Re: Power Exchange

I did not participate in the call last week because I thought it was only
concerning financial consultants. Shortly before the meeting,a more detailed
agenda arrived by e-mail(which may be par for the course but I find
irritating). Please find out 1) what was decided and 2) what is the agenda
for tues. Thanks

"J. ROBERT NELSON" <JRNELSON@LLGM.COM<
04/18/2001 12:57 PM

To: Richard.B.Sanders@enron.com
cc: CEKLUND@LLGM.COM
Subject: Power Exchange

The Committee interviewed financial advisors yesterday. The list included
PriceWaterhouse, KPMG, BDO, Stonefield Josephson and Neilson, Elggren. The
preference seemed to be PW, in major part because it was actively involved in
creation of the Power Exchange systems. There was an obvious concern about
the potential for conflicts given PW's role for the PGE committee. In that
regard, we were told (1) that there is a different standard for accountants
than attorneys, (2) that counsel for the PGE committee didn't perceive a
problem, (3) that there would be different teams handling each of the cases,
(4) that it was highly unlikely that there would be any disagreement over the
underlying numbers (ie, that PW would at the same time be supporting and
challenging numbers in claims litigation). We've asked PW for assurances
that if there is any challenge, it will be available to support the
participants' position. We're waiting for a response. For the moment, no
second choice has been identified.
Before the interviews, I spoke with Marc Cohen. He's frustrated with Joe
Eisenberg. Joe has been slow in generating a stipulation to transfer
litigation responsibility to the participants committee. Consequently, Cohen
went ahead and drafted a stipulation himself. Evidently Eisenberg is about
to sign off, and the matter will be presented to the court presumably on
shortened time. I took the opportunity to urge Cohen to press Eisenberg to
prepare a liquidating plan. In that regard, Eisenberg did go to the
creditors committee and propose using $4 million of the $20 million of
available cash to support a plan. Not surprisingly, the creditors came back
asking for $18 million. Cohen's sense is that there may be a deal in the $10
million range, particularly if we can persuade the trade that the
participants may themselves have a claim against the $20 million. Cohen is
giving thought to how we make that case. If we can agree on a number, we can
get rid of the trade creditors, shift responsibility for the wind up to a
liquidating agent of our choosing and close the bankruptcy case.
Cohen apparently has made no headway in efforts to reconstitute the PGE
committee. He's concerned that the second largest creditor does not have a
seat at the table and questions whether the presence of such entities as
Enron and Dynegy adequately represents the interests of the broad range of
Power Exchange participants. Wearing our CPX committee hat and the duty that
comes with that, are we comfortable leaving things as they are rather than
encouraging our counsel to pursue the matter with some formal motion in the
PGE case? Unless I hear to the contrary, I'll assume that our position in
that regard has not changed and that if there were a committee vote on that
particular issue, we'd abstain.
I see that some efforts may be underway to compel the Power Exchange to
release collateral. Is that something we'd consider joining? Bob Nelson

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J. Robert Nelson
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