Harbor/EPMI July Gas Invoice

Patti/Janie:

To recap the billing issue between EPMI and ENA with respect to the Harbor
deal, as indicated on the attached spreadsheet, I believe EPMI ordered
292,500 MMBtu at an average price of $4.65/MMBtu for a total of $1,360,125.
Harbor Cogen used 288,574 MMBtu (this usage will be in the ENA SoCalGas
imbalance statement). ENA delivered 297,348 MMBtu in a pattern that resulted
in a price above $4.65/MMBtu. In the system right now, ENA is trying to bill
EPMI 297,348 MMBtu at this higher price.

So, there are two issues. First, does Janie agree with my statement as to
what EPMI bought, given that the Gas Daily arithmetic seems to be indicating
a higher weighted average price than $4.65. If not, let's get that on the
table. Janie could you let me know on that? Secondly, how can we deal with
this volume issue? ENA can bill based on deliveries as this is how gas is
typically sold. ENA can bill based on usage as we do with accounts such as
Jefferson Smurfit and Filtrol. The concept of billing based on ordered is
troublesome as if ENA were to try to bill on what EPMI ordered, this would
make the imbalance calculation that Sherry A. does out of wack.

So, to keep this simple, to address this volume issue on a go forward basis,
an approach that might work is that ENA would bill EPMI on usage at the
$4.65/MMBtu price (288, 574 @ $4.65/MMBtu). And, it would be understood that
EPMI would receive the first 3,926 MMBtu of August gas from ENA at a price of
$4.65/MMBtu. This could easily be done by making a deal entry for a day in
August that would adjust a price reflect the value of this imbalance. This
would be the way we would hanle it from now on.

Let me know what you think.

Teresa: Irrespective of the above discussion, let's reduce Harbor's PX
payment by $1,360,125 to reflect gas costs. If we end up with something
other than this we can catch it as a billing adjustment with the ISO
payment.

Thanks

Chris