Subject: Re: Assignment of Regulatory Risk Responsibility for Current Assets
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked]
Date: Wed, 9 Feb 2000 07:02:00 -0800 (PST)

Mark --

Thanks for the additions.  I will add to the Asset / Responsibility Matrix.

The definition I have been using is that Regulatory Risk is a subset of 
Sovereign Risk (with the other element being Political Risk).  Regulatory 
Risk is a "legal" action taken by a government or its agent which modifies 
Enron's business environment, most often directly through modifications in 
the energy and communications markets, but also in broad areas such as taxes 
and export - import policies.  Political Risk is a "supra-legal" action that 
has the same impact (e.g., expropriation).

Currently the Regulatory Risk Working Group (Fiona Grant is member) is trying 
to put in place a "standard" process to review and analyze regualtory risk 
around the globe - quite an undertaking.  When I use the term Regulatory Risk 
Management, I am primarily talking about such a process.  The key elements of 
any risk management function are (1) identification, (2) assessment, (3) 
mitigation / transference, and (4) audit.  You would probably agree that the 
most difficult problem is to try and assess the impact of any Regulatory Risk 
event.  The other key goal is to have a Mitigation Plan in place with an 
assigned person to "manage" our activities so that Enron does not face an 
associated loss.

My goal is to try an have this process in place by mid-year.  That would 
include having undertaken a structured review of our current Assets (the 
reason for the original questions) and the ability to review pending deals. 

When you come over to Houston next week I would really like to sit down and 
go through my thoughts with you.  

Thanks.

JDS

 

Mark Schroeder@ECT
02/09/2000 05:48 AM
To: James D Steffes/HOU/EES@EES
cc: Richard Shapiro/HOU/EES@EES, Steven J Kean/HOU/EES@EES, Fiona 
Grant/LON/ECT@ECT, Philip Davies/LON/ECT@ECT 
Subject: Re: Assignment of Regulatory Risk Responsibility for Current Assets  

Jim - overnight I realised you need to add our project in Turkey (Fiona 
Grant) and Poland (Philip Davies).  I have not given you any one person, as 
the regulatory issues seem to be country/environment specific, and instead I 
have given you the names of each person with country responsibility.  Indeed, 
at year-end we completed a financial transaction (Project Margaux), in which 
regulatory risk was reviewed.  A definition of Rugulatory Risk would be 
helpful, e.g., in most of these markets, trading arrangements are being 
re-written, or developed for the first time, this put existing PPAs under 
pressure.  Would energy taxes, carbon taxes/trading, transmission pricing 
(both for evacuation of power, and delivery of gas), changes in property 
tax/fuel tax regimes, risk of price regulation, all be included?  Do you have 
checklist?  We can identify these risks, what is meant by "manage"?  We work 
on these types of issues on a daily basis, so I am unclear as to what else is 
intended or implied.  thanks  mcs     

James D Steffes@EES
08/02/2000 17:24
To: Richard Shapiro/HOU/EES@EES, Mark Schroeder/LON/ECT@ECT
cc: Steven J Kean/HOU/EES@EES 

Subject: Assignment of Regulatory Risk Responsibility for Current Assets

Rick & Mark --

One of the first steps in building our Regulatory Risk process is to 
establish responsibility for the current assets owned/managed by Enron.  
Having a point person that I can contact will help me immensely.

Attached is a listing of the assets that I have been able to pull together -- 
there may be more that you know about.

Is it possible for us to agree upon the person(s) who will manage the 
Regulatory Risk with each of these assets?  Please feel free to call me to 
discuss.

I would like to have this assignment process complete within the month.

The same type of effort will be necessary as we review pending transactions.

Thanks.