Q: The following volumes are capacities west of Station 1 that will result fro= m tie-in construction work slated for the Red Rock expansion. Tie-in assem= blies will be required on both the Mainline and Loopline at stations 1, 2, = and 3. New block and side valve assemblies for new compressor and scrubber= s will be installed on the suction side main and loop lines at each station= . The tie-in will entail blocking (isolating) a line segment within the st= ation yard on the suction side (each line done separately) thus creating a = dead leg back to the next upstream block valve crossover(s). Hence, all of= the flow will be forced into a single line when making tie-in on the adjac= ent pipeline line. The result of forcing all volumes into a single line wi= ll produce greater pressure losses in the operating segment to the existing= compression and reduce throughput due to lower suction pressure and respec= tive horsepower limitations. Discharge piping at the station having tie-in= work will be unchanged regarding valving configurations. Tie-in=09Schedule/Duration=09Capacity=09X-over Status CS 2 ML=09Oct '01 / 4 days=09960 MMcfd=09MLV 3010-open us/ds x-over; open u= s 30" x-over CS 2 LL =09Oct '01 / 2 days=09960 MMcfd=09MLV 3010-open us/ds x-over, open = us 30" x-over CS 1 ML=09Mar '02=09/ 4 days=09990 MMcfd=09MLV 2012 & 2011-open us/ds x-ove= r; open us 30" x-over CS 1 LL=09Mar '02=09/ 2 days=09990 MMcfd=09MLV 2012 & 2011-open us/ds x-ove= r; open us 30" x-over CS 3 ML=09Apr '02=09/ 4 days=091010 MMcfd=09MLV 4012 & 4011-open us/ds x-ov= er; open us 30" x-over CS 3 LL=09Apr '02=09/ 2 days=091010 MMcfd=09MLV 4012 & 4011-open us/ds x-ov= er; open us 30"x-over Notes: 1.=09Specific schedule dates are forthcoming 2.=09Schedules could be impacted by material deliveries and is based upon r= eceipt of construction permits 3.=09Durations consider working around the clock until completed
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A: TW Capacity Affected for Red Rock Tie-ins

Q: Reviewed by Mark Williams, SVP Risk Management, Citizens Power The long awaited second edition of Managing Energy Price Risk has finally arrived. It has been four years since the first edition was published. During this hiatus, a lot has happened as risk management within the rapidly expanding energy industry has come of age as a respected discipline. The second edition is a rich compilation of papers by a surprisingly representative group of industry leaders, practitioners and academics. The books strength is that it reinforces the fact that risk management principles initially applied to a narrow band of energy commodities can and should be applied across a wide array of energy commodities including electricity. As expected the book does a solid job in capturing an international perspective on the various challenges, which are not isolated to any one continent but are global in scope. It includes a lengthy introduction that effectively frames risk management progress, advancements and innovations that started in the oil markets in the 1970's and migrated to the natural gas and most recently expanding to the electricity industry. Managing Energy Price Risk is comprised of 15 chapters, all of which include an introduction, which minimises the disjointedness that you may expect from a book written by a large number of authors. Other improvements in this second edition include expanded graphics, highlighted panels, detailed appendices and a separate glossary, which provides the reader with additional reference material. In particular the chapter on energy options written by Michael Hampton is a useful primer and provides the reader with a concise explanation of option theory, pricing, basis risk, delta hedging as well as practical guidelines for distinguishing between hedging and pure speculation. For the more advanced reader, the chapter on Energy Exotic Options, written by Vince Kaminski, Stinson Gibner and Krishnarao Pinnamaneni is particularly strong as it outlines the challenges associated with the exotics and effectively documents the latest methods used by leading practitioners in pricing such instruments. Additionally, the chapter on Accounting for Derivative Contracts in the Energy Environment by three consultants from Arthur Anderson, is a well written summary which addresses the numerous tax related issues including a timely discussion on the US Financial Accounting Standards Board's Statement 133 (see EPRM October 1999, page 22). Having this tax information housed in one concise chapter is of great value. The second edition however is not without flaws. In particular, it would have been useful to have more information on the current challenges risk managers are confronted with in the power industry including latest advancements in volatility and correlation estimation techniques. Additional attention could have also been placed on the shortcomings of the current market structure and methods in finding and applying appropriate hedging strategies and instruments. In the fledgling power market, this continues to be one of the primary challenges. In summary, this second edition of Managing Energy Price Risk builds upon the sentinel work laid out in the prior edition and is a valuable reference book for the new recruit or seasoned veteran. It is a welcome edition to any risk management library.
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A: Book review

Q: I want to move forward with scheduling the initial meeting of the Operational Risk Management task force. How does Tuesday, October 16th and the afternoon of Thursday, October 18th look for everyone? Please let me know your schedule for both of these dates. Most of the task force members have been identified, with the exception of those from GRMO and IT. Sally Beck will identify representatives from these two areas. I would also expect that other individuals may be consulted from time to time as additional expertise or resources or required. I intend to schedule a two-hour block of time for this meeting. The agenda will include, at a minimum, the following topics: Definition of Operational Risk for Enron - What's in and What's Out Preliminary Goals for Operational Risk Management (to be refined by the group) Develop Common Language Identify Framework for Monitoring Risk Role of this task force - Strategy Set common objectives for implementation this year and a look forward to 2002 Current Initiatives Communications Plan Open Discussion - Other Ideas from the group - Suggestions re other groups/individuals to include on the task force I am excited about leading this initiative for Enron. We have a unique opportunity to define operational risk measurement for Enron, develop reporting guidelines, and provide qualitative assessments of operational risk, all of which will be considered during the risk capital allocation process. But most importantly, we can identify ways to mitigate Enron's exposure to operational risk. Please call if you would like to discuss any of the above prior to the meeting. Thanks,
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A: Operational Risk Management

Q: We need to update the advice we received from Mexican counsel to address the online trading issue. I spoke to Nony and while we're at it I'm also going to ask whether there are any other updates since they rendered their original advice. Are there are other issue you would like to add to our request for advice?
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A:
Update to Mexico Advice