PRIVILEGED AND CONFIDENTIAL

Vicki Sharp, John Klauberg and I had a short call on Sunday to discuss any 
legal issues associated with the proposed accounting treatment of certain of 
transactions between EPMI and EES.

1. EPMI has requested that the economics of the Assigned Transactions (the 
PGET transactions assumed by EPMI and referred to in the December 28, 2000 
letter between EPMI and EEMC) be held by EPMI, and not retained by EEMC as 
provided by the letter agreement.

Wes, could you confirm that EPMI wishes to assume the economics of those 
transactions effective 1/1/2001?  I have assumed that this is the case, and 
have drafted an amendment to the December 28 letter accordingly (attached 
below).  Please review and let me know if this is something we can work with 
(note that the draft letter may need revisions based upon resolutions of 
other issues raised in this e-mail).  We will also need to confirm that there 
are no undesirable tax or bankruptcy implications to this approach.

One element of the assignment of the "Regulatory Receivable" and the 
assignment to EPMI of the PGET trades that we have questions regarding is the 
apparent lack of consideration flowing back to EEMC/EES as a result of these 
transactions -- we will have transferred some fairly substantial assets from 
EEMC/EES to EPMI, but have made no provision for those entities receiving 
anything in exchange.  The December 28 letter did make reference to the 
possibility of "back-to-back" transactions between EPMI and EEMC, which may 
answer that questions with respect to the assignment of the PGET trades, but 
if we are going to go that route, we would need to work out the terms of 
those "back-to-back" transaction by which EPMI sells the power that it 
purchases from PGET/Avista to EEMC to enable EEMC to fill its short position. 
For instance, at what price would EPMI resell the PGET/Avista power to EEMC 
so that EEMC can supply the requirements of its Direct Access Customers?  If 
the transfer price is at market, EEMC will recognize a significant loss on 
sales to its DACs.

2. On January 17, 2001, EES and EEMC assigned certain of their "Regulatory 
Receivables" to EPMI.  The assignment was intended to be an absolute transfer 
and true sale of EEMC/EES' rights in those receivables, but the Assignment 
Agreement does not recite any consideration for that transfer.  Again, we 
assume that the transfers of those receivables would leave a  "hole" in EES' 
books that, in an arms-length transaction, would be filled by the 
consideration that EES/EEMC received for the sale.  Has there been any 
conversation about the benefits that may ultimately flow back to EES/EEMC in 
consideration for their transfer of these receivables to EPMI?  While the 
attached amendment is not intended to address the assignment of that 
receivable, it may be beneficial to make reference to those benefits in this 
amendment.     

3. The January 17, 2001 assignment transferred that portion of the negative 
CTC that had accrued to date, but we have not effected any transaction to 
transfer the risk of the remaining marked position to EPMI.  There was some 
discussion of an EES/EPMI "swap" that would transfer the risk in the 
remaining position to EPMI.  Is that still being contemplated?            






Travis McCullough
Enron North America Corp.
1400 Smith Street EB 3817
Houston Texas 77002
Phone:  (713) 853-1575
Fax: (713) 646-3490