
Date: Mon, 10 Apr 2000 03:49:00 -0700 (PDT)
From: colleen.sullivan@enron.com
To: chris.germany@enron.com
Subject: Re: CES contract - Choice Demand Swings in April 2000 - PLEASE READ
Cc: joan.veselack@enron.com, chris.germany@enron.com, molly.johnson@enron.com,
dick.jenkins@enron.com, katherine.kelly@enron.com,
victor.lamadrid@enron.com, joann.collins@enron.com,
robert.allwein@enron.com, robert.superty@enron.com,
scott.goodell@enron.com, scott.neal@enron.com
Bcc: joan.veselack@enron.com, chris.germany@enron.com, molly.johnson@enron.com,
dick.jenkins@enron.com, katherine.kelly@enron.com,
victor.lamadrid@enron.com, joann.collins@enron.com,
robert.allwein@enron.com, robert.superty@enron.com,
scott.goodell@enron.com, scott.neal@enron.com

Chris has already answered one question--I'll try to answer another.   Here
is the way the deal works as it relates to storage and intra-day swing
volumes.
CES-Retail provides us with a first of the month daily sales number and a
monthly storage number.  The estimated sales numbers are outlined for the
entire term of the deal in the exhibit--each month, during bid week they must
provide us with their final number, which must be within 10% plus or minus
the numbers on the exhibit.  Anything outside of this range is an agreed upon
price at the time it is proposed.  The monthly storage numbers are provided
on the proxy schedule--we already have those numbers for the remaining term
of the agreement--these cannot be modified without mutual agreement.  In a
given month, however, CES has 5% flexibility on their total monthly volume.

Now, for the daily volume issue.  CES provides us with its nomination by
10:00 a.m., including the amount of gas it needs from storage.  If they call
us with a change to this storage number intra-day, then we must make the
change on their behalf, including buying gas to prevent them from incurring
overrun charges.  The price of any incremental sales volumes is completely
negotiable at that time.   If ENA is using any storage capacity for its own
benefit during this type of situation, and CES' new nomination is still under
its storage MDQ, but our nomination causes us to exceed the MDQ, then we are
at risk for any overrun charges.  HOWEVER, if CES never calls with a change
and their volumes increase significantly, causing overruns (even if ENA is
using some of the storage capacity), CES is responsible for any overrun costs
or penalties.

Hopefully this all makes sense--if not, I'll be happy to have a meeting to
walk through different situations.  Anyway, from a customer service
perspective, we definitely need to advise CES-Retail each and every time as
soon as we find out their volumes have changed with no notification to us and
it causes them some incremental overrun or other charge.






