Message-ID: <29031336.1075845240678.JavaMail.evans@thyme> Date: Wed, 23 May 2001 10:32:07 -0700 (PDT) From: a..martin@enron.com To: brian.redmond@enron.com Subject: RE: CHAD - Attorney Client Privlege - Confidential Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Martin, Thomas A. X-To: Redmond, Brian X-cc: X-bcc: X-Folder: \Martin, Thomas A.\Martin, Thomas A.\Sent Items X-Origin: MARTIN-T X-FileName: Martin, Thomas A..pst If this truly cleans out the closet then it is worth it. The potential upside of the Entex Audit is more like $2 - $3 million but our ability to recover that much is questionable given the weak contract language for resolving non-performance. In the past ENA and Entex resolved volume shortfalls under the term contract by extending the term. Obviously we will not have that remedy. Do not let AEP separate other issues away from this and try to pick us to death. Tom -----Original Message----- From: Redmond, Brian Sent: Tuesday, May 22, 2001 10:39 PM To: Koehler, Anne; Martin, Thomas A.; Coffey Jr., Jim; Edison, Andrew; Hall, Bob M Subject: CHAD - Attorney Client Privlege - Confidential Confidential - Attorney Client Privlege Please give me your thoughts on the attached proposal to resolve the "dangling chads" with AEP. I have attached the proposal and a "value analysis" of the proposal, both of which I propose to send to AEP. The key benefits of the proposal from Enron's perspective are the following: 1. Removes us from the vagueness and uncapped exposure of the Ducote deal with Entex for additional costs. AEP can capture the economics of future gas deliveres to Entex associated with this capital expenditure. 2. Captures the leverage that AEP will have in the Entex audit. I think for ENA to pursue Entex would be difficult/time consuming and may lead to a tortious interference suit from AEP. 3. Gives up the interest payment we think AEP owes us. This is true value we are giving up, but do we really want to fight with AEP in court over this (to the extent they are not bluffing)? 4. Removes us from having to process imbalances - saving manpower costs and further removing us from hassles with AEP. AEP is better able to capture value from these imbalances then we are, since they have the pipe. 5. Gets us out of the Coastline law suit. I'm pretty sure Coastline is at least owed the $1.4MM that we would contribute. AEP has a chance to minimize any further costs, which are capped by the value of the claim at a further $2.2MM. Please do not circulate this. Thanks, Brian << File: Chadprop0522.doc >> << File: chadpropsum0522.doc >>