Message-ID: <5321901.1075842567891.JavaMail.evans@thyme> Date: Thu, 25 Jan 2001 03:51:00 -0800 (PST) From: drew.fossum@enron.com To: paul.cherry@enron.com Subject: Re: PG & E Credit Assurance Cc: jerry.peters@enron.com, rod.hayslett@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: jerry.peters@enron.com, rod.hayslett@enron.com X-From: Drew Fossum X-To: Paul Cherry X-cc: Jerry Peters, Rod Hayslett X-bcc: X-Folder: \Drew_Fossum_Dec2000_June2001_2\Notes Folders\'sent mail X-Origin: FOSSUM-D X-FileName: dfossum.nsf I have reviewed your various emails and will get back to Paul shortly. DF From: Paul Cherry 01/24/2001 04:45 PM To: Drew Fossum/ET&S/Enron@ENRON cc: Jerry Peters/NPNG/Enron@ENRON, Rod Hayslett/FGT/Enron@ENRON Subject: Re: PG & E Credit Assurance Drew, In regard to Jerry's questions, could you provide your opinion. Many Thanks. ---------------------- Forwarded by Paul Cherry/GPGFIN/Enron on 01/24/2001 02:42 PM --------------------------- Jerry Peters 01/24/2001 04:38 PM To: Paul Cherry/GPGFIN/Enron@ENRON cc: Rod Hayslett/FGT/Enron@ENRON Subject: Re: PG & E Credit Assurance What about the risk that a bankruptcy trustee could pull the escrow account back into the general creditors' estate? Is that any greater than the risk a prepayment would be required to be returned? I think we do need to review this with Stan and/or Danny (as well as someone else in Enron that's managing the bigger picture on PGE credit risk.) Rod Hayslett 01/24/2001 01:54 PM To: Paul Cherry/GPGFIN/Enron@ENRON cc: Jerry Peters/NPNG/Enron@ENRON Subject: Re: PG & E Credit Assurance I guess I would argue then he hasn't secured the future business, since it is not fully prepaid. We could raise the amount to cover the days exposed and be in a better position. From: Paul Cherry 01/24/2001 11:22 AM To: Jerry Peters/NPNG/Enron@ENRON, Rod Hayslett/FGT/Enron@ENRON cc: Subject: PG & E Credit Assurance I have spoken with Chris Chung of the PG & E Risk management group in regard to the necessary credit assurances TW would require. Chris stated he could not provide a letter of credit but would consider a prepayment. He also indicated that through his business group he heard as a rumor that we would accept a one month valuation. To continue the discussion, I told Chris a decision as to the amount would have to be authorized by my management and my proposal as to how the prepayment would work , is PG & E would wire the agreed prepayment to us to secure the February business, then make payment for the January transportation on the due date in February and then make the prepayment on a monthly basis with a true up to the actual invoice. Chris countered with PG & E posting a Security Deposit in an Escrow account to secure the future transactions. The issue I have with this arrangement is that theoretically if PG & E defaults on payment on the due date, we have approximately forty days exposure and more until we can suspend service which could be an additional thirty days. Please review and advise your comments and/or direction. Also, should we review our proposal with other Senior Management before responding. Regards.