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Enron Mail |
Per your request, Attached is the slide we reviewed with Danny today. It shows the value of contract terminations for NNG for the contract year of 1101/03 to 11/01/04 to be $145 million. It also shows that the estimated market value is $95 million. I think for planning purposes however, we would assume that we would contract for the full value of $145 million either through better pricing analytics, new business development projects and/ or Rate Case reallocation to captive customers. The biggest risk would be the South end TFF of $12 million which we would have a hard time replacing at a $3 million level. So, depending on your assumptions, 2003 and 2004 could be flat to 2002 margin of $439.1 million - or, if you take into account the TFF deterioration, it could be below by $8 to 10 million. However, this deterioration will be offset by some of the new power plant projects - in particular "Pleasant Hill" which will bring an incremental $6 million in 2004. I think you also have to assume that other business development projects will come in to help offset the downsides. Sorry if I rambled a bit too much. My view is that NNG will have margin targets for planning purposes flat with 2002. Call me if you wish to discuss.
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