RE: KU Compliance Deal '02

Not yet.

We're making progress on agreeing the contractual language (three issues left which I think we'll get through - awaiting their response). The main problem is that they are insisting that we sign the deal with their unregulated arm - LG&E Fuel Services Inc. as opposed to KU. Their explanation is that b/c LG&E Fuel Services Inc. is unregulated, they wouldn't be the subject of a Public Service Commission Review in the event Enron doesn't perform.

Tom Moran is in contact with KU to see what umbrella if any LG&E Fuel Services Inc. is lying under.

Will keep you updated.

Lenny

-----Original Message-----
From: Shankman, Jeffrey A.
Sent: Tuesday, November 06, 2001 8:57 AM
To: Hochschild, Lenny
Subject: RE: KU Compliance Deal '02 - '04

did you get this done?

-----Original Message-----
From: Hochschild, Lenny
Sent: Friday, November 02, 2001 11:17 AM
To: Moran, Tom; Gresham, Wayne
Cc: Shankman, Jeffrey A.; Mcquade, Tom
Subject: KU Compliance Deal '02 - '04

We're trying to close an in the money sale with KU. They called Tom Mcquade yesterday evening to say that they can't deal with us b/c of credit. Their commercial guy suggested that if we want to get this deal done quickly, we should go through their unregulated group - LG&E Fuel Services Incorporated and we need to keep the original contractual language as they initially proposed.

We need to get this deal closed quickly, consequently:

1. We either need to get KU's credit guys comfortable with our credit or do this deal with LG&E Fuel Services Incorporated.
2. Tom, do you feel comfortable with LG&E's Fuel Services Inc. credit? The sale is 300,000tpy for 3 years '02-'04 at $39/t in a roughly $37/t market and dropping.
3. Wayne, please call their attorney Beth Cocaneougher. She's the one who told their commercial guy they can't deal with us b/c of credit. Apparently she wants to have us revert back to the original contractual language (sounds like a re-trade) and do this deal with LG&E. Please call her to see what language she needs changed beyond what we have already agreed to and see if we can get our credit guys to discuss any concerns that they might have with whoever is a decision maker over there.

Thanks,
Lenny