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Enron Mail |
A GISB can be used for deals longer than a month if they are fully
interruptible. However, we would only use the GISB for firm business If they limit their business to one month or less which would include a 31 day month. The $20MM credit line represents the mark-to-market exposure of all business that ENA would be doing with the customer so that any deal that would tend to exceed the aggregate credit line would need to be separately supported with additional credit documentation, i.e., a letter of credit or a increase in the coverage under a parent guarantee. Phil DeMoes@ENRON 03/07/2001 01:07 PM To: Dan J Hyvl/HOU/ECT@ECT cc: Subject: RE: Physical Contracts Lets discuss. ---------------------- Forwarded by Phil DeMoes/Corp/Enron on 03/07/2001 01:07 PM --------------------------- "Bergen, Laurence" <laurence.bergen@opc.com< on 03/07/2001 05:46:41 AM To: "'Phil.DeMoes@enron.com'" <Phil.DeMoes@enron.com< cc: "Mitchell, Clarence" <clarence.mitchell@opc.com<, "Walker, Tara" <tara.walker@opc.com<, "Brown, James" <james.brown@opc.com<, "Cook, Jim" <jim.cook@opc.com<, "Autry, Charles" <autry@ahclaw.com< Subject: RE: Physical Contracts Phil, Thank you for your explanation of the billing process. Your email raised some questions for us. Specifically, we do not understand your statement that the GISB is an interruptible contract for gas supply that is 30 days or less. The GISB form you mailed us is similar to GISB's which we have received from other companies. All specifically state in the bottom disclaimer paragraph of the first page that "This Contract is intended for Interruptible transactions or Firm transactions of one month or less and may not be suitable for Firm transactions of longer than one month." Further, in the interior of the GISB, on Exhibit A, there is a place to check whether one wants firm or interruptible. The intent of this email is to clarify. Our interpretation is that GISBs can be for firm (which is what we would want to do), and they would be for 31 day months as well as 30 day or less. Do you agree with this? If our interpretation is correct, it is not clear why a Master Firm is needed. Can you explain what the value add is to our doing business? [Perhaps it would be useful for a case where we wanted to cover our long term purchases for a combined cycle plant which we intended to operate every day of the year other than scheduled maintenance outages.] Lastly, in our notes from our meeting, I wrote that Enron had offered an initial $20MM credit line for Oglethorpe. When doing physical contracts either under a GISB or your Master Firm, does this amount represent a Mark to Market limit or a nominal limit? We have our people reviewing GISB, ISDA, and Master Firm as I write this. We look forward to your responses. Larry Bergen -------------------------------------------------------------------- -----Original Message----- From: Phil.DeMoes@enron.com [mailto:Phil.DeMoes@enron.com] Sent: Friday, March 02, 2001 4:14 PM To: Bergen, Laurence Subject: Re: Physical Contracts Hey Laurence, Good meeting you and Larry yesterday. I think we had some good discussion yesterday and it seems like we have some things we can work on together. As far as the contracts, a couple of clarifications and an answer to your question below. You should have received a Master Firm Purchase/Sale Agreement via email and hard copy. Additionally, you have already received a GISB contract and a ISDA Agreement. Here is a brief description of what each of them do: GISB - Gas Industry Standards Board Agreement - this is an interruptible contract for gas supply that is 30 days or less. OPC would not be able to lock forward NYMEX prices on this contract but can purchase short term supplies. ISDA - this contract is for financial positions only. If you wanted to enter into swaps or derivative based products, you can perform them under this contract without ever having to take physcial delivery. Master Firm - Under this contract, OPC will be purchasing firm gas supply and will be able to lock forward values on the NYMEX. Note that this is a physcial contract which will require OPC to take delivery. OPC will receive a bill from Enron around the 5th after the month of delivery and will be required to pay no later than the 25th. If the 25th is on a weekend or holdiay, then the invoice will be due on the next business day. OPC payment obligations are always after the month of delivery no later than the 25th with no need for any payments beforehand. Note that under Triggering Event in Section 4.2, either party may need to provide additional credit assurances in the event of a material change which could cause a letter of credit to be issued. Let me know if you did not receive the Master Firm Agreement or if you have any more questions. Thanks. Phil DeMoes "Bergen, Laurence" <laurence.bergen@opc.com< on 03/02/2001 11:26:46 AM To: "'phil.demoes@enron.com'" <phil.demoes@enron.com< cc: Subject: Physical Contracts Phil, One quick question we forgot to ask yesterday. If OPC were to to place an order for physical contract for a delivery month of this summer, when would we have to pay for this? Would it be so many days after the end of the month in which received, etc? Would there be any cash due upon placing the order? Larry Bergen Oglethorpe Power Corporation
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