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Enron Mail |
We intend to reserve $5.5 million associated with PX Index-based deals with=
third parties that we did in January. The $5.5 million represents the amo= unt by which we underpaid some of our services customers relative to the PX= index. NO P&L IMPACT. Amounts currently sitting as annuities in Enpower.= We should release this reserve when the California refund case is complet= ed and new/final PX MCPs are published by FERC. The story goes like this ... We typically buy power from our services custo= mers at a PX Index price. Throughout January we entered PX Index based pur= chases from our services customers into Enpower. At the same time, Foster = was negotiating a certain $150/MWh payment to our customers given all of th= e noise around the PX, the weird prices that it was printing, and the $150/= MWh soft price cap that FERC had in place. We settled with our customers b= ased on the $150 value. Most of our customers were fine with this. To do = this we entered annuities into Enpower for the difference between the PX pr= ice and the $150 price. These annuities have been "hanging out there" sinc= e January. We should have run those annuities through the books and reserv= ed the amount when we settled with our customers (I am assured by Foster an= d Postelthwaite that we have properly settled with our customers). Somewhe= re between our middle market team and our risk group in Portland the annuit= ies were never run through the books (you may recall that we lost two of ou= r three people on our risk desk at this same time). Foster or Wolfe should= have caught this. Let me know if you have any questions or concerns. -----Original Message----- From: =09White, Stacey W. =20 Sent:=09Wednesday, October 31, 2001 5:49 AM To:=09Belden, Tim Subject:=09FW: Reserve (Schedule C) for PX deals Just double checking that you have already talked to Lavo about these. Thanks, Stacey -----Original Message----- From: =09Law, Samantha =20 Sent:=09Tuesday, October 30, 2001 8:09 PM To:=09Greene, Tracy; Belden, Tim; Foster, Chris H.; Mallory, Chris Cc:=09Postlethwaite, John; White, Stacey W. Subject:=09Reserve (Schedule C) for PX deals Dear all, Just a heads-up to everyone, the Risk will reserve $5,518,289.90 on 10/31/0= 1 in the ST-CA books regarding the following four annuity deals: #566310=09$1,885,593.81 #566307=09$1,383,042.10 #566313=09$1,539,749.09 #566377=09$ 709,904.90 Total=09=09$5,518,289.90 As discussed earlier, since these deals have never come through to ST-CA bo= ok, we will give this value back to ST-CA while reserving it at the same ti= me. Therefore, there will be NO P&L impact for ST-CA.=20 Tracy, We are treating this just like the way we discussed in the last email (10/2= 4). Therefore, you should be able to take them out from the LTD report in N= ov. Please let me know if you have any questions. Samantha Law EPMI West Power Risk Management 503.464.7248
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