Subject: RE: Ash Grove Cement Company - deal booked without approval
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Wed, 6 Jun 2001 11:12:00 -0700 (PDT)

I agree with and support  what Tracy is saying in her message below. However, 
in one regard, I would say it a little differently.  Legal was not 
"instructed" by anyone to approve any confirms.  I discussed the deal with 
both John and Mike and it was my understanding that the long term deal was 
conditional upon Ashgrove signing the EEI.  To me, (and this is where I think 
my understanding was identical with Tracy's)  this meant that the long term 
deal would not be booked until the EEI was signed. I was led to believe that 
Ashgrove would indeed sign the paper yesterday and we faxed a complete set 
of   documents signed by Tim up to them in mid afternoon with instructions 
for them to return fully signed copies.     They did not sign the paper and 
the deal has been booked.  Somehow, our teamwork process didn't work and we 
got the booking ahead of the signing and this is a process issue which we 
must all strive to address more effectively.  ----cgy  

 -----Original Message-----
From:  Ngo, Tracy  
Sent: Wednesday, June 06, 2001 3:51 PM
To: Malowney, John
Cc: Swerzbin, Mike; Yoder, Christian; Bradford, William S.; Wolfe, Greg; 
Foster, Chris H.
Subject: Ash Grove Cement Company - deal booked without approval

John,

I am sending this email to document the incorrect process that commercial 
independently took in handling the long-term deal with Ash Grove Cement 
Company [EPMI sale of 6MW (3MW in Jan/Feb); 7X24; 7/1/02 thru 6/30/07; fixed 
$42.25/MWh].

Credit and Legal worked diligently to expedite the due diligence/credit 
review and legal contract crafting of an EEI for Ash Grove Cement.  Credit 
also stated that based on the proposed credit terms in the EEI contract to 
support the terms in the transaction, there would be NO credit reserve for 
this deal so long as it is confirmed under the EEI.  

Credit had already approved a shorter term deal without any credit terms 
[EPMI sale of 6MW; 7X24; 10/1/2001 thru 6/30/2002; fixed $88.25/MWh] to be 
confirmed under a general long-term confirm.  Credit however required that 
the longer term deal be confirmed under an EEI with good legal and credit 
terms given the tenor of the transaction.

Yesterday, you agreed to the conditions and you/Mike Swerzbin informed me (in 
Tim Belden's presence) that the long term deal was not going in the system 
until the contract was executed.  However, somehow, Legal was instructed to 
approve TWO confirms to go out.

Consequently, to my dismay, the deal was booked yesterday evening.  My 
response to the blatant disregard for 'correct processes' is as follows:
- Should Credit/Legal work expeditiously for firedrill transactions that are 
not followed through with correctly? please keep in mind that other 
marketers' commercial requests are re-prioritized when a firedrill is coming 
through;
- Should Credit "trust" a marketer when a marketer informs Credit that the 
process is being handled correctly?
- Should Credit continue to stand by the 'no credit reserve quote'?
- Is this fair when other marketers are working hard to get contracts in 
place and to follow the process accordingly?
- How can we correct this process going forward?  I think that Credit and 
Legal handled the process in the most commercially sensitive manner; however, 
commercial decided to independently go against process control.

Comments are welcome.

Tracy