Re: Aquila

I have talked to Aquilla on several occasions (including today) and they
continue to say they are capable of playing by the rules. I will talk to
them again tomorrow and suggest that we shut off their capability to trade
physical gas online (and vica versa for Aquila Energy Marketing). They have
asked us not to do this however I believe it may be time to revisit this. We
do have the legal ability to hold them to their click deals however they do
not have the contracts to manage physical gas. This would obviously make a
messy situation. I suggest that you call Jennifer Denny, Torrey Moorer or
myself as soon as you see one of these transactions in the future as we can
check into it immediately.

All transactions that have occured will be assigned by Aquila to Aquila.
Mark Taylor will draft the agreements and Aquila has agreed to this.

Kathryn Cordes
12/13/99 05:15 PM

To: Bob Shults/HOU/ECT@ECT, Debbie R Brackett/HOU/ECT@ECT, Jennifer
deBoisblanc Denny/HOU/ECT@ECT, Mark Taylor/HOU/ECT@ECT, Jeffrey T
Hodge/HOU/ECT@ECT
cc: Brent A Price/HOU/ECT@ECT
Subject: Aquila

We need to know what the resolution plan is to getting Aquilia straight for
trading Physical and Financial products. Today we saw Aquilia Risk trade
Next Day Physical Gas again and we were asked to move the deal to Aquilia
Energy. What is being done to get Aquilia Risk from continuing to enter
Physical trades on line? My concern for this trade was that we brought it to
Credit's attention this morning and did not get final word to move the deal
to Aquilia Energy until late in the day (4.45pm) which affects Logistics
ability to nominate for next day business. Logistics has been made aware of
the late nom and will be working with the Pipe to get the nom in. If there
are issues with this late nom from the pipeline we will let you know.

I'm not comfortable with the internal process of counterparty name changing
of EOL deals and would like to get comfortable with how we are going to set
this process up. I think there should be legal review of all deals that we
change and would suspect that some form of communication would need to be
conveyed to the counterparty.

KC