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Hey Lindy - I haven't seen or talked to you in a while. It will be fun to (potentially) work with you and Lorraine again -- I can at least treat you guys to a couple of good lunches! Next Friday will be fine for me. I am out of town through Thursday, but open all next Friday - so just let me know if something on the 9th would work for ya'll - I think there are five potential deal areas on the table: 1. Restructure existing ECS deals (bisti, bloomfield, gallup-switch from MTM to accrual, hubbard, WT1) 2. Increase netback from Gallup demand management (up to $2MM/year); possibly MTM the remaining balance? 3. New ECS/EES deals 4. RCM Project -- $20 MM to $100 MM guaranteed incremental cashflow and earnings for GPG in 2002 5. ETS Trading/Risk Management Project - use SCADA data for incremental earnings creation through trading/risk management See you then. Dave David A. Foti Accenture 2929 Allen Parkway, Suite 2000 Houston, Texas 77019 713/837-1997 "Donoho, Lindy" <Lindy.Donoho@enron.co To: David A. Foti/Internal/Accenture@Accenture m< cc: "Harris, Steven" <Steven.Harris@enron.com<, "Y'Barbo, Paul" <Paul.Y'Barbo@enron.com< 11/01/2001 04:25 PM Subject: RE: ECS Contract Review & New Idea Dave, How are you? I hope all is going well with your new job. I'm sorry we won't be able to meet this Friday. Can I call or e:mail you to set-up another time? I'll look forward to seeing you soon. Thanks, Lindy -----Original Message----- From: david.a.foti@accenture.com [mailto:david.a.foti@accenture.com] Sent: Tuesday, October 30, 2001 10:01 AM To: Donoho, Lindy; Harris, Steven Subject: RE: ECS Contract Review & New Idea Sounds good. This Friday, mid-morning or later would be best for me. David A. Foti Accenture 2929 Allen Parkway, Suite 2000 Houston, Texas 77019 713/837-1997 Steven.Harris@enron.c om To: David A. Foti/Internal/Accenture@Accenture cc: Lindy.Donoho@enron.com 10/30/2001 09:39 AM Subject: RE: ECS Contract Review & New Idea Dave, If possible, I would like for you to sit down with Lindy and a few folks from our group who have been looking at this. I want to make sure that it would be an efficient use of your time and that we would not be duplicating anything. I will have Lindy contact you so we can set something up and then move forward as necessary. Thanks. Steve -----Original Message----- From: david.a.foti@accenture.com@ENRON Sent: Tuesday, October 30, 2001 7:20 AM To: Harris, Steven Subject: ECS Contract Review & New Idea Steve - I worked it out so you will be getting the lowest possible rate for my time, $175/hour (normal rate is $350). I would like to send you an engagement letter this week for up to 3 weeks or 120 hours ($21k). I think we can get it done in less time but the 120 hours provides some flexibility if we decide to go deeper on something -- we would only charge you for the hours we use. I am visualizing the deliverable as an analysis of your restructuring options as well as the NPV, Income, and operational effect for each. To the extent time allows, I will be able to help negotiate and close whatever option you choose. In order for me to offer our preferred rate, it is important to note that I would need to be able to do this project on somewhat of a flexible basis (e.g. Friday meetings, emails, and phone vs. being on-site 3 weeks full-time). Even with this flexible structure, I feel confident that we can have the deliverable complete by mid December. Please let me know if it is ok to draw up an engagement letter with these terms. ======================== As for the new idea ---- I have been spending much of my time lately helping merchant power generators think about ways to leverage the value of their asset position/market intelligence. It occurred to me that there is an analogy here that relates to pipelines. Pipelines have operational "events" that may have market effects: Unplanned outage (major/minor/duration/notice) Planned outages over a certain volume Operation flow order/ SOLs Key Plants backed in Takes over schedule volumes key points Linepack levels Pressure drops at key points Since the pipeline is exposed to gas prices through gas needed for operational purchases - it is rationale that these phenomena would be studied and acted (read traded) upon in order to minimize TW's market risk (read generate income). TW can setup a risk management group to execute this idea. It is not unusual for a pipeline to have a risk management function - Duke Pipeline for example has a VP of Risk Management for Pipelines. These "events" would be studied in the follow way - 1. Determine whether there is a correlation between an "event" and gas prices/basis differentials. - based on historical data. 2. For those events that have a strong correlations, develop a trading strategy around the relationship. 3. Back-test the trading strategy against historical data - determine profitability. 4. For operational "events" that are applicable, setup a system to execute program trading that is directly linked to SCADA. Secondary benefits of this risk management (trading) strategy, would be developing the expertise to make decisions related to benefits of selling the capacity physical vs. through basis derivatives. (or some combination of both) Steve, if you are interested in this idea I can start drawing up a workplan for this study. Dave David A. Foti Accenture 2929 Allen Parkway, Suite 2000 Houston, Texas 77019 713/837-1997 ----- Forwarded by David A. Foti/Internal/Accenture on 10/30/2001 06:50 AM ----- David A. Foti To: Steven.Harris@enron.com 10/27/2001 04:13 PM cc: Subject: Contract Review & $20 MM RCM Steve - I have some ideas related to ECS contract restructuring options. If your team is available I could come by next Friday mid-morning or later to start discussing with them. On the administrative side, I am working to nail down the lowest hourly rate I can get for you. I would probably propose something like 80 hours * rate, in the engagement letter. This amount of time should be adequate to put together a short study on your different options. I will send you a engagement letter this week. I would just need to get that signed by you before Friday. Also, please let me know if you need any other information on the Reliability Centered Maintenance idea, as you prepare to talk to the other officers. Dave David A. Foti Accenture 2929 Allen Parkway, Suite 2000 Houston, Texas 77019 713/837-1997 Steven.Harris@enron.c om To: David A. Foti/Internal/Accenture@Accenture cc: Audrey.Robertson@enron.com 10/11/2001 10:56 AM Subject: RE: TW Earnings Idea - Twist on ECS Deals Sounds great. Just check with Audrey (3-5849) and she can put you on my calendar. I am out all of next week. Thanks. Steve -----Original Message----- From: david.a.foti@accenture.com@ENRON Sent: Wednesday, October 10, 2001 3:52 PM To: Harris, Steven Subject: TW Earnings Idea - Twist on ECS Deals Hello Steve - Haven't talked to you in a while, hope all is well. A quick update - I moved over from EES to Accenture's Energy group about six months ago and have been focusing on Trading and Risk Management & Pipeline Optimization projects. I had an idea which I thought you might find interesting. Accenture has a strategic alliance with a technology provider for Reliability Centered Maintenance (RCM) -- basically an advanced methodology & technology for making maintenance decisions. They are the standard for electric T&D companies and are now trying to move over into the pipeline segment. This is how I was thinking about using them to structure a deal: 1. TW hires Accenture to implement RCM 2. RCM Benefits are determined by a pilot project (4 weeks) 3. Accenture pays TW upfront for 10 years of projected benefits from RCM (say $20MM) as part of our "guarantee" 4. TW pays Accenture an annual licensing fee for the use of RCM over the next 10 years which will flow into the next rate case. I am currently pursuing another project with Ben Asante, so I am around the Enron building. Let me know if you would like to get together to discuss further. Hope all is well. Dave 713-252-9061 (mobile) David A. Foti Accenture 2929 Allen Parkway, Suite 2000 Houston, Texas 77019 713/837-1997 This message is for the designated recipient only and may contain privileged or confidential information. If you have received it in error, please notify the sender immediately and delete the original. Any other use of the email by you is prohibited. ********************************************************************** This e-mail is the property of Enron Corp. and/or its relevant affiliate and may contain confidential and privileged material for the sole use of the intended recipient (s). Any review, use, distribution or disclosure by others is strictly prohibited. If you are not the intended recipient (or authorized to receive for the recipient), please contact the sender or reply to Enron Corp. at enron.messaging.administration@enron.com and delete all copies of the message. 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This message is for the designated recipient only and may contain privileged or confidential information. If you have received it in error, please notify the sender immediately and delete the original. Any other use of the email by you is prohibited.
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