Dear John (and Sara this is a follow-up from my email to you of this morning 
our time),

I think Morten-Eric is planning to call you again tomorrow morning and he may 
mention this but I am still trying to work out the best way to move forward 
on this.  I have also today spoken with David Minns to see if he has done 
anything like this before.

Having today had a closer look at the provisions you included and especially 
the three at the end (outstanding swap transactions, swaps to roll up under 
new master and credit provision of master to govern), I am a bit confused. 
Morten did say that you had said that these could be deleted but I wanted to 
make sure we were on the same track.  

In simple terms, this transaction with Nippon Chemi-con is a simple stand 
alone agreement to supply physical power.  (There is not even an option for 
financial settlement in this one - although there will be in later ones).  
From the credit terms you have proposed I wonder whether you are thinking 
that we need a credit support annex or something similar because it will not 
be enough just to put in those terms you have included, additional provisions 
will be required so that those terms can work (and we don't have a master so 
we don't already have any of those).

If so, I guess we need to link a CSA into the power contract.  If Sara has 
done this before or can email me something along these lines I am very happy 
to have a go at it.  

If on the other hand this is less of an ISDA related issue (which I am 
starting to suspect) and is something that the lawyers doing physical 
electricity trading may have done before, perhaps it is better to ask them 
and not Sara.  Have you dealt with anything like this with the physical 
traders before - suspect you may well have.

I am attaching the latest draft of the agreement - FYI.




I am really sorry if I seem pedantic or difficult (or less than smart) but I 
have never done anything credit related like this before and am very unsure 
about the best way to move forward in order to get a draft to the customer 
ASAP without imposing anymore than necessary on you all in Houston (or London 
if Mark Evans has any ideas).  SO HELP!! (Grin!)

Thanks John.  I wont be in much before 9am tomorrow morning but would be 
happy to call you then or later at home, if you want to speak.  Just let me 
know what suits you.

 









	John Suttle@ECT
	2000/11/28 08:32
		
		 To: Jane McBride/AP/Enron@ENRON
		 cc: Alan Aronowitz/HOU/ECT@ECT, Mark Evans/Legal/LON/ECT@ECT, Sara 
Shackleton/HOU/ECT@ECT
		 Subject: Re: credit for Nippon Chemi-con

Sara - 

Can you please help Jane in putting credit language into the confirmation of 
a Japanese deal?  I have provided a worksheet with credit provisions that 
would normally go into a master or an omnibus confirmation.  In this case, it 
will be an omnibus.

Please let me know if I can do anything from here.

John



Jane McBride@ENRON
11/27/2000 05:11 PM
To: John Suttle/HOU/ECT@ECT
cc: Alan Aronowitz/HOU/ECT@ECT, Mark Evans/Legal/LON/ECT@ECT 
Subject: Re: credit for Nippon Chemi-con  


Hi John,

Thanks for this, just wondering though, how do you usually get from this sort 
of table to the actual provisions to include in the contract.  Alan, Mark, is 
there any easy way to do this?

Thanks.

Jane 




	John Suttle@ECT
	2000/11/28 07:05
		 
		 To: Morten E Pettersen/AP/Enron@Enron
		 cc: Jane McBride/AP/Enron@Enron, Joseph P Hirl/AP/ENRON@ENRON
		 Subject: credit for Nippon Chemi-con

Morten Erik - 

I recommend the credit terms provided in the attached document to be included 
in the Nippon Chemi-con contract.  These are industry standard terms for a 
counterparty with credentials such as Nippon-Chemi-con, and these industry 
standards are what will enable Enron to syndicate the credit risk if we 
decide to do so in the future.  

After my discussion with Jonathan last week, I think it is clear that Credit 
is on the same page with your team in that we recognize the importance of 
getting this first deal booked.  I think that in proposing the terms of your 
transaction to the counterparty though, Enron can begin educating the market 
as to the nature of the credit risk imbedded in the deal structure, and in 
doing so, begin setting the same standards we have in our other portfolios.  
The attached credit terms are not set in stone, but I think they are a good 
place to start.  I will make myself available to you and the counterparty to 
discuss the credit terms, and we will be very willing to negotiate the terms 
in good faith.  

My point is simply that we should not enter into any of these transactions 
without fully discussing the credit implications with the counterparty.
 
Please feel free to call me or write if you have any questions or concerns.

John  
x30906