ML042100430

Notice of Application & California Power Exchange Corporations Application for Payment of Professional Compensation & Reimbursement of Expenses Under 11 U.S.C. 503(b)(3) & (4); Memorandum of Points and Authorities; Declarations of Cohen, Re

ML042100430
Person / Time
Site:	Diablo Canyon
Issue date:	07/20/2004
From:	Miriam Cohen Kaye Scholer, LLP, Reorganized California Power Exchange Corp
To:	Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California
References
01-30923-DM, 94-0742640
Download: ML042100430 (20)

Text

Marc S. Cohen, Esq. (CASB 065486)

Ashleigh A. Danker, Esq. (CASB 138419)

Conine J. Rebhun, Esq. (CAS8 211647)

KAYB SCHOLER LLP 1999 Avenue of the Stea, Site 1700 Los Angeles, Califintia 900674048 Telephone: (310) 783-1000 Tdeaier. (310) 781-1200 Attorneys for Creditor, Roged California Power Exchange Corporation UNIED STATES BANKRUPTCY COURT NORTHER DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION Inre

) CaeNo.01-30923-DM Inre PACIFIC GAS AND ELECTRIC

) Chapter 11 W-0 C)

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Ne COMPANY, a California corporation, Reorganized Debtor.

Federal Id. No. 94-0742640

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I Status Conbrence:

Date: Ste mber 20,2004 Time: 1 30pmn.

Place: 235 Pine Street, 22nd Floor San Francisco, CA I

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1s 2 16 17 IS 19 21 I22 23 24 25 26 27 28 TO THE HONORABLE DENNIS J. MONTALI, UNITED STATES BANKRUPTCY JUDGE, REORGANIZED DEBTOR PACIFIC GAS AND ELECTIC COMPANY, THE OFFICIAL UNSECURED CREDITORS COMMrirTE, THE UNITED STATES TRUSTEE, ALL PARTIES REQUESTING SPECIAL NOTICE, AND OTHER PARTIES IN INTEST:

PLEASE TAKE NOTICE that on September 20,2004 at 1:30 p.m., or as soon thereafter as counsel may be heard by the Honorable Denmis I. Montald, United States Bankruptcy Judge, in Courtroom 22, located at 235 Pine Street. 22nd Floor, San Prancisco, California, the Reorgaized Cadifomai Power Exchange Corporation (CalPX")

shall apply, and hereby does apply (the "Appllcation), to the Court for an Order granting payment of compensation and reimbursenent of costs to CaIPX in the amount of $516,91 1.51 under II U.S.C. §§ 503(bX3) and (4) (the "Substantial Contribution Claim) in midng a substantida contribution to the successal reorganization under chapter 11 of the Bankruptcy Code of Pacific Gas and Electric Company ("PG or the.Debtor.

The Application is based upon this Notice of Application and Application, the attached Meorandumn of Points and Authorities and Declarations of Marc S. Cohen, Conine J. Rebbun, and Michael Schek, the concurrently filed Appendix of Exhibits, the records and files in tis case, and such additional evidence and argument as may be presented at or before the hearing on the Application.

PLEASE TAKE FURTHER NOTICE that the hearing on September 20, 2004 on the Application shall be stats nferce oniv. Ine addition, by agreement between CalPX and PG&E, memorialized in a letter dated June 21, 2004 to VirginiaBelli, Courtroom Deputyto Judge 1/

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'I, "Il 111 NOTICE OF APPLICATION AND THE CALIFORNIA POWER EXCHANGE CORPORATION'S APPLICATION FOR PAYMENT OF PROFESSIONAL COMPENSATION AND RRIMBURSEMENT OF EXPENSES UNDER 11 U.S.C. gf 503(b)(3)

AND (4); MEMOR.ANDUM OF POINTS AND AUT[IORITIES; DECLARATIONS OF MARC S. COHEN, CORBuIN J. REBHUN, AND NIIC15L SC}IRNK lNSUPSPORT TllEIMOF

[Appendix of Exhibits filed conturntly herewith]

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n1NWD CalPre Re*wK for Psrwd dButonvoW Cmulbatim Claim "INa~gWIFF Call`X's Request fir PrAwl of Substmlial CmtnNWm Claim gwj

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17 I1 19 20 21 22 23 24 25 26 27 28 Montali, aul accepted by Judge Montali, a modified brieflne schedule with respect to the Applicatioa is in effect as follows: (i) oppositions, if any. shall be filed and served on or before August 24, 2004 and (ii) CadPXs rcply(ies), if any, shall be filed and served on or before September 13, 2004.

Dated: Julyj2__ 2004 KAYB SCHOLER LLP Marc S. Cohen Ashleigh A. Danker Corine J. Rebhun By:

Marc S. Coben Attorneys for Creditor, the Reorganized California Power Exchange Corporation 3

UIS4S.WP CIPXa' Requst for Payment of Subatial Cot&baim aim 2

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TABLE OF CONTENTS I.

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INTRODUCT7oN.............................................

4 BACKGROUND.............................................,

6 THE ROLE OF CALPX AND THE PARTICIPANTS COMMITTEE ARGUMENT..10 Li

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A Creditor Making a Substantial Contribution to a Chapter 1 I Case Is Entitled to an Administrative Expense Claim Pursuant to It US.C. §§ 503(bX3XD) and 503(bX4).......................................................

10 B.

The Substantial Contribution Test.......................................

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SUMMARY

OP COMPENSABLE SERVICES 12

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CalPX played a major and constructive role in resolving multiple objections to PG&E's various applications under FREP 2004 for production by CalPX of confidential and highly sensitive infoination concerning the Participants..

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Through pleadings and negotiating PG&E's Plan and Disclosure Statement, counsel for the Participants Committee substantially contributed to the PG&E case

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Kaye Scholer's work with a special subcommittee of the PG&E Committee substantially contributed to the PG&E case by resolving issues with proposed versions of the PG&E Plan.1 8

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CaIPX through the Participants Committee, substantially contributed to the PG&E case by challenging PG&Z's motion to estimate Participant claims.

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By assisting PG&E in the creation of voting procedures to deal with the Class 6 claims, CalPX, thmugh the Participants Committee, substantially contributed to the PG&E case 20

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Through its counsel, the Reorganized CalPX made a substantial contribution to the PG&E case by assisting with the creation of the Class 6 escrow account

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Te Reorganized CaIPX is entitled to reimbursement for time set preparng the Substantbi Contribution Claim.21 VL CONCLUSION.22 DECLARATION OF MARC S. COHEN.23 DECLARATION OF CORRJNE J. REBEHUN.36 DECLARATION OF MICHAEL SCHENK.38 24 25 26 27 28 2304.W1O CaIPXa Request 8w ayfteast of SitaraCaibues an WWW10D CdPX. Re fo r Pyon fSbanbai am*d Cah

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9 10 11 12 13 14 is 16 17 Is 19 20 21 22 23 24 25 26 27 28 Page CASES 87FRC 1 61,203(1999)..........................

4 ClIrisinu Wie Caft imwson Wm cm m v. Son (n re Cistian Ufa Center).

821 F.2d1370(9th Cir.1987.).....................

11,12 In re COt tofOrlnx 179 BIL 195 (Bankr. C D. Cal. 1995).....................

12 lre~h~r hvng.1c 764 F.2d655 (9th CL. 19S5).....................

21 296 BJL 81 (Bankr. D. NIL 2003).....................

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Law Offi s *ofeil Vincent Wakev. Sodonm Institute On re Sed.nstitute) 220 BL 74 (9h Cir.B.AP. 1998).....................

II STATUME II U.S.C.§327..........................

10 11 U.S.C. 330..........................

10,11 II U.S.C. 503..........................

10,11,22 11 U.S.Ca 1103..........................

10,11 BsnkrautActofl89 i§f242 nd243..........................

II II TABLE OF AUTHORITIES 2

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qNTROD U C O As the Court is aware, this chapter I1 case is unusud and highly complex. presenting nmerous 'blockbuster" legal issues with billions of dollars at stake. The Interplay between (i) the jurisdiction of the Banikuptcy Court, the Californis Public Utilities Commission (TCPUC'), and the Federal EnRy guty Commission (FPRC mnd (ii) tbe competng banauptcy estates of PG&E and CadPX created special challenges with respect to PG&E's assets, liabilities and operations and in proposing and confinming PG&E's plan of reorganiation (the "Plan").

With non-duplicative claims asserted in the amount of approximately Sl.7 billion dollars in Class 6 under the Plan, CadPX and the approximately 70 participants in CaIPX's erectricity markets (the "Participants) who were net sellers represented one of the most significarn creditor constituencies in PG&E's bankrptcy case. CdPX operated its markets pursuant to two FRRC-approved tasiffs (the 4Tariffh

. Pursuant to the Taliffh and the Participation Agreements exected by all buyers and sellers in Its markets, including PG&E, CaIPX was responsible fbr collecting the amounts owed by the net buyers In CalPX's markets, PO&E and the two other investor owned utility companies that participated in the markets, Southern California Edison (SCE") and San Diego Gis

& Electric Company ("SDG&E"), and paying the apprpriate amounts due to the Participants thit were net sellers in the markets.

In fintherance of its duties under the Tariffs and Participation Agreements, CaIPX filed ClaimnNo. 7411 on August 31, 2001 in the amount of S1,729,688,561.23 (the 'Otiginal Prepetilion Claim') and Claim No. 13282, amnending the Original Claim, on June 6,2002 in the amount of S1,778,979,543.96 (the "Amended Prepetition Claim" and, collectively with the Original Prepetition CaIPX operated its markets pursuant to the "California Power Exchange Corporation FERC Electric Service Tawiff No. 2". CalPX Trading Services ("CrS"), an unincorporated division of CalPX, operated a market for the purchase and sale of "block forward contract" for the delivery of energy in future months, which was govertned by the "CaIPX Trading Services Rate Schedule FERC No. 1". California Power xchange Corp. 87 FERC ¶ 61,203 (1999).

4 MEMORANDUM OF POIRTS AND AUTHORITIES rnrs.wio CalPXa Request rca P.ymmt of Subarsatral Coumbution Claim DI.W.WtD Call`X's Requeat tbrh y--- or Sebtania Cmstribu"a Clam 2:11M.VPI)

CSIM's Ralued for Peynod ofSubstantial CmtnWon Claim

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17 18 19 20 21 22 23 24 25 26 27 28 Claim, the "Prepetition Claim") against PG&B claiming. among other things amounts owed to CaIPX, but ultimately due to the Participants, by PG&E based on its activities in CaIPX's markets.

Notwithstanding CaIPX's right and duty to collect amounts owed by PG&E based on its activities in CaiPX's markets, many Participants filed their own direct claims against PG&E -

collectively duplicating a significant portion of the Prepetition Claim. This precaution on the part of the Participants, encouraged in part by a notice firom the ISO informing the Participants that ISO would not be asserting claims on their behalf against PG&E', created a number of difficult issues in the case including: () questions regarding the proper party(ies) to vote the claims, (ii) how to accurately quantify the claims in Class 6 given the extensive duplication and the fact that the direct claims erroneously included unspecified amounts owed by SCB,,(iii) how to structure the disputed claims reserve for Class 6 claimants, (iv) how to handle settlements of Class 6 claims vis-a-vis FERC and the PG&E and CaIPX bankruptcy estates, and (v) procedures for non-consensual resolution of Class 6 claims. The case was further complicated by PG&E's efforts to attack the direct clairns by naming CaIPX - the convenient one-stop source of information - in several requests for production of sensitive documents under Federal Rule of Bankruptcy Procedure

("FRBP') 2004 regarding the trading activities of the Participants.

As described in more detail below, CaIPX seeks payment of $516,911.51, its Substantial Contribution Claim.4 representing approximately 1,279 hours0.00323 days <br />0.0775 hours <br />4.613095e-4 weeks <br />1.061595e-4 months <br /> of service' performed by Greenberg.

2 See ExAilbIt "G" to the concurrently filed Appendix of Ehibits in Support of the California Power Exchange Corporation's Applicationfor Payment of Professional Compensation and Reimbursewent of Expsmes under 11 US.C,f 503(b)(3) and (4) (Appendix").

3 CaIPX's "day ahead" and "day ofr markets were blind pooled markets, with sellers receiving statements hum CalPX showing the amounts they were owed, but not the identity of the purchaser. Since both PG&E and SCE were in default, the statements sellers received - and used as the basis of their direct claims - also included unallocated amounts which SCE owed.

4 On January 21, 2004 CalPX also filed a request for payment of an administrative claim, which CalPX amended on May 26,2004 (the "Administrative Claim") in the amount of

$834,854.66, without prejudice to CalPX's right to include amounts incurred after March 31.

2004 or to amend the Prepetition Claim. Concutently herewith, and pursuant to the Court' (continued...)

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ILd Glusker, Fields, Claman, Machtinger & Kinsella LLP ("CGreenbergl, and Kaye Scholer repreeti at various times, (i) the Official Committee of Participant Creditors of CaIPX (the "Paticipants Committee") acting its own right or on behalf of CaIPX or (ii) Reorganized CaIPX during the period from April 6,2001 through June 30,2004. CalPX believes that the work of Greenberg and Kaye Scholar described herein made a substantial contribution to PG&B's successful reorganization, henefitted numerous parties in PG&E's case besides CaIPX, and was not duplicative of services rendered by PG&E's attorneys or the attorneys for PG&E's Official Comnmittee of Unsecured Creditors (the -PG&E Committee")

CaIPX is nonprofit public benefit corporation created by the State of California as an integral component of California's restructuring of the electricity industry. Pursuant to California Asqembly Bill ("AB") 1890, signed into law on September 23, 1996, and codified in various sections of the California Public Utilities Code, CalPX was established to conduct markets for the wholesale purchase and aale of electricity.

On March 31, 1998, CaIPX began operations to provide and maintain an efficient, competitive auction for the trading of wholesale electricity within the State of California. CalPX operated and administered two markets for the purchase and sale of wholesale electricity for delivery on the same day or the following day, in which approximately 70 entities participaed, Including PG&E. CalPX also acted as a scheduling coordinator for some of the Participants, including PG&E1 l

in the real-time market administered by the California Independent System Operator Cosporation (the "ISO"). PG&E participated in the new market structure pursuant to, riter alia, a written 4

(-continued) direction at hearing on June 9, 2004, Ca&PX is also filing a motion for authority to amend the Prepetition Claim to liquidate the amount of its prepetition and postpetition costs, Including attorneys fees, chargeable to PG&E which were initially asserted in the Prepetition Claim in an unhquidated amount.

aa Declaration of Michael Schenk attached hereto, 112 and 3.

6 nWd0.WrD C&MC& Regato ft Paymm otSubmndal Cmk&Wm CWm D2UM.Wra CM'S Requed for ViYamm afsLdwandol Contnudim Clahn

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9 10 1i 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Participaion Agreement made December 19,1997. PG&E also participated in a third market, for the purchase and sale of 'block forward contracts" for the delivery of energy in future montis, operated by an imincorporated division of CslPX pursuant to, inter ltia, a written Form Of Block Forward Market Participation Agreement dated July 12, 1999.

Pursuant to the Tarifib, CJIPX settled and cleared transactions in its markets and also those 99ahsactions in the ISO's real-time market in which it acted as scheduling coordinator. CalPX rneled all dat regarding the trading and scheduling activities of the Participants and, in the cut of real-time m t

t econciled amots due to and fiom Participants and the ISO.

CaiPX gnernted staments and invoices speciting the amounts due to nd fiom each Participant and to the ISO. CdIPX also operated a settlement and clearing system through which it collected and paid the unounts due to ind fron the Participants and the ISO.

Beginning in or about Jamary 2001, PG&E fidled to pay invoices fron CdaPX for trading in te markets administered by CaIPX and the ISO. PG&E's failnre to pay Ca1PX'e Invoices left a deficit of nearly two billion dollars In CaJPX's settlement clearing account, rendering CdPX unable to pay other Participants for electricity purchased by PG&E through CalPX~ markets. Participants have sought to recover the unpaid funds thlough claims in CslPX's bnrptcy case, claims in PG&E's bankruptcy case, and in multiple pir ings in the courts and before FERC.

CslPX suspended the operation of its markets on January31, 2001, and filed a voluntary petition under chapter I I of the Bankruptcy Code on March 9, 2001. A month later, on April 6, 2001. PG&E filed its voluntary petition wider chapter II of the Bankruptcy Code.

On November 1, 2002, the Bankruptcy Coort for the Central District of California (the eCaX Bankruptcy Court") entered its order confirming the Qfflcial Committee of Parflpant C

'FffthAmAWded Chapter) 1 Plan 0 Moifid (wd October 1, 2002) (the CalPX Plan"). Under the terms of the CalPX Plan, the CazPX Plan's Effective Date occured on April 1, 2003, when MERC entered its order approving certain CalPX Plan provisions over which it ha jurisdifction. See Declaration of Marc S. Cohen (ben DeLW), attached hereto, 1 6. PG&E's Plan was c6idirimed prtaunt to an entered by the Court on December 22, 2003 and became effective on April 12,2004.

7 2tW19R CaWX'sRqnut for PqtmentoESubtatial Coninbtittn Clim I

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THE ROLE OF CALPX AND TME PARTICIPANTS COMMITTEE Three law firms have representd CalPX and its estate in connection with PG&E's bankruptcy case: Jeffer, Mangels, Butler & Marmaro LLP ("Neffee), Greenberg, and Kaye Scholer.

Jeffer was employed by CaIPX as it bankruptcy counsel in CaIPX's own chapter 11 case reb erg represeted the Participants Committee' in the early stages of CaIPX's bankruptcy case and Kaye Scholer represented the Participants Committee thereafter. After the CadPX Plan became effective on AprIl 1, 2003, Kaye Scholar began representing and continues to represent Reorganized CaIPX as special counsel, including In connection with this matter. Due to the relatively small amount of fees attributable to Jeffer which would be applicable to the Application, CdIPX has elected not to include any fees incurredbyJefer in tOe Application. See CohenDeeL, 17.

Although Jeffer was CaIPX's bankruptcy counsel, pursuant to an Order of the CaIPX Bankarptcy Court on entered July 13,2001 (the Utigation Order", the Participants Cormmitteie was authorized to represent the CalPX bankruptcy estate in connection with certain litigation and claims, including the CaIPX estate's claims against PG&E pursuant to the terms of the Litigation Stipulation between CaIPX and the Participants Committee The Litigation Order provides, "..Cal Pf/ be and it Is authorized to pay the fees and costs incurred in the prosecution and defense of the Litigation (by the Participants Committee] fiom the general funds of this [CalPXJ chapter 11 estate, provided, however, that such payment is without prejudice to (i) the rights, claims and demands of party in intrest to bring proceedings before this Court or any other court ofcompetentpilmiriedon to seek recovery of such payments for the benefit of the estate of Cal P/X fium the Participants,.

(emphasis added) Copies of the Litigation Stipulation and Litigation Order are attached as Erhlblta

'Al and IB," reapectlvely, to the Appendix. The Application is being brought for the benefit of CaIPX Se Cohen Decl, I S.

Certain of the activities of the Participants Committee, acting on behalf of CalPX pursuant to The Participants Committee was duly appointed by the Office of the United States Trustee for the Central District of California on March 26,2001 for the purpose of representing the Interests of net sellers In the CaIPX markets.

8 2313M.1" CaIPX'#Reqt" for Paymedol'Substimlial CantnibWon Claim

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>.. 16 Y 17 is 19 20 21 22 23 24 25 26 27 28 the Litigation Stipulation and Litigation Order, are described in detail below. Primarily, these activities were to ensure that (i) PG&E's requests for production of documents by CalmX were complied with in a manner which protected the confidentiality concems of CaIPX and the Participants, and satisfied PG&E's needs, (ii) adequate provision was made in the PG&E Plan for resolution by FERC of the disputes relating to CaIPX's Tariffs and markets, and for payment by PG&E of amounts directed by FERC to be distributed to or through CsIPX, and (iii) the proper roles of CalPX and its Participants under the Tariffs were taken into account in plan voting and other matters. an Cohen DecL, 19.

Throughout the PG&E bankruptcy case, the Participants Committee also finctioned as a liaison between PG&E and the Participants in resolving issues relating to their claims and the PG&E Plan. SA Cohen Decl.. 1 10. The vital benefits to PG&E of these cfforts have been gublicl recogiized bvPG&E itselt. S.

"Statement of Pacific Gas And Electric Company Regarding the Employment of Kaye Scholer LLP and BDO Seidman," filed August 8, 2001 in the CaIPX chapter 11 case (the "PG&E Statement), attached to the Appendix as Exhibit "C:"

PG&E has communicaed regularly with Marc Cohen, counsel to the Committee,... regarding developments in PG&E's case.

The Participants' Committee, through pleadings, court appearances, and its involvement in negotiations, played a major and constructive role in resolving multiple objections to PG&E's applications under Federal Bankruptcy Rule 2004 for production of documents by CaIPX and the California Inidependent System Operator.... In addition, the Participants' Commttee worked with PG&E to sponwr a telephonic meeting wdth members of both the Participants' Committee and the Unofficial Commnittee of Energy Sellers to discuss information regarding the progress of PG&d's chapter 11 case. PG&B and the Participants' Commnittee are discussing the role that the Participants' Commttec can play in PG&E's development and proposal of a chapter l, plan The Participants' Committee serves a valuable role in both the CaiPX and PG&E cases by effectively focusing the voices of the market participants, the sheer magnitude of whose claims compels attention by the respective debtors, but whose numerosity makes the role of the Participants' Committee essential in discussing the interests of mrket participants.

Accordingly, PG&E supports the current role of the Participants' Committee in tese cases....

The efforts of the Participants Committee were primarily through Greenberg and Kaye 9

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17 1S 19 20 21 22 23 24 25 26 27 28 Scholer. whose employment as counsel for the Participants Committee was approved by the CalPX Bankruptcy Court The legal fees incurred by Greenberg and Kaye Scholer directly beneficial to the PG&E estate during the period of April 6, 2001 through May 31, 2004 are summarized and described in Article V, below.

As a result of being employed in the CaPX case, both Greenberg's and Kaye Scholer's fees and expenses through March 30, 2003 were thoroughly reviewed and approved by final order of the CaIPX Bankruptcy Court after determining that those expenses were reasonable, actual and necessary in compliance with the standards of 1 1 U.S.C. §§ 327,330 and 1103. These fees and expenses were paid out of the CaIPX esate pursuant to several orders of the CaIPX Bankruptcy Court.7 The fees and expenses of Kaye Scboler from April 1,2003 to May31, 2004 werc billed in accordance with the same procedures as those approved by the CaIPX Bankruptcy Court. So Cohen Decl., 1 12. Thus, all of the fees and expenses incurred in substantially contributing to the PG&E case were actual, reasonable and necessary. Accordingly, reimbursement of these fees and expenses by PG&E to CaIPX is entitled to priority treatment pursuant to 11 U.S.C. §§ 503(bX3)(D) and 503(b)(4).

IV.

ARGUMENJ A.

A Credltor Making a Substantial Contribution to a Chapter 11 Case is Entitled to an Administrative Expense Claim Pursuant to 11 U.S.C. p8 5031b1(3UpD and 503M 4'l.

Section 503(b) of the Bankruptcy Code lists several fees nd expenses which are entitled to administrative expense priority. Included in this list under § 503(bX3XD) are "expenses" of 7

The Bankruptcy Court for the Central District of Califomnia in the CalPX case approved the final fee applications of Greenberg and Kaye Scholer, including fees and expenses incurred in connection with the PG&B case sought herein, and ordered CaIPX to pay those expense&

CalPX obeyed those Court orders and paid the fees. The order approving the final co~penlsation for Greenberg's fees and expenses entered on June 20,2003, is attached to the Appendix as Exhibit "D." The "Order re Third and Final Application of Kaye Scholer LLP for Allowance and Payment of Compensation and Reimbursement of Expeases" entered on June 13,2003, is attached to the Appendix as ExhIbit "El S; Cohen Decl., 1 2.

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3i1344.WiO CWX's Requr frw Papnent c(&sbinca butica Clium 10 23W49W1g CaIPXs Requca r. Paymmi of Saibdaulial Ceabibuilee Claim 233IWID U41FIXs Reua fr Psy atsimatl anfdo im

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§503(b)(3). CdPX, having filed the Prepetition Claim against PG&E, which remains unpaid, is a "creditor" for purposes of 503(bX3)(D). Furthernore, under 11 U.S.C. 5 330 and 1103, those fees and expenses incumred for the period April 6, 2001 through Msarch 31, 2003 paid by CadPX to Greenberg and KSw Scholerpunt to their fee applications were expenses of the CalPX estate.

Tlus, upon a showing by CalPX of its having made a substantial contribution to the PG&E case, an of the amounts detailed herein which were paid from the CalPX estate to Greenberg and Kaye Scholer for services fron April 6,2001 through March 31, 2003 are entitted to adminisvative picorltypursuartto II US.C. 5 503(b)3)(D).

CaIPX may also recover the amounts It has paid to Kaye Scholer for Kaye Scholer's repreuentetioioffCaPX in the PG&E case firm April 1, 2003 to the pr oReasonable compensstion forservicesrendered byan sttorney... of an entitywhose expense is allowable under paragraph (3) Is included in the list of expanses entitled to administrative expense priority.

It U.S.C. I 503(bX4). CalPX)a plan of reorganization became effective on April 1, 2003, at which time the Participants Committee ceased to exist mnd Kaye Scholer assumed certain specific representation of the Reorganized CaIPX, including for all mattes In the PG&B a se. S Cohen Decl, 16. Tbhu once CrlPX demonstrates that It substantially contributed to the PG&E case, CaIPX will be endtled to the fee and expenses incured for Kaye Scholer'a services in the PO&B ce from April 1. 2003 through May 31, 2004 as n administrative expense claim pursuant to II U.S.C. 503(bX4) regardessof whelterCsPX has my expenses covezed under 11 U.S.C. 5 503(b)(3)(D). S The law Offices of Ndl Vincent Wake v. Sedom histitute (In re Se hJsdt b)220 BR. 74,81 (9th Cir. BAP. 1998).

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The Snbitsuttal Cenrtfbatlon TesL As described in detail below, CalPX substantially contributed to the PG&E case. Substantial contribution, while not defined in the Baukruptcy Code, originates rom §§ 242 and 243 of the Bankruptcy Act of 189S. See Christian Llfe Center Utination Defense Committee v. Silva (In re

£Uitn I Jtinter), 821 F.2d 1370, 1373 (9th Cir. 1987.) The applicable test for determining 11 Er Iid

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9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "substantial contribution under the 1898 Act was the extent of benefit to the estate and the same test applies to claims under comparable section 503(b)(3XD)." hL Courts also evaluate the following three main factors when determining whether a claimant has substantially contributed to a case: (1) whether the services were rendered solely to benefit the creditor or to benefit all the parties to the case- (2) whether the services provided a direct, significant and demonstrable benefit to the este; and (3) whether the services were duplicative of services rendered by attotneys for the connmittee, the committee themselves, or the debtor and its attorneys.

In re Pow Wow River CameouL Inc 296 BR. 81 (Bankr. D. N.H. 2003) (considering all 3 factor, in evaluating a creditors administrative claim); In re Conty of Oranm 179 BRL 195 202 at

n. 19 (Bankr. CD. Cal. 1995) (citing as dicta the second factor as a requirement for giving administrative priority to an indenture trustee).

The detailed narrative of the services provided by Greenberg and Kaye Schbler included below show that these services (1) provided a direct, significant and demonstrable benefit to the PG&E case; (2) were provided to the benefit of numerous p arties involved in the PG&E case, and (3) did not duplicate the efforts of PG&E, the PG&E Committee or their respective counseL V.

SUMMARY

OF COMPENSABLE SElRVICIS The work of Greenberg and Kaye Scholer which substantially contributed to the PG&E case falls into the following seven categories:

1. FRBP 2004 Document Production Requests to CalPX byPG&E

2. PG&E Pbn/DS

3. Work with the PG&E Subcommittee of the PG&E Connittee

4. Opposition to PG&E'a Motion to Estimate Class 6 claims Fecs lncu. ed S60,927.r5

$280,955.31

$2,509.25

$24,286.00 12 "LMWn>

'CaPX' Reqa for Pny~wn of Sbtfhaal C0nuUt Chin "13OW-7D Cal]?X's Reqved for Parnest ofSobehmfial ContriMon Claim

2 3

4 5

6 7

S 9

10 11

{

12 Id Li 13 0

I 14

()5 W

16 e

17 Is 19 20 21 22 23 24 25 26 27 28

5. Voting Procedures for Class 6 claims

6. Procedures for the Class 6 disputed claims reserve and escrow

7. Preparation of the Application Total

$26,248.02 543,224.18 S78.761.60

$516,91151 The amounts sought in the Application include only those expenses for service directly related to the PG&E chapter 11 case, and do not include costs incurred in connection with other proceedings such as those before FERC, the CsiPX bankruptcy case, or in state and federal court litigation, even though these fees were also directly or indirectly related to PG&U CRIPX, however, hereby reserves its rights to seek compensation in connection with other such proceedings pursuant to the Tariffs and federal law. 3; Declaration of Conine J. Rebhun attached hereto ('Rebhun DelC"), 11 2-4. The detailed billing statements for Greenberg and Kaye Scholar are attached to the Appendix as Exhibits "1" and "J," respectively. Next to each time entry included in the Application is the code for the task category into which such entry was assigned in compiling the Application. Biographies of each of the Greenberg and Kaye Scholer professionals and paraprofessionals whose services comprise the Substantial Contribution Claim are attached to the Appendix as Exhibit "H."

These services, described in detail below, substantially contributed to the PG&E case by streamlining and efficiently managing PG&E's communication with the over 70 Participants asserting claims in Class 6 of approximately $1.7 billion, providing a central repository of information for use by PG&E and other parties in the PG&B case, successfuly negotiating and resolving the demands of the Participants leading to a confirmed plan of reorganization, lessening the burden on the professionals of PG&E and the PG&E Committee by providing assistance during the reorganization process to the Participants, creating novel solutions to the unique issues raised in PG&E's complex case and expediting a smooth transition through the bankruptcy process.

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CaIPX played a major and constructive role In resolving multinle oblectlons to PG&E's various apliicatlons under FRBP 2004 for production by CalPX of confidentlal and highly sensitive information conuceruing the Participants, Fees - $60,927.15 Task Code - "2004"'

On April 26,2001, PG&B filed the first of several sweeping requests for the production of document by CaIPX pursuant to FRBP 2004. PG&E later justified its burdensome request by arguing tht the reques information wa (a) critical to valuating the claims of the Participants for formulating and developing a plan of reorganization, (b) necessary to determine whether PG&E had a basis to assert setoffs, and (c) potentially going to provide PG&E with affirmative claims against the Participants. S page 13 of the "Notice of Motion and Motion forEntry of Order Requiring Production of Documents by the California Independent System Operator Corporation and California Power Exchange Corporation Pursuant to Federal Bankruptcy Rule 2004" filed on May 31,2 001 (Docket No. 752, the "May 2001 Request") attached to the Appendix as Exhibit "P." Furthermore, PG&E sought information fiom CalPX in part because it believed that the Participants and the ISO represented the largest block of PG&E's debt that was expected to be subject to objection or litigation. A, Thus, by PG&E's own statements, the Participants Committee's assistance in creating a framework for obtaining infonnation from CalPX was essential to PG&E's reorganization and substantially contributed to the PGAB case.

As PG&E recognized in the May 2001 Request, creating a procedure for producing information was complicated by the fact that CatPX was not authorized to disclose the information PG&E requested because of confidentiality provisions in the Tariffs and individual confidentiality agreements and that such information might be considered sensitive financial information by some of the Participants. S the May 2001 Request, p. 4. In fact, these concerns sparked an outpouring of demands on CaIPX by individual Participants not to disclose the requested information. &s Cohen All task codes refer to the nottions contained in Appendix ExhibIts "I" and "J", the Greenberg and Kaye Scholar billing detail, located next each individual time entry included in the Application. Time entries without task codes assigned to them are not included in the Application. ag Rebhup Decl., 12.

14 13 liAJ1W.,%-

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Carxs Rqa for nam of Submai Colibutn (Um

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III Decl., 1 14. While som Participants chose to file separate objections, most Participants turned to counsel for the Participants Committee to protect the rights and interests of all of the Paricipants.

PG&E has publicly ackbowledged that Marc Cohen and counsel for the Participants Committee played major and constructive role In resolving these concerns 9 S the PO&E Statement attached to the Appendix as Exhlbit 'CI' After extensive negotiations aid meet and confer sessions, te Participants Committee's cormsel helped create a procedure which resulted in the production of infonustion to PG&E while also protecting the confidentil and proprietary nare of the inibrnston. 3 Cohen Decl 11 5.

This procedur including severely restricting to disclosed infomation to Po&B personnel and establishing mechaniumn to protec confidential infinnation, was approved by the "Order Directing Production of Documents to Pacific Oss and Electric CompanyPursuant to Federal BankrptcyRule2004 AndProtetive OrderRespectng ConfidentlitofDocme" entered on hly 11, 2001 (Docket No. 1,446). Additionally, the Participants Committee successfully sought the right of the Participants to engage in reciprocal discovery fait PG&E which was approved in the "Order Directing Production of Documents to ISO/PX Market Participants Pursuant to Federal Bankruptcy Rule 2004 and Protective Order Respecting Confidentiality of Documents entered on Iuly 11, 2001 (Docket No. 1,44) as supplemented by the VOrderre Disclosure of Documents by Mwakt Participants to Key Personnel entered on Sqetember 21 2001 (Docket No. 2.249). This reciprocity alone saved the PG&B eshte thousands of dollars and numerous hours (not to mention the Court's time) in processing Individual Participates FIsP 2004 requests, undoubtedly making a substantial contribution to the PG&E case.

PG&E filed additional requests for the productionof doduents fiom CdIPX on October 11, 2001 and March 20,2002. The Participants Committee took an active role in ensuing that the Participants were protected during compliance with these additional requests, including filing a It should be noted that CatlPX by acting to protect the Participants, took the opposite approach as the ISO.

he ISO circulated a notice disclaiming responsibility for protecting the interests of the Participants, causing the inefficient response of each Participant nrecessaily fending for itselE The ISO's 'nportant Notice re Bankruptcy Claims Bar Date" is attached to the Appendix as Exhbit "G.

• SmCohen Decl., 114.

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3 i

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8 9

10 11 12 tal 13 0t 14 C) 15 17 19 20 21 22 23 24 25 26 27 28 limited opposition to PM&E's March 20,2002 request (Docket No. 5,793) on April 3, 2002. In particular, the Participants Committee's limited opposition ensured that the Participants retained the right to reciprocal information as ordered by the Court in the "Order Directing Production of Additional Docunents to ISO/PX Mairet Participants Pursuant to Bankruptcy Rule 2004 entered on April 25, 2002 (Docket No. 6, 105). Maintaining this reciprocity again spared the Court and PG&E from dealing with and avoided multiple requests made by individual Participants which wouId have needlessly proliferated proceedings and overburdened the parties and the Court.

In addition to filing pleadings and negotiating with PG&E, counsel for the Participants Cormnittee also spent a significant number of hours over the course of two years assisting Participants in complying with the Court's FRBP 2004 orders. Se Cohen Decl., 1 7. This assistance Included adtiing Participants with respect to the production and confidentiaity of information, reviewing produced materials, centrally organizing responses to the multiple document requests, and verfying compliance with the confidentiality and non-disclosure procedures. IL In fact, counsel for the Participants Committee acted as the focal point for compliance issues related to PG&E's FRBP 2004 requests, thereby esring the efficient sharing of infornation, preving resources of the PG&E estate and helping the overall administration of the PG&E case. aL Through these efforts and the reciprocal sharing of bnformation, the Participants Committee made a significant and substantial contribution to the PG&E case which was not duplicated by PO&Z the PG&E Conmittee, or their respective counsel 2.

Tlrmenh otCdnRIndneuLatiug PG&E's Plan avid Disclogire Statemnent.

ee dsd r thMe Portlienanh Committee substantIally contributed to the i&E ese.

Fees - S280,5.31 Task Code - "Plan or "DS" Kays Scholer's and the Reorganized CaIPX's significant efforts facilitated the approval of PG&E's disclosure statement and gained broad creditor support for the PG&E Plan, thereby substantially contributing to the PGI&E case Work under this category includes a significant number of hours spent on conference calls, in negotiation sessions, analysis of pleadings, legal and market research, expert consultation, participation at hearings and extensive meetings.

16 3313.WnD CITX's Req-Aft PIYN-d0fSuWWAal ConInUtIon aefrn rn3.

WFD

'CPIP)Vs Pepid for Pernud of Subft#W ContnWion Clsim

7 8

9 10 11 12 j

13 I

14 (fl15 16 17 18 19 20 21 22 23 24 25 26 27 28 In addition, counsel for the Participants Committee and the Reorganized CalPX filed the following important pleadings:

(i) Response of Participants Committee of CalPX to Disclosure Statement for Plan of Reorganation for PG&E and PG&E Corporation filed on November 27, 2001 (Docket No. 3,487);

(ii) Response of Participants Committee of CalPX to the Second Amended Disclosure Statement for Second Amended Plan of Reorganization for PGI&E and PG&E Corporation filed on March 19,2002 (Docket No. 5,280);

(iii) Response of Participants Coninittee of CslPX to the Disclosure Statement for the CPUC's Plan of Reorganiation for PG&E filed on May 3.2002 (Docket No. 6,307);

(iv) Participants Committee's Joinder to (l) Objection of Powerex Corp. to Plan of Reorganization Proposed by PG&E and PG&E Corporation, and (2) Objection of Avista Energy, Inc. to PG&E Plan of Reorganization filed on July 17,2002 (Docket No. 8,928);

(v) Participants Committee's Joinder to Objection of Powcrex Corp. to Plan of Reorganization Proposed by the CPUC filed on July 17, 2002 (Docket No. 8.929);

(vi) Stipulation to Modify Plan Proposed by the CPUC Regarding Treatment of Class 6 Claims filed on August 2,2002 (Docket No.

9,918);

(vii) Joinder of the Reorganized CalPX to Objection of Powerex Corp. to Disclosure Statement for Plan of Reorganization Proposed by PG&E, PG&B Corporation, and the PG&E Committee filed on July 23, 2003 (Docket No. 13,221); and (viii) Reorganized CaJPX's Joinder to Objections of Powerex Corp., Reliant Energy Services, hic., and Dynegy Power Marketing, inc. to Plan of Reornation for PG&B dated July 31, 2003 filed on September 2, 2003 (Docket No. 13,547).

See Cohen Decl., 119.

These pleadings, among other things: (a) challenged the lack of any explanation of how unsuccessfully disputed claims would be paid; (b) questioned how funds would be reserved for the Class 6 claims; (c) called for a disputed claims reserve or escrow account to hold the Class 6 funds; (d) objected to estimating the Class 6 claims for feasibility purposes at hundreds of millions of dollar lower than actually anticipated; (e) demanded specificity with respect to the timing of payment to Class 6 creditors; and (f) challenged the improper characterization Class 6 claims as unimpaired. As a result of these challenges and demands, PG&E's disclosure statement included 17 Wi

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3 4

5 6

7 8

9 10 11 12 13 14 25 16 27 18 19 20 21 23 24 25 26 27 28 more meaningful and complete disclosure and the proposed plan became feasible and thus, more likely to be confirmed.

In addition to improving the quality of disclosure and feasibility of the plan, the work d9ne by the Participants Committee's counsel and the Reorganized CalPX under this category culminated in the 'Stipulation Resolving Objections of Class 6 Objectors to Plan of Reorganization Under Chapter I I of the Bankruptcy Code for Pacific Gas & Electric Company Proposed by Pacific Gas and Electric Company, PG&E Comporation and the Official Committee of Unsecured Creditors Dated July 31. 2003" filed on November 13, 2003 (Docket No. 14,076, the "Class 6 Stipulation). The Class 6 Stipulation, heavily negotiated and orchestrated by Kaye Scholer, embodied a settlement between the more than 70 Participants and PG&E and resolved numerous objections to the PG&E Plan through PG&E's agreement to fund the disputed claim escrow with $1.6 billion. This settlement helped PG&E obtain broad creditor support of its plan, leading to the ultimate confirmation of the PG&E Plan and undoubtedly making a substantial contribution to the PG&B case.

3.

Kaye Scholer's work with a sUpclal subcommittee of the PG&E Comnitttee substantly contributed to the PG&E case by resolving issues with proposed versions of the P!G&E Plan.

Fees - S2,509.25 Task Code - "Sub" As part of the Participants Committee's efforts to assist PG&E in drafting a consensual plan, the Participants Committee formed a special PG&E subcommittee (the "CalPX Subcomminttee to help address Participant concerns. So Cohen Decl., 1 22. On numerous occasions, Kaye Scholar met with members of the PG&E Subcommittee of the PG&E Committee to develop and alyz these issues of concern via-a-vis PG&E's plan of reorganization.

dL Subsequently, Kayo Scholer and members of the CalPX Subcommittee signed confidentiality agreements with PG&E, obtained confidential infrmation from PG&E, and met with PG&E to provide input on PG&E's development of its plan. AId These efforts undoubtedly made a substantial contribution to the PG& ea se because they led to the Class 6 Stipulation and the eventual confirmation of PG&E's plan.

Is woos 41.M7D CaIPX's Requ-e for PiMf a oubsdl Camubfim Cam 2134.ME Wcsr Reqwg Ibr, arewtSuati Cwnubm ray

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4.

CAiPM. through the Partlcioants Committee. sbstantally contributed to the PG&E case by ehalnein* PG&E's motion to estimate Partiftnt cshm.

Fees -S24,26."0P Task Code - "Eat" As pa of PG&E's efforh to avoid adequately funding a disputed clains resenre for Class 6 claims (described In the discussion of PG&E's proposed pian and disclosure statement in Article V.2 above), PG&B filed a 'Motion for Order Detennining Procedures for Estimating Certain Claims for Pian Feasibility Purposes" on Mach 1, 2002 (Docket No. 5,008, the "Estimation Motion). The Estimation Motion requested, mog other things, the Court to allow PGJ&E to estimate Class 6 claims at S1.1 billion instead ofSl.7 billion (the rmount of theCalPX Prepetition Claim). In an effort to ensure ffir voting on the PG&E Plan the Participants Committee ied its 'Opposition of Official Committee of Participant Creditors of Califboia Power Exchange Corporation to PO&E's Motion for Order Determining Procedures for Estimating Certain Claims for Plan Feasibility Purposes" on March 22,2002 (Docket No. 5434). he Participants Committee objected to the Estimation Motion became, among other things: (a) the CsiPX Prepetition Claim was neither contingent nor unliquidated, (h) PG&E's potential refund was not susceptible to estimation, and (c) estimation was not warranted to avoid delay. Furthamore, the Participants Committee's opposition highlighted P&'s.ilgoal behind the Estimation Motion - to unfyirly lower the amount and thus, inadequately fomd, the disputed claims reserve.

Severl parties, inchlding CaTpXm, fiedjoinden to tbe Pwticipants Committee's pposition which ultimately defeated PO&E's effoits to estimate the Clas 6 claim d der-fund e aCla 6

disputed claim reserve. Negotiations then ensued, which eventually ensured adequate funding of the disputed claims reserve and the creation of a truly feasible plan thereby making a substantial contribution to the PG&E cae.

'11 111 111

.111 111 Id

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10 11 12 13 14 15 16 17 18 19 20 21 22 23 i4 25 26 27 28

5.

By assisting PG&E In the creation of Voting procedures to deal with the Clas 6 claims. CslPX. through the Participants Committee. snbstantisllv contributed tQ the fG&E Fees - S26,248.02 Task Code - "Voting" PG&E filed its 'Motion for Temporary Allwance of Claims of Certain Electricity Generstors and Disallowance of Claims of Califmhia Power Exchange hor Plan Voting Procedurcs" on May 13, 2002 (Docket No. 6444), seeking Court approval of a voting procedure for the Class 6 claims. On Jnme 3,2002, the Participants Committee filed its Memorandum of Points and Authorities of Official Cooumnittee of Participant Creditors of the California Power Exchange Corporation in Support of Detor's Motion for Temporary Allowance of Claims of Certain Electhicity Generators and Disallowance of Claims of California Power Exchange for Plan Voting Purposes" (Docket No. 6955) explaining the importance of this voting proe.

The Court approved the proposed voting scheme on June 17, 2002 (Docket No. 7332).

Although both the Participants Committee and PG&E worked to support the same goal, ie.

approval of the proposed voting procedures, their vWork was not duplicative. The Participants Conmmittee's work: (a) convinced CalPX not to oppose the voting procedures, (b) lessened the burden on PG&E and its counsel by not having to counter Participant and CdIPX objections, (c) was necessary to ensure Participant support, and (d) facilitated the Courts appoval of the proposed voting scheme. Te Participants Committee's work also substantially contributed to the PG&E case because it helped create and obtain approval of a fhir and equitable voting sheme for Class 6 claimants.

6.

Throngh Its connseL the Reorsaled CaIWX made a substantial contrlbntion to the PG&E cese by assistIng wIth the creation of the Class 6 escrow account Fees - 343,224.18 Task Code = "Escrow" The Reorganized CdIPX successfilly negotiated the terns of an escrow agreement for a Sl1.

billion escrow account (the "Escrw Agreement") with PG&E for the Class 6 claimants. During these negotiations, counsel for the Reorganized CalPX researched issues of general concem to all of 20

" 0 0 t mCoIP Xs fteq ues for P m mu t of Sub sian tki C enrd budoa asiM r n e w ut a P '

e u s s s r u a fS b t m m a n b ie 23130"WPD

-- Call'Xs Request fbi Parmm offtbff
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3 4

5 6

7 S

9 10 11 12 23 14 15 16 17 IS 19 20 21 22 23 24 25 26 27 28 the Class 6 claimants and helped assure the Class 6 claimants that their interests were protected.

Kayo Scholer's research and participation in negotiating the Escrow Agreement: (a) resulted in numerous changes to the Escrow Agreement, (b) ensded that the Escrow Agreement was duly authorized and enforceable, and (c) prevented individual Class 6 claimans from objecting to the Escrow Agreement. Kaye Scholer also appeared at the hearing on the Escrow Agreement on behalf of the Class 6 claimts, leading to the efficient and timely approval of the Escrow Agreement by the PG&E bankruptcy court on March 5,2004. So Cohen Decl., 127. Accordingly, the Reorganized C&IPX, through its counsel, made a significant and substantial contribution to the PG&E case which was not duplicated by PG&E, the PG&E Committee, or their respective counsel.

7.

The Reorganized CaIPX Is entitled to reimbursement rime spent prenarlug the Substantial ulalon Clalqa Fees - 578,761,60 Task Code - "503(b)(3)"

In the Ninth Circuit, a claimant is entitled to compensation for services related to preparing applications for compensation.

e In re N

oM In. 764 F.2d 655 (9th Cir. 1985)

(attorney allowed compensation for preparing a fee application because such preparation is an actual and necessary expense of the estate). Accordingly, CaIPX requests reimbursement of its attorneys fees in preparing the Application.

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10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1

VI.

CONCLU2SIO Based on the foregoing, CaIPX respectfully requests allowance of the Substantial Contribution Claim in tho amount of $516,911.51 as an administrative expense claim pursuant to

• § 503(bX3) and (4). CalPX reserves Its right to amend the Substantial Contribution Claim without prejudice to any rights of CaIPX under the Tariffs or other fedral or state law.

Dated: July a

2004 iCAYE SCHOLER LIP Marc S. Cohen Ashleigh A. Danker CorrineJIRabhun X

Marc S. Cohen Attorneys for Creditor, the Reorganized California Power Exchange Corporation 22 nu..wr COIPX' Reques for Pyanmt of Subd-sWi Comakmom Clam 21 E3.-.m

%;auL-9 K qued for tahncy of Subsmuia Cnutbon Clohn

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10 11 12 13 14 IS 16 17 Is 19 20 21 22 23 24 25 26 27 28 DECLARATION OF MARC S. COREN

1. Marc S. Cohen, declae:

1.

1em a member of Kaye ScholerU uP(Kay Scholea.

Prior to joiningKaye Scholer on July 9, 2001.1 wasi member of Greenberg Glusker, Fields, Cleran, Machtinger & Kinsella LLP

("Geenbergo. I am the barniptcy attorny primarily responsible for the representation of the Reorganized Califormia Power Exchange Corporation (the "Reorganized Debto or "CalPX") with respect to certain matters, including this matter. Prior to the Effective Date of CaIPX's Plan on April 1, 2003,1 was bankruptcy counsel to the Official Committee of Participant Creditors (the Participants Committee" both during my tenere at Greenberg and at Kaye Scholer. I supervised the other bankruptcy lawyers at Greenberg and Kaye Scholer working on these matters. I have personal knowledge of the fbts set forth herein end, if called as a witness, could and would testify competently thero. Capitalized tenns not otherwise defined herein have the same meanings ascrbed to them in the pleading to which this declation is attached

2.

In fAtheranc of its duties under the Tariffs and Participation Agreements. CadPX filed Claim No. 7411 on August 31,2001 in the mount of S1,729,688,561.23 (the "Original Prepedtion Claim") and Claim No. 132S2, amending the Original Cla, on June 6,2002 in the amount ofSl,778,979,543.96 (the "Amended Prepetition Claism and, collectively with the Original Prepetition Claim, the "Prepetition Claim") against PG&E clahnmin smong other things, amounts owed to CslPX, but ultimately due to the Participants, by PO&E based on its activities in CalPX's maret

3.

Notwithstanding CaIPX's right and duty to collect amounts owed by PG&B based on its activities in CadPX's markets, many Participants filed their own direct claims against PG&E -

collectivly duplicating a significant portion of the Prepetition Clim. This precaution on the part of the Paricipats, encouaged in pat by a notice from the ISO Infonming the Prticipants thatISO 23

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10 i11 12 13 14 15 16 17 is 19 20 21 22 23 24 25 26 27 2S would not be asserting claims on their behalf against PG&E"', created a number of dificult issues in the case including7 (i) questions regarding the proper party(ies) to vote the claims, (iI) how to accurately quantify the claims in Class 6 given the extensive duplication and the fact that the direct claims erroneously included unspecifled amounts owed by SCE", (iii) how to structure the disputed claims reserve for Class 6 claimants, (iv) how to handle settlements of Class 6 claims vis-a-vis FERC and tie PG&E and CsIPX bankruptcy estates, and (v) procedures for non-consensual resolution of Class 6 claims. Ihe case was further complicated by PG&E's efforts to attack the direct claims by naming CaPX - the convenient one-stop source of information - in several requests 1br production of sensitive documents underFderal Re of Bankruptcy Procedue

("FRBP) 2004 regarding the trading activities of the Participant

4.

As described in mor detil below, CalPX seeks payment of SS1491 1.5, its Substantial Contribution Clalm,'2 representing approximately 1,279 hours0.00323 days <br />0.0775 hours <br />4.613095e-4 weeks <br />1.061595e-4 months <br /> of service perfirmed by Greenberg and Kaye Scholer reprsenting, at various times, (i) the Participants Committee acting its own right or on behalf of CalPX or (ii) Reorganized CalPX during the period firm April 6,2001 through June 30,2004. CalPX believes that the work of Greenberg and Kayo Scholer described herein made a substantial contribution to PG&E's successful reorganization, benefitted numerous SeeExhibit "G" to the concurrently filed AppendirofErhibits in STppori of the Calfornia Poe Exchange Copron 's Appliationfor Payment of Professional Compention and Reibursment ofExpense under II US.C ff 503(b)(3) and (4) (-Appendix-).

CalPXs 'day shea and "day of' markets were blind pooled markets, with sellers receiving statements from CdPX showing the amounts they were owed, but not the identity of the purchaser. Since both PG&E and SC wvnre in default, the statements sellers received - and used as the basis of their direct claims - also Included unallocated amounts which SCE owed.

On January 21, 2004 CaIPX also filed a request for payment of an administrative claim,

• hich CalPX amended on May 26, 2004 (the "Administrative Claim") in the amount of S834,854.66, without prejudice to CalPX's right to include amounts incurred after March 31, 2004 or to amend the Prepedtlon Claim. Concurrentlyherwit, and pu nt to the Cout' direction at hearing on June 9, 2004, CalPX is also filing a motion for authority to amend the Prepetition Claim to liquidate the mount of its prepetition and postpetition costs, including attorneys fees, chargeable to PG&E which were initially asserted in the Prepettion Claim in anunliquidated amount 24 rnuaiWwmo catt'X'a Requm ro ftr amds of Sualisud.1conbation Calm fl f t4 w P CalPX s ReqUWs for PsJ mesl or Vbsturdal Contnbutimu CaIMIT

I 2

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17 18 19 20 21 22 23 24 25 26 27 28 parties in PG&E's case besides CalPX,. and was not duplicative of services rendered by PG&E's I

attorneys or the attorneys for PG&E's Official Committee of Unsecured Creditors (the "PG&E Committee").

5.

CadPX suspended the operation of its markets on January 31, 2001, and filed a voluntary petition under chapter II of the Bankruptcy Code on March 9, 2001. A month later, on April 6. 2001, PG&E filed its voluntary petition under chapter II of the Bankruptcy Code.

6.

On November 1, 2002, the Bankruptcy Court for the Central District of California (the "CalPX Bankruptcy Court') entered its order confirming the Official Committee of Participant Creditors' Fipfh Ameided Chapter II Plan as Modyfled (Revised October 1, 2002) (the "CalPX Plan'). Under the terms of the CalPX Plan, the CalPX Plan's Effective Date occurred on April 1, 2003, when PERC entered its order approving certain CalPX Plan provisions over wbich it has jurisdiction. At that time, the Participants Comnittee ceased to exist and Kaye Scholer assumed certain specific representation of the Reorganized CalPX, including for all matters in the PG&E case.

PG&E's Plan was confirmed pursuant to an entered by the Court on December 22,2003 and became effective on April 12, 2004.

7.

Three law firms have represented CalPX and its estate in connection with PG&B's bankruptcy case: Jeffer, Mangels, Butler & Marmaro LLP ("Jeffee"), Greenberg. and Kaye Scholar.

Jeffer was employed by CalPX as its bankruptcy counsel in CaIPX's own chapter 11 case.

Greenberg represented the Participants Committee' 3 in the early stages of CadPX's bankruptcy case and Kaye Scholer represented the Participants Committee thereafter. After the CalPX Plan became effective on April 1, 2003, Kaye Scholer began representing and continues to represent Reorganized CalPX as special counsel, including in connection with this matter. Due to the relatively small amount of fees attributable to Jeffer which would be applicable to the Application, CadPX has elected not to include any fees incurred by Jeffer in the Application.

8.

Although Jeffer was CaIPX's bankruptcy counsel, pursuant to an Order of the CalPX

'3 The Participants Committee was duly appointed by the Office of the United States Trustee for the Central District of California on March 26, 2001 for the purpose of representing the interests of net sellers in the CalPX markets.

25

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0I hi 4d Bankruptcy Court on entered July 13, 2001 (the "Litigation Order"), the Participants Commnittee was authorized to represent the CalPX bankruptcy estate in connection with certain litigation and claimrs, including the CalPX estate's claims against PG&E pursuant to the terns of the Litigation Stipulation between CalPX and the Participants Committee. The Litigation Order provids, "... Cal P/X be and it is authorized to pay the fees and costs incurred in the prosecution and defense of the Litigation [by the Participants Committee] from the general funds of this [CalPXI chapter II estate, provided, however, that such payment is without prejudice to (i) the rights, claims and demands of a party in interest to bring proceedings before this Court or any other court ofcompelent jursdidion to seek recovery of such payments for the benefit of the estate of Cal P/X from the Participants.....

(emphasis added) Copies of the Litigation Stipulation and Litigatiotr Order are attached as Exhibits "A" and "B," respectively, to the Appendix. The Application is being brought for the benefit of CalPX.

9.

Certain of the activities of the Participants Committee, acting on behalf of CalPX pursuant to the Litigation Stipulation and Litigation Order, are described in detail below. Primarily, these activities were to ensure that (i) PG&B's requests for production of doctuments by CaIPX were complied with in a manner which protected the confidentiality concerns of CaUPX and the Participants, and satisfied PG&E's needs, (ii) adequate provision was made in the PG&B Plan for resolution by FERC of the disputes relating to CalPX's Tariffs and markets, and for payment by PG&E of amounts directed by FERC to be distributed to or through CalPX and (iii) the proper roles of CalPX and its Participants under the Tariffs were taken into account in plan voting and other matters.

10.

Throughout the PG&E bankruptcy case, the Participants Committee also fiuctioned as a hiaison between PG&E and the Participants in resolving issues relating to their claims and the PG&E Plan. The vital benefits to PG&E of these efforts have been publicly rceized bv G&E ilrdfd B&, "Statement of Pacific Gas And Electric Company Regarding the Employment of Kaye Scholer LLP and BDO Seidman," filed August 8, 2001 in the CalPX chapter II case (the "PG&B Statement"), attached to the Appendix as ExhlbIt C:"

PG&E has communicated regularly with Mar Cohen, counsel 26 nlr.5w1o taIPXs I~qust f Psmen ofSubsazami csrubuton lai 23136WPD

-CAIMS Rqued fiw Paymwt ol'Subdands! Comibution Clafin 233WW.WMD CaD'X's RequeN for Psyrnmt of Substantial C

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-j0 0

hii to the Committee,... regarding developments in PG&E's case.

The Participants' Committee, through pleadings, court appearances, and its involvement in negotiations, played a major and constructive role in resolving multiple objections to PG&E's applications under Federal Bankruptcy Rule 2004 for on of docments by CsIPX and the California bideperdent SystemuOpaaltor.... In addition, the Particpants' Comnitbe worked with PGO&B to sponsor a telephonic meeting with membars of both the Participgnts' Committee and the Unoffidda Committee of Energy e lersst dscss infrmation rearin the progress of PG&E'a chapter 11 cae. PG&e and the Patcpnts' Comnilttee ae discussing the role that the Participnts' Conunittee can play In PO&E'a development andproonl of a chapter 11 plan The ParTcipsuts' Comnnittee serves a valuable role inboth ffire CaIPX and PG&EB cases by efihotively focusng the voices of the market pariiats, the sheer mag nitude of wvhose claims compels attntion by the respective dcbtors, but whose munerosity makes te rtoe efbte Participants' Committee essential in discussing the interet of market partiipants.

Accordingly. PG&B suports the current role of the

-Participants' Conmdittee in these cae....

11.

Tbe effots of the Pstlclptnts Commnittee were primaily through Greenberg and Raye Scholer, whose employment ascounsel for the Participants Cormuiffee was approved by tbe CalPX Banrgtc Court The legal fees Inure by Greenberg and Kayo Scholbr direty beneficial to the PG&E estate during the period of Apnil 6, 200t through May 31, 2004 are summaized and described below.

12.

As a result oftbeing mpboyed in the CaIPXC case both Greenberg's and Kayo Scholar's fees and expenses through March 30, 2003 wnre thnoroghly reviewed and approved byr fmsal yn5dr of the CadPX Bankruptcy Coumt sl~er determining that those expenses were reasonable, actual and neceDssay in compliance with the standards oft 11 U.S.C. §§ 327, 330 and 1103. Thaes fees and expenses were paid out of the CaIPX estate puruat to seea orders of the CaIPX BankruptcyCourt. 4 The fees andexpenses oftKayo Scholar from April 1, 2003 to May 31, 2004 The Bankruptcy Court for the Central District of Callfornia in the CalPX case apoved the final fee applications of Grenerg and Kayo Scholar, including fees and expenses incmumud in connection wvith the PG&kE case sought berei, andt ordered CdIPX to pay those expenses.

CalPX obeyed those Court ordeu and paid the fees. The order aproing the final compestion for Greenberg's fees and expenses entered on June 20,.2003, is attached to the 27 the 2

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9 10 11 i

12 IX Li IJ 13 0I 14 O 15 II 16 v

17 18 19 20 21 22 23 24 25 26 27 28 were billed in accordance with the same procedures as those approved by the CaMX Bankuptcy Court Thus, all of the fees and expenses incutred in substantially contributing to the PG&E case were actua, reasonable and necesssry. Accordingly, reimbursement of these fees and expenses by PG&E to CdPX is entitled to priority treatment pursuant to II U.S.C. §§ 503(bX3)(D) and 503(bX4).

13.

CaIPX ptared a maor and constructive role in resolving multitle obections to PO&B's various alicaiona under FRBP 2004 for production by CalPX of confidential and highlt sensitive information cencernine the Patlicignnl.

Fees - S60,927.15 Task Code - 92004" On April 26,2001, PG&E filed the first of several sweeping requests fbr the production of documents by CadPX pursuant to FROP 2004. PGt&E laterjustified its burdensome requests by arguing that the requested information was: (a) critical to evaluating th claims of the Participants for formulating and developing a plan of reorganization, (b) necessary to determine whether PG&E had a basis to assert setoffs, and (c) potentially going to provide PG&E with affirmative claims against the Participants. Seepage 13 of the 'Notice of Motion and Motion for Entry of Order Reqnring Production of Documents by the Califinmia Independent System Operator Corporation and Calfia Power Exchange Corporationursunt to Pederd Bankruptcy Rule 2004" Sled on May 31,2001 (Docket No. 752, te IMay 2001 Requesr) attached to the Appendix as Exhibit 6F." Furthernore, PO&E sought informatioinfomn CaIPX in pwt because it believed that theParticipahts nd the ISO represented the largest block ofPGt&E's debt that was expected to be subject to objection or liigation.

14.

As PG&E recognized in the May 2001 Request, creating a procedure for producing information was complicated by the fact that CaIPX was not anthorizto disclose the infrmation PG&E requested because of confidentiality provisions in the Tariffs and individual confidentialty u

(_continued)

Appendix as Exhibit 9)." The 'Order re Third and Final Application of Kaye Scholar LIP for Allowance and Payment of Compensation and Reimbursement of Expenses" entered on June 13, 2003, is attached to the Appendix as Exhibit "K' 28 231%M~.WPD nIN,45.w~o C st X 's R qeg

" ft r a m uof sub sa n Wa C O W & MutoO Claim f3 5 9 W OC I X a sq e tofy e r t u s an i t C o r b lo l i 2SINW.WPID cawrs Requan for Krnwersubstswai contnindion claim

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10 11 12 iJ 2j 13 01: 14 U) is t4 16 V

17 18 19 20 21 22 23 24 25 26 27 28 agreements and that such information might be considered sensitive financial information by some of the Participants. S the May 2001 Request, p. 4. In fact, these concerns sparked an outpouring of demuands on CalPX by individual Participants not to disclose the requested informatior. While some Participants chose to file separate objections, most Participants turned to counsel for the Participants Committee to protect the rights and intests of all of the Participants. PG&E has publicly acknowledged that Greenbrg, Kays Scholer, and I played a major and constructive role in resolving these concerns." S. the PG&B Statement attached to the Appendix as Exhibit "C."

15.

After extensive negotiations and meet and confer sessions, I and other members of my finn helped create a procedure which resulted in the production of information to PG&E while also protecting the confidential and proprietary nature of the information. This procedure, including severely restricting access to disclosed informuation to PG&B pesonnl and establishing mechanisms to protect confidential information, was approved by the "Order Directing Production of Documents to Pacific Gas and Electric Company Pursuant to Federal Bankruptcy Rule 2004 and Protective Order Respecting Confidentiality of Documents" entered on July 11. 2001 (Docket No. 1,446).

Additionally, the Participants Committee successffufly sought the right of the Participants to engage in reciprocal discovery from PG&E which was approved in the "Order Directing Production of Documents to ISOIPX Market Participants Pursuant to Federal Bankruptcy Rule 2004 and Protective Order Respectirng Confidentialityof Documents" entered on July 11,2001 (Docket No. 1,448), as supplemented by the "Order re Disclosure of Documents by Market Participants to Key Personnel" entered on September21. 2001 (Docket No. 2,249). It is mybelief that this reciprocity alone saved the PG&E estate thousands of dollars and numerous hours (not to mention the Court's time) in processing individual Participant's FRBP 2004 requests undoubtedly making a substantial contribution to the PG&E case.

16.

PG&E filed additional requests for the production of documents from CaIPX on is It should be nored that CalPX, by acting to protect the Participants, took the opposite approach as the ISO. The ISO circulated a notice disclaiming responsibility for protecting the interests of the Participants, causing the inefficient response of each Participant necessarily fending for Itself The ISO's "Important Notice re Bankruptcy Claims Bar Date" is attached to the Appendix as Exibit 'G."

29 1

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10 11 12 Id

.il 13 0I 14 0(1) 15 Id>-

16 V

17 19 20 21 22 23 24 25 26 27 28 October 11, 2001 and March 20,2002. The Participants Committee took an active role in ensuring that the Participants were protected during compliance with these additional requests, including filing a limited opposition to PG&E's March 20,2002 request (Docket No. 5,793) on April 3,2002.

In particular, the Participants Committee's limited opposition ensured that the Participants retained the right to reciprocal information as ordered by the Court in the "Order Directing Production of Additional Documents to ISO/PX Market Participants Pursuant to Bankruptcy Rule 2004" entered on April 25,2002 (Docket No. 6,105). In my opinion, matainig this reciprocity agnspared the Cout and PG&E from dealing with and avoided multiple requests made by individual Par which would have needlessly proliferated proceedings and overburdened the parties and the Court.

17.

In addition to filing pleadings and negotiating with PG&E, I and other Kaye Scholar attomeys acting under my supervision also spent a significant number of hours over tho course of two years assisting Participants in complying with the Court's FRBP 2004 orders This asdistnce included advising Participants with respect to the production and confidentiality of information, reviewing produced materials, centrally organizing responses to the multiple document requests, and verifying compliance with the confidentiality and non-disclosure procedures. In fact, I acted as the focal point for compliance issues related to PG&B's FRBP 2004 requests, thereby ensuring the efficient sharing of information, preserving resources of the PG&E estate and helping the overall administration of the PG&E case. Through these efforts and the reciprocal sharing of information, the Participants Committee made a significant and substantial contribution to the PG&B case which was not duplicated by PG&E, the PG&E Committee, or their respective counseL

18.

Through uleadlugs and negotlatlig PG&E's Plan and Disclosure Statement.

counsel for the Participants Committee substantilly contributed to the PG&E cse" Fees - 5280,95.31 Task Code - 'Plan" or IDS' Kaye Scholer's and the Reorganized CalPX's significant efforts facilitated the approval of PG&B's disclosure statement and gained broad creditor support for the PG&E Plan, thereby substantially contributing to the PG&E case. Work under this category includes a significant number of hours spent on conference calls, in negotiation sessions, analysis of pleadings, legal and market research, expert consultation, participation at hearings and extensive meetings.

30 n31"M/ wo 1.

ma o augms -. im atCli 21M4.Wn

-A neq W-- ray"u W ZuD-cnMuia %AUMORcu 30 23M10WIS CdPX's Request for Payawat of Subgantul Caetibutioua C1i

-J0 U(n)

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10 11 12 13 14 15 16 17 28 19 20 21 22 23:.

24 25 26 27 28

19.

In addition, Kaye Scholar filed the following inmpotant pleadings:

(i) Response of Particpants Conunittec of CatPX to Disclosure Statement for Plan of Reorganization for PG&E and PG&E Corporation filed on November 27, 2001 (Docket No. 3,487);

(it) Re ponse of Participants Committee of C&IPX to the Second Amended Disclosure Statement for Second Amended Plan of Reorganization for PG&E and PG&E Corporation filed on Mach 19,2002 (Docket No. 5,280);

(idi) Response of Particpants Committee of CsIPX to the Disclosure Statement for the CPUC's Plan of Reorganization for PG&B filed on May 3, 2002 (Docket No. 6,30Th (iv) Participants Committee's Joinder to (1) Objection of Powerex Corp. to Plan of Reoanization Proposed by PG&E and PG&E Corporation, and (2) Objection of Avista Energy, Inc. to PG&E Plan of Reorganization filed on July 17, 2002 (Docket No. 8,928);

(Y) Participants Coumnittee's Joinder to Objection of Powerex Corp. to Plan of Reorganization Proposed by the CPUC filed on July 17,2002 (Docket No. 8,929);

(vi) Stipulation to Modify Plan Proposed by the CPUC Regarding Trestnent of Clas 6 Claims filed on August 2,2002 (Docket No.

9,918);

(vii) Joinder of the Reorganized CsIPX to Objection of Powerex Corp. to Disclosure Statement for Plan of Reorganization Proposed by PG&E, PG&E Corporation. and the PG&B Commnittee filed on July 23, 2003 (Docket No. 13,221); and (viii) Reorganized CaIPX's Joinder to Oljections of Powrex Corp., Reliant Energy Services, bnc, and Dynegy Power Marketing, Inc. to Plan of Reorganization for PG&E dated July 31, 2003 filed on September 2,2003 (Docket No. 13,547).

20.

These pleadin, among other thWi (a) challenged the lack of ny explanation of how unsucessfully disputed claims would be paid; (b) questioned how funda would be reserved for the Cla 6 claims; (c) called for a disputed claims resrve or escrow account to hold the Class 6 fnnds, (d) objected to estimating the Class 6 claims fot feasibility purposes at hundreds ofnmilllons of dollars lower thn actually anticped: (e) demanded specificity with respect to the timing of paymeat to Class 6 creditors; and (f) challenged the impoper characterization Class 6 claims as unimpaired. As nrest of these chalenges and demnds, PG&E's disc re stament included more meaningNil and complete disclosure and the proposed plan became fbasible and thus, more 4.

2 3

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° 14 t.)

U) 15 16 Y 17 18 19 20 21 22 23 24 25 26 27 28 likely to be confinoed.

21.

In addition to improving the quality of disclosure and feasibility of the plan, the work done by Kaye Scholer under this category culminated in the "Stipulation Resolving Objections of Class 6 Objectors to Plan of Reorganization Under Chapter 11 of the Bankruptcy Code for Pacific Gas & Electric Company Proposed by Pacific Gas and Electric Company, PG&E Corporation and the Official Committee of Unsecured Creditors Dated July31. 2003" filed on November 13, 2003 (Docket No. 14,076, the 'Class 6 Stipulation). The Cla 6 Stipulation, heavily negotiated and orchestrated by myself embodied a settlement between the more than 70 Participants and PG&B and resolved numerous objections to the PG&E Plan throigh PG&E's agreement to fhud the disputed claims escrow with $1.6 billion. This settlement helped PG&E obtain broad creditor support of its plan, leading to the ultimate confirmation of the PG&E Plan and undoubtedly making a substantial contribution to the PG&B case.

22.

Kave Seholer's work with

• sneteal smb ommIttee of the PG&E Commfttee nbstantdl~lv contrlbnterd to the PG&E ease by resolfing Issues with proposed versions of the P&E Pgn.

Fees - S2,509.25 Task Code - "Sub"

-A As part of the Participants Committee's efforts to assist PG&E in drafting a onsensuiplan.

the Participants Committee formed a speCal P3&E subcommittee (the 'CalPX Subcommittee" to help address Participant concerns. On numerous occasions, I met with members of the PG&el Subcommittee of the PGCE Committee to develop and analyze these issues of concern via-a-via' PG&B's plan of reorganization. Subsequently, I and members of the CalPX Subcommittee signed confidentiality agreements with PG&E, obtained confidential informafson from PG&B, and met with PG&E to provide input on PG&E's development of its plan. These efAdorts undoubtedly made a substantial contnbution to the PG&E case because they led to the Class 6 Stipulation and the eventual confirmation of PG&E's plan.

23.

CsIPX. thronab the Particiants Committee. substbidtaly contributed to the rG&R! case by ch llenatw PG&E's motion to estbnate Participant claims.

Fees - S24,286.00 Task Code -

Eart" 31 32 m ueo wMM C sPw rs R equet for ?arm en or Su at-nstutll Ctm mibstion C hain,2164.

?

a T e u s t mmb fS bt n~ l C aib te t

231M.Wro C
Wrs It" for Psymbat ofSubdaiii at CwtntKnion Claim

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)-

16 17 18 19 20 21 22 23 24 25 26 27 28 As part of PG&E's efforts to avoid adequately funding a disputed claims reserve for Class 6 claims (described in the discussion of PG&E's proposed plan and disclosure statement in Article V.2 above). PG&E filed a "Motion for Order Determining Procedures for Estimating Certain Claims for Plan Feasibility Purposes" on March 1, 2002 (Docket No. 5,008, the "Estimation Motion'). The Estimation Motion requested, among other things, the Court to allow PG&E to estimste Class 6 claims at S 1.1 billion instead of S1.7 billion (the amount of the CalPX Prepetition Claim). In an effort to ensure fair voting on the PG&E Plan, the Participants Committee filed its "Opposition of Official Coirnittee of Participant Creditors of California Power Exchange Corporation to PG&E's Motion for Order Determining Procedures for Estimating Certain Claims for Plan Feasibility Pnrposes on March 22, 2002 (Docket No. 5434). The Participants Committee objected to the Estimation Motion because, among other things: (a) the CaIPX Prepetition Claim was neither contingent nor uniiquidate, (b) PG&E's potential refund was not susceptible to estimation, and (c) estimation was not warranted to avoid delay. Furthermore, the Participants Committee's opposition highlighted PG&E's real goal behind the Estimation Motion - to unfairly lower the amount and thus, inadequately fund, the disputed claims resve.

24.

Several parties, including CalPX, filed joinders to the Participants Committee's opposition which ultimately defeated PG&E's efforts to estimate the Class 6 claims and under-fund the Class 6 disputed claims reserve. Negotiations then ensued, which eventually ensured adequate funding of the disputed claims reserve and the creation of a truly feasible plan thereby making a substantial contribution to the PG&E case.

25.

BY assistlig PG&E In the creation of voting grocedures to deal with the Class 6 claims. CaiPX. through the Participanta Courruitt substantially contributed to tie PG&E Fees - $26,248.02 Task Code - 'Voting" PG&E filed its "Motion for Temporary Allowance of Claims of Certain Electricity Generators and Disallowance of Claims of California Power Exchange for Plan Voting Procedures" on May 13, 2002 (Docket No. 6444), seeking Court approval of a voting procedure for the Class 6 claims. On June 3, 2002, the Participants Committee filed its "Memorandum of Points and 33 7

8 9

10 11 12 h

13

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17 18 19 20 21 22 23 24 25 26 27 28 Authorities of Official Committee of Participant Creditors of the California Power Exchange Corporation in Support of Debtors Motion for Temporary Allowance of Claims of Certain Electricity Generators and Disallowance of Claims of California Power Exchange for Plan Voting Purpose? (Docket No. 6955) explaining the importance of this voting procedure. The Court approved the proposed voting scheme on June 17, 2002 (Docket No. 7332).

26.

Although both the Participants Committee and PG&E worked to support the same goal, i.e. approval of the proposed voting procedures, their work was not duplicative. The Participants Committee's work: (a) convinced CaIPX not to oppose the voting procedures, (b) lessened the burden on PG&E and its counsel by not having to counter Participant and CalPX objections, (c) was necessary to ensure Participant support, and (d) facilitated the Court's appmval of the proposed voting scheme. The Participants Committee's work also substantially contributed to the PG&E case because it helped create and obtain approval of a fair and equitable voting scheme for Class 6 claimants.

27.

Througl' Its counsel, the Reorganized CalPX made a substantlal contributlon to the PG&E case by assistiU with the creation of the Class 6 escrow aecouut Fees - $43,224.18 Task Code - "Escrow" The Reorganized CalPX successfully negotiated the terms of an escrow agreement for a Sl.6 billion escrow account (the "Escrow Agnrement") with PG&E for the Class 6 claimants. During these negotiations, Kaye Scholer researched issues of general concern to all of the Class 6 claimants and helped assure the Class 6 cliriants that their interests were protected. Kaye Scholer's reseach and participation in negotiating the Escrow Agreement. (a) resulted in numerous changes to the Escrow Agreement, (b) ensured that the Escrow Agreement was duly authorized and cnforceable, and (c) prevented individual Class 6 claimants from objecting to the Escrow Agrerncen I also appeared at the hearing on the Escrow Agreement on behalf of the Class 6 claimants leading to the efficient and timely approval of the Escrow Agreement by the PG&E bankruptcy court on March 5, 2004. Accordingly, the Reorganized CaIPX, through its counsel, made a significant and substantial contribution to the PG&E case which was not duplicated by PG&E, the PG&E Committee, or ther respective counsel.

34 l3 -3URWPD)

CAM's Requaia for Paymou offlub"tial Coaubutim Claim 2uw".VIM CalPX-, Requed for Paymaentof!l
tlBti&l C-Mbetion Claim

28.

The Ileorgurtiz CIlPX Is entitled to reimburaememt for tlyte sent p renarlig the Substontal Contrnton Ciatm.

Fees -

78,761,60 Task Code - "503(b)(3)"

Pursant to applicable case law, CalPX requests rnimbuenewt of its attorneys fees in preparing the Application.

I declare under penalty of peruy under the laws of the United States of America that te foregoing is trte and coaecL DaE: July'X, 2004 Marc S. Cohen J

0 U)

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10 21 12 13 14 15 16 17 28 19 20 21 22 23 24 25 26 27 28 DECLARATION OF CORRINE J REKBN L Conine J. Rebhua, declare.

1.

I sn an associate with the law firm of Kaye Scholar LLP CKaye Scholer"), counsel for the Reorganized California Power Exchange Corporation ("CaIPX") and, prior to April 1, 2003, counsel to the Official Connitbte of Participant Creditors of the California Power Exchange Corporation (the "Participants Conmmittee). I have personal knowledge of the fhct set forth herein and, if called as a witness, could and would testify competently thereto. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the pleading to which this declaration is attached.

2.

The work of Greenberg and Kaye Scholar which substantially contributed to the PG&E case flkis into the following seven categories:

1. FRBP 2004 Document Production Requests to CNIPX byPO&E

2. PG&E PlianDS

3. Work with the PG&E Subcommittee of the PG&E Committee

4. Opposition to PG&E's Motion to Estimate Class 6 claims S. Voting Procedures for Class 6 claims

6. Procedines for the Class 6 disputed claims reserve aNW escrow

7. Preparation of the Application Total Ee Incurred S60,927.15 S280,955.31 Zi S2,509.25

.;I S24,286.00

• S-S26,248.02 S43,224.18

,z S78,761.60 K 5516,911.51 TMe detailed billing statements for Greenberg and Kayi Scholar are attached to the Appendix as Exhlbits T and 7.'," respectively. Next to each time entry included in the Application is the code fbr the task category into which such entry was assigned in compiling the Application imnne 36 35 nUM4W5o CaIPXs ReqestO r Parremt of Subtantial Ccntbli Caim 22l34945.wI'o CsIPX.5 Request tsr Ps)¶nerrt of Substantial Ctnbittur Claim nwmm CalmXs Rato for t~n of Subsntmfl CmntnaN" Chim

t)

(IC W~

2 3

4 6

7 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 entries without task codes assigned to them are not included in the Application. I personally assigned the task codes to each of the time entries which are contained in Appendix Exhibits "I" and ".", with the exception of the task codes assigned to Kaye Scholers time entries reported during June, 2004 which were assigned by Ashleigh Danker and Marc Cohen of Kaye Scholer, and supervised the compilation of the summary contained in this paragraph.

3.

All of the amounts listed in the summary which were incurred prior to April 1. 2003 were: (a) incurred by proessionals (Greenberg and Kaye Scholar) whose employment was approved by the CaLPX Bankruptcy Court pursuant to 11 U.S.C. f§ 327 and 1103; (b) have been approved as reasonable, actual and necessary by the CalPX Bankruptcy Court; and (c) have been paid pursuant to 11 U.S.C. § 330 by final order of the CalPX Bankuptcy Cour The amounts incurred after April 1, 2003 were billed in accordance with the same standards a those approved as reasonable, actual and necessary by the CalPX Bankruptcy Court.

4.

To the best of my knowledge, information and belief, the time entries which I have identified in Appendix Exhibits "I" and "J" for inclusion in the Application and assigned task codes include only those for services directly related to the PG&B chapter 11 case, and do not include costs incurred in connection with other proceedings such as those before FERC, the CaJPX bankruptcy case, or in state and federal court litigation, which were directly or indirectly related to PG&E.

5.

Biographies of each of the Greenberg and Kaye Scholar professionals and paraprofessionals whose serviees comprise the Substantial Contribution Claim are attached to the Appendix as Exhibit "IL" I declare under penalty of pequry under the laws of the United States of America that the 2

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I 14 (f

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17 18 19 20 21 22 23 24 25 26 27 28 1, Michael Schenk. declare:

I I am a paraprofessional employed by Kaye Scholer LLP ("Kaye Scholer') I have personal knowledge of the facts set forth herein and, if called as a witness, could and would testify competently thereto. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the pleading to which this declaration is attached

2.

At the request of Conine J Rebhun of Kaye Scholar, I calculated the total hours of service performed by Greenberg by adding the time entries contained in Appendix Exhibit 9'"

which are marked with task codes for inclusion in the Application and detenrined that 102.6 honrs of service were perfbnead by Qrcanberg.

3 Also at the request of Ms. Rcbhun and Ashleigh Danker of Kayo Scholar, I calculated the total hours of service performed by Kaye Scholar by adding the time entries contained in Appendix Exhibit "JO which are marked with task codes for inclusion in the Application and determined that 1,176.558 hours0.00646 days <br />0.155 hours <br />9.22619e-4 weeks <br />2.12319e-4 months <br />" of service were performed by Kayo Scholar.

I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct.

Dated: July L 2004 2bc AelSh-1 DECLARATION OF MIC}AEL SCHENK foregoing is true and correct Dated: July 2I12004 Kaye Scholer's professionals and paraprofessionals bill thdir time in five minuts incremeItL However, Kaye Scholar's billing softwarc converts those entries into comparable increments representing hundredths of an hour - thereby causing certain time entries to be broken down into thousandths of an hour.

37 38 X160OWD calwa Rcqueor for nenat of Subtnial Ccinioa Cbaim

..AI C"IPX' RtW fr enymt ofSubdmil Cwn Claim t