Message-ID: <32975415.1075844241588.JavaMail.evans@thyme> Date: Fri, 18 May 2001 01:50:00 -0700 (PDT) From: amr.ibrahim@enron.com To: richard.shapiro@enron.com Subject: EES risk quantification and mitigation Cc: james.steffes@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: james.steffes@enron.com X-From: Amr Ibrahim X-To: Richard Shapiro X-cc: James D Steffes X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\Discussion threads X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf Rick: The internal design and testing of EES risk quantification and mitigation is now in a stage complete enough to be rolled in. The process is cooperative in nature between URM (utility risk management), GA in Houston, and GA in the regions. Harry, Stella, Pat, and I shall start communicating this process to the colleagues, each in his/her regions shortly. Please let me know if you have any comment and/or advise. Furthermore, please advise if you want me to walk through the process with you to demonstrate its abilities and output. Best regards AI ----- Forwarded by Amr Ibrahim/ENRON_DEVELOPMENT on 05/18/2001 08:40 AM ----- Amr Ibrahim 05/17/2001 05:39 PM To: Stella Chan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Patrick Keene/NA/Enron@Enron, Harry Kingerski/NA/Enron@Enron cc: Alberto Levy/SA/Enron@Enron Subject: Here it is guys including the new text in blue. Stella Chan and Pat Keene are currently streamlining the process of providing Government and Regulatory support to URM (Utility Risk Management) to include: Curve validation Process, Quantifying of Regulatory Risks/Change, Coordination of Strategy Development, and Coordination of Strategy Implementation. A description of these functions are as follows: Curve Validation Process: This process aims at reviewing, and validating, every 90 days, the regulatory inputs of: a) the largest 60 curves in Enron's books, and b) the new deals that are under approval during the review period. The curve validation process is currently in progress and GA personnel in Houston and the regions are already involved. Quantification of Regulatory Risks/Change: This process aims at quantifying dollars terms--the impact of the change in the regulatory inputs on a specific position. The model is now in place, and test is in progress. This process will involve initiation by GA regional personnel (also possibly by URM) with potential regulatory changes that may impact EES positions. The quantification exercise will be done jointly by URM and GA. Coordination of Strategy Development: The outcome of curve validation and quantification of regulatory risks--functions 1, and 2 above--will likely call for a group of regulatory measures and action items. The function of Stella and Pat is to coordinate and facilitate strategy sessions in association with the owner of the curve in URM, and her/his counterparts in Midwest/Midsouth, Atlantic Seaboard, the Western Region, and Texas & Oklahoma Ercot, and SPP. The strategy sessions shall come up with suggested action items, probability of success, and likely associate costs for implementation. Stella and Pat shall be responsible for seeking the buy-off, and approval, of the strategy from URM and securing the needed budget, if necessary. Coordination of Strategy Implementation: Once the strategy is approved, it shall enter the implementation stage. The role of Stella and Pat is to coordinate between URM requests/positions and their counterparts in the regions. As the case now, they shall continue supporting the regions in the implementation as needed. To facilitate these functions Stella and Pat shall emulate the coverage lines of the URM. Stella shall coordinate the Eastern Region, while Pat shall coordinate the Western Region. These regions do not follow the conventional wisdom, and need to be specifically defined. They are: Eastern Region: ME, NH, VT, NY, MA, RI, CT, NJ, PA, MD, DE, VA, WV, NC, SC, GA, AL, TE, KY, and FL. Western Region: The remaining states (including OH in the east). From the Regional perspective, the process will naturally be overseen by the Regional Managers (i.e., Steve, Janine, Jean, and Paul), meanwhile, Harry shall oversee it from Houston side. The process, however, is designed to be as autonomous as possible and shall make the least possible demand on the time and work load of the regional managers (usually in the final sprint for approvals). Stella, Pat, and Harry shall visit you shortly to discuss the details of the processes outlined above and listen to your comments and advise.