Mike Swerzbin told me Friday that he does not want us to pursue any action on 
this which would involve tearing up the option trades.  He did what Richard 
and I advised him to do,  he confronted Puget about it,  and is apparently 
satisfied from that conversation that their intentions were not as foul as we 
first suspected and seems willing to let the matter rest.  

Steve Hall's call to the Puget attorney's, referred to below,  was quite  
helpful in defusing the situation, although it really puzzles me why anybody 
would take the time to make a filing at FERC, (for price caps in the NW)  
just to show that another filing was ludicrous (price caps in California).  
Seems like bad regulatory faith or something. ----cgy   
---------------------- Forwarded by Christian Yoder/HOU/ECT on 11/07/2000 
08:08 AM ---------------------------


Steve C Hall
11/06/2000 04:55 PM
To: Christian Yoder/HOU/ECT@ECT
cc:  
Subject: Re: Puget Sound requests NW price caps  

Christian,

As I relayed to you and Tim Belden last week, Puget's counsel (Steve 
Marshall) assured me that Puget does not want price caps, and feels that the 
only thing worse than a price cap is a price cap in one market, but not in 
the adjacent market.  The intent of Puget's complaint was to point out to 
FERC the fallacy of adopting a price cap in California.  That's their story, 
anyway.  

Steve Marshall assured me that Puget's traders were unaware of its lawyers' 
intent to file a complaint seeking price caps.  I personally have no reason 
to disbelieve Marshall, who I know through my practice before BPA, and would 
doubt that he would risk his partnership at Perkins Coie and position as 
general counsel for Puget on a risky, tenuous scheme like this.

Nevertheless, assuming that Puget does not withdraw its complaint, Enron 
should note in its protest to Puget's complaint that ,if Puget's price cap is 
implemented, Puget would  benefit under contracts signed a few days before it 
filed its complaint.

According to Chris Foster, the traders are not interested in unwinding these 
deals unless the NW price caps are actually implemented.

Steve 

 



Christian Yoder

11/06/2000 08:03 AM
To: Steve C Hall/PDX/ECT@ECT
cc:  

Subject: Re: Puget Sound requests NW price caps


---------------------- Forwarded by Christian Yoder/HOU/ECT on 11/06/2000 
07:52 AM ---------------------------
From: Mark E Haedicke on 11/03/2000 05:26 PM CST
To: Christian Yoder/HOU/ECT@ECT
cc: Richard B Sanders/HOU/ECT@ECT 
Subject: Re: Puget Sound requests NW price caps  

I think this is a detrimental reliance case or fraud.  I want to be 
aggressive on this.  Richard, please let me know what theory is best.  Do we 
have counsel for Washington?

Mark



	Christian Yoder
	10/27/2000 12:15 PM
		 
		 To: Elizabeth Sager/HOU/ECT@ECT, Mark Taylor/HOU/ECT@ECT, Richard B 
Sanders/HOU/ECT@ECT, Mark E Haedicke/HOU/ECT@ECT
		 cc: 
		 Subject: Puget Sound requests NW price caps

In the days immediately before the application for a price cap, Puget came to 
us and asked us to enter into several put options.  We did so. I am advised 
by the traders that if this price cap were to actually be in effect,  our put 
option transactions would not make sense for us economically and we would 
never have entered into them had we known of their intention to make this 
filing.   I am under some pressure  to explain two things:  (i) whether the 
fact that they knew they were going to file for the cap when they did the 
options is some kind of fraud, and (ii) whether the WSPP Agreement or our 
ISDA swap agreements have any clauses in them to address this kind of 
thing,ie. is this some kind of "illegality" issue?  I am working on the 
second issue and have discussed it with Mark Taylor, but on the first issue, 
I need advice from Richard and anyone else who can help.----cgy 
---------------------- Forwarded by Christian Yoder/HOU/ECT on 10/27/2000 
09:59 AM ---------------------------


Mary Hain
10/27/2000 09:50 AM
To: James D Steffes/NA/Enron@Enron, Marcie Milner, Joe Hartsoe@Enron, Sarah 
Novosel/Corp/Enron@ENRON, Richard Sanders, Christian Yoder/HOU/ECT@ECT, 
Portland West Desk
cc:  
Subject: Puget Sound requests NW price caps

Puget Sound has filed a complaint against all jurisdictional sellers of 
wholesale energy and/or capacity in the Pacific Northwest, including parties 
to WSPP agreement.  Puget Sound requests FERC to impose price cap on 
wholesale sales of energy and capacity in the Pacific Northwest equal to the 
lowest price cap "established, ordered, or permitted by the Commission for 
wholesale purchases by the Cal ISO or Cal PX . . . ."  Puget requests an 
effective date of December 25,2000.