Remarkably clear explanation.


   
	
	
	From:  Ben F Jacoby @ ECT                           09/20/2000 06:48 PM
	

Sent by: Ben Jacoby@ECT
To: Kay Mann/Corp/Enron@Enron, Sheila Tweed/HOU/ECT@ECT
cc:  

Subject: LM6000 Title Transfer Question

FYI, see below.
---------------------- Forwarded by Ben Jacoby/HOU/ECT on 09/20/2000 06:43 PM 
---------------------------


Matthew Tezyk@ENRON_DEVELOPMENT
09/20/2000 06:13 PM
To: Ben F Jacoby@ECT
cc: Dan Shultz/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mike 
Coleman/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Dick 
Westfahl/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 
Subject: LM6000 Title Transfer Question

Ben,

Does ENA wish to accept Title of 14 LM6000's on September 26, 2000, or accept 
Title of these Units after each has been issued an Inspection Acceptance 
Certificate from EECC QA/QC department?


The following is a summary of the LM6000 Title Transfer Question:

Mike Storm, GE/SSEP Project Manager, requested from me, on 9/19/00, to accept 
title of 14 LM6000's no later 9/26/00.  I informed him I was not authorized 
to make this decision and that I would contact the Owner to make the 
decision.  I further informed Mike Storm that our Owner would not accept 
those terms and a compromise must be worked out. 
Contract Reference 15.2.1 of contract 24-LM6K-2-99 states: title transfers 
when equipment is ready to ship to the delivery point and seller notifies 
purchaser of such event.
Delivery Point is defined as the SSEP storage yard.
SSEP has notified us that Units #1-14 are "Ready to Ship".
Contract Reference 10.2.3 of contract 24-LM6K-2-99 states: purchaser has the 
right to inspect the equipment for "completeness prior to loading on 
transport to delivery point".
We have inspected the first eleven Units and have informed SSEP that Units 
#1-14 ARE NOT COMPLETE and therefore are NOT at the Delivery Point.
FACT: Units # 1-11 are at the delivery point. #12-14 are at SSEP.
FACT: If we sent a truck to SSEP tomorrow, NONE of the UNITS would be "Ready 
to Ship" to a project site.
FACT: SSEP QA/QC has 15 Non Conformance Reports on these 14 turbines which 
need to be corrected before they are "Ready to Ship".
It is in the best interests for both companies to correct the Non 
Conformance's prior to shipment to the delivery point or project site.
RECOMMENDATION: I recommend that we DO NOT accept Title until the Units are 
actually ready to be shipped to a project site.  The problem is that NONE OF 
THE UNITS ARE READY TO SHIP!  SSEP has to work off punchlist items which 
their QA/QC department has listed on Non Conformance Reports.  At this 
juncture, no money can be withheld from SSEP. To ensure they will be fixed, 
Title should transfer after our QA/QC inspectors give written notice that 
each Unit is complete and ready to ship.  This will protect ENA on the 
quality of the machines, as well as, ensure that little or no "re-work" is 
performed in the field.

If you require further information or any assistance in this matter, please 
feel free to contact me at 713-646-8258.

Matthew Tezyk
Project Manager