Re: TVA Control Areas - NERC Policies

Steve--Joe, Rick and I expressed concerns about suing TVA under the NERC
"agreements". Richard Sanders wants to have a conference call next week
with the outside counsel, Bob Madden.
---------------------- Forwarded by Christi L Nicolay/HOU/ECT on 12/17/99
04:13 PM ---------------------------
From: Christi L Nicolay on 12/10/99 08:49 AM
To: Richard Shapiro/HOU/EES@EES
cc: Elizabeth Sager/HOU/ECT@ECT, Joe Hartsoe/Corp/Enron@Enron
Subject: Re: TVA Control Areas - NERC Policies

ATTORNEY WORK PRIVILEGE

NERC is establishing penalties for violations of many of its rules, beginning
in 2000. I have talked with Kevin Presto and the other operators and
transmission people and hourly desk repeatedly about this. Generally, we
feel that we can remain in compliance and many of the operational rules are
valid for reliability. However, then we run into the "interpretation" issues
that have plagued us this summer. I think one problem is separating the
valid "operational" reliability rules from the rules (like ATC) that have a
huge market impact and can be misinterpreted and manipulated. Until FERC
actually reviews and approves NERC rules, I share Rick and Joe's concerns.

Richard Shapiro@EES
12/09/99 12:08 PM
To: Elizabeth Sager/HOU/ECT@ECT
cc: Joe Hartsoe/Corp/Enron@Enron@ECT, Christi L Nicolay/HOU/ECT@ECT
Subject: Re: TVA Control Areas - NERC Policies

I have some concern over the impact to us if we were to take the position
you suggest.-- I'm not sure we would be comfortable with NERC rules
constituting the equivalent of a contract given how "wonderful" so many of
their rules are. Will be interested to hear from Joe and Christi. Thanks.