Jeff:

You are quite correct about the facts of the arrangement.  However, between
the previous fixed price deal we did on the alternative settlement  and this
most recent agreement, we have lost $10,000 plus $12,500 for a total of
$22,500 on this one case.  In both situations, our hours were required by
the expanded press of the work in the hearing, and the uncertainty that is
involved in estimating the cost of hearing work is always difficult to deal
with.  As you will no doubt recall, on our last arrangement, I provided an
estimate that was much closer to what we have acutally spent on the GRI
hearing and briefing to date, which you then proceeded to propose paring on
an essentially arbitrary basis.  I unable to plead anything other than brain
disfunction as to why I agreed with your numbers, which I knew would be too
low.  So here we are.   In response to your proposal, I offer two
suggestions, one: we should split the difference between the estimate and
the actuals to date. That would mean you would pay $19,761 of the current
balance.  On that basis, we would prepare written comments and lobby for the
proposed decision when it comes out at no additional cost.  Two:  you pay
only the $15,000 that you propose ($13,500 plus the extra $1500), but we
clean the slate and start over on the file and any written comments or
lobbying on the proposed decision are paid for on a straight hourly basis.
I think either solution is fair to both sides.  We continue to absorb
losses, but get some additional compensation, you pay a bit more, but no
more than is fair, and there is still substantial commercial value in the
outcome of the case to warrant the regulatory expense.  If you want me to
explain the situation to Paul or Rick or Steffes in order to assist in
justifying the additional expense, I would be more than happy to do so.
Thank you, and I mean this sincerely, for considering our request for a
revision of the billing arrangements.  I am also willing to get together
today and talk about this face to face if you want.  Mike

-----Original Message-----
From: Jeff.Dasovich@enron.com [mailto:Jeff.Dasovich@enron.com]
Sent: Tuesday, October 10, 2000 9:27 AM
To: MDay@GMSSR.com
Subject: Bills for Gas Restructuring Activities


Mike:

We'd talked about getting together to discuss the bills for the case.  We'd
originally agreed to a flat fee of $13, 500 (if memory serves) with a bonus
for coming in under the cap.  You've sent me bills (as of August 17
according to my records) for over $25,000.  As you recall, we had a very
lengthy discussion regarding the magnitude of the work associated with the
hearings and associated briefs.  I stressed that $13.5 was what I'd spend
and that we'd have to do the best we could within that constraint, which is
why I pressed for a flat fee arrangement at the outset.  With that in mind,
I believe that it's important to honor the arrangement.  However, in light
of the particular circumstances in this case, I'm willing to exceed the
previous arrangement for a total of $15,000, but can't go above that.  If
you'd like to discuss it further, I'd be happy to talk about it.  Let me
know.

Best,
Jeff