QUESTION: John, I have reviewed the contracts (Asset Agreement and the GPA) and here are my= thoughts regarding your request. In short, the agreements do not specific= ally address capacity being needed by third parties. ENA does have a right= to all of their capacity free and clear of all encumbrances. Last year we= did discuss this issue (the interruptible VNG customers wanting to take re= leases of VNG capacity), but at the time Jim Scabareti indicated that he wa= s going to play hard ball with his interruptible shippers in year 2 (i.e. n= ow), since VNG was really getting tight on assets due year-on-year load gro= wth and no new capacity additions. He gave the assets up last year because= he did not want to have any noise at the VSCC when the VSCC was considerin= g the affiliate relationship between VNG and AGLES. However, as I reflect = on it now, it seems to me that VNG (aka Sequent) really needs to weigh heav= ily the decision to release any assets to third parties through this winter= (interruptible or otherwise). At a minimum, any releases should be done r= ecallable based on weather forecasts based on some HDD amount. The profit = sharing provision is the same for years 1 and 2. My suggestion is that you do the following: (1) remind Sequent about the de= liverability issue facing VNG and (2) develop a plan with Sequent for talki= ng to Customers, so as to minimize any VSCC risk since the VSCC thinks Sequ= ent is VNG's asset manager. =20 Mark Breese is back in the office tomorrow and I will confer with him as we= ll. You might seek Jeff Hodge's thoughts as well. If you have any questio= ns, please ask. Regards,
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ANS: VNG transportation capacity

QUESTION: Dear Mr. Lay, I know you are extremely busy so I will be quick: Thank you for being everything I have always known you to be. Diana Peters P.S. Please take care and I will remember you in my prayers
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ANS: CONFIDENTIAL

QUESTION: Lisa and Liz: Each of Great Bay, El Paso Electric and LG&E Power have issued LC's to us that have has a drawing condition the fact that they have failed to provide alternate security and less than 20 days are left before expiration. Another drawing condition is that a "default" has occurred under the EEI. The LG&E and the Great Bay EEI master have a default that occurs if a party fails to establish, maintain, extend or increase Performance Assurance when required pursuant to the Agreement. The definition of Letter of Credit in each Master does NOT have language to the effect that it has to be acceptable to us. In the El Paso Master the default is based on a party's failure to meet the collateral requirements in Article 8. In that Master, the LC must be acceptable to us. Do you think that we can argue that the failure to renew the LC is a "default" that would permit us to terminate and draw?
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ANS:
EEI Qusetion