Re: Canadian Form of Physical Power Master

I appreciate the extra work. Thanks. Mark

Greg Johnston
11/02/2000 04:43 PM

To: William S Bradford/HOU/ECT@ECT, Aleck Dadson/TOR/ECT@ECT, Derek
Davies/CAL/ECT@ECT, Paul Devries/TOR/ECT@ECT, Chris Gaffney/TOR/ECT@ECT, Bill
Greenizan/CAL/ECT@ECT, Peggy Hedstrom/CAL/ECT@ECT, Robert
Hemstock/CAL/ECT@ECT, Jeffrey T Hodge/HOU/ECT@ECT, Mark Powell/CAL/ECT@ECT,
Elizabeth Sager/HOU/ECT@ECT, Dianne Seib/CAL/ECT@ECT, Laura E
Scott/CAL/ECT@ECT, Andre Templeman/CAL/ECT@ECT, Garrett Tripp/TOR/ECT@ECT,
John Zufferli/CAL/ECT@ECT
cc: Rob Milnthorp/CAL/ECT@ECT, Mark E Haedicke/HOU/ECT@ECT, Peter
Keohane/CAL/ECT@ECT
Subject: Canadian Form of Physical Power Master

Further to the landslide of e-mails I have sent relating to this agreement, I
hope that this will be the last as far as asking for input. Over the last
few days, the form of the paper pursuant to which Enron Canada will trade
physical power in Canada has been reviewed and (I think) finalized by legal
in Calgary and Houston and the commercial people in Calgary. We have
determined that it is in the best interest of Enron to jointly promote the
Edison Electric Institute (EEI) form of master which, as I described in my
e-mail of yesterday, consists of a standardized base contract with an
amending section, much like the ISDA form of financial master. However, as
the current form of the EEI master is a US document, containing many US
specific provisions that have no application in Canada, commercially it has
been identified as a concern that, with respect to counterparties that are
not sophisticated trading companies, selling a US document with a Canadian
addendum will be difficult if not impossible.

Therefore, we are going to proceed to finalize the form of "industrial
master" that I have drafted and sent out numerous times for review, a copy of
which I enclose in both a clean and black-lined version (black-lined to the
most recent draft distributed to you) in what I now believe is, in fact,
final form. Our commercial people can use this form, together with the form
of GTC I distributed to most of you earlier today, to market power in Alberta
to counterparties who will not accept the EEI form.

We will immediately begin the process of supporting the use of the EEI form
in Canada but will propose that a Canadian form of base contract be agreed to
and implemented, thereby eliminating the problem of using a US document as
the base contract for Canadian transactions. I will begin the process of
trying to create a first draft of this base contract which, other than with
respect to removing US references and incorporating specific Canadian
principles, will be identical to the US form. I will also commence the
process of preparing what Enron believes the form of addendum to this
Canadian base contract should be.

Sorry for the lengthy e-mail, but I wanted to ensure that everyone was
completely up-to-date with the status and process. I believe that this
solution will address everyone's concerns without jeopardizing commercial
transactions in Alberta.

Thanks

Greg