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Enron Mail |
pls print--I can't get it to print in here. thanks. df
---------------------- Forwarded by Drew Fossum/ET&S/Enron on 01/11/2001 09:56 AM --------------------------- Susan Scott 01/10/2001 01:02 PM To: Drew Fossum/ET&S/Enron@ENRON cc: Subject: Gallup -- monitoring system issue Drew, since my message to you this morning I've spoken with Gerald Nemec and Mark Knippa and here is what I've been able to learn. ECS's position is that they could not begin getting a monitoring system in place (automated or manual) until it could obtain access to CDEC's website, which required the execution of a confidentiality agreement with Tri-State to protect the confidential information on the website. I do not remember exactly when I first reviewed the confidentiality agreement; I believe I OK'd a draft agreement sometime over the summer (Schedule 21 became effective sometime in July), and I received executables from Gerald Nemec around Thanksgiving, which I had signed and returned to ECS. The confidentiality agreement was fully executed as of Dec. 8, 2000. ECS blames the delay between draft and execution on Tri-State/CDEC, who allegedly would not work on the confidentiality agreement until the merger was completed. Currently ECS is working with Kevin Hyatt on getting an automated system in place. TW has access to the CDEC website, but such access is of limited use until an automated system is implemented, because identifying peaks would require continuous monitoring. Apparently the programming is being done through Arnold Eisenstein's group (using an outside contractor, I believe). In fact, EE&CC has been responsible for the automated system from the outset, in that development of the monitoring system was included in ECS's payments to EE&CC. ECS believes they have done everything possible to fulfill their obligation to develop a monitoring system. But they also argue that even if they did not fulfill this obligation, they are not responsible for the expenses TW incurred due to use of the compressor during peak load periods, as the implementation of a monitoring system is no guarantee that peak loads will actually be avoided. While ECS does have a point, this is still a pretty harsh legal position for ECS to take with an affiliate and business partner. If ECS breached its obligation, it should take responsibility for its share of the consequences. The difficult question is whether ECS breached the obligation. What is "good faith" is subjective. Since the confidentiality agreement is for the protection of CDEC, ostensibly the Enrons could have just signed an agreement and sent it to CDEC and it would have been binding on us. However, issuance of a password and access to the website was totally within CDEC's discretion. It is difficult to know whether there is anything ECS or TW could have done to expedite the process. Also, we will probably never be able to tell for sure how long the confidentiality agreement sat on CDEC's and ECS's desks prior to execution. Going forward, until an automated system is implemented, TW will still risk being charged for peak demand until it monitors the website continuously. If we do monitor the system manually, I believe the agreement does obligate ECS to reimburse us for the additional employee time. I asked Mark Knippa to find out how soon the software could be installed. Kevin should, probably follow up with him on this. Please call me; while writing this I had a gut feeling I should probably talk to you about it before sending to the larger group. Centilli appears more than anxious to get this resolved (and is adamant that ECS owes us money). Thanks. From: Drew Fossum 12/14/2000 05:31 PM To: James Centilli/ET&S/Enron@ENRON, Randy Rice/OTS/Enron@ENRON cc: Susan Scott/ET&S/Enron@ENRON, Steven Harris/ET&S/Enron@ENRON, Rod Hayslett/FGT/Enron@ENRON, Dan Fancler/ET&S/Enron@ENRON, Charlie Graham/ET&S/Enron@ENRON Subject: Re: Gallup Rebate Randy, this is the issue I left you the voice mail on. Article 6 of the Gallup Compression Services Agreement (which I am sending to you separately) with ECS obligates ECS to "work in good faith with CDEC" to establish an automated system that would automatically have alerted us to peak loading conditions on CDEC's system. We had a pretty good idea when we signed the contract that ECS would not be able to complete that by the contract start date, so we negotiated a fall back plan under which ECS is obligated to "assist [Transwestern] in developing a manual system to accomplish the same result and will hold harmless and keep [Transwestern] whole for all cost and expenses" associated with the manual system. We will fight with them about who owes the $200k that James mentions below based on their failure to "assist" us in managing the cost. In the mean time, we need to make sure that we are doing everything we can to get a handle on the situation to mitigate future costs. Do we have someone who is watching this out there? We are running so full tilt on TW that we may not have as much flexibiltiy to manage this situation as we expected, but let me know what we can do. James had heard that one hold up was the absence of a confidentiality agreement--I guess between ECS and Transwestern--that would permit ECS to communicate to us the details on how to access teh key info. from CDEC. That sounds like a BS excuse from ECS, but it that's what they are saying, let me know and we can figure out a solution. Thanks. DF James Centilli 12/14/2000 02:49 PM To: Susan Scott/ET&S/Enron@ENRON cc: Steven Harris/ET&S/Enron@ENRON, Drew Fossum/ET&S/Enron@ENRON, Rod Hayslett/FGT/Enron@ENRON, Dan Fancler/ET&S/Enron@ENRON, Randy Rice/OTS/Enron@ENRON Subject: Gallup Rebate Would you please contact Gerald Nemec and review the Gallup Compression Service Contract in respect to the Load Control Management. My understanding was that ECS was to provide a means to access CDEC's online profile in order for us to make a decision to avoid running the compressor during CDEC's peak load periods. We have not received access to this information which has resulted so far in additional electric cost of $200,987.33 for the period of July through September. Additional cost will be incurred for the remainder of this year, that I have not been able to review yet. This cost is averaging $79,000 per month if we continue to run the compressor as we have in August and September.
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