Message-ID: <20968147.1075855005799.JavaMail.evans@thyme>
Date: Tue, 25 Sep 2001 15:51:59 -0700 (PDT)
From: lorraine.lindberg@enron.com
To: michelle.lokay@enron.com, tk.lohman@enron.com, mark.mcconnell@enron.com, 
	paul.y'barbo@enron.com
Subject: FW: TW OBAs Calling for Volumetric Settlement
Cc: kimberly.watson@enron.com
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This is the final OBA letter that we should be using to terminate the volum=
etric OBAs.  Lee will be down sometime tomorrow afternoon to review all our=
 letters.

 -----Original Message-----
From: =09Pryor, Tony =20
Sent:=09Tuesday, September 25, 2001 5:24 PM
To:=09Lindberg, Lorraine
Subject:=09FW: TW OBAs Calling for Volumetric Settlement
Importance:=09High



 -----Original Message-----
From: =09Pryor, Tony =20
Sent:=09Saturday, September 22, 2001 9:16 AM
To:=09Huber, Lee
Cc:=09Watson, Kimberly
Subject:=09TW OBAs Calling for Volumetric Settlement

Lee, as I mentioned on Friday, the purpose of the attached letter is to ter=
minate the volumetric OBAs and revert to the tariff OBA to avail ourselves =
of the "hammer" in Section 4(b) of the tariff form (Sheet 147) which permit=
s us to credit the operators' scheduled volumes to the imbalance, ie, confi=
scate their gas.  I'm told that the subject OBAs were individually negotiat=
ed and deviate from the tariff in one way or another.  They also said that =
these OBAs allow cashout, but don't require it, and that's the problem:  Th=
e operators are not voluntarily paying back the gas because in many locatio=
ns (ie, San Juan), the pipeline is full and they don't want to short their =
markets.  Because I haven't seen any of the agreements that we propose to t=
erminate (the TW people have just finished briefing them), I told the group=
 that an attorney needs to look at each one to make sure that we cannot, in=
 fact, force cashout.  In most of them, I'm told, cashout is at the option =
of the party owing the imbalance. =20

As I also mentioned, this letter is a template; a starting point.  It must =
be tailored to each OBA being terminated. For example, the Section numbers =
are not filled in, and must be supplied. You will note in the second paragr=
aph of the letter that we say, essentially, that in capacity-constrained ar=
ea, if volumetric settlement is to occur, it will need to be accomplished t=
hrough crediting their scheduled volumes to the imbalance.  From my convers=
ations with TW, my understanding is that most of the volumetric OBAs do not=
 have a provision expressly permitting us to do that.  Indeed, as I mention=
ed above, that's my understanding of why we're terminating the volumetric O=
BAs.  Even if there is no provision in the subject OBAs for crediting sched=
uled volumes, my opinion is that we can offer that as an option, because th=
at is still a way of balancing "in kind", but omit the reference to the agr=
eement (as I have noted with brackets).  If they don't want to do that, cas=
hout is the only other option; that's our way of forcing cashout. =20


Thanks for your help, and if you need help, you might ask Maria or Dari.  H=
owever, I don't envision that it will take much time to do any one letter..=
...............Tony

