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Enron Mail |
As you all may remember we have answers to Calpine's interrogatories which
are due tomorrow. I am inserting the draft responses and a verification form. Please review the draft answers and call me with any questions. I would like to get them finalized and signed today as I am leaving to go out of town this afternoon. I think that Elizabeth may be the person with the most knowledge and therefore, the best person to sign the verification. Please call me with any changes or if you have any difficulty in reading th= e answers. My direct line is 713-844-3003. I apologize for the short notice. IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION ENRON POWER MARKETING, INC. o o Plaintiff, o o V. o CIVIL ACTION NO. H-00-0885 o CALPINE POWER SERVICES o COMPANY o PLAINTIFF=01,S ANSWERS TO DEFENDANT=01,S FIRST SET OF INTERROGATORIES TO: Defendant, Calpine Power Services Corporation, by and through their attorneys of record, Mr. David J. Beck, Mr. Thomas E. Ganucheau, Beck, Redden & Secrest, L.L.P., 1221 McKinney, Suite 4500, Houston, Texas 77002. Pursuant to Rule 33 of the Federal Rules of Civil Procedure, Plaintiff Enron Power Marketing, Inc. (=01&Enron=018) files its Answers to Defendant= =01,s First Set of Interrogatories. Respectfully submitted, Laura Gibson Federal I.D. No. 81 State Bar No. 07869350 ATTORNEY-IN-CHARGE FOR PLAINTIFF OF COUNSEL: William W. Ogden Federal I.D. No. 2172 Texas Bar No. 15228500 OGDEN, GIBSON, WHITE & BROOCKS, L.L.P. 2100 Pennzoil South Tower 711 Louisiana Street Houston, TX 77002 (713) 844-3000 (713) 844-3030 (Facsimile) CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing has been served on all counsel of record, by first class U.S. mail, on this _____ da= y of September, 2000 as follows: David J. Beck Thomas E. Ganucheau BECK, REDDEN & SECREST, L.L.P. 1221 McKinney, Suite 4500 Houston, Texas 77010-2010 Laura Gibson ANSWERS TO INTERROGATORIES INTERROGATORY NO. 1: Please describe in detail the factual and legal basis for your contention that CPSC =01&breached the Assignment Agreement=018 by allegedly =01&failin= g to endeavor in good faith to obtain the consent from LCRA.=018 ANSWER: On July 30, 1999, Calpine entered into an agreement with Enron in which it agreed to assume Enron=01,s obligation to supply power to the LCRA under the Enron/LCRA Power Purchase and Sale Agreement dated August 31, 199= 5 and as it was amended on April 15, 1999. The July 30, 1999 Assignment Agreement contains a condition that Calpine will obtain LCRA=01,s written consent to the assignment and a release of Enron and its affiliates from an= y and all obligations and liabilities under the Agreement. Calpine specifically agreed to endeavor in good faith to obtain LCRA=01,s consent a= s soon as practicable following Enron=01,s execution of the Assignment Agreem= ent. Shortly after the execution of the Assignment Agreement, Ed Baughman and Steve Snow spoke to determine the status of Calpine=01,s efforts to obtain = LCRA =01,s consent. Mr. Baughman followed up with Mr. Snow during the week of August 16, 1999 to determine the status of Calpine=01,s efforts to obtain L= CRA=01, s consent. It was clear from Mr. Baughman=01,s conversation with Mr. Snow = that Calpine was not exercising its best efforts to obtain LCRA=01,s consent. W= hen this became apparent, Mr. Baughman and others at Enron began making inquiries of LCRA to determine what would be required to obtain LCRA=01,s consent. These conversations made it clear that Calpine had not explored the issue with the LCRA. Further, Enron representatives were advised by representatives of the LCRA that Calpine had not furnished any financial information to the LCRA to make it comfortable with Calpine=01,s assumption= of the delivery obligations. Such failure by Calpine to use due diligence in obtaining LCRA=01,s consent combined with its failure to provide the LCRA w= ith any financial or credit information demonstrates that Calpine did not endeavor in good faith to obtain the LCRA=01,s consent. INTERROGATORY NO. 2: Please describe in detail the factual and legal basis for your contention that CPSC failed =01&to exercise good faith in agreeing to reasonable requ= ests relating to the assignment,=018 specifically identifying each and every all= eged =01&reasonable request=018, and when, how, by whom, and under what circumst= ances the request was made, and CPSC=01,s response to each request. ANSWER: Calpine failed to exercise good faith in agreeing to reasonable requests relating to the assignment by failing to endeavor in good faith to obtain LCRA=01,s consent to the assignment, failing to provide LCRA with financial information and failing to provide LCRA with a parent guaranty guaranteeing Calpine Power Services Corporation=01,s performance of its assumption of the Enron/LCRA Power Purchase and Sale Agreement. Additionally, Calpine failed to agree to reasonable requests when it failed to provide an indemnification from its parent corporation indemnifying Enro= n in the event that Enron paid any money out on its guaranty to the LCRA. On or about August 26, 1999, after it became clear that Calpine was not taking any effort to endeavor in good faith to obtain the LCRA=01,s consent, David Portz of Enron sent Ron Fischer of Calpine the documents necessary to provide Calpine=01,s parent guaranty and indemnification of any payment by Enron under the LCRA agreement. Calpine refused to execute these documents or to negotiate in good faith for any necessary modifications thereto. Additionally, in a telephone conversation between Enron and Calpine representatives, Calpine conceded that in the past, it had traditionally provided a parent guaranty. INTERROGATORY NO. 3: Please describe in detail any and all damages allegedly suffered by you and for which you seek redress herein, and describe in detail the method by which such damages are calculated. ANSWER: Enron has not yet calculated the damages it has incurred as a result of Calpine=01,s breach of its obligations under the Assignment Agreement. Enron continues to have an obligation to supply the LCRA with power and will be required to do so until the contract terminates on December 31, 2002. Enron will supplement this interrogatory in accordance with the Federal Rules of Civil Procedure. INTERROGATORY NO. 4: Do you contend that CPSC was obligated under the July 30, 1999 Letter to seek and/or secure a guarantee from Calpine Corporation? If you answer to either is =01&yes,=018 please describe in detail the legal and factual basi= s for each such contention. ANSWER: Yes. Beginning during approximately the summer of 1998, it became customary in the wholesale power market to provide a parent guarantee when the power was either being purchased by or sold to a marketing affiliate. In a telephone conference on the afternoon of August 27, 1999, Calpine representatives conceded that they generally provided a parent guaranty. Additionally, the representatives conceded that it did not cost Calpine Power Services Company any money to provide a parent guaranty. In the negotiations between Enron and Calpine prior to the execution of the Assignment Agreement, it was understood that Calpine would provide a parent guarantee. When the transaction changed from the back-to-back transaction to the assignment, in recognition of the increased risk, Enron increased th= e amount that it was willing to pay Calpine to assume its obligations under the Enron/LCRA Power Purchase and Sale Agreement to $1.8 million. In recognition that parent guarantees are customary in the industry, in December of 1999, Calpine and Enron exchanged parent guarantees. INTERROGATORY NO. 5: Identify each action which you contend is =01&customary and reasonable in t= he industry=018 and which you contend CPSC failed to undertake in order to =01= &obtain LCRA=01,s consent=018 to the assignment of the Power Agreement. ANSWER: Calpine failed to act in a customary and reasonable manner by failing to act promptly to obtain the LCRA=01,s consent to Calpine=01,s assignment. Further, Calpine failed to act in a customary and reasonable manner in failing to provide LCRA with any financial information concerning Calpine Power Services Corporation or its parent in order to assure the LCR= A of Calpine=01,s financial ability to perform under the Assignment Agreement= . Calpine also failed to provide either Enron or LCRA with a parent guarantee and to provide parent indemnification to Enron for any amounts paid by Enro= n to the LCRA as a result of Calpine=01,s failure to perform its obligations under the Power Purchase and Sale Agreement. INTERROGATORY NO. 6: Identify and describe in detail each and ever action taken by you to mitigate your alleged damages in this matter. ANSWER: On December 8, 1999, Enron gave notice to the LCRA of its termination of the Enron/LCRA Power Purchase and Sale Agreement dated Augus= t 31, 1995, as amended on April 15, 1999 effective December 31, 2002. On December 31, 1999, Enron entered into an agreement with Oxy Vinyls, L.P. wherein Enron Power Marketing, Inc. purchased electrical capacity and energ= y from Oxy. Additionally, Enron has purchased the power necessary to supply the LCRA at the lowest prices available to it in the market. S:\Enron\Calpine\resp to rogs.wpd VERIFICATION STATE OF TEXAS o o COUNTY OF HARRIS o BEFORE ME, the undersigned authority, on this day personally appeared ____________________________, an authorized representative of Enron Power Marketing, Inc. I state that I am legally competent to make this Verification, which is based on my personal knowledge, and that the factual statements contained in these answers to interrogatories are true and correct. ____________________________________ SWORN TO AND SUBSCRIBED BEFORE ME on this _____ day of ____________, 2000. _____________________________________ NOTARY PUBLIC IN AND FOR THE STATE OF TEXAS
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