We've talked this over at this end and agree we should be taking the following approach:

Remind Brazos that under Exhibit 7.12, page 2 of the PPA, Brazos is precluded on any gas day from taking a greater volume of gas than the plant's MDQ (45,000 Dth/d) less the amount needed to satisfy its generation request.

The partnership will accept total gas nominations as generation first, gas for resale second.  If Brazos' electric nominations by hour would, given ambient conditions, cause us to use at or above the plant's MDQ under its contracts with Apache/Williams (45,000 Dth/d), gas nominations will be zero.  This needs to be handled between the operators.  I've emphasized "at or above" on purpose; if an all electric nomination would cause Brazos to burn in excess of 45,000 Dth per day, we will honor that request (we're looking at this with the attorneys and may choose at a future date to change the way this has been administered in the past, as this situation currently causes the partnership to incur an economic loss).  

After being notified of the need for a schedule adjustment, Brazos is free to reset its hourly electric nominations to allow for gas deliveries to the extent it desires (provided they're still capped at 45,000 Dth/d if they take gas).  Whenever they go this route, however, we need to hold them to the electric nomination (i.e., they should get a courtesy call from an operator each and every time they go over the nominated electricity amount).  Remind Brazos that under the PPA, they will be billed for penalties associated with not adhering to their electric nominations on days on which they've elected to take gas.

If the issue of precedent comes up, remind them that we're operating in a new territory and that electric-gas nominations have only been made over the past 7 months; it wasn't until recently that we've been able to attribute imbalance penalties to Brazos, which has caused us to look at the scheduling provisions of the agreement much more closely.

As a show of good faith, we should also make an attempt to track gas consumed/nominated for redelivery and advise them toward the end of the month of opportunities to up their gas nominations.

Hope this helps to clarify where we are.

RH

 -----Original Message-----
From: 	"Ken Riesz" <ken.riesz@naes.com>@ENRON [mailto:IMCEANOTES-+22Ken+20Riesz+22+20+3Cken+2Eriesz+40naes+2Ecom+3E+40ENRON@ENRON.com] 
Sent:	Friday, June 15, 2001 4:27 PM
To:	Mazowita, Mike; Hill, Garrick; Ward, Charles
Subject:	Gas Nom's

Chuck,
I just wanted to make sure everyone has the same undertstanding of the gas
nominations and usage issue. Today with this most recent daily nomination
revision from Brazos, Brazos(WACO) now understands that we are going to hold
them to 45,000 Mbtu's when they are requesting electrical generation and gas
energy. However, I want everone of us to understand that a nomination from
Brazos for a 6312 MWH,s(263/hr),will require the plant to utilize 47,500 to
48,500 Mbtu's at this ambient temperature to deliver the requested energy.
To allow Brazos any gas the total delivered electrical energy would have to
be something less than 258MW loading per hour.
Regards, Ken