EPMI recently did a deal with the City of Vernon which was a little bit funky 
and the sensitive, high strung city got somewhat out of sorts about the way 
we insisted upon documenting the deal and bitched to our trader (Rosman) 
about it, who, in turn, having a bad karma day, as usual, came in and bitched 
to me about it.  After some hearty belly-laughing at his expense flowing from 
the rich comedic theme of how we talk so sweet to our customers on the phone 
and then hang up and curse their mortal souls with expletives deleted,    I  
agreed with him that we need to ask the following question to those above 
with more wisdom than we have:

When you do the physical leg of an EFP transaction,  must the delivery point 
for the physical piece be identical to the delivery point of the futures 
piece?  

Shooting from the hip on the Casino floor without much substantive 
explanation to go on, I said the answer to this question was absolutely yes 
and the City of Vernon huffed and puffed and said they had done other deals 
where the delivery points were different.

I made us document the deal as follows:

1. An undocumented Nymex transaction whereby our broker agreed with their 
broker that we would buy 30 Palo Verde futures contracts from Vernon for $120.

2. Then, the Exchange of this futures position for a physical position was 
documented as a physical trade whereby EPMI sold Vernon 30 MW at Palo Verde 
for $120.

3. Then, because Vernon wanted to get out of their Palo Verde position, we 
agreed to buy back the 30 Mw for $120 and this was documented as a phsical 
transaction.

4.  Then, because Vernon needed the power at NP-15, we sold them 30 MW at 
NP-15 for $116. (Don't get distracted by thinking about buying at $120 and 
selling at $116 and losing money. The prices were good at both points as part 
of our portfolio of deals.)  

Vernon said we should have done step 1 and step 4 and not 2 and 3 and that 
they do this all the time.  I basically said that if the delivery point in 
the NYMEX contract was PV that it had to be the same in the physical part of 
the EFP.   May we please have the benefit of any comments on this issue.  
Thank you kindly.----cgy