Steve, I talked to Cindy Burnette about SIT Penalties in February on Monday, 
3/13/2000. Unfortunately Joann and I thought the SIT withdrawal Penalty was 
lifted on 2/3/2000 and reinstated on 2/17/2000. We did not realize that TCO 
lifted the penalty for only one day on 2/3/2000 and reinstated it on 
2/4/2000. TCO lifted it again on 2/15/2000 and reinstated it on 2/17/2000. 
Joann and I missed the period from 2/4/2000 to 2/14/2000.

In early February, Cindy talked to Joann and I about matching the burns to 
the best reading around noon of the gas day that just ended. Because TCO 
allows it shippers to  use SIT, our goal is try to match the burn to about 
500 dkt difference. There are some days we will go a little longer and some 
days we will go a little shorter. Our February 2000 monthly goal was to hit 
close to zero. I'm attaching a spreadsheet that shows Enron's net SIT for 
February was +288. Joann and I also realize that when SIT withdrawal is not 
allowed, that we need to send extra gas to the burn and then back off the gas 
once the actuals are received. 

The attached spreadsheet shows that on days 2/4/2000 to 2/6/2000 that Enron 
had 17,753 Broadrun gas going into Enron's IPP pool. Each day the SIT 
withdrawal was less than 500 dkt. On day 2/9/2000, we did adjust the actuals 
to meet the burn and Joann sent the print screens to Cindy on 3/10/2000 for 
proof to waive the penalties. On gas days 2/11/2000 to 2/14/2000, we were 
short less than 500 dkt and we had 5684 broadrun gas going to the pool. On 
2/18, we did adjust the actuals to meet the burn and sent the screen prints 
to Judy on 3/6/2000 for proof to waive the penalties for that day.

Joann and I are very competent and experienced schedulers and were not trying 
to game TCO's system by abusing the SIT withdrawals. We just didn't realize 
that TCO had reinstated the penalties for SIT withdrawal for 2/4/2000 to 
2/14/2000. The way TCO posts on the bulletin board, it is not always clear to 
the shippers when penalties situations are lifted and reinstated.

My other concern was how this penalty was communicated to us. Julie called me 
on 3/6/2000, and said that Judy wanted Julie to send to me the 8 series 
report. I told Julie I had no idea what she was talking about, but go ahead 
and send the report. When I received the report, it was the report we had 
used for overrun charges. We did not occur overrun changes, so I was not 
concerned with the report. Then Cindy called me about an hour later on 
3/6/2000 to tell me we had Hopewell penalties. I told Cindy I didn't 
understand what penalties we had incurred, since there were no overrun 
charges. She said we had SIT withdrawal penalties. Joann and I looked at days 
1, 2, 17, 18, 19, 20, and 21. We faxed over the proof to TCO for day 18, that 
we had matched the burns to the readings available at noon that day. Joann 
specifically asked Judy if this was the only penalty we had, and Judy was not 
100 % sure but thought so. 

There were no further conversations between TCO Team 3 and Enron about the 
SIT withdrawal penalties, until Cindy called Joann on 3/10 around 4:30 pm to 
tell Joann we had incurred several days of penalties. Joann asked Cindy which 
days, since we had already fixed the days we knew about SIT withdrawal 
penalties. Cindy told Joann about days 4,5,6,9,11,12,13, and 14. Joann faxed 
the proof for day 2/9/2000. Joann asked Cindy if she could do the retro's for 
the other days because we had plenty of Broadrun gas going to our pool. Cindy 
told Joann that she would have to run it past Steve, to waive the other days 
penalties.

TCO's philosophy has been vary accommodating to its shippers in the past. 
Judy had always told Joann and I, if CES/Enron made a good faith effort to 
keep SIT to a minimum, the penalties will not be charged. Enron feels it made 
a good faith effort to minimize SIT withdrawals in February 2000, and would 
like the SIT withdrawal penalties to be waived.

In addition, Enron has a win/win request for our Customer ServiceTeam. TCO's 
penalty philosophy appears to be changing and will not be as accommodating as 
it was in the past. Enron would like our Customer Service Team's assistance 
during the month to identify potential penalty situations. This will 
alleviate disagreements between TCO and Enron at the end of the month.

Before I send the this to Jeanne Adkins and Tom Brasselle, I'm running this 
past y'all. 

Thanks for your assistance and understanding Enron's point of view.