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Enron Mail |
The fun begins, even though no one is "officially" to AssetCo or Service Co
as of yet. ---------------------- Forwarded by John Ale/HOU/AZURIX on 06/30/2000 09:59 AM --------------------------- "Keith Harris" <keith.harris@wessexwater.co.uk< on 06/30/2000 09:42:02 AM Please respond to "Keith Harris" <keith.harris@wessexwater.co.uk< To: Libby Gawith/BTH/AZURIX@AZURIX cc: "john coppack" <jb.coppack@wessexwater.co.uk<, kevin.gibbs@wessexwater.co.uk, Gareth Jones/BTH/AZURIX@AZURIX, Keith Willett/BTH/AZURIX@AZURIX, "legal" <legal@wessexwater.co.uk<, "'Chris Perry'" <chris.perry@wessexwater.co.uk<, "Nigel Reed" <nigel.reed@wessexwater.co.uk<, Jim.Wheaton@CliffordChance.com, John Ale/HOU/AZURIX@AZURIX, Chris.Bright@CliffordChance.com, colin.skellett@wessexwater.co.uk, sam.allen@wessexwater.co.uk Subject: Re: contracts Libby The error correction mechanism was put in at your request. The whole point is that it protects both sides. It protects assetCo & EngCo from being ripped off by either side as gain / pain after a given point is shared. It also protects EngCo from AssetCo getting a bad regulatory deal or mis-specifying a project - your point about Bath tunnel. The down side is that it blunts incentives if the trigger point for error correction is too close to the target cost. Note also that packages of work are to be let. This diversifies the risk of rip-off / poor estimation. Keith -----Original Message----- From: libby_gawith@azurix.com <libby_gawith@azurix.com< To: Keith Harris <keith.harris@wessexwater.co.uk< Cc: john coppack <jb.coppack@wessexwater.co.uk<; kevin.gibbs@wessexwater.co.uk <kevin.gibbs@wessexwater.co.uk<; gareth_jones@azurix.com <gareth_jones@azurix.com<; kwillet@azurix.com <kwillet@azurix.com<; legal <legal@wessexwater.co.uk<; 'Chris Perry' <chris.perry@wessexwater.co.uk<; Nigel Reed <nigel.reed@wessexwater.co.uk<; Jim.Wheaton@CliffordChance.com <Jim.Wheaton@CliffordChance.com<; jale@azurix.com <jale@azurix.com<; Chris.Bright@CliffordChance.com <Chris.Bright@CliffordChance.com<; colin.skellett@wessexwater.co.uk <colin.skellett@wessexwater.co.uk<; sam.allen@wessexwater.co.uk <sam.allen@wessexwater.co.uk< Date: 30 June 2000 14:07 Subject: Re: contracts Keith, Looking again at the payment terms included below -- the terms for Contracting at Risk for the Engco are different from what was agreed at GMT & what is the norm in the industry. Was your proposal something you've seen elsewhere -- if so, please can you let us see the contract.? In the latest proposal Engco take all the pain/gain for X % around the target, and the pain/gain sharing happens above/below X % of the target. This is at odds with what normally happens -- usually the client would work up a target cost with the contractor, & then there would be a pain/gain share split from that target onwards. Sometimes there is a cap to the risk carried by one of the parties. The problem with the proposal below is that AssetCo is setting the cost , and I assume the scope & programme. And then asking Engco to take the risk that AssetCo's estimate is realistic. We would end up with endless arguments between the parties as to the details of the scope -- because that is the way that Engco would make its money. How would AssetCo be incentivised to be accurate in the estimating , if errors to X % are picked up by Engco. I am assuming of course that you would be setting the estimates at the 13% saving assumed in the Internal Business Plan, which we all acknowledge is going to be hard to achieve. I think we need quite a bit of work on this area -- I suggest we set up a sub-group to work through the details of how the Engco payment terms would work, for the Contracting Risk option. Are you OK with this suggestion? Libby "Keith Harris" <keith.harris@wessexwater.co.uk< on 29/06/2000 12:36:39 Please respond to "Keith Harris" <keith.harris@wessexwater.co.uk< To: "john coppack" <jb.coppack@wessexwater.co.uk<, kevin.gibbs@wessexwater.co.uk, Gareth Jones/BTH/AZURIX@AZURIX, Keith Willett/BTH/AZURIX@AZURIX, "legal" <legal@wessexwater.co.uk<, "'Chris Perry'" <chris.perry@wessexwater.co.uk<, "Nigel Reed" <nigel.reed@wessexwater.co.uk<, Jim.Wheaton@CliffordChance.com cc: John Ale/HOU/AZURIX@AZURIX, Chris.Bright@CliffordChance.com, colin.skellett@wessexwater.co.uk, sam.allen@wessexwater.co.uk, Libby Gawith/BTH/AZURIX@AZURIX Subject: contracts All Attached are the payment terms for 3 contract types agreed at Management Team on Tuesday 1 O&M for existing standards & asset condition 2 Meeting new pre-determined standards 3 Meeting new discretionary standards and growth The note is designed to be the parameters within which the contracts will be structured The objective is to move this note to Heads of Terms by the end on July Please contact me if you have any problems. In case Gareth has not told you the Clifford Chance team will be with us at 9.30 on Friday in Bristol to begin work on this. Gareth - Where are you planning to meet Keith ********************************************************************** This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this email in error please notify the Wessex Water IT Support Centre on: 44-1225-732088 or email support@wessexwater.co.uk This footnote also confirms that this email message has been swept by MIMEsweeper for the presence of computer viruses. www.mimesweeper.com ********************************************************************** ********************************************************************** This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this email in error please notify the Wessex Water IT Support Centre on: 44-1225-732088 or email support@wessexwater.co.uk This footnote also confirms that this email message has been swept by MIMEsweeper for the presence of computer viruses. www.mimesweeper.com ********************************************************************** - att1.htm
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