FYI.  Dave's proposal to Steve.

 -----Original Message-----
From: 	Harris, Steven  
Sent:	Tuesday, October 30, 2001 9:39 AM
To:	'david.a.foti@accenture.com@ENRON'
Cc:	Donoho, Lindy
Subject:	RE: ECS Contract Review & New Idea

Dave,
	If possible, I would like for you to sit down with Lindy and a few folks from our group who have been looking at this. I want to make sure that it would be an efficient use of your time and that we would not be duplicating anything. I will have Lindy contact you so we can set something up and then move forward as necessary. Thanks.
	Steve  

 -----Original Message-----
From: 	david.a.foti@accenture.com@ENRON  
Sent:	Tuesday, October 30, 2001 7:20 AM
To:	Harris, Steven
Subject:	ECS Contract Review & New Idea

Steve -

I worked it out so you will be getting the lowest possible rate for my
time, $175/hour (normal rate is $350).  I would like to send you an
engagement letter this week for up to 3 weeks or 120 hours ($21k).  I think
we can get it done in less time but the 120 hours provides some flexibility
if we decide to go deeper on something -- we would only charge you for the
hours we use.

I am visualizing the deliverable as an analysis of your restructuring
options as well as the NPV, Income, and operational effect for each.  To
the extent time allows, I will be able to help negotiate and close whatever
option you choose.

In order for me to offer our preferred rate, it is important to note that I
would need to be able to do this project on somewhat of a flexible basis
(e.g. Friday meetings, emails, and phone vs. being on-site 3 weeks
full-time).  Even with this flexible structure, I feel confident that we
can have the deliverable complete by mid December.

Please let me know if it is ok to draw up an engagement letter with these
terms.


========================

As for the new idea ----

I have been spending much of my time lately helping merchant power
generators think about ways to leverage the value of their asset
position/market intelligence.  It occurred to me that there is an analogy
here that relates to pipelines.

Pipelines have operational "events" that may have  market effects:
    Unplanned outage  (major/minor/duration/notice)
   Planned outages over a certain volume
   Operation flow order/ SOLs
   Key Plants backed in
   Takes over schedule volumes key points
   Linepack levels
   Pressure drops at key points

Since the pipeline is exposed to gas prices through  gas needed for
operational purchases - it is rationale that these phenomena would  be
studied and acted (read traded) upon in order to minimize TW's market risk
(read generate income).  TW can setup a risk management group to execute
this idea. It is not unusual for a pipeline to  have a risk management
function -  Duke Pipeline for example has a VP of  Risk Management for
Pipelines.

These "events" would be studied in the follow way -

1. Determine whether there is a correlation between  an  "event" and gas
prices/basis differentials. - based on historical  data.
2.  For those events that have a strong  correlations, develop a trading
strategy around the relationship.
3.  Back-test the trading strategy against  historical data - determine
profitability.
4.  For operational "events" that are  applicable, setup a system to
execute program trading that is directly linked to  SCADA.


Secondary benefits of this risk management (trading) strategy, would be
developing the expertise to make decisions related to benefits of selling
the capacity physical vs. through basis derivatives. (or some  combination
of both)

Steve, if you are interested in this idea I can  start drawing up a
workplan for this study.



Dave





David A. Foti
Accenture
2929 Allen Parkway,  Suite 2000
Houston, Texas 77019
713/837-1997


----- Forwarded by David A. Foti/Internal/Accenture on 10/30/2001 06:50 AM
-----

            David A. Foti
                                         To:     Steven.Harris@enron.com
            10/27/2001 04:13 PM          cc:
                                         Subject:     Contract Review & $20 MM RCM




Steve -

 I have some ideas related to ECS contract restructuring options.  If your
team is available I could come by next Friday mid-morning or later  to
start discussing  with them.

On the administrative side, I am working to nail down the lowest hourly
rate I can get for you.  I would probably propose something like 80 hours *
rate, in the engagement letter.  This amount of time should be adequate to
put together a short study on your different options.  I will send you a
engagement letter this week.  I would just need to get that signed by you
before Friday.

Also, please let me know if you need any other information on the
Reliability Centered Maintenance idea, as you prepare to talk to the other
officers.


Dave




David A. Foti
Accenture
2929 Allen Parkway,  Suite 2000
Houston, Texas 77019
713/837-1997



            Steven.Harris@enron.c
            om                           To:     David A. Foti/Internal/Accenture@Accenture
                                         cc:     Audrey.Robertson@enron.com
            10/11/2001 10:56 AM          Subject:     RE: TW Earnings Idea - Twist on ECS Deals






Sounds great. Just check with Audrey (3-5849) and she can put you on my
calendar. I am out all of next week. Thanks.

     Steve

    -----Original Message-----
   From:   david.a.foti@accenture.com@ENRON
   Sent:   Wednesday, October 10, 2001 3:52 PM
   To:     Harris, Steven
   Subject:  TW Earnings Idea - Twist on ECS Deals

   Hello Steve -

   Haven't talked to you in a while, hope all is well.  A quick update - I
   moved over from EES to Accenture's Energy group about six months ago and
   have been focusing on Trading and Risk Management & Pipeline
   Optimization
   projects.

   I had an idea which I thought you might find interesting.  Accenture has
   a
   strategic alliance with a technology provider for Reliability Centered
   Maintenance (RCM) -- basically an advanced methodology & technology for
   making maintenance decisions.  They are the standard for electric T&D
   companies and are now trying to move over into the pipeline segment.
   This
   is how I was thinking about using them to structure a deal:


   1.  TW hires Accenture to implement RCM
   2.  RCM Benefits are determined by a pilot project (4 weeks)
   3.  Accenture pays TW upfront for 10 years of projected benefits from
   RCM
   (say $20MM) as part of our "guarantee"
   4.  TW pays Accenture an annual licensing fee for the use of RCM over
   the
   next 10 years which will flow into the next rate case.

   I am currently pursuing another project with Ben Asante, so I am around
   the
   Enron building.  Let me know if you would like to get together to
   discuss
   further.

   Hope all is well.


   Dave
   713-252-9061 (mobile)




   David A. Foti
   Accenture
   2929 Allen Parkway,  Suite 2000
   Houston, Texas 77019
   713/837-1997


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