Off Peak

July 15, 2002

It's a Wash!

The guide to round-trip trading.

Who	What They Did*	What They Said*	Our Translation
American Electric Power	Trading transactions involving sequential trades with the same terms and counterparties, which amounted to approximately one-quarter of 1 percent of the total trading transactions.	"The total contribution of these transactions to gross revenue is not material. The company believes that substantially all of these transactions involve economic substance and risk transference and do not constitute 'round trip' or 'wash' sales."	Don't worry-our trades were like a gnat landing on a camel's back.
Calpine Corp.	Reported 31 transactions for simultaneous purchase and sale of the same electricity product between the same counterparties.	"These transactions were completed for valid risk management reasons. ... Each of the Transactions was at fair market value as reflected by then-current market conditions using customary trading procedures."	We only did it to protect shareholder value.
Duke Energy Trading and Marketing	the WSCC involving the physical sale of natural gas to another company together with a simultaneous purchase of the same product at the same price.	"These transactions were engaged in at the request of the counterparty. ... The de minimus number of such transactions belies any intent or practice to inflate reported revenues, trading volumes, or prices. The three transactions, over a two-year period, represented a tiny fraction of the more than 30,000 wholesale forward transactions entered into by Duke Energy. ..."	The counterparty made me do it.
El Paso Merchant Energy	Two trades at the same price with the same counterparty that occurred on the same day.	"Two of the trades were made in order to donate money to the families of victims of the September 11, 2001 World Trade Center attack. The Intercontinental Exchange offered to donate all fees attributable to trading activity conducted on its platform on September 21, 2001 to the families of the victims of September 11."	We should have written a check.
Willams Energy Marketing and Trading Co.	Two transactions on the same day with the same counterparty at the same volume and price.	"Transactions on the same day with the same counterparty at the same volume and price did occur. ... These transactions were initiated by Williams to facilitate hedging of price risks of natural gas reserves of Williams Exploration & Production and to facilitate hedging of price risks associated with power sales by Williams Energy Marketing and Trading Co. None had the purpose or effect of increasing Williams' reported volumes or revenues since Williams reports its revenues on a net basis."	What's your problem-it was all in the family.

*Source: Company press releases and filings at the Federal Energy Regulatory Commission

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