Message-ID: <12142617.1075840890149.JavaMail.evans@thyme> Date: Tue, 24 Apr 2001 12:22:00 -0700 (PDT) From: tim.belden@enron.com To: john.lavorato@enron.com, louise.kitchen@enron.com Subject: Schedule C Reserves Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Tim Belden X-To: John J Lavorato , Louise Kitchen X-cc: X-bcc: X-Folder: \ExMerge - Kitchen, Louise\'Americas\Portland X-Origin: KITCHEN-L X-FileName: louise kitchen 2-7-02.pst we have had trouble valueing transmission, literally forever. we finally released a spread option model last night to value transmission. it spit out some huge values for out of the money transmission because it is valued as a daily option. for example, transmission from big eddy (in the northwest) to nob spit out a value of $28 million -- all extrinsic. given the state of affairs in california right now, i find it highly unlikely that we will take power from the northwest to deliver into the capped market. last night we recognized $16 million of transmission value, almost all intrinsic value associated with closing open positions. we reserved $36 million associated with extrinsic value. we will revalue the options once a week and make appropriate adjustments to the reserves. let me know if you have any questions or concerns.