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Enron Mail |
A summary of AA's final audit results was never delivered to me, Brenda and=
Bob (I have added Brenda and Bob to the distribution) were handling the AA= audit team and I have never seen a compilation of the items we agreed to i= n our last meeting with AA just before the HPL sale negotiations started. = This does not mean Bob or Brenda may not have the information but I have ne= ver seen it. (Confidentially, I think AA was struggling with their role in= this because Entex/Reliant is such a large customer of theirs) In our las= t meeting we agreed to use the audit issues as leverage to clarify the inte= nt of the contract. Who were the other suppliers, how were they allocated,= clear definition of which citygates HPL served off-system and access to ba= lancing information on a real time basis for planning purposes. A better u= nderstanding of Entex's transportation agreement on Midcon and a more proac= tive role in the management of the transportation contract Or, if we could= not get some of this information and cooperation, HPL would reduce its rol= e with Entex to deliveries at HPL's sales point (basically out of HPL's ass= et) into Midcon, etc. Clarification of contract issues will help HPL identify those Entex markets= we can consider incremental on other pipelines (currently Entex/Midcon cla= ims some Midcon citygates are outside the 10 bcf commitment and additive to= Midcon's supply contract with Entex (part of HPL's audit issues is that th= ere is no definitive agreement on which ones). Indentification has the aff= ect of determining those Entex markets HPL should spend their capital on be= cause theoretically we have the other markets via the transportation agreem= ent. Other issues revolve around Entex's allocation proceedure for R/C and indus= trial gas users. As you all know, there is a significant difference in pri= ce between the two. Entex's allocation proceedure needs to be clearly docu= mented and supported. HPL is in the unusual position of having its custome= r (Entex) determine the allocation and whether or not the customer (Entex) = has met all its obligations, naturally, the customer rarely falls short of = its contractual requirements with this process. Any monies recovered in this process belong to the desk, it was their perfo= rmance risk, storage revenue, P/L etc that was at risk during the contract = year. Additionally, a new audit period for the last contract year will be = at the end of this month. If Enron is going to pursue this, it would be ap= propriate to contact Entex for preperation for an additional audit. I sugg= est we avoid the AA conflict (we should have enough work papers etc. to sup= port the effort) and go with one of the other large audit firms who has no = alliance to Reliant or Entex. From:=09Brian Redmond/ENRON@enronXgate on 04/19/2001 07:52 PM To:=09Thomas A Martin/ENRON@enronXgate, Edward D Gottlob/HOU/ECT@ECT, Barba= ra N Gray/HOU/ECT@ECT, James I Ducote/HOU/ECT@ECT, Brad Blevins/HOU/ECT@ECT= , Steve HPL Schneider/HOU/ECT@ECT, Jim Coffey/ENRON@enronXgate cc:=09Lillian Carroll/ENRON@enronXgate=20 Subject:=09ENTEX Team: I met with Brad Blevins and Jim Ducote today regarding credits and obligati= ons (implied, documented or otherwise) between Entex, ENA and HPL. We need= to pull the above group together to get a consistent view on: 1.=09The definition and transfer of ENA obligations to Entex and reserves a= gainst those obligations to HPL/AEP. 2.=09The creation of an A/R invoice to Entex for payment based on the defin= itive results of the audit. Brad/Jim: can you email the note you gave me today to the above group. Tom/Ed: can you pull together a summary of the results of the audit showin= g what Entex owes HPL and what Entex owes ENA. Lillian: can you arrange a meeting with the above group to discuss. Thanks, Brian
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