the QF's Payables in an estimated amount of S280.584 (as 28 defined in the Agreement, the 'Provisional Prepetition Payabics") in six equal monthly SflP. ANOOROER AULTHORJZNO ASSUMTI ONF OfPA AWDCOMPROMISr OP CLAIMS WITH MlDWAYSUNSST 02-JAa-03 2

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installments, with a piovision for any necessary upward or downward adjustments after the QF receives payment of certain amounts owed by the California Power Exchange (the "PX");'

WIEREAS, PG&E respectfully submits that in light of this Court's approval of PG&E's assumption of well over 200 similar PPAs. the Commtitte's support of the assumption of the QF's PPA, and the service of this Stipulation and Order by facsimile on December 18, 2002 to all panics who (pursuant to the Coun's August 16, 2001 Order) have.

identified themselves as desiring service of notices and pleadings regarding PG&E's assumption of PPAs, adequatc and appropriate notice of these assumptions has been given under the circumstances i

For good cause appearing, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED:

1.

PG&E is authorized to enter into the Agreement. a copy of which is attachedc hereto as Exhibit 1, and the Agreement is hereby approved;

2.

PG&E and the QF shall be bound by all of the Agreement's terms and conditions; and.

'As described in the recitals of the Agreement, pursuant to the terms of the parties' Enabling Agreement, this QF was paid in the following non-standard fashion: For a specific Damemntpcriod, QF would receive payment from the PX for certain energy deliveries (the tPX Payment")

which pa ment QF was requircd to forward to PG&E. PG&E would make payment to the QF under tccrms of the PPA, resulting in a net amount due to one party or another. The PX, however, failed to pay QF under the terms of the Enabling Agreement in or after January 2001.

Accordingly the final net amount of Payables due QF is indeterninable until the PX pays QF tie PX Payment.

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• 26 27 21 DATED:

Il 2002 HOWARD RIE NEMERVSKI, ANADY A PriofasinoCrporation KIMBERLY fr BLISS AttneYs for Debtor and Debtor in Posiesaion PACIfC GAS AND ELECTRIC COMPANY DATED:

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,-,-Y Atarnewy for OFFICIAL COMMIEE air UNSECURED CREDrroRs ORD B"ad upon theo foregoing sipwation and ood4 CeUa Appealng

,ibeor, it u So ORDERED.

12DC EC20 2rZM DATED;

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-j ACREEMENT THIS AGREEMENT ('Azrrmrnt) dated as of'Novecnber 30,2002 (the "Effeclive Date'), by and berwcen Midway Sunset Cogeneration Company, a California general partnership

(.Q) and Pacific Gas and Electric Company. a Califomia corporation F

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QF aud PG&E are sometimes referred to herein collectively as 'Paries" and individually as a "Panv.

WITNESSETH WHEREAS. QF arnd PG&E ate Parties to a power purchase agreement, dated December 14a 1989. for PG&E'as purchase 0o1power from QF's project identified by PG&E LogNo.-

2SC321 (as amended.f Ej)

WHEREAS. QFand PG&E were also Parties loan enabling agreement executed on...

July 28 1998 (the 'Enrabline A rreenent") which among other things provided that, for a specific payment perioda QF was to receive payment from the California Power Exchange (

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which payment QF was required to forward to PG&E in its entirety, and PG&E was required to make payment to QF for deliveries during the sante period based on the terms of thc PPA resulting in a net amount due to one Party or to the other; WHEREAS, thc Enabling Agreement was terminated and ieplaced by a new agreemcet tthc 'I citcr A men1 cxeculed on December 21.2001; WHEREAS, the tenns of the Enabling Agreement continue to govern transactions under the PPA occuning up lo Decernber 21 2001 and the LertrAgreemcn govems transactons underihePPAoeccrringonorafierDecember2l,2001:,

z WHEREAS, CaIPX failed to make the required payment to QF for deliveries oternrgy and for other charges payable to QF. attributable to the PG&E PPA, under the Enabling Agreement in or aher January. 2003 (the "PX Pamen"), which QF has calculated as totaling S876,472, as a result of which QF did not forward any sums to PG&E for the same time period; WHEREAS. PG&E failed to pay the full amount due QF undertthe PPA for deliveries of energy and capacity for the month of anuary. 2001 (totalingSI.013,730) anwd forother charges, owed to QF for January. 2001 and for other months ynder the Enabling Agreemcnt Ltotaling 5143.326) (collectively, the -rG&EAMount")

in the aggwegate antuunt ofSlIS57.05o6 as calculated by QF; -

WHEREAS on March9.2G01, CalPX flcd a voluntarypetitiotunderChapter 1I ofthe United States Bankruptcy Code (tle 'PX Bankrtrttcv Case") in the Los Angeles Division of the United States Biankruptcy Court for the Central District of California (the -PX Bin*vvcy Cort-') (in re Caliornia Power Fichange Corpora!ion, Blankr. Case No. LA 01-16577E'S);

WHEREAS the aclual net amount ofpayablcs due QF is indeterninable until the CaUJX pays QF the PX Payment; I

IIONORAB~LE DEW~SMOSTAM J UNID STATES BANKRUFrCY JUDGE -

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ktel a0 103 iStA1s_ In 06:20 on tln@ 5t5 for-02-JAW-ti 11:56tIA FRM-tO*ARAILt AL.tt415)Il-5t10 dt1lt75tt12 T-5t0 P*01/l5 F-4tt WHEREAS, QP has calculated and inforrned PG&E thit the maximum amount payable by CalPX for the PXPaymrent is S876,472, although the actual amount paid by CAiPX could be lower for reasons including but not limited to. the terms of any plan offreorgpnization confirned in the PX Bankruptcy Case. The netting of this maximum PX Payment amount agsinst the PG&E Amount results in an estimated net amount ofpsyables dueiQF from PG&E in the amount of Two Hundred Eighty Thousand, Five Hundred Eighty-Four Dollars (S280,SS4) (the "Provisionsl Prep~etitionpavables), asset forthin Attachment A"hereto; WIIEREAS. on April 6.2001. PG&E filed a voluntarypetition under Chapter II of the United States Bankruptcy Code (the DlnlkruneCv Case) in the San Frncisco Division of ie United States Banlruptcy Court for the Northem District o Califomia (the 7R2nknspv Court )

(In re Pacific Gas and Eectric Conpoany, 1a3iur. Case No. 01.03923);

WHEREAS, QF notiied P&E of its desire to have the PPA assumed byPh&E pursuant to an order of the PO&E Bankruptey Coun under Section 365 of the Bankruptcy Code in the llankruptcy Cse and

-d WHEREAS PG&E is willing to agree to QFs request to i5sume the iPA o tie tems -

and conditions set fordt herein: -

NOW THEREFORE, in consideration of the premises described above nd the terms aid conditions set fonh below; the Paities herby re as rollowrs-

1.

AissurnDfon The eff&ctiveness ofthi sAgreement is coniingent upon assumption ofthe PPA in eccordince with ihe procedure described below-..

1

a.

Within a reasonabile period ifter the execuition and delivery ofthis Agreement by the Parties, PG&E shall file with the Bankruptcy Court and ierve a stipulation seeking approval ofthis Agreement (the Stinulation") and b

The Bankruptcy Court rnust approve the Stpulation effective s of November 30 2002 and authorize PG&E's assumption of the PPA effecdiie as of the Effective Date.

2.

Calculation and Rfte of Interes. The ouistanding prineipal balance of the.,

Provisional Prepetition Payables.shall bear interest t a rate of five percenit(5%) per annuum (the Interest Rate) from the respective due dates of the principal *mounts set forth in Attachment A until paid. Interest shall be cildulated on the basis of a 365-day year vvwih ile 'ittuil number of days (excluding the first day and including the list day) occurring during the period for which interest is payable.

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3.

Pavment Schedule

a.

Inerest All ccrued prepetition and postpetiiion interest due on the Provisional Prepetition Payables shall be paid on or before November 30.2002. If all ascrued prepetition and postpetition interest is paid onNovember 30.2002, the total amount of interest due QF under this Agreement on that date shall be Nineteen Thousand Thiree Hundred Thirty Nine Dollars and Seventy-Eight Cents (SI 9,339.78). Thereafterc scrued interest on the I573"511 111501 1,21P oltS707 2

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b.

Princinal. Notwithstanding the terms of any plan ofreorganization riled by PG&E ot anyether party in ihe Bankruptcy Case, PG&E shall pay the outstanding principal balance of the Provisional Prepetitiort Payables in six (6) equal monthly installments on the lass PG&E business dayoreach month commencing November 30,2002 and continuing at the end oreach month thereatler until paid in ftll; oprovided, however, that if the Bautkruptcy Court order approving this Agreement is not entered until after November 30,2002. then the installment payable on November 30,2002 shal bepaid as soon as practicable afler entry ofthat order.

c.

Setmarate Pamenti. Unless designated to the contraty in writing at least "one (1) iweek in advance ofthe payment date, all principal and interest payments due hereunder shall be made to QF in the amounts set forth in Attachment A attached hereto. Each ofthe piyments above is subject to aidjustment for rounding errors (either upwards or downwards) of up to but no more than one dollar (S.00).,

d.

DueonPtanErfeftiveDate.Ifheeffectivedateofanyplanconfirmedin.

the Bankruptcy Ciscshal occur beforethePovisionlPrepetition Payables and all interest accrued thereon has been paid in fiall the remiining batance ofthe Provisional Prepeition Payables and all interest accrued thereon' shall be paid on such plan effective date.

e.

SStLffs. To the extent that PG&E has or claims to have any right to assert any existing or future right of setoftis a defenre to or reduction of any of its obligations to pay the Provisional Prepetition Payables or the PG&E Amount and/or interest thereon, PG&E hereby waives such right of setofrfwith respict to such obligations, but only with respect to sutc i obligations. Provided PG&E is not in default of its payment obligations under this Agreement, and except as otherwise expressly provided underthis Agreement, QF shall not setaofTany obligation owed to PG&E against such QF's right to receive payments of the Provisional Prepetition Payables or the PG&E Amhount under this Agreement. Excep! as. set forth above, each Parry retains any and all setoffrights it may have. if any unde the PPA, the Enabling Agreement, and the Letter Agreement.

f.

Monthly Payments under the PPA. For deliveries starting on October 1, 2002, QF herebywalves any rlghl that it might have pursuant to CalifornIa Public Utilities Commission ("E=I)

Decisiont 01-03-067 to receive semi-monthly paymentsin lieu of.

monthly payments pursuant to the PPA.

g.

Other Terrs.f The right of QF to receive all payments hereunder including, without limitation, under the assumed PPA and the Enabling Agreement.shall be entitled to administrative expense priority under Bankruptcy Code Sections 503 and 507(aXl).

QF shall have standing and reserves the right to object or seek other relief in the Banluuptcy Coun in the event that PG&E's cash reserves fall belo ov what is reasonably necessary to timely satisfy PG&E's postpehition obligations, including the obligations under this Agreement. The obligations ofPG&E under this Agreement shall be binding on any trustee in a Chapter 7 or IR5572"1. 1502 ltllP OIt.507s I

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Chapter II bankruptcy Case, and cannot be altercd, maided ormodified by any plan of reorganization or other order or rulang in the Bankruptcy Case.

4.

Scnklements and Adiustmerts.

a.

Interim Adiustmenis. IfQFreceivcs anyinterim payments from CIPX on account of the PX Payment, QF shall apply each such payment to reduce the amount o0fthc ls scheduled and unpaid installment of the PG&E Amount. and shall notify PG&E ofcach such application within fivc (5) busincss days therafcr. Intrcest, for purposes ofcalculating the Finsl Setilement Amount describcd in the following P&ragraph 4.b, sha ceasc to accruc on such interim payent amount s of the date reccived by QF.

b.

'Final Settlemcn. Within fve (5) business days aAcr QF rccivcs the firal payment fron GCIPX on account ofthe PX Payment, QFshall notifyPG&E of thcact SDamOunt,

• and the aggregate amount paid, by CaIPX on account of the PX Payment. The Partics shall each calculate the adjustment, if any, due fhom one Party to the other, as appropriate under t ternu of the Enabling Agriement as well as the inercst duc on suc adjustmnt (the "Final Setilemn Ar 'j.

Inictest shal be calculaied at the Inercst Ratce Within fifteen calendar days folldwing receipt by PG&E ofQF's notice the Parties shall conferin good faith to econcile.

their rcspective clculstions of thc Final Settlernt Amount. Subject to the tensaining provisions of this Paragraph 4.b, the Party that owes the Final Sesdlenent Amount shall make payment to the other Party within five (5) business days aller the p'arties agrec in writing to the Final Settlement Amount: Should the CaLPX distribute to QF on account of the PX Paymnct a surn greala than the calculated PX Payment arnount; and desigsit the excess amount as'

.intcst. QF shall remit that interest go PG&E. QF shall bear no other responsibiliy for inst Should the Pantics not be able to agree on the Final Settlement Amowut. thc dispute will be submined to the Bankruptcy Court for resolution.

5.'

Wihdrwal xcp for (hose administrative claims specifically provided for by Seclion 3g. hereof, and, except for administrativec claims payable with rcspect to the Lena Agreement, QF waives its right to file any Etankruptcy Code Section 503 administrative expense claims based on services provided to the estate through the date of this Agicemaat. Furthermorc, QF agrees to waive and withdraw any and all cliinu or proof of claims QF has filed in the Bankruptcy Case within seven (7) days after a anksrpicy Court order approving this Agreement has become final and not subject to appeal. QF further agrees to forgo any rights it Tnay have to amend such claims, or to file new claims for the period befor Apri16, 2001.

6.

Waiver orPecuniary Loss Damatses. QF waives its right to recover pecuniary' loss" damages in connection with assumption of the PPA pursuant to DankruptcyCodc Section 36S(bX 1 )(B). This waiver shall not diminish or affect QF's right jo payment ofthe Provisional Prepetition Payables, the Final Sctilemenl Amount. and any intacist thercon.

7 Waiver of Righi to PreAssumprtion Claim. QF waives its right to assert claims to rtceivc the difference betwecn the market price and the contract price for tnegy and capacity delivecrd to PG&E horm and after April 6.2001 ihrough the Effective Date, provided that PG&E assumes the PPA. pursuant to Bankruptcy Code Section 365 and 503(b).

4157^

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/1 02-JM-0t 11:58Att t.!GttR0,i Uttz151211-5910 t151t21ltt 1--04 P.I/tt6 F-4l6 psvnrent of Post.AssuntplionOblimations. In accordanrc with BankruptcyCodc Section 365, from and slaer the date the Bankruptcy Court approves this Agreement, PG&E shall pay in full any and all post assumption obligations due under the PPA and the Enabling Agreement, and all obligations dte undcr the Lenctr Agrcemcnt, at such times and in such amounts as provided thercir. Such obligalions sball be affotded administrativc ptiority status under Bankruptcy Code Section 503. Good faith disputes regarding the amounts to be paid lo QF under the PPA. the Enabling Agreement or the Lener Agreement for posl asstimpUioU deliverics of cnegy and capacity shall not be decmed a brcach of this Agremn

9.

ROsrvation o tRirht.

Other than as set forth in Section 6 above, neither this Agreement nor PG&E's assumption of thc PPA in the manncr contemplated hacin "hll modify, waive, or otherwise picjudiec cither Party's rights and obligations witli respect to any proceedings before the CPUC, the Federal Enagy Regulatory Commission and the courts, relating lo thc encrgy price to bc paid pursuant to thc PPA the Enabling Agreement, and thc Letter Agrcmenat for the period prior to POhE's assumption ofthc PPA provideS berein.

t0.

Furthae Assurances. QF-and PG&E shall take all necessity action to implement this Agreement, including but not limited to preparing any documentation and taking any actions necessary to implement Section I of this Agreement, and approving executing and delivaeing this Agreement.

11.

BEankruotcvCoun Anoroval. This Agreement is subject to Bankruptcy Court approval and shall not becomc effective until entry of an order approving this AgreemrentL

12.

Descripive Headings. Thc descriptive headings of this Agreement are inserted for convenience of reference only and do not constitute a part ofthis Agrccmcn

13.

Exsenscs Each Party shall pay its ovin cxpenscs professional fees and other costs connected with or associated with the negotiation and execution of this Agriemnrt. In the event any Party bleaches this Agieement, the breaching Party shall pay all costs and espenses (including reasonable alromeys' fees and expenses) incurred by. the othr PaMy o Parties ia connection with or prising out of such breach.

14t pcfault I thc ccvnt that anypaymcnt required to be madc bylPC&E to Ql under this Agrccment is no niadc on or before thc datc due QF may makc a moton to enforce this Agrecmnt orseck other apropriate relicf fore the lankruptcyCourton seven (7) calendar days' notice. QFshall not b¶ required to commence an adversary proceeding or other suit and may proceed by noticd motion on scven (7) calendar days' notice without the requiremenl of obtaining an order shortening imc. QF reserves the righl to seek, as appropriate relief, that all amounts owed to QF. arid all interest thercon, should be accelerated as a result of such nonpayment. PG&E reserves the right to assert that acceleration is not appropriate.

Is.

GoyemirniLaw.This Agecrtentasmade and entcrd into in thc Stateof California, and shall in all respects be inteirpreted and governed under the laws ofCalifornia, without rCgard to principles ofconflicts of law.

16.

Entire Aerement. This Agreement, and all attaclansents hcrto, set forth the entire agreement between the Parties relating to the assumption by PG&E of the PPA and the

-111-4 gl."1a. flaw light 013003S 5

i EXHIBIT-I PAGE /3

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payment of the Provisional Prepetition Payabics. and the Final Settlement Amotunt nd supersedes and replaces any pnior understanding. corespcndece comraitmeigs or arnenmets whether oral or writien, concerning the subject matters of this Agreement. Any modification o; amendment to this Agreement must be in writing and must be signed and dated by the Parties, and must explicitly state that it is intended to be an amendment to or rnodification of this AgTsmcni.

b b u

17.

Bindini Attectment. ThisaAgcment shallbebindingupon d inure to the benefit of the success5rs and assigns of the Parties hereto, including any trustee appointed in the Bankiuptey Case.

18.

Construction Atreemen' Counsel for the respective Panies I4ave reviewed a nd panicipated in the draftingofthis AgTeement. Consequently. the principleofconStruccionof contracts thal ambiguities shall be resolved against the diallcrshall not be used orapplied in the interpretation of this Agreement; l

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19.

Ripresentatins. Each Party hereby tepresents and warrants to each ofthe other Panies that (a) the execution of this Agreement has been duly authorized by all necessary corporate, sharetholder and similar ictions; (b) this Agreement has been duly executed and delivered and constitutes the legal valid and binding obligation of such Pany, enforceable against sucih Party in accordance with its terms-; and (c) the execution ind delivery qf this Agreement and ihe performance by such Party of its obligations hereunder do not and will not conflict witht contravene or breach, any law, judgrnent, order or material contract applicable to or binding oa such Party or any of its properties or assets.

20.

Assienrnent of Reivybles. QF eapressly repteserts and warraU tO PG&5l (a) that it is the sole holder of alU right, title and interest to the Provisional.Prepetition Payables and any right or claim to receive paymnrnts, ptoceeds or distributions thereon, ant (b) that QF has not assig~ned pledged or otherwise transferred its right, title and interest in the Provisional

.Prepetition Payables.(or any right or claim to receive payments, proceeds or distributions thereon) to any third party or parties for any purpose, whether as an outright esnsfor Otas*s transfq for security. Accordingly, all payments due under this Agreement shall be made by' PG&E to QF until PG&E receives notice from QF or assignees to make such payments directly to the assignees, in which case PG&E shall have no further obligation to make such payments directly to QF. Such notice shall be in writing, to the attention of.

Joseph C. lHenri Pacific Gas and Electric Company P.O. Box 770000, MC N12E San Francisco, California 94177 Fax: 415-973.9176 In the event tlt PG&E makes a payment of Provisional PrcpctitionlPayables to QF aft the effective date of any transfer of QF s right title and interest in the Provisional Prepetition Payabies. QF shall (x) promptly forward such payment to the transferee of its right. title and inictest in the Provisional Ptepelilion Payabies and (y) indemnify and hold PG&E harmless fiom any claim, demand or action by the transferee to collect any such parnent from PG&E.

ta" 3 lIAtS) m.o2tol s.ot0 6

,:XHIBIT I

PAGE Z

QF may not assign its night to receive any payment from PG&E or its obligation to make any.

payment to PG&E, as the case may be, pursuant to the terms of Patraraph 4 herein.

21.

Execution by Counternants. lThis Agreement may be executed in separate counterparts, each of which when executed shall be an original, but all ofwhich, taken together.

shall constitute one and the same instn'ment.

IN WITNESS WHeREOF, this Agreement has been duly executed by or on behalf'of QF and PG&E as of the date first written above.

PACIFIC GAS AND ELECTRIC COMPANY, MIDWAY SUNSET COGENEKAKION a California corporation COMPANY, a California general p

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T-504 P.15/16 F-4SC PROOF OF SERVICE BY FACSIMILE TRANSMISSION I am employed in the City and County of San Francisco, State of California. I am over the age of eightcen (18) years and not a party lothe within action; my business address is Three Embarcadero Center, 7th Floor, San Francisco, California 94111-4065; my business telephone number is 415/434-1600; my business facsimile number is 415/217-5910.

I am readily familiar with the practice for collection and processing of documents for transmission by facsimile machine of Howard, Rice, Nernerovski, Canady, Falk &

Rabkin, A Professional Corporation, and that practice is that the document(s) are taken to the Telecommunications Department at Howard, Rice. Nemcrovski, Canady, Falk & Rabkin, A Professional Corporation, along with a complete facsimile transmittal form for immediate transmission. Each such document received by the Telecommunications Department is transmitted, in the form received, as soon as possible after receipt.

On Decemrber 18,'2002,1 served the following document(s) described as Stipulatton And Order (Filed Pursuant To The Court's December 21, 2001 Oral Order) Authorizing Assumption Of Power Purchase Agreement Aand Compromse Of

.4 Claims With Midway Sunset Cogeneration Company on the person(s) at thc facsinilc number(s) listed below by facsimile transmission from facsimile number 415/217-5910 along with a completcd facsimile transmittal form in accordance with the regular process at the law offices of Howard, Rice, Nemerovski, Canady, Falk & Rabldn, A Professional Corporation, as follows:

Sec Attached Service List I declare under penalty of perjury that the foregoing is true and correct. Executed at San Francisco, California on December 18, 2002.

NAlliANIEi HAHUNT PROOF OF SERVICE

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Gregg M. Ficks/Crosby, Heafy, Roach &

FAX:

415-391-8269 2

May SWB:

510-763-2000 3

Gordon S. Young/Hantman & Egeli FAX:

410-266-5561 SWB:

410-266-3232 4

I William Bates, Randy Michelson, Geoffrey FAX:

415-393-2286 5

T. Holt/WMcCutchen, Doylc, Brown &

SWB:

415-393- 000 6

Enersn 7

David A. Burns/Baker Botts FAX:

713-229-2767 SWB:

713-229-1234 8

1 9

Frank Vram Zcrunyan/Sulmeyer, Kupez FAX:

213-629-4520 SWB:

213-6262311 10

.I Aron M. Oliner/Bulchaltcr, Nermer, Fields FAX.-

415-227-0770 11 SWB:

415-227-0900 12 Todd Duncan/r3NY Western Trust FAX:

213-630,6285 13 SWB:

213-630-6400 4

Evan C. Hollander/While & Case LLP FAX.

212-354,8113 SWB:

212-918-8660

-15 Patricia A. Cutler/

FAX:

415-705-3379 16 Office of the U.S. Trustec SWB:

415-705-3333 17 I

Robert J. Moore/Milbank, Tweed, Hadley FAX-213-629-5063 18 SWB:

213-892-4000 19 Anna Marie Fallon/l.P. Morgan Chase Co.

FAX-212-622-4834 20 SWB:

212-622.8395 21 Michael A. Rosenthal/Gibson Dunn FAXL:

214-698-3400 Counsel for Crockett SWB:

214-698-3100 22 Kimberly S. Winick/Mayer, Brown, Rowe. FAX, 213 576-8155 23

& Maw SWB:

213-229-5132 24 25 26 27 28 WD 110A2lnl4ll"131104I PROOF OF SERVICE P.1/16 F-4A6 I

M NIIT-PAGE IV