Thanks for the info.  Please include Murray O'Neil, Chris Stokley, Lisa McClendon and me in the meeting next week.  I recommend that we invite the Service Manager for this account also.  Ben Smith can identify the person for us.  Delainey has asked Service Managament to identify deals that are difficult to administer - this might be a good candidate.  Let's discuss this further next week.
 
Please contact Patti Thompson @ x35953 - she can help schedule Murray, Chris, Lisa and me.
 
Thanks.

-----Original Message----- 
From: Valenzuela, Tony 
Sent: Mon 9/10/2001 11:24 PM 
To: Donovan, Terry W.; Palmer, Maureen; Segura, Stephanie 
Cc: John, Saji; Thakkar, Ameet; Hannum, Richard; Wheelock, Carlos; Herod, Brenda F.; Hwang, Monica 
Subject: Owens-Illinois Option/consumption settlement, Power Percent on Peak, & Wholsale Index



Terry, Maureen, Stephanie,

Here is an outline of the issues we discussed today - We should have a follow-up meeting late next week and include

EWS operations group.  Please insert comments or questions in the notes below.

1. Natural gas Option settlement per Section 5.7 

This section gives EES the option to charge O-I the "market price" for the Natural Gas Basis when 

the market price is above the contract strike price.

This section applies to 7 sites with annual volumes of 7.7 million MMBTUS (~50% of O-I total gas load).

Issue:

We have not been able to invoice O-I for "market price" at these facilities since I have not been able to find

internally a number/methodology to show O-I on a monthly basis.

Next Steps:

Monica Hwang has been working with the traders, desk to find a "transparent market price" for these basis.

Terry agreed to also look internally to determine what information we will be able to show O-I.

Alternatives:

O-I has been asking for Fixed Index pricing to these pooling points.  If these options continue to be administratively difficult to 

manage then we can get out from under these with a fixed price structure.

2.  Consumption Variance for 90/110 band for natural gas and power per section 5.5

We have started the consumption variance calculations for the months of May 2001 and June 2001 and need

guidance on the following

On the power side:

One of the ambiguities is determining what the "current market value" is for the period when the All-In fixed 

price is in effect.

During our initial run we interpreted the "current market value" to be the all-in utility kwh cost for the specific month.

Is this appropriate and if not what value should be used for the "current market value"?

On the natural gas side:

In the case where the 90/110 band is exceeded we have run into the same "market price" problem 

for the basis as we have identified in number 1 above.  Solving issue number 1 above will also solve this one.

In terms of magnitude this is not as significant in dollar terms as the options settlement.


3. Percent on Peak (POP) determination for the power accounts

The contract currently states that the Wholesale index definition of POP will be applied to 12 billing

periods to derive the actual POP.

O-I has left the ball in our court to propose an approach to apply the wholsale definition to the Nov 1999 to

October 2000 billing periods.

Need guidance on approach that we would like to propose.


4. Wholesale Index proxy for commodity regions

Although the commodity regions are well established in the contract, the Index to be used for on-peak and off-peak

components regions are not fixed.

We need to identify a wholesale index at least for those 12 accounts that will be flipping to the index in January, 2001.


5. To the extent we view any exisiting contract open issues identified above unmanageable or undesirable, what options 

can we propose to O-I?



Tony