Lisa and Liz:

Each of Great Bay, El Paso Electric and LG&E Power have issued LC's to us that have has a drawing condition the fact that they have failed to provide alternate security and less than 20 days are left before expiration.  Another drawing condition is that a "default" has occurred under the EEI.

The LG&E and the Great Bay EEI master have a default that occurs if a party fails to establish, maintain, extend or increase Performance Assurance when required pursuant to the Agreement.  The definition of Letter of Credit in each Master does NOT have language to the effect that it has to be acceptable to us.

In the El Paso Master the default is based  on a party's failure to meet the collateral requirements in Article 8.  In that Master, the LC must be acceptable to us.


Do you think that we can argue that the failure to renew the LC is a "default" that would permit us to terminate and draw?




Carol St. Clair
EB 4539
713-853-3989 (phone)
713-646-3393 (fax)
281-382-1943 (cell phone)
8774545506 (pager)
281-890-8862 (home fax)
carol.st.clair@enron.com