Message-ID: <18737847.1075845935016.JavaMail.evans@thyme>
Date: Mon, 11 Sep 2000 10:27:00 -0700 (PDT)
From: kay.mann@enron.com
To: laura.luce@enron.com, gregg.penman@enron.com
Subject: Transfer price agreement
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X-From: Kay Mann
X-To: Laura Luce, Gregg Penman
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I'm working on the agreement, but since it is taking longer than I had hope=
d,=20
I wanted to send you my understanding of the basic premise for your input. =
=20
I'll continue to refine/integrate this into a real document while you revie=
w=20
the important stuff:



Hub Services.=20

=01&Hub Services=018 include (a) transactions entered into by MEH or the PG=
L HUB=20
which are subject to Peoples' Hub FERC operating statement, and (b) all=20
physical transactions which require the use of the Manlove or Mohammad fiel=
ds=20
(also known as =01&exchange=018 or =01&enhanced hub=018 services).=20

The profit [what is profit? Obviously before tax, but otherwise a GAAP=20
standard?] from Hub Services shall be split as follows:

? For transactions entered into between February 15, 2000 through September=
=20
30, 2000, the profit shall be equally shared.

? For transactions entered into from October 1, 2000 to September 30, 2001=
=20
(and successive years until September 30, 2004), Peoples will receive the=
=20
first $4 million in profit (cumulative, not annual), and will Enron receive=
=20
the next $1million in profit.  For any profit exceeding $5 million, Peoples=
=20
and Enron will share any on a 50/50 basis.

This arrangement excludes all agency fees paid to MEH.  These fees will be=
=20
shared 50/50 from the inception.=20

All internal costs incurred in the normal course of business will be borne =
by=20
the party incurring same. All third party costs will be shared equally, and=
=20
require MEH board approval.

PERC Peaking Agreement

PERC has contracts with PGL and with NICOR contracts relating to the=20
ethane/propane peaking facility. The two existing contracts pay a total of=
=20
$2million (approximate or exact) in demand charges annually. Any profit=20
exceeding $2 million in a year will be shared by Peoples and Enron on a 50/=
50=20
basis.

If either of these contracts is extended in any form other than the current=
=20
form, then Peoples and Enron share the demand charge and the profit on a=20
50/50 basis.

Other Transactions=20

Peoples and Enron will split the profit from any transactions other than=20
those described above on a 50/50 basis.=20



Kay