RE: Columbus Schools - Appropriations Risk

We still need something in writing from Janet.

-----Original Message-----
From: Herndon, Rogers
Sent: Wednesday, August 08, 2001 2:43 PM
To: Presto, Kevin M.
Subject: FW: Columbus Schools - Appropriations Risk

The CYA begins.

RH
-----Original Message-----
From: Stubblefield, Wade
Sent: Wednesday, August 08, 2001 2:41 PM
To: Sharp, Greg
Cc: Dietrich, Janet; Chapman, Kay; Gahn, Scott; Herndon, Rogers; Holmes, Sean; Brown, Jim
Subject: Re: Columbus Schools - Appropriations Risk

To be clear, we agreed that if the contract language was modified, it would be loose enough to support a mark this time but should not be used as the model. We did not agree, though, that this in any way limited our risk from a business perspective. I'm no trader, but my understanding is we have effectively sold the customer a call that we have to somehow hedge against? Again, we can mark and support what business decision is made, I just did not want there to be any impression that accounting had opined on the business valuation post year 1.

Wade

<< OLE Object: Picture (Device Independent Bitmap) << Enron Energy Services From: Greg Sharp 08/08/2001 02:00 PM Phone No: 713-853-5140 - Office 713-646-8913 - Fax 713-515-2033 - Cell 888-754-9685 - Pager EB 781

To: Janet R Dietrich/HOU/EES@EES, Kay Chapman/HOU/EES@EES
cc: Scott Gahn/HOU/EES@EES, Rogers Herndon/Enron@EnronXGate, Sean A Holmes/HOU/EES@EES, Wade Stubblefield/HOU/EES@EES
Subject: Columbus Schools - Appropriations Risk

Janet We are proceeding with the contract changes that were discussed with Jim Brown and we have told the customers that the document should be ready for their review early next week. Are you still okay with us proceeding as we had discussed at the offsite?
---------------------- Forwarded by Greg Sharp/HOU/EES on 08/08/2001 01:54 PM ---------------------------
From: Rogers Herndon/ENRON@enronXgate on 08/08/2001 09:24 AM
To: Greg Sharp/HOU/EES@EES, Wade Stubblefield/HOU/EES@EES
cc: Sean A Holmes/HOU/EES@EES
Subject: Columbus Schools - Appropriations Risk

Guys -

I am not comfortable leaving the appropriations risk "grey", as it has been referred to. The risk is there and it is real. If the EES Executive Comittee is comfortable with this strategy/approach then I would expect to have something in writing between EES and EWS releasing EWS of any and all $$ reponsibility associated with this potential, yet unmentioned, risk.

FYI, last time we priced this risk we came up with a notional value of $5MM.

I am on board with providing aggressive pricing and trying to enter new markets. However, we need to recognize all the risks.

Rogers