Does the gas desk keep the demand charge?  Also, we need to discuss-if you forget tocall.   If you forget to call, the price between the gas and power desk needs to be negotiated. Probably not a big deal in the summer but is a huge del in the winter with daily balancing.   Also, the gas desk will not be responsible for any imbalance penalties if you forget tocall.  If you forget tocall in the winter under daily balancing,  your desk will be charged my cost.   Otherwise, I think it's a go. 
 -----Original Message-----
From: 	Foster, Chris H.  
Sent:	Wednesday, June 13, 2001 4:06 PM
To:	Tholt, Jane M.
Subject:	RE: Harbor Cogen

Answering your 3 questions:

1.  You can imbalance trade 100% of it.  They are in your pool.

2.  Under the current structure, when we do not order gas, we buy it at that day's Gas Daily even if we forget to call.  This is bad for you guys.  Under the new structure, you only provide gas if we call.  

3.  The structure we have now gives us the option to elect prior to the month for a demand charge or as a variable adder against Gas Daily.  Would it work better to have a $.10 demand charge?  That might be workable.

I need to fish or cut bait on this deal by the end of this week as I will be on vacation next week and we will need to remove them from our SoCal pool if we do not want this deal.  So, let me know if the e new structure works for you given the answer to these questions.  Call me with any more questions.

Thanks

C

 

 -----Original Message-----
From: 	Tholt, Jane M.  
Sent:	Wednesday, June 13, 2001 1:20 PM
To:	Foster, Chris H.
Subject:	RE: Harbor Cogen


Can we imbalance trade this gas.  What happens when the cogen burns the gas without telling us like they have been doing.  Which desk keeps the 15000 demand charge?
 -----Original Message-----
From: 	Foster, Chris H.  
Sent:	Wednesday, June 13, 2001 11:11 AM
To:	Tholt, Jane M.; Grigsby, Mike
Cc:	Sullivan, Patti; Ward, Kim S.
Subject:	Harbor Cogen

Janie/Mike:

As you know, EPMI has been buying gas from the West Gas Desk for Harbor Cogen.  We dispatch this plant and buy their electricity.  Over the winter the Gas Desk was selling them (us) gas at Gas Daily Mid-Point plus $.05/MMBtu, based on consumption.  Since they have not operated that much there is not much money at stake.  With higher summer usage and the greater volatility at the border, however, this price is no longer fair for the Gas Desk.  

So, a couple weeks ago, I proposed a price increase to Harbor that would have them paying Gas Daily Mid-Point plus $.15/MMBtu still based on consumption.  They have been calling around and have an alternative deal, I think with Amoco that would have them paying Gas Daily Mid Point plus $.10/MMBtu based on scheduled volumes, not consumption.  We have to decide this week if we want to keep selling them gas or let them go to Amoco.

I hate to give up business, but it seems like we should unless we get a fair price.

Attached is a summary of a new structure that I think would retain the deal.  It changes the volume from scheduled versus consumption, and has them paying index plus $.10/MMBtu.  Schedules would be due by 8:30 and the volumes could not change over weekends.  I would suggest that it is better to keep this deal if I can get them to agree to the attached structure.  Please look it over and see what you think.  I will call later today to discuss.

Chris

 << File: gasdeal.doc >>