QUESTION: I am seeing more and more credit derivatives. The trades originating in Houston are coming from Jeff Kinneman's bond/debt traders but are booked in the name of ECT Investments, Inc. or ENA. I can't be certain if these are backed to EnronCredit.com Limited. In particular, there is a proposed total return bond trade with DLJ International Capital requiring ECT Investments to post collateral. We have no master with this party. Who in Houston credit is looking at credit derivatives? FYI, other credit deals seem to be transacted wtih Deutsche Bank and UBS AG.
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ANS: Credit Derivatives

QUESTION: Ken talked to Sen Kinder. He made the points you had prepared. Kinder agreed to shelve the legislation for this session. He said he had been hearing from several others, including Proctor and Gamble (which has a big facility in his district) that the legislation was not going to help competition develop in the state. He expressed willingness to work with us on a better package and also expressed interest in coming to Enron's offices. He is going to be in San Antonio in August and would like to come to Houston around that time.
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ANS: call to Sen Kinder

QUESTION: Good morning. With the energy crisis in California at this time, we will need to be extra careful with nominations at Socal and throughout the west to ensure that we continue to provide the excellent nomination service that we have been providing to our customers. You guys are doing an excellent job and we understand that you are under quite a bit of pressure with limited staff. Our contracts state that we must notify every customer of pipeline allocations 12 hours in advance. We all know that this can be almost impossible on EPNG, but because of the current price levels at Socal and the basins, Enron needs to call each customer and notify them of their cuts with an explanation of the pipeline cuts each day to avoid any potential penalties. We also need to document when the call was made. In regards to the ATM nominations on Socal (ones that we can't monitor), Enron will be requesting full pipeline summaries of the nominations from our counterparties. Please try to think of any nomination gaming that may take place at these historical levels. We need to remember that our counterparties may not act as they have in the past due to the market price implications on their P&L. We should not rely on prior business conduct in regards to "standard epng allocations" when dealing with our customers. I would expect that the market is going to overreact to any cuts that may be above the "pipeline average". Let's discuss how we are going to monitor the flows of nominations out of our control. How do we prevent collusion with respect to the socal nominations that we can't see? Are there package numbers on each baseload contract to ensure that they don't simply reshuffle gas according to price? Let me know which companies are not providing Enron with timely allocation reports at Socal and I will call their senior trader to discuss getting this operational information sooner. Sincerely,
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ANS:
Socal ATM nominations