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TO: All New York Mercantile Exchange Members
FROM: Neal Wolkoff, Executive Vice President
RE: CFTC Approves Amendments to Natural Gas Price Limit Rules
DATE: December 7, 2000
Notice # 00-419
______________________________________________
The New York Mercantile Exchange, Inc., has received permission from the
Commodity Futures Trading Commission to expand the initial price limits of
its natural gas futures contracts; create uniform limits across all months of
trading; abbreviating the trading halt; and expand the new limits by 200%
when the initial limit is reached.
The amended rules, which are attached, will take effect for the opening of
the open outcry tading session at 9:30 AM tomorrow.
The Exchange announced this morning that the board last night voted to amend
the procedures so the new natural gas limit will be $1.000 per million
British thermal unit and if any contract month is traded, bid, or offered at
the limit for five minutes, the market is halted for 15 minutes. When
trading resumes, expanded limits are in place that allow the price to
fluctuate by $2.000 in either direction of the previous day's settlement
price.
Currently, the market is halted for one hour if the price in one of the first
two months is traded at $.750 for five minutes. When the market reopens,
those limits are extended to all months, but are moved to surround the
previous limit in place in the direction of the move.
Under the amended rules, if a halt occurs during the last two days of trading
in a contract, when the market reopens, there are no price limits placed on
either of the first two nearby contract months.
NATURAL GAS: APPROVED AMENDMENTS TO PRICE FLUCTUATION LIMIT RULES
The rules below reflect the provisions that are being implemented. A copy of
the rules reflecting the changes made from the prior version of these rules
can be obtained from the Exchange,s Legal Department.
Rule 220.08. PRICES AND MINIMUM FLUCTUATION SIZE
(A) Prices shall be quoted in dollars and cents per million British thermal
units (MMBtu). The minimum price fluctuation shall be $.001 per MMBtu.
Rule 220.08A. SPECIAL PRICE FLUCTUATION LIMITS FOR NATURAL GAS FUTURES
(A) Initial Price Fluctuation Limits for All Contract Months. At the
commencement of each trading day, there shall be price fluctuation limits in
effect for each contract month of this futures contract of $1.00 per MMBtu
above or below the previous day,s settlement price for such contract month.
(B)(1) Triggering Event and Temporary Trading Halt. If a market for any
contract month is traded or, is bid in the case of upward price moves or is
offered in the case of downward price moves, for five (5) minutes
consecutively at the upper or lower price limit, as applicable, then a
Triggering Event will be deemed to have occurred.
(2) Except as otherwise provided in this rule, as a result of such Triggering
Event, the market will be given notice immediately that in two (2) minutes,
there will be a fifteen (15) minute temporary trading halt in all contract
months of that futures contract and the associated option contract
("Temporary Trading Halt"). The market will remain open during this
two-minute notice period, and the commencement of the Temporary Trading Halt
shall not be affected by market activity occurring during this notice period.
(3) Expansion of Limits Following Temporary Trading Halt. Following the end
of the 15-minute Temporary Trading Halt, the market shall reopen in all
contract months of this futures contract. When trading resumes, price
fluctuation limits for each contract month, except as otherwise provided in
this rule, shall be expanded to $2.00 per MMBtu above and below the previous
day,s settlement price for such contract month;
provided that if such Temporary Trading Halt occurs on either of the last two
days of trading in the current delivery month, when trading resumes, there
shall be no price fluctuation limits in effect for the remainder of the
trading day both for the current delivery month and for the next nearest
contract month to delivery.
(4) Following resumption of trading after a Temporary Trading Halt, there
shall be no additional trading halts and no further expansion of price limits
for the remainder of the trading day.
(C) Duration of Session Following Temporary Trading Halt. When trading
resumes after a Temporary Trading Halt, trading generally shall continue
until the regularly scheduled closing time subject to the following
exceptions:
1) if, at the start of the 15-minute Temporary Trading Halt, there is less
than 15 minutes
before the close, then, when trading resumes after the Temporary Trading
Halt, the trading session shall be expanded as necessary to provide for
fifteen (15) minutes of trading following the resumption of trading, and the
closing period shall be the final two minutes of trading of this 15-minute
period of trading;
2) provided however that if the five-minute Triggering Event is completed
during the
closing period (on any day other than the last day of trading in the current
delivery month), there shall be no Temporary Trading Halt for any contract
month and no expansion of price limits for any contract month; and
3) provided further that if the five-minute Triggering Event is completed
during the
closing period on the last day of trading in the current delivery month,
following the 15-minute Temporary Trading Halt, trading shall resume for
thirty (30) minutes for all contract months. In such circumstances, the
closing range for the current delivery month shall include both the period
from the start of the closing range to the start of the Temporary Trading
Halt as well as the 30-minutes of trading following resumption of trading.
(D) Application of Price Fluctuation Limits to NYMEX ACCESSc The limits
described in this rule shall apply to trading on NYMEX ACCESSc, except as
provided by NYMEX Rule 6.56 and except that:
(1) if the five-minute Triggering Event is completed during the last ninety
minutes of a NYMEX ACCESSc trading session, there shall be no Temporary
Trading Halt and no expansion of price limits during the remainder of such
NYMEX ACCESSc trading session, and
(2) there shall be no Temporary Trading Halt during a NYMEX ACCESSc trading
session if, in the opinion of the President of the Exchange or his designee,
either the Triggering Event was not reflective of otherwise prevailing market
conditions or a Temporary Trading Halt is unwarranted.
__________________________________________________
Please click on the link below to indicate you have received this
email.
"http://208.206.41.61/email/[email protected]&refdo
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paste it into the web site address and press Return. |
Kim,
I just got your e-mails. Sorry about missing your party, how was it? Hopefully you didn't have too much fun without me!
Next time, call me at 972-459-2705 to let me know you are having a party.
How is everything in Houston these days? Are you liking being back in Tejas?
Hope you are doing well and hope to see you soon.
Dave
On Thu, 07 June 2001, "Ward, Kim S." wrote:
>
>
>
> > -----Original Message-----
> > From: "Melissa Reese" <[email protected]>@ENRON
> > [mailto:IMCEANOTES-+22Melissa+20Reese+22+20+3Cmreese+40cmsenergy+2Ecom
> > [email protected]]
> > Sent: Tuesday, June 05, 2001 2:05 PM
> > To: [email protected]; [email protected];
> > [email protected]; [email protected]; [email protected];
> > [email protected]; Ward, Kim S.
> > Subject: Fwd: FW: this is good...
> >
> >
> > ---------------------- Forwarded by Melissa Reese/MST/CMS on
> > 06/05/2001
> > 02:05 PM ---------------------------
> >
> >
> > [email protected] on 06/05/2001 01:54:51 PM
> >
> > To: [email protected]
> > cc: [email protected],
> > [email protected], [email protected],
> > [email protected], [email protected], [email protected],
> > [email protected], [email protected],
> > [email protected]
> > Subject: Fwd: FW: this is good...
> >
> >
> >
> >
> >
> > >>>This is GOOD...I expect it back too!
> > >>>A simple friend has never seen you cry.
> > >>>A real friend has shoulders soggy from your tears.
> > >>>
> > >>>A simple friend doesn't know your parents' first names.
> > >>>A real friend has their phone numbers in his address book.
> > >>>
> > >>>A simple friend brings a bottle of wine to your party.
> > >>>A real friend comes early to help you cook and stays late to help
> > you
> > >>>clean.
> > >>>
> > >>>A simple friend hates it when you call after he has gone to bed.
> > >>>A real friend asks you why you took so long to call.
> > >>>
> > >>>A simple friend seeks to talk with you about your problems.
> > >>>A real friend seeks to help you with your problems.
> > >>>
> > >>>A simple friend wonders about your romantic history.
> > >>>A real friend could blackmail you with it.
> > >>>
> > >>>A simple friend, when visiting, acts like a guest.
> > >>>A real friend opens your refrigerator and helps himself.
> > >>>
> > >>>A simple friend thinks the friendship is over when you HAVE an
> > >> argument.
> > >>>
> > >>>A real friend knows that it's not a friendship until after you've
> > had
> > >a
> > >>>fight.
> > >>>
> > >>>A simple friend expects you to always be there for them.
> > >>>A real friend expects to always be there for you!
> > >>>
> > >>>Pass this on to anyone you care about......if you get it back you
> > >have
> > >>> A ball is a circle, No beginning, no end.
> > >>>
> > >>>It keeps us together, like our Circle of Friends.
> > >>>But the treasure inside for you to see is the treasure of
> > friendship
> > >>>you've granted to me.
> > >>>
> > >>>Today I pass the friendship ball to you.
> > >>>Pass it on to someone who is a friend to you.....
> > >>>
> > >>>INSTANTLY WHEN YOU RECEIVE THIS LETTER, YOU'RE REQUESTED TO SEND IT
> > >TO
> > >>>AT LEAST 10 PEOPLE, INCLUDING THE PERSON WHO SENT IT TO YOU.
> > >>>
> > >>>
> > >>
> > >
> > >
> > >
> > >
> > > Return-Path: Received: from rly-za04.mx.aol.com
> > (rly-za04.mail.aol.com
> > >[172.31.36.100]) by air-za01.mail.aol.com (v77_r1.36) with ESMTP;
> > Thu, 31
> > >May 2001 11:09:31 2000 Received: from VOLTAIRE.stic.net
> > (mail.stic.net
> > >[204.57.118.5]) by rly-za04.mx.aol.com (v77_r1.36) with ESMTP; Thu,
> > 31 May
> > >2001 11:09:06 -0400 Received: from SABRE ([216.198.60.175]) by
> > >VOLTAIRE.stic.net (Post.Office MTA v3.5.3 release 223 ID#
> > >0-70040U18500L11000S0V35) with SMTP id net; Thu, 31 May
> > 2001
> > >09:33:55 -0500 Reply-To: From: "Anne Breihan" To: "Jean McGarry" ,
> > "Liz
> > >Jauer" , "'Barbara duggan'" , "'Dale Back'" ,
> > "'Del
> > >Ammerman'" , "'jessica grafton'" , "'Linda Traylor'"
> > ,
> > > "'Patsy Brewer'" Subject: FW: this is good... Date: Thu, 31 May
> > 2001
> > >09:32:23 -0500 Message-ID: MIME-Version: 1.0 Content-Type:
> > text/plain;
> > > charset="iso-8859-1" Content-Transfer-Encoding: 8bit X-Priority: 3
> > >(Normal) X-MSMail-Priority: Normal X-Mailer: Microsoft Outlook 8.5,
> > Build
> > >4.71.2173.0 X-MimeOLE: Produced By Microsoft MimeOLE V5.50.4133.2400
> > >Importance: Normal -----Original Message----- From: Patsy Brewer
> > >[mailto:[email protected]] Sent: Thursday, May 31, 2001 8:03 AM To:
> > Anne
> > >Breihan (E-mail); Barbara Duggan (E-mail); Beatrice Murray (E-mail);
> > >BevLowry (E-mail); Donna Pundt; Linda Leos; Pris Rauch; Ricka
> > Zimmermann
> > >Subject: FW: this is good... > > > >This is GOOD...I expect it
> > back
> > >too! > >A simple friend has never seen you cry. > >A real friend has
> > >shoulders soggy from your tears. > > > >A simple friend doesn't know
> > your
> > >parents' first names. > >A real friend has their phone numbers in his
> > >address book. > > > >A simple friend brings a bottle of wine to your
> > party.
> > >> >A real friend comes early to help you cook and stays late to help
> > you >
> > >>clean. > > > >A simple friend hates it when you call after he has
> > gone to
> > >bed. > >A real friend asks you why you took so long to call. > > > >A
> > >simple friend seeks to talk with you about your problems. > >A real
> > friend
> > >seeks to help you with your problems. > > > >A simple friend wonders
> > about
> > >your romantic history. > >A real friend could blackmail you with it.
> > > > >
> > >>A simple friend, when visiting, acts like a guest. > >A real friend
> > opens
> > >your refrigerator and helps himself. > > > >A simple friend thinks
> > the
> > >friendship is over when you HAVE an > argument. > > > >A real friend
> > knows
> > >that it's not a friendship until after you've had a > >fight. > > >
> > >A
> > >simple friend expects you to always be there for them. > >A real
> > friend
> > >expects to always be there for you! > > > >Pass this on to anyone you
> > care
> > >about......if you get it back you have > >found your true friends! A
> > ball
> > >is a circle, No beginning, no end. > > > >It keeps us together, like
> > our
> > >Circle of Friends. > >But the treasure inside for you to see is the
> > >treasure of friendship > >you've granted to me. > > > >Today I pass
> > the
> > >friendship ball to you. > >Pass it on to someone who is a friend to
> > >you..... > > > >INSTANTLY WHEN YOU RECEIVE THIS LETTER, YOU'RE
> > REQUESTED
> > TO
> > >SEND IT TO > >AT LEAST 10 PEOPLE, INCLUDING THE PERSON WHO SENT IT TO
> > YOU.
> > >> > > > > > >
> >
> >
> >
> >
> >
______________________________________________________________________
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I left out an important component of the call. The lenders are considering
closing without the Furnas consent which would be the best of all worlds.
But we'll have to weigh the difference between what the bank wants for that
and forcing Furnas to sign.
mb
Robert C Williams
02/02/2001 07:34 AM
To: Michelle Blaine/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: [email protected], [email protected], John Novak/SA/Enron@Enron,
Bruce Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Richard B Sanders@ECT
Subject: Re: Cuiaba Call--legal issues
I want to get involved in this. Michelle will bring me up-to-date. I don't
understand why we are considering Brazilian court versus ICC arbitration.
Michelle Blaine
02/01/2001 07:36 PM
To: [email protected], [email protected]
cc: John Novak/SA/Enron@Enron, Bruce
Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Richard B Sanders@ECT, Robert
C Williams/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
Subject: Cuiaba Call--legal issues
1. Consent Issue: Jose Bestard (he's the main developer who did this deal)
reported that he met with Furnas this week. Furnas had not received EPE's
letter addressing the consent issue. Furnas continues to link its failure to
sign the consent to commercial exposure to the high price from the MAE. There
are initials on the original consent and no one (including Furnas) knows
whose they are. John Novak told me he's not sure of the significance, but it
is not uncommon in Brazil to initial documents. Nevertheless, we need to ask
our Brazilian lawyers whether there is any significance under Brazilian law.
Keep in mind also that consent document was between EPE and the assignor,
Electronorte.
2. Arbitration considerations: Bestard has a meeting planned with the
ambassador. He consulted Enron's financial/business consultant in Brazil,
Winston Fernino (sp?) who advised that we should exhaust all political
avenues before resorting to litigation or arbitration. What concerns me,
however, is his advice that, politically, it is not the time to seek
assistance fromthe president for the consent, that there is a political
battle in the senate, and that we should wait until the end of February to
seek political assistance. My view on that is, to wait 4 more weeks to
progress with this notice of default, when the 90 day cure period has
expired, plus the 30 day extension which has also expired, sends the wrong
message and weakens our position. Thus, it is my recommendation that we
proceed immediately with a notice to terminate under Clause 27, paragraph 2
of the PPA, which then requires a 30day consultation period (paragraph3) at
the end of which we have the option to terminate. This buys us a little
time, but keeps the pressure on, at the end of which we can initiate
proceedings to compel the consent or to terminate. I'm not sure what
reaction the notice to terminate could bring about from Furnas. I'm not sure
how that plays out in our settlement with Siemans. Consider also that the
commercial people are not comfortable with termination yet. I am not sure
what rights, if any, we waive by waiting around doing nothing or how that may
affect our position in arbitration or litigation (something we need to look
at under the contract, although I cannot immediately recall any deadlines or
express waivers related to timing in this regard). I committed that we would
advise the team on the next call (next Thursday) our recommendation with
respect to arbitration/litigation. I want to make sure they understand
every possibility so they can make an informed decision. You have the matrix
developed already if you want to expand on that, or handle that your own
way. Bestard opines that Furnas will fight hard, that they have
traditionally been very adversarial and uncooperative. I'll find out who
represents them.
3. Force Majeure: Furnas is also taking a very strong position that EPE
does not have a valid force majeure claim. Based on my reading of the
contract, our facts appear to fit squarely under Clause 95(c). However, I'm
told we did not comply strictly to the notice terms. We'll need to show that
we were not negligent as a cause for the attorney general's action. Laine
Powell, President of the Cuiaba companies will gather the information on our
force majeure claim and we need to consider the legal issues related to our
position. Note that if FM lasts more than 12 consecutive months, both
parties have the right to terminate. No one buys the plant and we're stuck.
I'll find out the date of our last FM notice. There have been several.
4. Budget: Lets consider what it will cost to nail down this arbitration
concern and give initial advice on how to proceed over the next week, what
it will cost to prepare for arbitration and, the cost of the arbitration.
Darren I'll call you tomorrow and we can break that out. We may want to
consider the litigation route. We'll need to put together some kind of
proposed or potential time line, and what will happen in each stage and tie a
number to it. I've done this with Pete before and he seems to like it. It
needs to be subject to review as we go along.
5.NEXT: Prep for the call and get a recommended strategy in place. I'm going
to get together all our opinions on the Brazilian state of arbitration and
get a conference call with one of these experts so we can get the best
advice. We certainly have some conflicting views. Our experience in the
Brazilian courts is that nothing happens and we could be stuck for years, so
I am inclined to take our chances with arbitration and we may get stuck in
the court anyway. If we go to court, perhaps Furnas would take the position
that we must arbitrate, that is what Fernando Serec said. Who knows.
Please give me your comments or just call me. I'm open to any suggestions.
John Novak will be able to tell us about all the competing concerns that I
may be unaware of with any strategic plan.
Regards,
Michelle |
Executive Summary
? The likely outcome of the 16 May elections is a victory by the BC Liberal
Party (currently holding polls at 70%), a pro-business, right-of-center party
led by Gordon Campbell.
? Major changes in British Columbia energy policy are likely under a Liberal
government.
? A low snow pack, a return to regulation by the BC Utilities Commission and
public concern about outstanding debts owed by US power consumers could force
BC Hydro to stop out-of-province power sales once existing contracts expire
? BC Hydro,s additional generation at Williston is likely undeliverable
Liberal Party Platform
? Income tax cut that would make BC,s income tax the lowest in Canada
? Independent audit of the province,s books amid allegations of NDP
mismanagement and incompetence
? Review of all Crown corporations (including BC Hydro) to enhance efficiency
and management quality
? Campbell has also said that he wants to scrap the Corporate Capital Tax,
the Machinery Equipment Tax and the Corporate Income Tax.
Energy Agenda
According to sources, under the Liberal party's rule, significant changes in
the BC government's energy policy could include a move toward the
privatization of some BC Hydro assets, perhaps including its transmission
assets, as well as increased government support for independent power
producers and coal-fired production. At the same time, a rate review and
attempts to establish a broad electricity strategy for the province could
lead to a lack of clarity about the province,s overall energy strategy over
the next few years. Campbell reportedly is a proponent of deregulation and
of expanding coal-fired production. Campbell calls thermal coal, &an asset
that we want to be able to move forward with and to encourage once again in
BC.8 A high-ranking NDP source believes that Campbell will take the province
back along the path of natural resources extraction rather than promoting new
technology. The source expects this to lead to strong protests from
environmentalists. &These are confrontational moves, and people will be on
the streets.8
Campbell's most likely choice for energy minister is Richard Neufeldt, though
we caution that this decision depends on the make-up of the legislature after
the election. Neufeldt is responsible for the Liberal Party,s energy, mining
and northern development portfolio. Sources speculate that if right-wing
Liberals are dissatisfied with the party,s performance after the May
election, Neufeldt could again defect to the Opposition. However, this gives
Campbell even greater incentive to name Neufeldt energy minister, a
high-profile position.
Should the Liberals win the election, Gordon Campbell has indicated that he
would return BC Hydro to regulation by the BC Utilities Commission. The BC
government has derived $5.5 billion in revenue from BC Hydro since 1991
(roughly 85 percent of its profit). Critics say this has undermined the
utility,s ability to pay down approximately $7.5 billion in debt and invest
in the future. This also has left Hydro without a rate stabilization fund,
something that sources feel may be needed this year. Campbell reportedly
intends to address these issues, and one can expect this to lead to calls for
change.
Electricity Export Policy
Currently the BC Utilities Commission is demanding more information about BC
Hydro,s out-of-province sales. The Commission has warned that, given the low
snow pack, the utility could be a net importer of power this year. Supporting
this view, the Northwest Power Planning Council, representing BC Hydro,s key
trading partners in the US, has said that it would not be able to rely upon
British Columbia or Alberta during peak consumption periods over the next few
years, and that its customers face a 25 percent chance of not making it
through the winter without power losses. The combination of a low snow pack,
a return to regulation by the BC Utilities Commission and public concern
about outstanding debts owed to BC Hydro by US consumers may force BC Hydro
to stop out-of-province power sales once existing contracts expire.
BC Hydro Privatization
A key campaign energy issue for the Liberal party is the privatization of BC
Hydro. Campbell has urged greater electricity competition, saying, &We need
to ensure the transmission infrastructure is available to all, producers and
consumers, on an equal and non-discriminatory basis.8 He stated that
independent power producers have been discouraged at every turn. &I want to
change that big time,8 he told the Canadian Institute of Energy. Campbell
also urged more natural gas development, including pipelines and
co-generation plants.
Campbell backtracked on this stance last week after being challenged by NDP
leader Ujjal Dosanjh. Campbell stated on 25 April, &We have no intention of
selling BC Hydro; we have no intentions of selling their transmission lines,
no intention of selling their dams, we have no intention of selling their
reservoirs.8 Liberal Party spokesman Mike Morton also reiterated on 29 April
that BC Hydro would not be for sale. A high-level NDP source commented that
Campbell has been extremely careful in his choice of words regarding BC
Hydro, essentially saying that he would not privatize the dams, transmission
lines or generating stations, but that he is in favor of opening the sector
up to competition.
However, local sources believe that some parts of BC Hydro might be sold as
part of an overall review of BC Crown Corporations to enhance efficiency.
Likely sale prospects include BC Hydro,s distribution channels and its energy
trading subsidiary, Powerex. In addition, Gary Farrell-Collins, the Liberal
finance spokesperson and possible second choice for energy minister (after
Neufeldt), has stated that public ownership of BC Hydro,s non-core
businesses, such as Westech, its systems division, and customer billing,
could come under review.
BC Hydro Williston Generation
Current reservoirs levels at BC Hydro,s Williston hydro-generation facility
are at 2,150ft, which allows BC Hydro to drop levels another 35 ft (170
Gwhs/ft) under their current permit. The one drawback to this plan,s
additional generation involves the Mackenzie pulp mill that would have to
cease operation if water levels were to fall below 2,140ft. Sources close to
the Minister of Mines & Energy - elect, Richard Neufeldt, indicate that
levels at Williston probably will not be drawn down below Mackenzie,s
operational limits due to concern over political backlash. |