Spreadsheet: richard_shapiro__32227__Bank questions California
Sheet: California 7-2

 | Category | Question | Requestor | Answer
California
1 | California | Implications of Potential FERC investigation into CA natural gas market | CSFB | -Enron is a market maker in the California market.  We provide liquidity to that market.  We are price agnostic.   -Enron is not a generator.  We hold no operating generation in California and very little generating capacity in the Western US.  Unlike the generators, we do not make money based upon the difference between the cost of producing power and the market.  Rather, we profit from the difference between the bid and offer, with increasing volumes. -ENE has acted within FERC granted market based rate authority and in accordance with ISO & PX tariffs at all times.
2 | California | Does Wholesale have any capacity contracts on Transwestern | CSFB | -Yes but it is immaterial.  Only a small part of Transwestern business is effected by California issues.  Enron has some older contracts which secure only a small piece of Transwestern's effected capacity. -ENE is largest wholesaler of gas in the country.  At any point in time, we have capacity contracts on most major pipelines.
3 | California | Do any Wholesale transactions fall under FERC jurisdiction? | CSFB | -Price Mitigation rules:  FERC has imposed price caps in the spot market (same day, next day, < 24 hour term) for an 11 state region of the Western US.  Our spot transactions are subject to the price mitigation rules established by the FERC.  However, the majority of our wholesale business is transacted in the forward markets (outside of the scope of the FERC's price mitigation).  We provide predictable prices and reliable delivery of commodity products to our customers, who largely look to manage commodity risks inherent in their businesses for terms well in excess of the same day, next day market. -FERC jurisdiction:  FERC has jurisdiction over all physical power and gas transactions in the US. So all of our wholesale physical power and gas transactions are subject to FERC jurisdiction.  FERC has authorized Enron to transact on gas at market rates.  FERC has authorized Enron to transact on power at market prices and we mus demonstrate every three years that we do not exercise or hold market power.
4 | California | NY Times reported that Enron was a counterparty on transactions with El Paso Merchant Energy… | CSFB | -The investigation of El Paso centers around the "affiliate" dealings (transactions between a regulated subsidiary and El Paso's merchant subsidiary).  Enron (and 20 - 30 other entities) purchased capacity in early 2001 from El Paso Merchant.  Since that time the prices in the capacity market have fallen.  This is why El Paso is being investigated.
5 | California | Has Enron been asked to participate in  FERC ALJ hearings about El Paso | CSFB | -Certain Enron information has been subpoenaed  by the ALJ hearings and Enron has cooperated. -We are monitoring the progress.  Any continued involvement at this point is just to ensure that the information we provided remains confidential.
6 | California | What is Enron's Outlook for current FERC ALJ-mediated negotiations between CA and Generators?  Is Enron Participating in discussions? | CSFB | Pursuant to the FERC order, we are actively participating.  This process is confidential and we can't comment.  However, we wish to reiterate that Enron is not a generator.  We hold no operating generation in California and very little generating capacity in the Western US.  Unlike the generators, we do not make money based upon the difference between the cost of producing power and the market.  Rather, we profit from the difference between the bid and offer, with increasing volumes.