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Here is a summary of recent developments:
Another Class Action Natural Gas Complaint Against El Paso and others (Los Angeles) Berg v. Southern California Gas Company. Class action anti-trust and unfair competition. This is a conspiracy case alleging that the Southern California Gas, SDGE and El Paso conspired not to compete in the delivery of natural gas in Southern California. The complaint alleges that the conspiracy resulted in discouraging new power plants and drove up the cost of electricity by controlling the supply of gas. <<Berg Gas Complaint.pdf<< Copy of Rojoin Electricity Complaint I do not believe I include a copy of this complaint before. It is a class action involving the retail electrical market. <<Rojoin.cmplt.PDF<< California AG Investigation Here is a copy of my email to the California AG describing our agreement re preservation of data: Rich, As promised, here is my summary outline of what we discussed regarding preservation of data: 1. In Portland, we proposed to handle business email related to the topics in your preservation letter by instructing employees not to delete any email sent or received for 24 hours. Email that is personal and does not relate to the business topics you have identified can be kept, discarded etc. at the employee's pleasure. Each day there is a backup made that will capture the email in those employees mailboxes. After 24 hours, each employee is free to manage their email box as they deem appropriate to the business needs (e.g. keep, discard). From our conversation, I understand that you agree that this is an acceptable procedure. 2. With respect to the hard drives on individual computers, you would like to get an organizational chart for Portland that would enable us to discuss 6-12 individual's computers that would be copied using ProQuest Drive Image Pro 4.0. In addition, there may be some other individuals that you would like to have us use a software product called Robocopy to copy files from their hard drives onto the network. Until we figure out which computers to copy etc. we will not begin this process. We discussed that because of the holiday period, it may not be practical to get this started until after the new year. 3. Outside of Portland, we have proposed making a snapshot backup along business function lines reasonably called for by the subject matter of your request. We propose not to backup any other business units or functions. On a going forward basis, those business functions that related to the subject matter of your request would be instructed not to delete business email. 4. We believe that relevant database backups have been and will continue to be made and preserved. 5. When an employee runs out of hard disk space on their computer, it is an acceptable practice to copy files form their hard disk to the network (where they will be backed up) and then delete those copied files to make sufficient work space for the employee to work. 6. For EES, I explained that their IT services are outsourced so we do not have as detailed information immediately available. As I mentioned on the phone, all of these discussions and efforts being made are done without waiving any objections that any of the Enron entities may have to your request including scope, burden, jurisdiction, relevance, privilege, privacy, vagueness etc. and Enron specifically reserves each and every right and objection it or its employees may have. Please let me know if your general understanding of our conversation is different than the above. CPUC Subpoena Jeff Richter and Tim Belden have been working on getting the EPMI data correctly gathered. They hope that by the middle of next week the Enron technical types will have figured out where all the data is and have assembled it for production. Because Jeff Richter will be gone until after the New Year, we will not be producing any data to the CPUC until early next year. Jeff and Tim are focused on having a common set of reliable data that will be used for all subpoenas, discovery requests etc. We also discussed once we have the data collected that we use one of our experts to help with the analysis so that we are not creating files and records for which we will need to claim a privilege at a later point in time. In other words, since we are keeping the backup tapes for the systems in Portland any analytical work that Tim or Jeff do for us will be recorded on the backup tapes. Tim Belden FYI Tim and his wife are expecting their first child with a due date of December 25th. He will become out of pocket for a short time thereafter. FERC Reporting A question arose regarding whether Enron needed to file a report to FERC concerning sales out of market that exceeded the soft caps. This was a requirement that was requested by the ISO in an emergency application on December 8th. The order granting the relief did not seem to include the reporting requirement. The first cut at the data for the report showed that Enron made $1.0M over a weekend by buying power at $500 and selling at $700. A later cut at the data came up with a different answer. When consulted by Christian Yoder and Steve Hall, I made the unilateral decision not to file the report. It was unclear whether we needed to do so and I had not seen and did not trust the data. Later Dan Watkiss confirmed that he believed we did not need to file the report. However, beginning January 12th this report will have to be filed for sales over the soft cap. Since this report requires a breakdown of costs vs. sales price, it is the same data that the PUC has been requesting and we anticipate will be requested in the litigation. Tim Belden and Jeff Richter are working on a standard reporting method. Hiring of Chief Operating Officer for ISO Tim Belden has been approached by the current Chief Operating officer of the ISO requesting a job. Apparently the COO and the current ISO board are not getting along. The issue raised by Tim to Mark Haedicke and Richard was whether they saw a problem with this hire. One of the key issues would be what was the business purpose for the hire. Obviously, Enron does not want confidential ISO information from this person. Also, if this person will be a witness in the litigation there is a risk that if his testimony would be favorable to Enron it would be viewed as purchased. On the other hand if his testimony would not be favorable at a time when he was employed by Enron that could be harmful. There is also the question raised whether this is a bona fide request for employment or whether other motives could be in play. Tim will be meeting with the COO on Friday. He has instructions to make sure that he is not given any confidential data and that no commitment will be made then without consulting the litigation team. Potential for Criminal Investigation The news of the investigation and all of our involvement has raised questions in the mind of some employees as to whether there is a risk of personal liability for them (civil or criminal). I reported that all we know is that there is an investigation under way by the California Attorney General. We have no reason to believe right now that they are focused on Enron or that Enron or any employee is a target. I said that at this stage of the investigation (including our investigation) we do not know enough facts to evaluate the risk for individual employees. We have not reviewed the trader tapes to know what has been said on those tapes. If we learn of facts that are specific to an employee, Mark has asked that we notify him immediately. We did provide some of this same information to traders we interviewed early in the process. Analysis of EPMI data I have taken a look at the deviation of the ISO energy flow on a daily basis from its day ahead schedules and compared those deviations to EPMI's. The source of the data is public information that was available to decision makers at the time. The comparison shows that generally speaking the ISO was short in its projection by a magnitude of 5-10 times the amount that EPMI was out of balance. There are some exceptions, but those are rare. Approaching Federal Judge for More Time Dave Noonan has pointed out that we should look carefully at the assigned federal judge and decide who from the defense group locally in San Diego would be in the best position to make the motion. Holiday Contact List Dave Noonan suggested and I concurred that it makes sense for all of you who receive this report to email me with your contact information and schedule over the holiday period. I will have a composite list made up and distributed. Thanks Gary ======================================================= This email message is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply email and destroy all copies of the original message. To reply to our email administrator directly, send an email to postmaster@brobeck.com BROBECK PHLEGER & HARRISON LLP http://www.brobeck.com - Berg Gas Complaint.pdf - Rojoin.cmplt.PDF
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