you're not billing by the word now are you?  :)

-----Original Message-----
From: MDay [mailto:MDay@GMSSR.com]
Sent: Thursday, September 27, 2001 12:24 PM
To: Dasovich, Jeff; Smith, Mike; Mara, Susan; Steffes, James D.; MDay;
Williams, Robert C.
Cc: Sharp, Vicki; Higgason, Kelly; Maynard, Michelle
Subject: RE: Extensions of CA Deals


I also agree.  Until we see how the direct access suspension implementation
issues are resolved, there is a signficant probability that the utilities
will insist on seeing all documents related to an ESP agreement, and will go
screaming to the commission to turn off your DA service if it appears any
portion of the agreement was executed after Sept. 20.  As indicated in
previous calls, that does not mean an ESP agreement executed prior to Sept
20 cannot be amended as to price and other such terms, but it cannot be
extended or renewed so as to give the customer longer access to direct
access without raising the risk that the CPUC will invalidate the extension
IF it chooses to forbid extensions and renewals after Sept. 20.  At this
time we do not know when or if the CPUC will address these issues, although
as Sue Mara has reported, there will be a Rule 22 meeting in a week which
will likely result in utility filings to get clarification from the
commission on these issues.  Beyond that we have no idea of the procedural
schedule the Commission will follow in addressing these issues.

Bottom line:  The existing commercial deals should not be put at risk by
means of amendments as to term of the agreement which were executed after
Sept. 20.  Follow on extensions or renewals to take effect at the end of the
existing agreements can be signed, but will remain at risk untilthe renewal
or extension issue is addressed by the Commission.  Post Sept. 20 amendments
to the price term of existing agreements are very likely safe so long as the
pre-Sept 20 term and quantity of the contracts are not altered.

Let me know if you have any other questions. 

Mike Day

-----Original Message-----
From: Dasovich, Jeff [mailto:Jeff.Dasovich@ENRON.com]
Sent: Thursday, September 27, 2001 10:06 AM
To: Smith, Mike; Mara, Susan; Steffes, James D.; mday@gmssr.com;
Williams, Robert C.
Cc: Sharp, Vicki; Higgason, Kelly; Maynard, Michelle
Subject: RE: Extensions of CA Deals


For what it's worth, I concur with Mike.  Option 3 is the most prudent,
and preferable, path.

Best,
Jeff

>  -----Original Message-----
> From: 	Smith, Mike  
> Sent:	Thursday, September 27, 2001 10:50 AM
> To:	Dasovich, Jeff; Mara, Susan; Steffes, James D.; mday@gmssr.com;
> Williams, Robert C.
> Cc:	Sharp, Vicki; Higgason, Kelly; Maynard, Michelle
> Subject:	Extensions of CA Deals
> 
> CONFIDENTIAL ATTORNEY CLIENT COMMUNICATION
> 
> I'd like to get some thoughts on this issue and hopefully build a
> consensus pretty quickly.
> 
> We are in the process of extending the term of some of our existing CA
> deals that we executed on the Master in June.  Understanding that
> "new" deals struck after 9/20 are, and extensions of existing deals
> may be, at risk, it seems to me we have three basic options in order
> to effect this extension, and I want to make sure we evaluate and
> choose the one that minimizes the risk that the extension is
> invalidated.  Note that DASR's have been submitted for the subject
> accounts under the original Transactions.  
> 
> The 3 choices I see are:
> 
> 1.  .Amend and Restate the existing Transaction Confirmation to add
> the extension and new price for the extension.  In this case, the
> extension would be wrapped up on one document that is signed after
> 9/20 but effective in June.
> 2.  Simply amend the existing Transaction to add extended term and
> price.  This would be a separate document.
> 3.  Execute a whole new Transaction for the extended term, which would
> be effective when signed but the services and price under which would
> not start until after the expiration of the existing Transaction.  The
> existing Transaction would stay in tact as written.
> 
> It seems to me that choice number 3 is the safest overall.  The
> amended and restated route has appeal because the whole transaction is
> dated back to June.  However, if a regulator were to peel it back, the
> conclusion could be that the deal was struck after Sept 20 and
> therefore the whole transaction was invalid, including the original
> structure.  I think that choice 2, though creating a separate document
> for the extension, could fall into the same trap.  In that sense,
> choice 3 seems safest because arguably the original transaction is not
> at risk.  If the extension is invalidated, that determination would
> likely not claw back to the original deal.
> 
> The commercial teams want to close these extensions in Q3 so they are
> moving fast.  Please let me know your thoughts asap.  If we need to
> have a quick call, I can set something up.  Thanks.  MDS


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