Message-ID: <23251651.1075858669935.JavaMail.evans@thyme> Date: Tue, 17 Jul 2001 11:18:03 -0700 (PDT) From: gail.brownfeld@enron.com To: b..sanders@enron.com Subject: FW: E-mail re damages expert Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Brownfeld, Gail X-To: Sanders, Richard B. X-cc: X-bcc: X-Folder: \Sanders, Richard B (Non-Privileged)\Sanders, Richard B.\Sempra X-Origin: Sanders-R X-FileName: Sanders, Richard B (Non-Privileged).pst Since you aren't going to the meeting, you might enjoy this. -----Original Message----- From: Markel, Gregory A. [mailto:GMarkel@brobeck.com] Sent: Monday, July 16, 2001 6:06 PM To: Brownfeld, Gail Subject: FW: E-mail re damages expert t > Gail, > > As you requested, here is a summary of what we discussed last week with > our damages experts, Seth Schwartz and Emily Medine of Energy Ventures > Analysis, Inc. > > They have received everything they requested from Enron in terms of > documentation. They have also gotten hold of the RDI and Hill & > Associates reports which discuss the coal / synfuel market outlook. They > have also reviewed the comments to Rev Proc 200-47, which was the one that > requested input regarding the IRS's decision at that time to suspend > issuing PLRs until it rethought the standards that should apply. > > Generally speaking, they are finding support for the idea that the > synfuel/coal spread should diminish and approach zero over a relatively > short period of time. Essentially, they are finding that the two are > commercial substitutes for one another, and that the primary reason > for a discount in synfuel early on is to achieve market acceptance. In > fact, there is even some support for the idea that synfuel would trade at > a premium to coal, because at least some power plants found that burning > synfuel rather than coal reduces their emissions of nitrous oxide. The > spread is the key number both for our damage case and for mitigation. We > have discussed previously how the spread works into the swap agreement > analysis.. However it is also the key number in mitigation because if the > spread is less than $5.25 (fully expensed) then the damages should be zero > if coal is available to run the machines so that Sempra can get the tax > credit. Obviously in the short run they may have a claim for down time > but in the longer run the facilities should be operating and producing > credits. > > They also are looking at how the European market was heading towards > accepting synfuel. This is particularly significant since Europe would be > a large market for Pier IX product. In this regard, they've been looking > at records from the CoalTrans conference held in Madrid 10/25-27/00. Did > anyone from Enron attend this conference? > > They cannot yet put numbers to their analysis, but it generally appears > that their work is heading in the right direction for us. > > On mitigation, as you know, we've been stonewalled by Sempra on our first > attempt to get information about what they are doing currently in > Kentucky. I expect this will be a battle. The court rules require us to > attempt to "meet and confer" to resolve the issue without court > intervention first, then write a letter to the court, and only if that > results in an impasse can we resort to motion practice. We had an > unproductive meet and confers today on these issues. We will try to bring > this to ahead as quickly as possible We are also preparing deposition > notices for the person most knowledgeable about the mitigation issues. We > have also asked Emily and Seth to work on a model for what Sempra could do > in mitigation efforts based on general market information. If and when we > get the specific information about what is happening in Kentucky > currently, that information will be incorporated into their mitigation > model. > > ======================================================= This email message is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply email and destroy all copies of the original message. To reply to our email administrator directly, send an email to postmaster@brobeck.com BROBECK PHLEGER & HARRISON LLP http://www.brobeck.com