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Enron Mail |
I agree with and support what Tracy is saying in her message below. However,
in one regard, I would say it a little differently. Legal was not "instructed" by anyone to approve any confirms. I discussed the deal with both John and Mike and it was my understanding that the long term deal was conditional upon Ashgrove signing the EEI. To me, (and this is where I think my understanding was identical with Tracy's) this meant that the long term deal would not be booked until the EEI was signed. I was led to believe that Ashgrove would indeed sign the paper yesterday and we faxed a complete set of documents signed by Tim up to them in mid afternoon with instructions for them to return fully signed copies. They did not sign the paper and the deal has been booked. Somehow, our teamwork process didn't work and we got the booking ahead of the signing and this is a process issue which we must all strive to address more effectively. ----cgy -----Original Message----- From: Ngo, Tracy Sent: Wednesday, June 06, 2001 3:51 PM To: Malowney, John Cc: Swerzbin, Mike; Yoder, Christian; Bradford, William S.; Wolfe, Greg; Foster, Chris H. Subject: Ash Grove Cement Company - deal booked without approval John, I am sending this email to document the incorrect process that commercial independently took in handling the long-term deal with Ash Grove Cement Company [EPMI sale of 6MW (3MW in Jan/Feb); 7X24; 7/1/02 thru 6/30/07; fixed $42.25/MWh]. Credit and Legal worked diligently to expedite the due diligence/credit review and legal contract crafting of an EEI for Ash Grove Cement. Credit also stated that based on the proposed credit terms in the EEI contract to support the terms in the transaction, there would be NO credit reserve for this deal so long as it is confirmed under the EEI. Credit had already approved a shorter term deal without any credit terms [EPMI sale of 6MW; 7X24; 10/1/2001 thru 6/30/2002; fixed $88.25/MWh] to be confirmed under a general long-term confirm. Credit however required that the longer term deal be confirmed under an EEI with good legal and credit terms given the tenor of the transaction. Yesterday, you agreed to the conditions and you/Mike Swerzbin informed me (in Tim Belden's presence) that the long term deal was not going in the system until the contract was executed. However, somehow, Legal was instructed to approve TWO confirms to go out. Consequently, to my dismay, the deal was booked yesterday evening. My response to the blatant disregard for 'correct processes' is as follows: - Should Credit/Legal work expeditiously for firedrill transactions that are not followed through with correctly? please keep in mind that other marketers' commercial requests are re-prioritized when a firedrill is coming through; - Should Credit "trust" a marketer when a marketer informs Credit that the process is being handled correctly? - Should Credit continue to stand by the 'no credit reserve quote'? - Is this fair when other marketers are working hard to get contracts in place and to follow the process accordingly? - How can we correct this process going forward? I think that Credit and Legal handled the process in the most commercially sensitive manner; however, commercial decided to independently go against process control. Comments are welcome. Tracy
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