National Energy & Gas Transmission, Inc.

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
IN RE: 	:
:
NATIONAL ENERGY & GAS 	: 	Case Nos. 03-30459PM
TRANSMISSION 	: 	03-30461 through 03-30464
f/k/a PGE&E NATIONAL ENERGY, 	: 	and 03-30486 through 03-30687
INC., et al., 	: 	Chapter 11
: 	(Jointly Administered under
Debtors 	: 	Case No. 03-30459PM)
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MEMORANDUM OF DECISION
Debtors, National Energy & Gas Transmission, Inc. (also “NEGT”) and NEGT Energy
Trading - Power L.P., f/k/a PG&E Energy Trading - Power L.P. (also “ET Power”), filed a
Limited Objection to the Motion filed by Southaven Power, LLC (“Southaven”), Docket Entry
No. 3955, to confirm the final award entered in the proceeding before the American Arbitration
Association on February 1, 2007, entitled In the Matter of Arbitration Among PG&E Energy
Trading-Power, L.P., Claimant, Counter-Respondent, and Southaven Power, LLC, Respondent,
Counter-Claimant Claimant, and NEGT Energy Trading-Power, L.P., Respondent, Case No. 16-
198 00206-03.
The arbitrators awarded Southhaven from ET Power the sum of $395,513,731.15,
consisting of a termination amount of $394,792,000.00 and $721,731.15 in arbitration fees and
costs awarded. Southaven was awarded $176,209,004.00 from NEGT under the Guaranty,
“which amount is included within the amount of award from ET Power, not in addition to it.”
As the claim filed by Southaven against NEGT was in the sum of $176,209,004.00, the result of
the arbitration was to allow that claim in its entirety.
Date signed March 26, 2007
Entered: March 28, 2007 Case 03-30459 Doc 3983 Filed 03/28/07 Page 1 of 3

The dispute before now this court involves Southaven’s effort to increase the amount
allowed on its January 6, 2004, claim against NEGT, to the extent that a certain loan made by ET
Power to Southaven described as the Subordinated Loan is repaid in any part to ET Power. This
issue appears to have been raised initially in the damage phase of the arbitration proceeding.
The arbitrators declined to address this issue. Paragraph II.L. of the award states:
L. Future Behavior Under the Guarantee
Southaven has requested that the Panel also hold that if the Required
Guaranty Amount increases in the future based on events that occur after the
arbitration, that NEGT would be liable for an added amount under the Guarantee.
TR 8800-04. We decline so to proceed ahead of the voluntary dispute resolution
procedures to which Southaven agreed in the CSA. In CSA § 29.1(c), the parties
created a procedure to attempt to resolve any disputes “promptly, equitably and in
a good faith manner” before they can resort to arbitration. It is only if disputes
fail to be resolved under CSA § 20.1 within 30 days that a party can send the
other side a notice of intent to arbitrate.
If Southaven’s request for this ruling is viewed as arising under the CSA,
it would be premature for us to decide a dispute when the occasion to possibly
increase the Required Guaranty Amount has not arisen, Southaven has not made
demand upon ET, the parties have not attempted the voluntary procedures
mandated in § 20.1(c) of the CSA, and no proper notice of arbitration has been
given on that issue. If such a request is viewed as proceeding only under the
Guarantee, that agreement does not have an arbitration provision, but envisions
suit in state or federal court in New York State. R 185, § 10(d). In either event,
we do not believe that this is the appropriate time and place to resolve the
possibility of such a future dispute.
The parties’ rights are subject to the Stipulation filed in this case. Docket Entry No.
2018. The Stipulation provides for the resolution of the claims filed by Southaven in accordance
with the Rules of the American Arbitration Association pursuant to § 20.2 of the June 1, 2000
agreement among the parties. The Stipulation was approved by Order of court entered
September 27, 2004. The Stipulation provided in part:
7. Southaven, Caledonia and GECC continue to reserve their rights to
amend and supplement their Claims and/or to file additional proofs of claim for
additional proofs of claim if they should deem it necessary and appropriate for
any reason, including without limitation to provide an updated statement of
amount due or for any other purpose for which a proof of claim filed in this case
may be amended.
Case 03-30459 Doc 3983 Filed 03/28/07 Page 2 of 3

10. This Stipulation constitutes the entire agreement between the Parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, written and oral, between the Parties with respect
to the subject matter hereof. All promises, inducements, or statements of
intention made by the Parties with respect to the subject matter hereof are
embodied in this Stipulation.
Southaven never amended its proof of claim. Moreover, at paragraph 3 of their Limited
Objection, Debtors point out six separate occasions in the course of this matter where Southaven
acknowledged the maximum amount of its Guaranty claim was $176,209,004.00, the amount
allowed in the arbitration.
The Stipulation committed all matters existing between these parties to the arbitrators.
The arbitrators did their job. The court will enter an order confirming the arbitration award.
Nothing further remains to be done with respect to the Guaranty claim. It has been allowed in
full.
cc:
Matthew A. Feldman/Shelley C. Chapman, Esq., Willkie Farr & Gallagher, LLP
787 Seventh Avenue, New York, NY 10019-6099
Martin T. Fletcher/Paul M. Nussbaum, Dennis J. Shaffer, Esq., Whiteford Taylor & Preston
Seven Saint Paul Street, Suite 1400, Baltimore, MD 21202
Deborah H. Devan, Esq., Neuberger Quinn Gielen Rubin & Gibber
One South Street, Baltimore, MD 21202-3282
Benjamin W. Hawfield, Esq., Moore & Van Allen
100 N. Tryon Street, #4700, Charlotte, NC 28202-4003
Henry P. Baer Jr., Esq., Latham & Watkins, 885 Third Avenue, #1000, New York NY 10022
United States Trustee, 6305 Ivy Lane, #600, Greenbelt MD 20770
End of Memorandum
Case 03-30459 Doc 3983 Filed 03/28/07 Page 3 of 3