Global Markets Legal Matter - Puerto Rico Claims and Disputes

Keep me posted on this matter. Mark
----- Forwarded by Mark E Haedicke/HOU/ECT on 10/20/2000 11:38 AM -----

John Schwartzenburg@ENRON_DEVELOPMENT
10/20/2000 09:36 AM

To: Mark E Haedicke@ENRON_DEVELOPMENT, Frank
Sayre/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Vicki Sharp@EES
Subject: Global Markets Legal Matter - Puerto Rico Claims and Disputes

I am copying Frank Sayre and Mark Haedicke on this memo because I understand
that responsibilty for this project is now somewhere between you two gents
and therefore you both need a heads up. Vicki, you also need to be aware of
this as well.

I attach a letter EECC signed and sent out to the EcoElectrica project
yesterday re the need to schedule a senior management meeting to try and
resolve outstanding issues and payments due EECC for this project, We have
been trying to schedule meetings to resolve these matters since September,
but the project, perhaps because of Mission Energy's impact, has not yet
agreed to a meeting to resolve the matter.

With David Haug's help we were able to get a significant portion of
undisputed payments that had been delinquent for some time (in some cases
since before the first of the year) paid. including a recent payment of $6
million. Even so, approximately $18 million still remains unpaid to EECC and
seriously delinquent. EcoElectrica has identified $8.4 million as being
withheld in connection with disputed liquidated damage payments, but there
remains an undisputed, unpaid balance of approximately $9.6 million that
EcoElectrica has not offered any contractual or other explanation for
withholding other than that they are working on other matters.

Larry Izzo needs to get these claims resolved, and at least needs a
commitment from EcoElectrica to a date for formal senior management
discussions under the contract from the project. Failing that, he will be
directing EECC to seek clearance to institute arbitration proceedings.