Enron Mail

From:brian.redmond@enron.com
To:david.delainey@enron.com, john.lavorato@enron.com
Subject:Cushion Gas
Cc:wes.colwell@enron.com, joseph.deffner@enron.com, jim.schwieger@enron.com,thomas.martin@enron.com, kay.chapman@enron.com
Bcc:wes.colwell@enron.com, joseph.deffner@enron.com, jim.schwieger@enron.com,thomas.martin@enron.com, kay.chapman@enron.com
Date:Wed, 17 Jan 2001 03:47:00 -0800 (PST)

Dave/John:

Attached is a recommended strategy for addressing the Cushion Gas issue with
AEP. Bottom line is:

1. Hedge our obligation now - understand that John has already done this.
2. Begin working with AEP to get their bid on purchasing the Cushion Gas from
us (at a premium that will cover the cost of the additional 5.5 bcf)
3. Begin working with the banks regarding the cost/potential for Enron to
re-monetize the Cushion Gas at a higher basis (again to cover the cost of the
additional 5.5 bcf). At a minimum, this gives us additional negotiating
leverage with AEP.
4. Re-classify the 5.5 bcf from PP&E to a long term asset to delay
recognition of the higher cost.
5. Once we get AEP's bid on purchasing the pad gas - introduce the fact that
we mistakenly omitted from the balance sheet a 2007 liability to re-inject
the 5.5 bcf of pad gas. Offer for Enron to assume this 2007 liability.
6. If necessary we can also look at a higher threshold for the A/S line
liability, as I think that the risk that additional repairs will be required
is low.

Any comments/direction is appreciated,
Brian