Subject: RE: NYISO collateral due FRIDAY 12/7
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked]
Date: Thu, 6 Dec 2001 08:09:09 -0800 (PST)

In addition to other issues, we will need to check that the DIP financing arrangements will permit the posting of collateral and in the amount required. Travis McCullough is well placed to address this issue.

 -----Original Message-----
From: 	Padron, Juan  
Sent:	Thursday, December 06, 2001 9:30 AM
To:	Stubblefield, Wade; Herndon, Rogers; Steffes, James D.; Nicolay, Christi L.; Sager, Elizabeth; Smith, Mike B; Sharp, Vicki; Dietrich, Janet
Cc:	Nettelton, Marcus
Subject:	NYISO collateral due FRIDAY 12/7 

Wade,

In order for EES to participate in the Monthly ICAP Auction on 12/13, we need to wire cash collateral of $750,000 to NYISO by COB Friday 12/7.  The cash collateral must be adequate to allow the amount of ICAP we need to clear in the market (or we will be exposed to the Monthly Deficiency Auction -- which could be much higher than the "regular" Monthly Auction).   Our Physical Delivery Load will increase significantly starting 01/01/02 (and stabilize, thereafter) to ~ 70 MW.  

In addition, NYISO is offsetting the cash collateral of $680,000 that was wired to them last Friday against previous month's Energy and ICAP bills.  While we can attempt to technically argue against this offset due to the bankruptcy, the loss of status to continue transacting with the NYISO will violate the reps in our customer agreements, and, thus, risk the validity of the book (est.  $60MM).  The calculation of the offset is below.  Therefore, we will then need to wire additional collateral of $760,500 by COB TUES. 12/11 (based on 3 X highest month of $235,500 (Nov. 01)).  Keep in mind that the collateral for Energy will increase even more in January due to our increase in Load, as previously mentioned.

  $680,000 Collateral sent 11/30 (Friday)
  (255,000) Nov. Energy bill (will be sent 12/7--due 12/17)
  (125,000) Nov. ICAP bill (same)
  ( 32,000)  Oct. true-up
  (127,000)  Dec. ICAP bill (due 1/02)
___________________

 $141,000 left will be kept by NYISO until it is certain that true-ups from past invoices are complete (which can take awhile for this ISO).

Please wire cash collateral to the following:

Key Bank, N.A.
66 South Pearl Street
Albany, NY 12207
ABA 021300077
Account 329681005271
Tax ID: 14-1815612

Mary McGarvey
Controller & Assistant Treasurer
518-356-6125 (phone)
518-356-6232 (fax)

Let us know if you need additional information.

Juan Padron  31751

Christi Nicolay 37007  and cell 713-301-3421