Subject: Re: PG & E Credit Assurance
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked]
Date: Thu, 25 Jan 2001 03:51:00 -0800 (PST)

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.