Subject: RE: NEPOOL Financial Assurance
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Tue, 27 Nov 2001 13:17:47 -0800 (PST)

My understanding is that we have posted bonds in excess of $60M and are in compliance with the NEPOOL Financial Assurance Policy.
EPMI and EES are not relying upon an Enron Corp. guaranty to provide any part of the financial assurance required by NEPOOL. 
	
Suggest we can take one of four courses of action:  (1)   Do nothing;

					    	   (2)    Request and authorize the ISO-NE to disclose to concerned NEPOOL participants the fact that EPMI and EES 						           have posted bonds to ensure compliance with the NEPOOL Financial Assurance Policy and that no part of the    						           financial assurance required is provided by an Enron Corp. guaranty;

					   	   (3)    Send a letter to all NEPOOL participants confirming that EPMI and EES financial assurance obligations are being 						           met solely by the posting of bonds;
				
					               (4)    Combination of both (2) and (3).

If there is a perception or a clear understanding that the credit downgrade of Enron Corp. is the reason for a reduction in trading activity with EPMI and/or EES in NEPOOL and that NEPOOL participants will respond favorably if they knew that the financial assurance is provided by way of bonds, not an Enron Corp. guaranty, then option (1) should be discarded.
	
Option (2) may be enough to give the comfort to "concerned" participants.
	
Option (3) and (4) will ensure that any letter we send out will make its way into the press, almost as soon as it is sent and if we send any such letter out we need to be prepared to meet any media interest. Further, the publication of any such letter in the press may encourage other counterparties in other forum to demand that EPMI and/or EES post bonds in order to continue trading and could materially adversely affect our trading activities.
	
If we considered that any disclosure would make a material difference to the confidence that NEPOOL participants have in trading with EPMI and/or EES, my recommendation would be to pursue Option (2).

Marcus

 -----Original Message-----
From: 	Nicolay, Christi L.  
Sent:	Tuesday, November 27, 2001 2:24 PM
To:	Herndon, Rogers; Presto, Kevin M.; Davis, Mark Dana
Cc:	Nettelton, Marcus; Sager, Elizabeth; Kingerski, Harry; Steffes, James D.
Subject:	FW: nepool financial assurance

Kevin, Rogers, and Dana -- We do not have to do or say anything since, per NEPOOL, Enron is in compliance.  However, if you feel that NEPOOL participants are not trading with us and we need to make some statement, we can (if ok with legal).  Let us know. Thanks.

 -----Original Message-----
From: 	Allegretti, Daniel  
Sent:	Tuesday, November 27, 2001 1:40 PM
To:	Nicolay, Christi L.
Subject:	nepool financial assurance

I got a call today from Ed McKenna, the ISO-NE treasurer.  He is getting a large volume of calls from NEPOOL Participants concerned about Enron Corp's credit rating.  He is telling these Participants that his office only monitors whether NEPOOL members EPMI and EES are in compliance with the NEPOOL Financial Assurance Policy, which they are, and does not monitor Enron Corp.  Ed suggested that when PG&E experienced difficulties PG&E drafted a short notice, which ISO-NE circulated, explaining how its subsidiaries were not affected by the credit rating of the parent.  The ISO is offering us the same opportunity to draft and circulate something similar if we wish.

What may be going on here is a concern by NEPOOL Participants that we are using a parent guaranty to meet the Financial Assurance Policy.  My recollection, however, is that we have instead posted surety bonds from AA agencies to meet NEPOOL credit requirements.  If we disclosed this to the NEPOOL Participants it might allay their credit concerns.  We may however, not want to disclose this if we are employing parent guarantees elsewhere, lest we be asked to post surety bonds everywhere.  Can you discuss this with the traders and see what they want to do?