ENRON CENTRAL DESK Hunter Shively Fletch Sturm Jason Williams

Overview b Peoples Supply Deal b Central Desk Organization Structure b Using Information to make markets and money

Role of Jason Williams b Monthly Setup Supply QuantitiesSupply Quantities TransportationTransportation PricingPricing b Manage Daily Activities SIQ,, DIQ InputSIQ,, DIQ Input Variable TransportVariable Transport b Liaison Between Trading and Logistics b Facilitate Smooth Communication Between Peoples and Enron Volumes, ConstraintsVolumes, Constraints Changes, CutsChanges, Cuts b Gather Key Information Storage, Flows, WeatherStorage, Flows, Weather

Items Involved In Managing Deal b Deal Booking Risk Group, Validation, ContractsRisk Group, Validation, Contracts b Morning Reports Information Gathering, Pipeline SummariesInformation Gathering, Pipeline Summaries b Daily Activities And Flows Variable Transportion Costs, EconomicsVariable Transportion Costs, Economics b Scheduling Support Function, Tracking ActualsSupport Function, Tracking Actuals b Pinpointing And Solving Issues Cuts, Constraints, Weather, Human ErrorCuts, Constraints, Weather, Human Error b Accounting Pricing, Pipeline Report ComparisonPricing, Pipeline Report Comparison

Peoples - Enron Website

Top Half Of Edit Sheet (Enron View)

Bottom Half Of Edit Sheet (Enron View)

Historical Pop-Up Screen

Historical Weather Pop-Up Screen

Top Half Of Edit Sheet (Peoples View)

Bottom Half of Edit Sheet (Peoples View)

North Shore Sendout

Monthly Setup and Quick View (Top)

Monthly Setup and Quick (Mid)

Monthly Setup and Quick View (Bottom)

Past, Present And Future b The Beginning b Exciting Days Early On b Analyze Opportunities b Moving Towards EDI b Work On Confirmation Process b Originate New Ideas b Regularly Evaluate Progress b Keep Communication Lines Flowing

Central Desk

Reasons for having expertise in North America b Gas grid is constantly changing b The pipeline grid allows for gas to flow where it is most needed b Goal of the desk is to make money and expand knowledge of the region

Central Desk Statistics b The desk moves 4.5BCF/day of physical gas through the region b The traders execute an average of 480 physical trades per day b The desk makes markets in 17 different physical locations

Organization Structure

Market Area Book b LDC markets on EOL PGL&C PGL&C Nicor Nicor Nipsco Nipsco Consumers Consumers Michcon Michcon

Liquidity at PGL&C b Advantages Pooling Concept Pooling Concept Good connection with incoming pipes Good connection with incoming pipes Midwest Hub (Online Marketing) Midwest Hub (Online Marketing) b Disadvantages Nicor’s has greater gas requirements Nicor’s has greater gas requirements

Gulf Coast Book b Pipelines ANR-SE ANR-SE NGPL Gulf Leg NGPL Gulf Leg Trunkline Trunkline b Book attempts to capture intra-gulf spreads

Midcon Book b Pipelines ANR-SW ANR-SW NGPL - Midcon Leg NGPL - Midcon Leg Noram Noram NNG NNG Oklahoma Intra-state Oklahoma Intra-state PEPL PEPL

Eastern Canada b Pipelines TCPL TCPL Great Lakes Great Lakes b Major trading points Dawn Dawn Niagara Niagara

Job Function of Traders b Each trader makes a market in a physical location and is responsible for the profit or loss associated with market making b Service customers b Make speculative market decisions b Gather information about the market that gives the desk an edge in trading

Traders do not make money by Gambling

Translating Information Into Trading Strategies Fletcher J. Sturm

What type of Information do we receive? b Pricing natgas, oil, power, residnatgas, oil, power, resid b Fundamentals AGA, weather servicesAGA, weather services b Customer transactions RFP’s, market tradesRFP’s, market trades b News generation, production, transport, demandgeneration, production, transport, demand

Which term is relevant? b Short –present to 1 week b Medium –1 week to 1 month b Long –1 month +

Which risk will be impacted most? b Price b Basis b Spread index, seasonalindex, seasonal

How do we enter into the right trade? b Mental checklist: Is information bullish or bearish?Is information bullish or bearish? Which term(s) will be impacted?Which term(s) will be impacted? Which location(s) will be impacted?Which location(s) will be impacted? Which risk(s) is affected?Which risk(s) is affected? b Buy or Sell relevant product for location and term

How do we “Manage” the position? b Continue to gather new information see abovesee above b React to any new information which affects position Increase, decrease, spread, or close positionIncrease, decrease, spread, or close position b Follow risk management policy guidelines Properly report position and profit/lossProperly report position and profit/loss Maintain position and VAR limitsMaintain position and VAR limits