Message-ID: <30746936.1075853857982.JavaMail.evans@thyme> Date: Thu, 3 Feb 2000 01:03:00 -0800 (PST) From: colleen.sullivan@enron.com To: scott.neal@enron.com Subject: Transport formula settles Cc: dan.junek@enron.com, chris.germany@enron.com, judy.townsend@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: dan.junek@enron.com, chris.germany@enron.com, judy.townsend@enron.com X-From: Colleen Sullivan X-To: Scott Neal X-cc: Dan Junek, Chris Germany, Judy Townsend X-bcc: X-Folder: \Chris_Germany_Dec2000\Notes Folders\Transport X-Origin: Germany-C X-FileName: cgerman.nsf Scott-- Something for you to consider: If the transport people are to have their own books, my belief is that the curve setting used for the transport values ought to be as unbiased as possible. This means using as few "formula based" curves as possible and as many Gas Daily publication postings as possible. I'm not sure how you or your traders feel about the following postings, (how realistic they are), but I think they bear watching to see if they could be used for calculating transport p&l. In Gas Daily, under Citygate, Pooling Point Prices, there are Mid Atlantic Citygates postings for both CNG and Columbia Gas. These could potentially be used for CNG North & South Citygates and TCO citygates. The only thing I have to confirm is how these would load since there is no index posted each day--it is a range of prices instead. Historically TCO and CNG citygate postings haven't been much of an issue because we haven't held much transport on CNG and TCO, but with the CES business in our portfolio, the times have changed. Currently we are using "formula based" curves set by the traders to calculate CNG and TCO transport p&l, and there sure seems to be a huge difference between the postings and how we are marking the curves. For example, today's Gas Daily postings compared to our curve markings are as follows: GAS DAILY GAS DAILY SPREAD SPREADS per TRADERS CURVES TCO pool $2.985 $1.565 $.10 TCO citygate $4.55 CNG North $3.39 $ .585 $.16 CNG South $3.305 $ .670 $.16~ CNG Citygate $3.975 Obviously there are huge differences, so someone must be wrong. There are two solutions that I see. One is to switch to the Gas Daily posting, which in my mind is preferable if you believe the postings are accurate; the other solution is to have the traders change their curves more often to more closely reflect the actual spreads in the marketplace. That's up to you. Obviously if we believe the postings are completely off base and our spreads are more accurate, then nothing needs to be done, but if you want to know what you're really making on your transport (and you now have a lot of it), we need to focus on it being accurate. Anyway, let me know what you decide and I'll either forget about it or work on getting the Gas Daily postings pulled into the calculations. ---------------------- Forwarded by Colleen Sullivan/HOU/ECT on 02/03/2000 08:29 AM --------------------------- From: David Oliver 02/02/2000 12:56 PM To: Colleen Sullivan/HOU/ECT@ECT, Mark Friedman/HOU/ECT@ECT cc: Subject: Transport formula settles Colleen, Mark wanted me to let you know where a few city gate points are settling daily: CNG North City Gate = GD CNG North +.16 CNG South City Gate = Settles at what the intra-month trader sets their intra-month curve at. TECO Citygate = GD CGT/App +.10 Please note that CNG North City and TECO City settle prices come in at a one day lag. After we receive gas daily settles, we reload prices for any derived curves. If you have any questions please let me know. David x3-4231