FW: Master Netting Agreements Reminder

Please see Elizabeth's e-mail below.

-----Original Message-----
From: Sager, Elizabeth
Sent: Wednesday, October 31, 2001 10:19 AM
To: Heard, Marie
Subject: Master Netting Agreements Reminder

Reminder - If you are working on a Master Netting Agreement, you also need to understand what type of entities are being included in the netted group. On the power side, there are regulatory restrictions on a regulated utility from becoming a guarantor of the debts of unregulated companies; accordingly, an MNA with a regulated utility and other unaffiliated parties on its side will not work, particularly if you are posting collateral on a fully netted basis. In this case, the only option would be to keep the underlying margining agreements in place (no new global collateral annex) and have the MNA only be a cross default and acceleration and possible setoff (just in case the money is going the right way and/or just in case it works). Mary is working on a new draft of the MNA to be used if we are not superceding the underlying margining terms. Thanks

Elizabeth Sager
713-853-6349