Attached is the latest draft of the Transport Option Program filing. There are a couple of important changes from the last draft. One is that we're no longer stating that the option fee is going to be "market-based." At FERC, the term "market-based" has connotations of having to prove to FERC that a non-cost-based rate is appropriate because we lack market power. While we probably do lack market power, the consensus of the legal/regulatory team was to try to portray the option fee as a built-in feature of the transport rate, which is simply being disaggregated into a separate option fee. If this theory is not clear to you after you read the filing letter, let's discuss how it should be improved. The other significant change (also based on my meeting with legal/regulatory) is that I've structured the tariff language and the agreement so that every shipper, regardless of whether they currently use transport on TW, will have to have a firm transportation agreement when they buy an option. In other words, a shipper that does not currently have a service agreement will simply execute an agreement with a MAXDTQ of zero. This structure has two advantages: 1) it's consistent with our option-fee-as-part-of-transport-rate theory, and 2) it will help support that theory in our next rate case. I'd like to meet next week, either Wednesday afternoon or Thursday, to discuss the following topics: 1) Your comments and questions on this draft, 2) Some examples of options, to make sure the tariff provisions and contract work from a logistical standpoint, 3) The bidding process, and how bids for options will be evaluated, and 4) Comments received from shippers thus far. I'll be working on 41 tomorrow; let's talk about what would be a good meeting time. I will be out Mon. and Tues.
Q: What is a potential subject line for this email?
answer: Transport Options Program
Sheri: Our swaps group meeting is at 10 on Wednesday so I cannot make the second half of the Training Session. Could you please coordinate with Suzanne on another time? Again, I just need to take the second part of the class. thanks.
Answer: Lotus Notes Training
Here is an email: It's not looking good for getting back to you today on this - shaping up to be a very bad day and we need to coordinate with Credit for their responses as well. I have a call in to John Suttle and have forwarded the revised draft to him. We'll do what we can. I saw your reply to my previous note. On this one point: It strikes me as disingenuous to say that they don't have the internal systems for csa's with nonfinancial counterparties - the same systems would work for nonfinancial parties as well as financial parties. IBJ is the most sophisticated Japanese player in the derivative market and one would believe that they could handle the documentation for both financial and non-financial entities. I note, I have heard that it is not market practice for Japanese financial institutions to provide collateral to non-financial institutions, so it may be very difficult for them to alter their position. I understand. My view is just that it is probably not a systems issue but a position and it irks me to have the point made as a systems issue when it is not. As we both agree, the issue may be moot depending on what Credit thinks.
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A: IBJ
Q: On November 14, 2001, SCE filed an advice to establish the ratemaking necessary to implement a number of regulatory components included in its October 2nd Settlement with the Commission The settlement agreement described the operation a new account termed the PROACT that the Commission will establish by order. The advice letter provides the structure and operation of the PROACT, The beginning balance of the PROACT will consists of the unrecovered procurement related obligation as of September 1, 2001. Beginning on Sept. 1, on a monthly basis, the following amounts will be recorded in the PROACT: (1) SCE's Surplus (recorded revenues minus recoverable costs); (2) all refunds related to procurement related liabilities; (3) securitization proceeds, (4) interest expense. The advice letter provides a detailed explanation as to how SCE's surplus and recoverable costs will be calculated. In addition, the advice letter addresses settlement rates. SCE notes that, under the Settlement, the Commission agreed to maintain electric retail rates for retail customers at no less than the Settlement Rates during the Repayment Period. Settlement Rates are defined in the Settlement as " gross electric retail rates (including surcharges)". In its advice letter, SCE proposes to define gross electric retail rates to mean the system average rates. By defining it that way, the Commission can change the revenue allocation between rate groups, as well as effect some rate increases/decreases in certain rate components as long as such revisions do not result in a change in SCE's system average rates. SCE has asked for a September 1, 2001 effective date for the advice filing. Under standard procedures, protests on the filing would be due December 4th. SCE has asked for an accelerated schedule of November 28. To date, as far as I am aware, it has not been granted. Please let me know as soon as possible if Enron would like to weigh in on this advice filing. Jeanne
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A: SCE Advice Letter to Implement Settlement with Commission
IN: Brant: Their lawyer finally called me. We have a few open credit issues on our side that I need for you to think about: 1. Are you okay with the cross default threshold on both sides being 3% of stockholders' equity? They didn't like $100,000,000. 2. For corporate policy reasons, they cannot take advantage of affiliate setoff. Since I wasn't sure what relationships ENA and its affiliates had with this counterparty, I wasn't sure how strongly you felt about it. Please advise. Carol

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OUT: El Paso Energy
IN: This is an email
When: Thursday, October 18, 2001 9:00 AM-11:00 AM (GMT-06:00) Central Time (US & Canada). Where: EB 50 M03 *~*~*~*~*~*~*~*~*~* On behalf of Linda Roberts, A meeting has been scheduled to discuss Texas General Land Office Management Proposal. This meeting will take place as follows: Thursday, October 18, 2001 9:00 AM - 11:00 AM Enron Corp. 1400 Smith Houston, TX 77002 EB 50M03 (50th floor) If you have any questions, please contact Linda Roberts @ (713) 345-4972. Thank you,

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OUT:
Updated: Texas General Land Office Management Proposal (conference room change)