Is this still an active case? If so, I'd like to get a status report and 
include it on my report to Derrick. Who is handling(inside and outside)
----- Forwarded by Richard B Sanders/HOU/ECT on 02/04/2001 10:06 AM -----

	Richard B Sanders
	01/21/2001 10:23 AM
		 
		 To: Richard B Sanders/HOU/ECT@ECT
		 cc: 
		 Subject: NGX Litigation and Outside Counsel


----- Forwarded by Richard B Sanders/HOU/ECT on 01/21/2001 10:27 AM -----

	Peter Keohane
	12/19/2000 10:09 PM
		 
		 To: James Derrick/Corp/Enron@ENRON
		 cc: Mark E Haedicke/HOU/ECT@ECT, Richard B Sanders/HOU/ECT@ECT
		 Subject: NGX Litigation and Outside Counsel

Jim (and Richard) my apologies.  In the pace of the year-end I forgot to 
inform you of a piece of litigation commenced by Enron Canada.  The 
litigation is against NGX Canada Inc. and Canadian Enerdata, and their 
shareholders, Westcoast Energy and OM Groupen for NGX, and Richard Zarzeczny 
for Canadian Enerdata.

It is somewhat complicated.  In brief, NGX operates an electronic natural gas 
trading brokerage which suffered competitively after the onset of Enron 
Online, and Enerdata publishes the only available and reliable natural gas 
indices for our market.  Traditionally the indices were based upon a 
comprehensive survey of fixed-price physical gas transactions over the broad 
market.  Presumably to coerce business onto the NGX system, and with two 
days' notice, NGX purchased the right to calculate the indices (as opposed to 
Enerdata itself or the publication itself) and changed the methodology for 
the indices to include only trades completed on NGX's system.  The result is 
the indices are, for contractual purposes, quite cleverly unchanged and 
therefore still as described in hundreds of our trading contracts and 
thousands of transactions, but in substance have been changed to represent 
only NGX's segment of the market, which introduces unmanageable volatility 
and unreliability, and is affected by other limitations such as the ability 
to trade with NGX for a variety of reasons, including credit restrictions or 
electronic failure. [ex.  We have contracts to buy and sell Coke, somebody 
bought the formula for Coke, changed it to Sprite, put the Sprite in the Coke 
can, such that we are now forced to buy and sell Sprite under the auspices of 
contracts to buy and sell Coke.]

In any event, no commercial alternative was viable, and we decided to 
commence a law suit based upon interference with economic relations, 
interference with contractual relations, breach of obligations of good faith, 
civil conspiracy and passing off.  All are viable claims but difficult to 
prove.  We have to get past simply being outsmarted.  We have also decided 
not to involve regulators or antitrust enforcement.  The discovery process 
will be key, and we hope to influence a commercial result that includes all 
electronic trading systems, including Enron Online, into the indices. The 
lawsuit is for injunctive relief (which will be particularly difficult) and 
damages of C$100MM.  We hope to garner industry support, but to date and as 
usual, many parties agree with our position but are not willing to get 
involved.  Some competitors are also happy to segregate Enron Online from the 
rest of the market.

In terms of counsel, we initially were going to use Robert Anderson of Blake 
Cassels & Graydon, who we have used on many matters, but Blakes was 
conflicted after the injunction papers were served.  We had to find 
replacement counsel on short notice and, with the recommendation of Blakes 
but based primarily on my prior experiences, retained Clarke Hunter of 
Macleod Dixon.

My apologies for not letting you know sooner.  I had discussed the matter 
with Mark before commencing the suit, and Mark asked me to drop you and 
Richard a line, but I simply forgot.  If you have any questions or concerns, 
please call at 403.974.6923.  If I don't hear from you, all the best for the 
holidays.

Peter.