Re: GTC'S AND CONFIRMS

FYI----Don't know what happened to my recommendation that they use either an
unexecuted agreement notation or call the counterparty from the trading floor
on a recorded line.
---------------------- Forwarded by Dan J Hyvl/HOU/ECT on 08/30/99 01:37 PM
---------------------------

Julie Meyers
08/30/99 01:26 PM
To: Melissa Graves/HOU/ECT@ECT
cc: Kathryn Cordes/HOU/ECT@ECT, Donald P Reinhardt/HOU/ECT@ECT, Susan
Smith/HOU/ECT@ECT, Vance L Taylor/HOU/ECT@ECT, Dan J Hyvl/HOU/ECT@ECT
Subject: Re: GTC'S AND CONFIRMS

Re 1. I don't believe that the traders on 35 are appropriately covered based
on what Dan has told me. Is that a concern? If so, it is possible to
manually change the confirm to fit the situation for the mean time.

Re 3. I understand what Mary is saying, but in these cases that I'm
referring to (which I believe are rare), I believe the gas is flowing. The
meter has been turned on and isn't the pipeline accepting the gas? We are
still not nominating the gas, and because we have not put the ticket into the
system, we are withholding payment. Now, from what I understand, client
services will make a manual payment, if they are called by the producer.
But, for 1 month or even 2 months, we have not made a payment, because client
services would not have known to make a payment, therefore, we are still in
violation. It appears the best solution legally, would be not to turn on the
meter until the contract is signed. I'm not sure that is a good business
decission though.

I know that there are cases where we don't know that the meter is still
flowing, or that it has been turned on. I think the easiest thing would be
to make sure that we are covered with a GTC spot, taking out the language of
the recorded line.

Julie

Enron Capital & Trade Resources Corp.

From: Melissa Graves 08/30/99 10:37 AM

To: Julie Meyers/HOU/ECT@ECT
cc: Kathryn Cordes/HOU/ECT@ECT, Donald P Reinhardt/HOU/ECT@ECT, Susan
Smith/HOU/ECT@ECT, Vance L Taylor/HOU/ECT@ECT
Subject: Re: GTC'S AND CONFIRMS

Julie,

In response to your concerns below:

1. The traders on 35 are currently attempting to install a recorded line to
be used when negotiating.

2. The difficulty with putting in a contract as unexecuted is that Unify
will not prevent the payment from going out the door. I do not believe Unify
Settlements drafts based on contract status, it drafts on any Sitara deal
that replicated down, and Sitara reads unexecuted as a valid contract.

3. We have posed the possibility of entering the contract as unexecuted and
enhancing Unify to hold payment as long as there was VP approval to hold
payment, but Mary Cook said that this process would be in violation of the
UCC based on the fact that we would partially perform (by accepting the gas
via the nom/scheduling process). With this partial performance, withholding
the payment would not be appropriate under the law.

Please let me know your thoughts after reviewing my comments.

Thank you,
Melissa

Julie Meyers
08/27/99 03:36 PM
To: Melissa Graves/HOU/ECT@ECT
cc: Kathryn Cordes/HOU/ECT@ECT
Subject: GTC'S AND CONFIRMS

While going through our confirmation process, there was some concern raised
on deals that we are not confirming. I'm sure you are aware of the concern
that George W. had with not wanting a confirmation to go out to the producers
when they were trying to get a firm contract signed. I spoke with Dan Hyvl
today and I wanted to relay to you his thoughts.

His first concern was if the Asset Traders were trading on a recorded phone
lines. Apparently the GTC's specify that if there is a dispute with what is
on the confirmation, the recorded phone call would be the back up. He said
that if these calls are not recorded, then we should not be using the GTC's.
In the case where the tickets are being held back until the contract is
signed (example: a ticket was submitted today to start back in June), then we
should be putting the contract in as unexecuted so the deal can be valued and
tracked. His decision on that issue was based on my memory that if a
contract is marked unexecuted, Unify would not make payment. If that is not
the case, we could still put the contract and deal in the systems, and have a
VP signed off that payment would not go out the door.

If deals are being done on an unrecorded phone line, Dan said that we would
need to do something different if the payment is to go out the door. Like
for example, have the producer sign a one month contract. Which I'm not sure
you would want to do that. Otherwise, he said that the trades should be sent
down to 31 so they will be recorded.

I hope this makes sense. Please call me, and let me know your thoughts.

Julie