tenaska iv gas are you going to make the price changes to the tenaska iv sale 384258 for
10 / 00 and 11 / 00 that james details below ? right now , we are showing a short
pay of $ 351 , 201 . 49 for those two months .
megan
- - - - - - - - - - - - - - - - - - - - - - forwarded by megan parker / corp / enron on 12 / 29 / 2000
11 : 46 am - - - - - - - - - - - - - - - - - - - - - - - - - - -
james armstrong @ ect
12 / 19 / 2000 10 : 31 am
to : daren j farmer / hou / ect @ ect
cc : megan parker / corp / enron @ enron , jody pierce / hou / ect @ ect , mike
mazowita / corp / enron @ enron , garrick hill / hou / ect @ ect
subject : tenaska iv gas
daren , per review of the gas agreements between tenaska iv and
williams / apache and our understanding of the agency agreement , i had a few
items i wanted to discuss with you ( in lieu of our meeting today that was
cancelled ) :
1 . looking at the october gas supply to the plant , i think tenaska iv should
have been charged at the contract prices with williams & apache ( i . e . 2 . 285 )
and not at what the final price that was actualized per megan ' s summary -
230 , 406 at $ 710 , 616 . 70 , price of $ 3 . 084 . if this volume was charged at
2 . 285 the total would have been $ 526 , 477 . 71 , a difference of $ 184 , 138 . 99 .
2 . looking at the november gas supply to the plant , tenaska iv was charged
$ 2 . 91 per mmbtu , instead of $ 2 . 285 for volumes of 267 , 300 . at the $ 2 . 91
price , the total settlement price was $ 777 , 843 instead of $ 610 , 780 . 50 at
2 . 285 , showing a difference of $ 167 , 062 . 50 .
i reviewed the gas supply agreements and the williams gas price ( pg . 19 ) for
2000 gas is 2 . 32 , which can be adjusted by the waha transportation adjustment
if delivered at waha . this adjustment started in 1997 at $ . 03 per mmbtu and
increase by 5 % per year . thereby currently , the adjustment factor is at
. 0347 , giving us a price of $ 2 . 2853 per mmbtu .
in reviewing the apache gas agreement ( pg . 22 ) , i noticed that the gas price
is 2 . 285 at waha & 2 . 315 at katy / carthage for 2000 . per review of the apache
invoices , it appears that we are not getting our gas at these points but at
other places ( i . e . lomak - sterling & mendell cdp ) at a price of $ 2 . 175 . if
enron has a separate agreement at these delivery points and can capture a
margin difference then that is upside to enron . however , i think the plant
should not be charged above the contract price of $ 2 . 285 .
looking at the daily gas that was scheduled to the plant for november and
october , i did not see that their use went over the contracted volumes from
williams and apache of 45 , 000 mmbtu per day . therefore i don ' t think spot
prices are part of the equation here . additionally , i recall from our
meeting last month that all enron makes on this deal is the agency fee of
$ . 04 per mmbtu ( excluding the margin difference that enron has on apache gas
delivery points if my scenario above is correct ) .
so based upon items 1 & 2 above , i am suggesting that tenaska iv adjust their
november invoice owed to enron for gas used by the plant by the gas price
differences showed above . therefore , i am planning to wire a payment of
$ 484 , 234 . 03 ( see breakout below ) on friday , 12 / 22 , to enron on behalf of
tenaska iv texas partners , ltd . for this activity .
month plant gas price amount
november 267 , 300 2 . 91 $ 777 , 843
november adjustment $ ( 167 , 062 . 50 )
october adjustment $ ( 184 , 138 . 99 )
nov . agency fee 1 , 350 , 000 . 04 $ 54 , 000
sept . agency fee 98 , 813 . 04 $ 3 , 592 . 52
total $ 484 , 234 . 03
i discussed these issues with mike mazowita , rick hill & jody pierce before
reaching this conclusion . should you have any different ideas or thoughts
that i am not covering , please call me at 3 - 7280 and we can discuss . thanks .
james
tenaska iv gas
are you going to make the price changes to the tenaska iv sale 384258 for
10 / 00 and 11 / 00 that james details below ? right now , we are showing a short
pay of $ 351 , 201 . 49 for those two months .
megan
- - - - - - - - - - - - - - - - - - - - - - forwarded by megan parker / corp / enron on 12 / 29 / 2000
11 : 46 am - - - - - - - - - - - - - - - - - - - - - - - - - - -
james armstrong @ ect
12 / 19 / 2000 10 : 31 am
to : daren j farmer / hou / ect @ ect
cc : megan parker / corp / enron @ enron , jody pierce / hou / ect @ ect , mike
mazowita / corp / enron @ enron , garrick hill / hou / ect @ ect
subject : tenaska iv gas
daren , per review of the gas agreements between tenaska iv and
williams / apache and our understanding of the agency agreement , i had a few
items i wanted to discuss with you ( in lieu of our meeting today that was
cancelled ) :
1 . looking at the october gas supply to the plant , i think tenaska iv should
have been charged at the contract prices with williams & apache ( i . e . 2 . 285 )
and not at what the final price that was actualized per megan ' s summary -
230 , 406 at $ 710 , 616 . 70 , price of $ 3 . 084 . if this volume was charged at
2 . 285 the total would have been $ 526 , 477 . 71 , a difference of $ 184 , 138 . 99 .
2 . looking at the november gas supply to the plant , tenaska iv was charged
$ 2 . 91 per mmbtu , instead of $ 2 . 285 for volumes of 267 , 300 . at the $ 2 . 91
price , the total settlement price was $ 777 , 843 instead of $ 610 , 780 . 50 at
2 . 285 , showing a difference of $ 167 , 062 . 50 .
i reviewed the gas supply agreements and the williams gas price ( pg . 19 ) for
2000 gas is 2 . 32 , which can be adjusted by the waha transportation adjustment
if delivered at waha . this adjustment started in 1997 at $ . 03 per mmbtu and
increase by 5 % per year . thereby currently , the adjustment factor is at
. 0347 , giving us a price of $ 2 . 2853 per mmbtu .
in reviewing the apache gas agreement ( pg . 22 ) , i noticed that the gas price
is 2 . 285 at waha & 2 . 315 at katy / carthage for 2000 . per review of the apache
invoices , it appears that we are not getting our gas at these points but at
other places ( i . e . lomak - sterling & mendell cdp ) at a price of $ 2 . 175 . if
enron has a separate agreement at these delivery points and can capture a
margin difference then that is upside to enron . however , i think the plant
should not be charged above the contract price of $ 2 . 285 .
looking at the daily gas that was scheduled to the plant for november and
october , i did not see that their use went over the contracted volumes from
williams and apache of 45 , 000 mmbtu per day . therefore i don ' t think spot
prices are part of the equation here . additionally , i recall from our
meeting last month that all enron makes on this deal is the agency fee of
$ . 04 per mmbtu ( excluding the margin difference that enron has on apache gas
delivery points if my scenario above is correct ) .
so based upon items 1 & 2 above , i am suggesting that tenaska iv adjust their
november invoice owed to enron for gas used by the plant by the gas price
differences showed above . therefore , i am planning to wire a payment of
$ 484 , 234 . 03 ( see breakout below ) on friday , 12 / 22 , to enron on behalf of
tenaska iv texas partners , ltd . for this activity .
month plant gas price amount
november 267 , 300 2 . 91 $ 777 , 843
november adjustment $ ( 167 , 062 . 50 )
october adjustment $ ( 184 , 138 . 99 )
nov . agency fee 1 , 350 , 000 . 04 $ 54 , 000
sept . agency fee 98 , 813 . 04 $ 3 , 592 . 52
total $ 484 , 234 . 03
i discussed these issues with mike mazowita , rick hill & jody pierce before
reaching this conclusion . should you have any different ideas or thoughts
that i am not covering , please call me at 3 - 7280 and we can discuss . thanks .
james