Re: TVA authority

FYI
---------------------- Forwarded by Elizabeth Sager/HOU/ECT on 08/19/99 04:43
PM ---------------------------

Enron Capital & Trade Resources Corp.

From: Cynthia Sandherr @ ENRON 08/13/99 04:48 PM

To: Joe Hartsoe/Corp/Enron@Enron
cc: Elizabeth Sager/HOU/ECT@ECT, Steven J Kean/HOU/EES@EES, Christi L
Nicolay/HOU/ECT@ECT, James B Fallon/HOU/ECT@ECT, Joe
Hillings/Corp/Enron@Enron
Subject: Re: TVA authority

Joe: I do not know if you have contacted I.G. George Prosser yet.
Apparently, the Hill & Knowlton bad press is all over today's local valley
papers. I spoke to two Hill contacts today who advise that if George Prosser
appears at all reluctant to proceed, please let me know and these Hill
contacts will contact him directly to advise him to go forward as they are
willing to lend him their political support.

Cynthia Sandherr
08/11/99 08:49 PM

To: Elizabeth Sager/HOU/ECT@ECT, Joe Hartsoe/Corp/Enron@Enron
cc: Steven J Kean/HOU/EES@EES, Christi L Nicolay/HOU/ECT@ECT, James B
Fallon/HOU/ECT@ECT, Joe Hillings/Corp/Enron@Enron (bcc: Cynthia
Sandherr/Corp/Enron)
Subject: TVA authority

Craven Crowell's authority to act without a full TVA board is limited by
federal statutory authority to only carrying out "administrative functions."
He is explicitly prohibited from carrying out "policy functions" without the
other board members in place. We know who the Administration intends to
nominate for the two board vacancies, however, these candidates can only be
officially nominated and confirmed by Congress sometime after Congress
reconvenes on September 8th at the earliest.

Since I know you would like an immediate fix to your TVA control area issue,
during the month of August you might pursue TVA's policy actions against our
control area in violation of federal statute. (In the meantime, however, I
am continuing to work the Appropriations strategy (best possible resolution
date October 1, 1999) and the Authorization strategy (best possible
resolution date October 7, 2000.))

Currently, the TVA Inspector General George Prosser who can be reached at
(423) 632-4120 is in hot pursuit of Mr. Crowell. He has successfully had
legislation introduced to curb Mr. Crowell's authorities, and soon will issue
a report (sure to receive much front page negative publicity) that Mr.
Crowell "lied" to Congress by failing to disclose a TVA $100,000 monthly
publicity retainer with Hill & Knowlton to a House Congressional Oversight
Committee. Ironically, this retainer was to help Mr. Crowell obtain
favourable earned media.

We believe the I.G. could easily be persuaded to pursue the wrong-doing
caused by Mr. Crowell in developing TVA policy in the absence of a board. If
he pursues the case, he would likely immediate reinstate our positions during
the investigation so as not to cause further harm, plus he could require TVA
to pay damages if he successfully proves his case. Regardless, this
investigation would cause nasty publicity for TVA.

I have discussed with Joe Hartsoe what materials he may wish to provide the
I.G. in order to help him make our case that this action "created policy." I
have also given Joe Hartsoe a listing of all of TVA's industrial customers
likely curtailed during the heat wave. We should contact a few of these
industrials in order to also ask them to intervene against TVA's policy
action on our control area. These industrials could also claim monetary
damages from being wrongfully curtailed by a policy that arguably reduced the
amount of available power in the region.

The down side is Mr. Crowell could pursue "administrative" retributions
against Enron activities.