Message-ID: <31182502.1075860330190.JavaMail.evans@thyme>
Date: Thu, 17 Feb 2000 07:37:00 -0800 (PST)
From: christian.yoder@enron.com
To: mark.taylor@enron.com
Subject: system outage risk
Cc: elizabeth.sager@enron.com
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Mark,
One of the current priorities of  Casino Willamette  is our Services Desk, a 
relatively new concept whereby we supposedly do a bunch of California 
scheduling coordination services for customers who are too unsophisticated to 
deal with California complexity,  earn a reasonable little fee and, here is 
the kicker,  the whole enterprise is seen as involving "very little risk."  
It is seen as picking up a fair bit of change off the floor with no risk,   
as though a slot machine broke and a bunch of quarters rolled around on the 
floor and all we have to do is scrape them up.  Not big money, but safe 
money.  "Pays the overhead," one often hears traders remark.  

I have drafted a series of confirms over last year to document a variety of 
transactions and am in the process of reviewing them with an eye to constant 
improvement.  I am having a series of discussions with traders, schedulers 
and settlement folks and one risk that keeps coming up in their minds, which 
I am not really sure I have covered in our documents is referred to as 
"system outage risk."   Interaction with the Cal PX and the California ISO is 
all online electronic.  Scheduling power into the California market is all an 
online business.  So let us say that one bright spring morning we have agreed 
with our 17 SC customers to schedule a variety of power products into and out 
of the California system, and right at the critical moment when all of this 
scheduling stuff is supposed to click, the whole damn system collapses?  
Apparently we have a bunch of system apparatus that is our own,  that is, it 
is not just our link up to the California entities.  One time our  tie line 
got cut (middle of night, no problem because they got it fixed in time)  Is 
this kind of internal system breakdown an event of force majeure,  or is it a 
default on our part?  I have been reading our eol agreements, in particular, 
the ETA and am not sure how to address it.  Is it appropriate in the new age 
electronic commerce world for a party providing electronically based  
services to just tell everybody that if our system goes down we are not 
liable and by the way, if it causes a bunch of costs to come flowing back 
from the ISO,  the other poor guy has to pay them?  I would appreciate your 
thoughts, based on your eol experience.  ----cgy