QUESTION: The following is a list of the industries that ENA will be responsible for covering. All other end-use customers will be covered by EES. Based on your input, we have added the big three automakers, cement, primary metals and large agricultural. In addition, ENA will have 8 companies listed in Aerospace/Other. Please let me or John know as soon as possible if you have concerns, else we're done. Regards,
Propose a subject line for this email?
ANS: Final Look: ENA/EES SIC Codes

QUESTION: The model review meeting on Thursday went well, and the consensus was that = there are many changes to be made to the current Foothills economic model. = Many assumptions in the current model were challenged by the participant co= mpanies. Foothills agreed to reflect the suggested changes to the model (An= dy is supposed to send out a summary of the discussion) and provided an ele= ctronic copy of the model for withdrawn partners' review. Withdrawn partner= s agreed to give their comments/feedback on the model to Foothills until 11= /27/01 and another meeting to reach an agreement on economic model/toll was= scheduled for 12/03/01 or 12/04/01. The data from economic/toll model will= be used in commercial proposal/presentation to the ANS producers which ANN= GTC intends to have by 12/20/01. Tim and I will review Foothills' cash flow= and COS model and prepare comments. Overall, the participants though that the current Foothills model ($0.43/MM= Btu toll for Alaska section) has very aggressive assumptions in many ways, = and it is very likely that the toll will be increased significantly after a= ll the appropriate revisions are made. The following are the main discussio= n points of the meeting. Item 1 and 2 are expected to have a very large imp= act on the toll. 1) Capex and Opex need to have annual/monthly escalation (current model has= 0% escalation). For example, Foothills sensitivity analysis shows that 2.5= % Capex escalation would increase the toll by $0.20. Numbers such as 1.5% f= or Capex and 2.5% for Opex were thrown during the meeting, but more reviews= need to be done regarding appropriate escalation rates. Do you have any op= inion on this, Bryan? 2) Foothills is using Flowthrough method (using cash taxes in COS calculati= on) to calculate income taxes that go into the Cost of Service and might be= underestimating Cost of Service. Tim thought that the Flowthrough method w= ill not fly because of previous cases in which that method was not allowed = by IRS and FERC. Foothills said that they can still have same toll under No= rmalized tax method by changing the depreciation number, but Tim was concer= ned that it might force the partnership to record negative depreciation. Fo= othills declined our request to share their Cost of Service model and insis= ted that we calculate the toll ourselves based on the information in the ca= sh flow model. They agreed to provide a hard copy of their Cost of Service = model in the end, but Tim and I were under impression that Foothills was tr= ying to lower the toll as much as they can. Tim was also concerned about le= velized toll approach because of FERC might lower allowed return in the lat= er rate cases and more analysis needs to done regradign this. Please correc= t me if I am wrong here, Tim. 3) OM & A is currently estimated to be 1% of Capex but this might be too lo= w (OM&A in more latest cost estimate by Foothills is approx. 1.5% of total = Capex). 4) The Withdrawn Partners' historical contributions ($228 million) will be = added to the Rate Base, but this might be dropped if necessary. Success fee= of $40 million should be included in the project budget. 5) Working Capital will be added to the project cost. The Line Pack cost (1= 4.5 Bcf for the whole section) was assumed to be borne by ANS producers but= some participants highly doubted that that would be the case. The Line Pac= k gas might have to be bought by the Partnership or the Producers will at l= east demand certain return on their gas sitting in the pipeline for 25 year= s. 6) For Return on Capital and AFUDC, 14% ROE and 8% Interest on Debt assumin= g 30/70 capital structure is likely to be kept. However, the current drawdo= wn schedule assumes construction financing available from the very beginnin= g, which will not be true. Certain assumptions should be made on the financ= ial close date and commercial agreement/preliminary determination date to c= alculate AFUDC more accurately. 7) Current financing assumption in the model is a 25 year bank loan with ba= lloon amortization and DSCR of 1.6. In reality, the initial bank loans will= be of shorter maturity (5-15 years) and certain roll-over financing will b= e unavoidable. It is also likely that the loans will have multiple tranches= with different terms, interest rate, seniority etc.=20 8) There is significant currency risk associated with Canadian section of t= he ANGTS considering that some sources of capital, revenues and part of ope= rating expenses will be in Canadian dollars. A mechanis to mitigate currenc= y risk should be in place and there might be some costs associated with it. 9) Property taxes of 2% in Alaska seems high, but Property taxes during con= struction period should be added. Lastly, there is about $300 million difference ($4,336-$4035) between ETS c= urrent cost estimates and the cost estimate in the Foothills model, excludi= ng IDC and AFUDC. Another engineering estimate might have to be dome for la= rger pipe size (46 or 48 inch) as noted in Bryan's email. =20 Thanks,
Propose a subject line for this email?
ANS: Toll Model Review Meeting Updates

QUESTION: I called Edmund Cooper and he is out on vacation til Monday. Do you think I should email him the certificate, have him print it out there in London, I guess Anita has to initial the two ISDA Master Agreements for signature, then Edmund could get them initialled by Credit in London, and then bring the certificates and agreements up to Mark Frevert for signature. What do you think?
Propose a subject line for this email?
ANS:
Master Signing