fw : lc to peoples in the immediate term , i am requesting we provide an lc to pec in the amount of $ 2 . 5 mm to cover pec providing 100 % of guarantee to wps . the executive management of pec is in ny for their annual analyst meetings . i will address the other outstanding transactions and potential remedies the week of november 26 th in chicago .
laura
- - - - - original message - - - - -
from : penman , gregg
sent : friday , november 16 , 2001 11 : 27 am
to : luce , laura
subject : lc to peoples
here is the current situation with third party credit support .
wisconsin public service ( wps )
- 5 day storage svc , 4 months ( 11 / 10 / 01 - 3 / 10 / 01 ) , total value = $ 240 , 000 demand charge , plus minor commodity premium on injection gas
- guarantee : $ 5 million total ( i think we can get this lowered somewhat , maybe $ 3 million )
- per rudwell johnson in credit , wps will only accept a surety bond from enron . otherwise , 100 % guarantee from peoples .
options :
1 - issue peoples an lc for enron ' s portion of the guarantee
2 - accept a sharing percentage different than 50 / 50 . 75 / 25 may work , but some in their shop are pushing for as high as 90 / 10 . this sets an extremely dangerous precedent for future deals and may have negative implications for the long term viability of enovate . i am concerned about the message this will send .
3 - let the deal blow up and force people ' s hand through the restricted activities language of the operating agreement . this has obvious downsides from customer perception to the potential unwinding of enovate .
i have suggested many other options but they have not been receptive to them . for instance , only issue an lc if we are rated junk .
nrg
- fuel managment services for testing phase of a combined cycle plant , term : 11 / 20 / 01 - 3 / 31 / 02 , total value = $ 100 , 000 demand charge , plus variable charges based on usage .
- guarantee : they have not given us a number yet . they have initially indicated they will not take enron credit . rudwell will be contacting them today to determine if they will take enron credit and what the amount will be .
options :
same as above
other third party business
counterparty service term total demand charge
wisconsin gas 10 day storage service 3 yrs ( 4 / 1 / 02 - 3 / 31 / 05 ) $ 1 , 100 , 000
wisconsin gas 50 day storage service 3 yrs ( 4 / 1 / 02 - 3 / 31 / 05 ) $ 3 , 375 , 000
txu storage service 1 yr ( 4 / 1 / 02 - 3 / 31 / 03 ) $ 990 , 000
oneok storage service 1 yr ( 4 / 1 / 02 - 3 / 31 / 03 ) $ 875 , 000
pg & e storage service 1 yr ( 4 / 1 / 02 - 3 / 31 / 03 ) $ 840 , 000
pancanadian storage service 1 yr ( 4 / 1 / 02 - 3 / 31 / 03 ) $ 402 , 500
none of the above counterparties have explicitly stated they will not take enron credit yet . wisconsin gas has called and expressed concern over enron , particularly given the term . txu has also called and tried to wiggle a little bit on the deal as a result of enron ' s situation . we have put them off for the time being . hopefully , we have enough time before the above deals start to reassure them of our credit .
let me know if you have further questions and i will keep you posted .
thanks - gregg
fw : lc to peoples
in the immediate term , i am requesting we provide an lc to pec in the amount of $ 2 . 5 mm to cover pec providing 100 % of guarantee to wps . the executive management of pec is in ny for their annual analyst meetings . i will address the other outstanding transactions and potential remedies the week of november 26 th in chicago .
laura
- - - - - original message - - - - -
from : penman , gregg
sent : friday , november 16 , 2001 11 : 27 am
to : luce , laura
subject : lc to peoples
here is the current situation with third party credit support .
wisconsin public service ( wps )
- 5 day storage svc , 4 months ( 11 / 10 / 01 - 3 / 10 / 01 ) , total value = $ 240 , 000 demand charge , plus minor commodity premium on injection gas
- guarantee : $ 5 million total ( i think we can get this lowered somewhat , maybe $ 3 million )
- per rudwell johnson in credit , wps will only accept a surety bond from enron . otherwise , 100 % guarantee from peoples .
options :
1 - issue peoples an lc for enron ' s portion of the guarantee
2 - accept a sharing percentage different than 50 / 50 . 75 / 25 may work , but some in their shop are pushing for as high as 90 / 10 . this sets an extremely dangerous precedent for future deals and may have negative implications for the long term viability of enovate . i am concerned about the message this will send .
3 - let the deal blow up and force people ' s hand through the restricted activities language of the operating agreement . this has obvious downsides from customer perception to the potential unwinding of enovate .
i have suggested many other options but they have not been receptive to them . for instance , only issue an lc if we are rated junk .
nrg
- fuel managment services for testing phase of a combined cycle plant , term : 11 / 20 / 01 - 3 / 31 / 02 , total value = $ 100 , 000 demand charge , plus variable charges based on usage .
- guarantee : they have not given us a number yet . they have initially indicated they will not take enron credit . rudwell will be contacting them today to determine if they will take enron credit and what the amount will be .
options :
same as above
other third party business
counterparty service term total demand charge
wisconsin gas 10 day storage service 3 yrs ( 4 / 1 / 02 - 3 / 31 / 05 ) $ 1 , 100 , 000
wisconsin gas 50 day storage service 3 yrs ( 4 / 1 / 02 - 3 / 31 / 05 ) $ 3 , 375 , 000
txu storage service 1 yr ( 4 / 1 / 02 - 3 / 31 / 03 ) $ 990 , 000
oneok storage service 1 yr ( 4 / 1 / 02 - 3 / 31 / 03 ) $ 875 , 000
pg & e storage service 1 yr ( 4 / 1 / 02 - 3 / 31 / 03 ) $ 840 , 000
pancanadian storage service 1 yr ( 4 / 1 / 02 - 3 / 31 / 03 ) $ 402 , 500
none of the above counterparties have explicitly stated they will not take enron credit yet . wisconsin gas has called and expressed concern over enron , particularly given the term . txu has also called and tried to wiggle a little bit on the deal as a result of enron ' s situation . we have put them off for the time being . hopefully , we have enough time before the above deals start to reassure them of our credit .
let me know if you have further questions and i will keep you posted .
thanks - gregg