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Yesterday Jeff Fawcett, Lee Ferrell and I met with Dynegy marketing and legal/regulatory representatives regarding TW Transport Options. Overall the meeting was very positive. We had nothing but encouraging remarks from the marketing representatives. However, the regulatory people (Sarah Tomalty, Ed Ross) had a couple of issues. The biggest issue is a marketing affiliate concern. Apparently Dynegy is on a crusade at FERC to place further limits on deals pipelines can do with their marketing affiliates. They have run into situations in which pipelines (examples: Koch, El Paso) have blatantly favored their marketing affiliates to the extent that Dynegy cannot even do deals with them. (In fact, one of the problems with Koch has been Koch's price option deals with its affiliate.) The perception is that the affiliates, by using "funny money," can always make themselves the highest bidder, with a net benefit to the entire organization (pipeline + affiliate). The remedy Dynegy is proposing is to require a marketing affiliate, if it is the highest bidder, to credit back the difference between the price it pays and the price offered by the next highest bidder. The presumption is that the affiliate has an unfair advantage because it is able to pay above market value in order to get the capacity. Dynegy's proposal would encourage affiliates to pay "real" dollars. While it emphasized its belief that TW does not favor its marketing affiliates, Dynegy would like for us to include in our filing some limitation on options transactions with marketing affiliates. It is likely that other pipelines will file for the ability to sell options once FERC approves our filing, and Dynegy would like for this type of protection to be part of the precedent set by our filing. Ed hinted that FERC may be considering a divestiture requirement for marketing affiliates, and that pipelines can avoid this extreme result by voluntarily limiting their transactions with affiliates. Shelley, I know you've discussed this issue with Ed already and our reactions were the same. Basically we politely told Dynegy that we don't believe we're part of the problem and that we are therefore not inclined to unnecessarily disadvantage our company by further limiting ENA's ability to do business with TW. We can probably expect an intervention with comments or a limited protest addressing the issue. The other regulatory question was whether we intend to file each option deal as a negotiated rate. My analysis of this issue is that since we're proposing the option fee as part of the transport rate, options would always be a type of negotiated rate and would need to be filed. If you think this is not the right answer, please let me know because we need to decide it before we file the tariff sheets. Sarah's question seemed to be more one of curiosity rather than a basis for protest. Like the Indicated Shippers, Dynegy appeared interested in an all-customer meeting to discuss the service. Jeff and the rest of the commercial group are looking further into whether and when we would have such a meeting. If you have any questions or concerns please let me know.

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OUT: TW Options Update: Dynegy meeting
QUESTION: Greg Whalley has requested a Trader's Meeting tomorrow morning @ 7:45 a.m. (CST). The meeting will be held in his office, ECS 06752. The dial-in number for Portland and Calgary is listed below.
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ANS: Trader Meeting - 2/7 @ 7:45 a.m. (CST) - ECS 06752
Are these numbers consistent with your expectations. We will submit to HR if no onjections. Traditionally Sutton has looked at the range and made the decision where to be inside the range. I don't know if Skilling will do the same. I have a voice mail into him to see. Rick
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answer: EcoElectrica/Corinto Valuations for Compensation Purposes
Elizabeth - Can you please have one of your attys forward a draft of the power netting agmt to South Carolina E&G. It is my understanding that trading will be curtailed (if not already shut down) until this agmt is in place. Luara will provide your atty a contact to forward the document to. Thanks.
Answer: South Carolina Electric & Gas Company - Power Netting Agmt request
Here is an email: Dad, I was talking with Kathleen this weekend and she had some ideas and suggestions about Enron. I asked her to put them in writing so that I could share them with you. I am attaching her memo. Please keep in mind, she loves her job, these are just ideas to make it that much better. I love you, Dad,
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A: Kathleen's Comments
QUESTION: Per your request. Is the contract supposed to be an off balance sheet contract? I'm supposed to be working on the changes necessary to make this one 97-10 compliant, but I haven't done it yet. Maybe you will beat me to it, which is fine by me. Kay
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Form Contract, Rev Minus 1