Power Trading Audit Meeting

Stacey,

As per our conversation today, enclosed please find a list of topics we would
like to discuss for our Power Trading Audit:

1. Understand Nature of Portfolio
? Nature of portfolio, risk factors, correlation between curves,
calculation
of correlation factors, off-peak trading, liquidity of portfolio, etc.

2. Understand Performance Metrics
? Performance metrics utilized for traders, benchmarking trader
performance,
results of inadequate performance, bonus determination process.

3. Organizational Structure

4. Overall Market/ Newly Traded Markets
? Traders? assessment of the overall market, including most active regions,
liquidity of peak versus off-peak positions, new markets, etc.
? Extent of autonomy of the traders with implementing trading strategy
(i.e.,
whether traders can implement own trading strategies).
? Reports that are available regarding the number of trades executed on a
monthly or quarterly basis.
? Changes in management reporting process from prior year (i.e., book
administrator rolls, Schedule B & C, etc.).
? Extent of use of ExPower (if still utilized).
? Extent of exotic deals valued outside of EnPower and the related controls
surrounding deal capture, valuation, management reporting, and financial
reporting.
? Limits placed on trader activity (including position limits, VAR limits,
etc.) by the commodity group and the monitoring of those limits, if
applicable.

5. Ancillary Services
? Type of ancillary services provided to customers and the extent of
ancillary service trading. Discuss what governmental regulations or ISO
regulations exist for ancillary services (i.e., specified rates, market
caps,
etc.), and the impact on the curve. Understand why the curve typically does
not
change for ancillary services.

6. Monitoring of Long-Term Deals
? Long-term deals monitoring by risk management, and reports provided to
management regarding the status of long-term deals.
? Status of NSTAR and other significant long-term deals of which we have
reviewed for proper booking.

7. Monitoring of Requirements Basis Deals (UI, NSTAR, etc.)
? Monitoring requirements of basis deals with risk management and document.
? Nature of changes made, and the reasonableness of the current booking of
the deal compared to current available information.

Please let us know at your earliest convenience if you are the right person to
talk about these topics. If not, please direct us to the correct
individual(s).

Thank you for all your help.

Tatiana

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