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Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 06/08/2000 
08:51 AM ---------------------------
   
	Enron North America Corp.
	
	From:  Scott Healy                           06/07/2000 05:31 PM
	

To: Don Miller/HOU/ECT@ECT, David W Delainey/HOU/ECT@ECT
cc: W David Duran/HOU/ECT@ECT 
Subject: Gleason

Bob Virgo has informed me that the desk wants to convert Gleason to combined 
cycle.  Bob told me this in the context of asking me whether Calpine would 
sell us any additional combined cycle equipment (i.e., steam turbines).  My 
guess is they won't.

If 1) it was of interest to us and 2) we are really going to convert Gleason, 
I think I could get Calpine to execute a purchase/short term tolling 
transaction on Gleason on favorable terms.  I say this for the following 
reasons:

1.  Calpine is typically a strong bid for combined cycle installations.
2.  Calpine has been trying unsuccessfully to get a combined cycle project in 
TVA (due to their rank in the cue) and thinks that it will take them a year 
to get through TVA.  We actually think that their project is blocked. 
3.  Calpine would likely take the incremental construction cost risk on the 
transaction.
4.  I believe that Calpine would undertake the permitting and interconnection 
work at their cost  and risk, if needed.  Given the cost of preparing a 
combined cycle permit along with the potential fight that ENA might face from 
TVA in such an effort, this risk sharing scenario could be attractive to ENA.
5.  Calpine would likely accept a short term tolling arrangement.  On their 
eastern assets, Calpine is generally executing 1-2 year deals.
6.  Calpine particularly in the east has been aggressively purchasing 
projects.
7.  If feasible, Calpine would probably be willing to further increase the 
size of Gleason.  Calpine's current plants announcements are generally in the 
700-1,000 MW range.

I know that Dave Delainey has not previously supported selling Gleason 
individually.  However, you may want to investigate if anything has changed 
in this circumstance, particularly since we are not generally a strong bid 
for combined cycle projects.  Please let me know. 

FYI--Dave Duran and I are meeting with Bob Kelly of Calpine on next Tuesday 
to discuss the use of Enron NOLs in Calpine's PG&E contract buyouts.