QUESTION: Greg: Can you help me answer this question? Also, we have been through our ISDA forms and had the following questions with respect to Canadian law matters? 1. We have assumed that for all ISDA Masters where Canadian law applies, we should not insert our arbitration provision. Is this correct? 2. With respect to the Trade Option exemption and Eligible Swap Participant reps that we normally insert in our form (which I have enclosed below), we have assumed that the only time that these reps should not be inserted is when the Master is between ECC and a Canadian or Foreign counterparty? Is this correct? What we are unsure about is whther these reps are needed when ECC's counterparty is a US entity. We look forward to hearing from you. Carol
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ANS: ISDA Securities Rep

QUESTION: FYI. Calger is in active talks with Freeman and DWR lawyers about the offer letter we submitted on Tuesday. Freeman's very anxious to do a deal for 200 MWs from the West Desk and then start talking about a deal for power from Parquet's Pastoria plant. Credit is of course the issue and Calger's told them that unless the credit issue is bulletproof it's not going to work. See Chris' comments below. It looks like progress is being made, but the details will make it or break it. Any thoughts? Might make sense to discuss on the call. Please forward along to others. Thanks. Best,
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QUESTION: I am changing the way the curve is generated starting in Jan 2004 to better replicate seasonal fundamentals. There are convincing arguments as to why the summer/winter spreads should tighten over time. However, in the previous methodology they blew out. For instance summer/winter in Cal 3 was .232 while Cal 10 was .256. I have added a seasonality dampening function that both contracts the summer/winter spread and applies a premium to the electric load demand months of July and August over time. The formula for the curve remains the same except for a premium lookup for the month as well as for the year. These premiums are as follows: Jan -.008 Feb -.004 Mar -.001 Apr .002 May .003 Jun .004 Jul .004 Aug .004 Sep .003 Oct .002 Nov -.003 Dec -.006 These premiums start in Jan 2004 On Wednesday Jan 2003 settled 2.959, the 3/4 spread was marked at .0375, the 4/5 spread was marked at .0475. In the old methodology Jan 2003 = 2.959 Jan 2004 = 2.959 + .0375 = 2.9965 Jan 2005 = 2.9965 + .0475 = 3.044 In the new methodology Jan 2003 = 2.959 Jan 2004 = 2.959 + .0375 - .008 =2.9885 Jan 2005 = 2.9885 + .0475 -.008 = 3.028 The only change in the formula is from: Month x = Month (x- 1 year) + lookup on year on year table to Month x = Month (x- 1 year) + lookup on year on year table + lookup on month premium table The seasonality premiums will change over time and I will let you know when I change them
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New curve generation methodology