Chris,

A couple of years ago the East and the Central Desks decided that Empire 
State Pipeline in NY would
be changed from an "East Desk pipeline" to a "Central Desk pipeline" in our 
scheduling and accounting
systems.  The reason for that decision was to fix the significant OA 
variances both desks were experiencing
by the Sithe book liquidations, and to better control and manage all the 
subtle little issues under the gas
sales agreement.  Since the only transaction that was being done on Empire 
was the Sithe deal, this 
approach has worked great and the OA and contract problems have been 
corrected. 

Over the last month or so, Sithe pointed out to us that some days CNG North 
Point gas prices were high 
enough so that Chippawa gas could be shipped over to CNG Lysander and still 
make a margin.  I talked 
to Geoff Storey about it and told him to keep that trade in mind.  At the 
time I assumed that Sithe's IT 
contract would be used to ship the volumes from Chippawa to one of the new 
interconnects with NFGS 
at Pendleton or CNG at Lysander and that we would just schedule it on the 
Central Desk and report the 
transactions under our monthly revenue sharing transactions with Sithe.

If ENA begins shipping gas on Empire under our own agreement, there are a 
couple things that I am very
concerned about:

 o   ENA has a contractual obligation to optimize Sithe's transportation 
assets & to split
       the incremental revenues with Sithe,
 o   Empire desperately wants to Sithe's new 750 MW plant to be served 
through Empire
       and if we start doing alot of IT business on Empire the word will 
probably get back to Sithe,
 o   I hope that Empire Pipeline continues to be a "Central Desk pipeline" in 
our systems.  We can
       not go back to that mess we had before when the Sithe deal was split 
between two desks.

I will be back in the office on Tuesday, maybe we can get everybody together 
an make sure that we can
come up with a plan that works for everybody.

Thanks,
Ruth