Freeman and CDWR

Thanks Chris - I assume you are speaking about credit risk on the thirty day
deal when you refer to the $2M exposure on $100 - has Tim spoken to John
about this? I am supportive of this proposal and approach. Like our
discussion, we have to find a way to be supportive to the re-development of
this market without creating un-acceptable credit or market losses. We also
have to support Lay's efforts in California.

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 02/19/2001
10:50 AM ---------------------------

Christopher F Calger
02/16/2001 06:11 PM
To: David W Delainey/HOU/ECT@ECT
cc:
Subject: Freeman and CDWR

Dave,

I just spoke with Freeman to let him know that we can provide him a letter
proposal which I can send out Monday. In general, we will offer 50MW NP-15
Peak from February 22 - March 31 at a fixed price (currently $265) with
payment due every 7 days. This would be documented under the form of EEI
that they have agreed to and is subject to (i) payment of outstanding amounts
due Enron; (ii) execution of EEI and confirm; (iii) confirmation that they
will pay the amounts due; (iv) good faith obligation to put together
creidtworthy structure; (v) good faith look at term deal which can be
back-dated to blend with this current deal, Pastoria and Demand Management.

It took some time to nail down the settlement numbers on our side. Legal
spent some time with Freeman's attorney but got agreement on the EEI Form.
Credit likes this a lot. Tim will have Lavo wear the market exposure -
$2MM if the market falls $100. David Freeman said he would look at it Monday
but it sounded good.

I will pull it together and copy you over the weekend.

Chris