Q: Meet Orlando Sanchez at the HBS Breakfast Club! Dear HBS Alumni: Join the Harvard Business School Club of Houston Breakfast Club at its fall kickoff meeting on Thursday, September 6, 2001 at 7:00 am at the River Oaks Country Club. Orlando Sanchez, Houston City Council member and November mayoral candidate will be the guest speaker. The HBS Breakfast Club started last November and was a tremendous success. It provides alumni the opportunity to network, establish friendships and discuss topics in an informal setting. Topics are determined at the first meeting of each session and speakers are invited to one or two breakfasts during the session. The Club meets the first and third Thursday each month from 7:00 to 8:30 am at the River Oaks Country Club. This year the Breakfast Club will be expanded to have fall, spring and summer sessions. The cost for the fall and spring sessions is $150 each and the cost for the summer session is $60. Non-Breakfast Club members and guests can attend for $23. If you are not already a Breakfast Club member come and see for yourself why this is such a great program. The Breakfast Club is an ideal way to meet and get to know fellow HBS alumni. SPEAKER: Orlando Sanchez, Houston Mayoral Candidate
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A: HBS Breakfast Club and Sept. 6 Meeting with Orlando Sanchez

Q: I heard from Algon yesterday on those contracts I said not to pay. We made a mistake releasing the capacity so ENA will be responsible for the charges. I do not want to bill CES for these charges since we made the mistake. This should only be a problem for May and June, I think. Please pay the disputed amounts.
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A: Algon

Q: Tanya: Based upon our earlier conversation, I will begin preparing masters for the following parties with (1) no CSA, (2) bilateral cross-default at US$100 million and (3) uncapped (or min US$100 million cap) guaranties for counterparties required to post guaranties. The parties on Clint's list are: (1) Lehman Brothers Finance S.A. [have form of master and a form of guaranty from Lehman Brothers Holdings Inc.] - Stephanie Panus (2) Credit Suisse First Boston International [no form of master] (3) Deutsche Bank [have a form of master from ENA negotiations] (4) Bear Stearns International Limited [no form of master] - Samantha Boyd (5) Morgan Stanley Capital Services Inc. [may develop form from ENA negotiations] (6) Credit Agricole Indosuez Tanya: Please let me know if any of the foregoing require parent guaranties. Clint: Please identify the lawyer to whom I should address comments. Also, are there any others? ENE has an agreement with Toronto Dominion, NY Branch. Samantha: Please assign Credit Suisse and Deutsche Bank and let me know who is handling.
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A: Enron Corp. ISDA master agreements

Q: As far as your email questions, my responses are following: 1. The list I have provided you is the only list that exists on financial counterparties. There is no Excel spreadsheet to follow. 2. Duke Energy Corporation. At Mark's direction, I am sending his note below regarding utilities. Again, until we do the due diligence on a utility counterparty we have no way of knowing what kind of local, state or federal regulation or approvals they may be subject to. We currently have masters in place with only about 10 utilities/govt's. We are in the process of negotiating another 30. Until those masters are executed and we have the relevant resolutions, authority documents and/or legal opinions, I cannot approve them for online trading. I have made every effort to search company websites and elicit from Credit whether a counterparty is a regulated utility or not. If I cannot tell by the information available to me, additional due diligence will be needed to see if they are subject to local, state, or federal regulation. Mark can override any decision I have made, I can only make decisions within the guidelines the attorneys have set for me. 3. Montana Power Trading and Marketing Company is a subsidiary of a regulated utility. I am unable to determine from Credit or their website what type of regulation they might be subject to. The note is true that Credit says they are getting out of the business anyway. 4. Petrotemex. Per my conversations with Mark and our advice from counsel, unlike U.S. and U.K. counterparties, Mexican counterparties are not able to enter into derivative transactions unless their articles and bylaws specifically provide for these types of transactions. We will not know this until the due diligence is completed, so I am supposed to say "no" for Mexican counterparties we do not have a master swap agreement in place with. 5. PSEG. It is an energy services company; however, it is also not an eligible swap participant (or "ESP"). CFTC regulation limits the derivatives trading we may do to certain types of counterparties that meet certain financial requirements (large, institutional type investors, companies, banks, etc). Corporations and partnerships have to meet certain net worth and asset levels or we cannot trade financially with them. Whenever I say "not ESP" or "not eligible swap participant" it means they have not met the financial net worth test. 6. The American Coal Company. See prior note.
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A:
Online Derivatives Trading with Regulated Utilities