What is the status of this? I agree with your analysis. However,If the core 
performance bond has been paid or otherwise extinguished and the CTS bond in 
no longer operable because of Davis' actions, then why is the PX holding on 
to our collateral? Is that question now before FERC? What happens if we lose 
at FERC---do we still have an argument worth pursuing here? I would like your 
and Gary's thoughts.



	"Harry Olivar" <hao@quinnemanuel.com>
	02/16/2001 08:38 PM
		 
		 To: <richard.b.sanders@enron.com>
		 cc: <gfergus@brobeck.com>, "A William Urquhart" <awu@quinnemanuel.com>, 
"Kristen Bird" <kb@quinnemanuel.com>, "Michael Lifrak" <mtl@quinnemanuel.com>
		 Subject: AAA Arbitration


We should discuss Tuesday what our current goal is in the AAA arbitration we 
filed.  (An administrative conference call is scheduled for Wednesday, 
February 21, at noon PST.)

From our perspective, it would make sense to put the arbitration on hold 
pending FERC's ruling on the charge-backs.  (Based on a conversation with 
counsel this afternoon, the PX is perfectly willing to do this.)  If FERC 
ultimately rules against us, the PX would be able to assert a set-off that 
would wipe out the claim in the arbitration.  If FERC disapproves the 
charge-backs, it may be possible to resolve the excess collateral issue.

Let's discuss on Tuesday whether you agree, or whether there are reasons for 
active pursuit of the arbitration.