pls print--I can't get it to print in here.  thanks. df
---------------------- Forwarded by Drew Fossum/ET&S/Enron on 01/11/2001 
09:56 AM ---------------------------


Susan Scott
01/10/2001 01:02 PM
To: Drew Fossum/ET&S/Enron@ENRON
cc:  

Subject: Gallup -- monitoring system issue  


Drew, since my message to you this morning I've spoken with Gerald Nemec and 
Mark Knippa and here is what I've been able to learn.  ECS's position is that 
they could not begin getting a monitoring system in place (automated or 
manual) until it could obtain access to CDEC's website, which required the 
execution of a confidentiality agreement with Tri-State to protect the 
confidential information on the website.  I do not remember exactly when I 
first reviewed the confidentiality agreement; I believe I OK'd a draft 
agreement sometime over the summer (Schedule 21 became effective sometime in 
July), and I received executables from Gerald Nemec around Thanksgiving, 
which I had signed and returned to ECS.  The confidentiality agreement was 
fully executed as of Dec. 8, 2000.  ECS blames the delay between draft and 
execution on Tri-State/CDEC, who allegedly would not work on the 
confidentiality agreement until the merger was completed.  

Currently ECS is working with Kevin Hyatt on getting an automated system in 
place.  TW has access to the CDEC website, but such access is of limited use 
until an automated system is implemented, because identifying peaks would 
require continuous monitoring.  Apparently the programming is being done 
through Arnold Eisenstein's group (using an outside contractor, I believe).  
In fact, EE&CC has been responsible for the automated system from the outset, 
in that development of the monitoring system was included in ECS's payments 
to EE&CC.  

ECS believes they have done everything possible to fulfill their obligation 
to develop a monitoring system.  But they also argue that even if they did 
not fulfill this obligation, they are not responsible for the expenses TW 
incurred due to use of the compressor during peak load periods, as the 
implementation of a monitoring system is no guarantee that peak loads will 
actually be avoided.  While ECS does have a point, this is still a pretty 
harsh legal position for ECS to take with an affiliate and business partner.  
If ECS breached its obligation, it should take responsibility for its share 
of the consequences.

The difficult question is whether ECS breached the obligation.  What is "good 
faith" is subjective.   Since the confidentiality agreement is for the 
protection of CDEC, ostensibly the Enrons could have just signed an agreement 
and sent it to CDEC and it would have been binding on us.  However, issuance 
of a password and access to the website was totally within CDEC's 
discretion.  It is difficult to know whether there is anything ECS or TW 
could have done to expedite the process.   Also, we will probably never be 
able to tell for sure how long the confidentiality agreement sat on CDEC's 
and ECS's desks prior to execution.  

Going forward, until an automated system is implemented, TW will still risk 
being charged for peak demand until it monitors the website continuously.  If 
we do monitor the system manually, I believe the agreement does obligate ECS 
to reimburse us for the additional employee time.  I asked Mark Knippa to 
find out how soon the software could be installed.  Kevin should, probably 
follow up with him on this.

Please call me; while writing this I had a gut feeling I should probably talk 
to you about it before sending to the larger group.  Centilli appears more 
than anxious to get this resolved (and is adamant that ECS owes us money).  
Thanks.


   
	
	
	From:  Drew Fossum                           12/14/2000 05:31 PM
	

To: James Centilli/ET&S/Enron@ENRON, Randy Rice/OTS/Enron@ENRON
cc: Susan Scott/ET&S/Enron@ENRON, Steven Harris/ET&S/Enron@ENRON, Rod 
Hayslett/FGT/Enron@ENRON, Dan Fancler/ET&S/Enron@ENRON, Charlie 
Graham/ET&S/Enron@ENRON 

Subject: Re: Gallup Rebate  

Randy, this is the issue I left you the voice mail on.  Article 6 of the 
Gallup Compression Services Agreement (which I am sending to you separately) 
with ECS obligates ECS to "work in good faith with CDEC" to establish an 
automated system that would automatically have alerted us to peak loading 
conditions on CDEC's system.  We had a pretty good idea when we signed the 
contract that ECS would not be able to complete that by the contract start 
date, so we negotiated a fall back plan under which ECS is obligated to 
"assist [Transwestern] in developing a manual system to accomplish the same 
result and will hold harmless and keep [Transwestern] whole for all cost and 
expenses" associated with the manual system.  We will fight with them about 
who owes the $200k that James mentions below based on their failure to 
"assist" us in managing the cost.  In the mean time, we need to make sure 
that we are doing everything we can to get a handle on the situation to 
mitigate future costs.  Do we have someone who is watching this out there?  
We are running so full tilt on TW that we may not have as much flexibiltiy to 
manage this situation as we expected, but let me know what we can do.  James 
had heard that one hold up was the absence of a confidentiality agreement--I 
guess between ECS and Transwestern--that would permit ECS to communicate to 
us the details on how to access teh key info. from CDEC.  That sounds like a 
BS excuse from ECS, but it that's what they are saying, let me know and we 
can figure out a solution.  Thanks.  DF 



James Centilli
12/14/2000 02:49 PM
To: Susan Scott/ET&S/Enron@ENRON
cc: Steven Harris/ET&S/Enron@ENRON, Drew Fossum/ET&S/Enron@ENRON, Rod 
Hayslett/FGT/Enron@ENRON, Dan Fancler/ET&S/Enron@ENRON, Randy 
Rice/OTS/Enron@ENRON 

Subject: Gallup Rebate

Would you please contact Gerald Nemec and review the Gallup Compression 
Service Contract in respect to the Load Control Management.  My understanding 
was that ECS was to provide a means to access CDEC's online profile in order 
for us to make a decision to avoid running the compressor during CDEC's peak 
load periods.  We have not received access to this information which has 
resulted so far in additional electric cost of $200,987.33 for the period of 
July through September.  Additional cost will be incurred for the remainder 
of this year, that I have not been able to review yet.  This cost is 
averaging $79,000 per month if we continue to run the compressor as we have 
in August and September.