FW: FW: Option for Wastewater Discharge and Water Reuse

FYI

This message came in from the accounting group re: a combined option/water
contract for the Longview project.

Apparently having separate documents for the option and the underlying
contract is important from an accounting standpoint, even though there may be
no difference in effect when compared with an option incorporated into the
primary agreement.

---------------------- Forwarded by Dale Rasmussen/HOU/ECT on 04/12/2001
07:51 AM ---------------------------
From: Herman Manis/ENRON@enronXgate on 04/11/2001 03:14 PM CDT
To: Laura Wente/HOU/ECT@ECT
cc: Lisa Bills/ENRON@enronXgate, Dale Rasmussen/HOU/ECT@ECT
Subject: FW: FW: Option for Wastewater Discharge and Water Reuse

Pursuant to discussions with AALLP, and as we discussed yesterday, combining
the water agreement with the option agreement is contrary to the approach we
agree upon with AALLP in configuring a true option agreement for water
supply. I explained our basic commercial reasons why we needed to do this to
no avail. The good news is that this, and only this agreement, may go out in
your desired format but there will be no exceptions permitted going forward.
Costs incurred around future documents that do not read as true option
agreements prepared in accordance with parameters estab. with AALLP and
accounting will be considered hard costs. Hope this helps out.

-----Original Message-----
From: Wente, Laura
Sent: Tuesday, April 10, 2001 3:57 PM
To: Manis, Herman
Cc: Carter, Bob; Bills, Lisa; Rasmussen, Dale
Subject: Re: FW: Option for Wastewater Discharge and Water Reuse

Hi Herman,

Thank you for your quick review of the Option Agreement with CSOB. I will
call you to discuss your comments further. However, there are some commercial
reasons for combining the Wastewater Discharge and Effluent (Water reuse for
cooling) into one option agreement. These reasons include the following:

1) Timing - We need to secure the wastewater discharge ability sooner than we
can pull together all of the details for a firm agreement. By highlighting
the major issues in the Option Agreeement we can confirm our discharge route
while we pull together the details for the underlying agreement. At this
point the Wastewater Discharge agreement that you referred to is on hold
until we have additional technical and permitting information. It is also
critical to ensure our ability to obtain effluent for cooling, prior to
firming up all of the details for a separate, underlying agreement on
effluent.

2) Combination is faster - Given the timing concerns expressed above, it is
faster to get there with one agreement rather than trying to work with the
CSOB on two agreements. The proposals that we are suggesting to the CSOB are
very new and somewhat out of their comfort zone. It is easier to get them
comfortable with these concepts in one agreement and at one time rather than
in two separate agreements.

As I mentioned, I will call you to discuss further, but hopefully the above
helps shed some light on our reasons for pulling together the agreement in
this format.

Regards,
Laura

From: Herman Manis/ENRON@enronXgate on 04/09/2001 12:50 PM CDT
To: Laura Wente/HOU/ECT@ECT
cc: Bob Carter/HOU/ECT@ECT, Lisa Bills/ENRON@enronXgate
Subject: FW: Option for Wastewater Discharge and Water Reuse

I think this Option Agreement and Wastewater Discharge Agreement should be
two separate agreements. What I mean by this is that the items in 1
a(i)-(ix) and 1 b(i)-(ii) should be carved out of this agreement and placed
in the Wasterwater Discharge Agreement. Remainder looks ok.

-----Original Message-----
From: Wente, Laura
Sent: Friday, April 06, 2001 1:32 PM
To: Bills, Lisa; Clark, Catherine; Engeldorf, Roseann; Manis, Herman
Cc: Blackburn, Jody; Carter, Bob; Rasmussen, Dale; jffell@stoel.com;
mwood@stoel.com; Clark, Ed; Mullen, Mark; Slaughter, Jeff; Thomas, Jake
Subject: Option for Wastewater Discharge and Water Reuse
Importance: High

Hello,

Please see the attached Option Agreement. The intent of the Option is to firm
up details for LED to discharge plant wastewater to the Cowlitz County sewer
treatment plant's (referred to as Cowlitz Water Pollution Control "CWPC"
plant) existing outfall on the Columbia River as well as obtain wastewater
from CWPC for use in cooling.

To give a little background, given our proximity to CWPC, the ability to
discharge to CWPC's Columbia River outfall is a viable plan. It reduces the
permitting time that would be required if we built our on outfall to the
Columbia. It is cheaper than sending all of the plant wastewater through the
whole treatment facility, especially given that cooling tower blowdown
(primary source of plant wastewater) is very clean.

We are also requesting effluent as a source of water for plant cooling given
that the Port's ability to obtain new water rights is unclear at this point.
Obtaining CWPC effluent is a viable option for plant cooling.

Please contact me or Bob Carter if you have questions about this document. I
expect to meet with the County next week to discuss. I would appreciate your
comments mid-next week. On a priority scale, comments on this prior to the
Water Agreement (sent in my previous e-mail) would be appreciated.

Thank you in advance for your assistance.

Regards,
Laura