|
|
Enron Mail |
An Agreement to Interconnect and Operate Natural Gas Pipeline Facilities has
been executed between HPL and the Rio Nogales Power Project, L.P. This agreement will provide for the physical means by which gas can be delivered from the HPL South Texas Joint Venture Pipeline System and the Rio Nogales Power Plant located near Seguin, Texas. The interconnect will be built on the South Texas System near the city of Prarie Lea. The power plant is presently in construction. The plant owners will build a new pipeline to connect to the HPL system. The new pipeline is anticipated to commence construction around June 1, 2001. Under the Interconnect Agreement HPL will, at its expense, install the hot tap and valve and then be reimbursed for its actual expenses. Expenses are estimated to be less than $150,000. A Guaranty Agreement has concurrently been executed between HPL and Constellation Power, Inc. This agreement by the parent of Rio Nogales Power Project, L.P. provides a corporate guaranty for payment of the work by HPL up to $300,000. With receipt of the executed Guaranty, Facility Planning and Enginneering are released to recommence discussions with Rio Nogales and thier pipeline constructor, Pinnacle, to finalize details of the interconnection. In recognition of the prospective close between HPL and AEP, HPL will attempt to have the work performed after the close. If the currently anticipated close date of June 1st occurs, this schedule should not be a problem. If the work can be scheduled after close, the receivable to HPL should be straightforward and not require any special handling. I therefore request that Jim Haden and Bob Camp coordinate with me regarding the schedule for the work. I would also request that Ken Kaase provide our Joint Venture Partner notification of the interconnection agreement or whatever advice is required under the JV Agreement. Ken, I will provide you whatever details are needed for this purpose. The interconnect is located on the system that would deliver future volumes to the City of San Antonio should HPL be sucessful in negotiating such a contract. It is also the system that could service the new Austin peakers either through new pipe or through a third party transport. To date, there is no gas sales or transportation agreement with Rio Nogales. Because of the current state of hydraulics on this system, and the multiple potential loads, all interested individuals need to be cognizant of a need to coordinate and plan for handling these prospective loads towards maximizing the benefit of the asset . Please advise if there are any questions or concerns.
|