Message-ID: <16930954.1075845747965.JavaMail.evans@thyme>
Date: Mon, 24 Jul 2000 01:42:00 -0700 (PDT)
From: gregg.penman@enron.com
To: laura.luce@enron.com, kay.mann@enron.com
Subject: Affiliate Master Purchase/Sale Agreement
Cc: bjspringer@jonesday.com
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I believe that we are in a position to cross one more agreement off our 
list.  I had a conference call on Friday afternoon with Boyd Springer, Roy 
Rodriguez (Peoples Commercial), Tim Hermann (Peoples Commercial), Mary 
Klyasheff (Peoples Regulatory Counsel) and Gerry Fox (Peoples Regulatory 
Counsel) to discuss Boyd's comments regarding the regulatory issues of the 
Affiliate Master.  His comments and our recommendations are as follows:

1)  Boyd had initially questioned the need to file for approval due to an 
exemption that exists for transactions conducted with Affiliates in the 
ordinary course of business at standard or prevailing market prices.  

There are two types of Affiliate transactions contemplated; a) simple 
buy/sells at a clear market price (which will fall under the exemption and 
don't need to wait for ICC approval ) and b) complex transactions with 
sharing arrangements,  management fees or other similar structures (which 
will not fall under the exemption and must wait for ICC approval).  Since ICC 
approval must be sought for certain transactions, it is recommended that we 
proceed with filing the Affiliate Master ASAP.

2)  Boyd had noted that as written the Affiliate Master becomes effective 
upon initial approval of the ICC.  However, there is an appeal/rehearing 
process for intervenors after initial approval and prior to final approval.  
Therefore, there exists a remote possibility that we could begin transacting 
under the Affiliate Master and not receive final approval.

After discussing this issue with Mary and Gerry, the probability is minimal 
that such an event would occur as we will receive feedback from the ICC from 
both the informal conversations prior to filing and throughout the process 
prior to approval.  As such, it is recommended that the effective date as 
written is acceptable.

3)  Boyd had indicated that the inclusion of the confidentiality provision 
may add further complexity to the filing and may want to be avoided to ease 
approval.  

After discussing the issue further, it appears that the confidentiality 
provision does add some complexity in the filing process in that additional 
steps must be taken.  However, after the filing is made, the inclusion does 
not add to the approval time in any measurable way.  Further, Peoples always 
files its contracts under confidentiality and feels that this should be no 
different.  Given that it will protect transactional information and does not 
add any time to the approval process, it is  recommended that we include the 
confidentiality provision as written.  

In summary, unless there are any other concerns, we should proceed with 
filing the Affiliate Master as currently written.  Jeff Hodge has already 
reviewed, approved and initialed the Affiliate Master as to its transactional 
content.   

Prior to filing, Kathy Donofrio (V.P., Regulatory Affairs) will forward of 
copy of the Affiliate Master to the ICC Staff followed shortly by a meeting 
to discuss the impending filing and get any initial feedback that may affect 
the filing.  

Current expectations are that approval will take a minimum of four months.  
For comparisons, Nicor currently has an Affiliate filing at the ICC that 
began in May and is already postponed until October.  Further, the current 
high priced gas environment has caught the attention of the ICC.  Although it 
may mean the ICC will be very busy, it may also be an opportunity to get an 
expedited approval if we can show the ICC that PGL/NS ratepayers will benefit 
from the Affiliate Master.

Boyd - Please let us know if I have mistated any of the issues or if you 
disagree with any of the recommendations as I would like to give Peoples the 
green light today to proceed with the filing process.

Thanks,

GREGG