Louise:

Discussions are heating up with Montana, and as such we have started to negotiate with Westinghouse a resolution to the generator claim. Please let me know if you have any update on CALME.

We intend to proceed with Montana and Westinghouse and cut the best deal for Enron Corp. Any definitive deal will of course require a DASH and your approval. Please let me know, however, if we need to slow these discussions down until we're fully resolved with CALME.

Regards,

Ben 
---------------------- Forwarded by Ben Jacoby/HOU/ECT on 03/31/2001 08:47 AM ---------------------------
   
	Enron North America Corp.  From:  Ben F Jacoby                           03/28/2001 07:25 PM	
		


Sent by:	Ben Jacoby
To:	Louise Kitchen/HOU/ECT@ECT
cc:	W David Duran/HOU/ECT@ECT 
Subject:	Re:   

Louise:

My responses:

1. The carrying costs have been capitalized, and under the accounting rules will continue to be capitalized through the last payment date under the turbine contract.

2. At this time, the turbine value is undetermined. While we have identified one potential counterparty (Montana Power), we do not have a signed deal. In addition, we are in the middle of a contract dispute with Westinghouse regarding the damaged generator. While we hope to resolve this dispute in the context of our exiting the turbine position, there exists the potential of this going into litigation.

3. Janet and I proposed the deal I discussed with you to CALME in December, but never got a formal response. I have put in several calls to Elio Tortolero at CALME, but have not heard from him for about a month. He advised me at that time that he would get me a counter proposal. My group has had de facto management responsibility for the unit since December.

4. This unit was initially an ENA unit, but was taken by CALME (David Haug) I believe in December '99 for projects they were considering. I am not aware of the terms of that transfer. 

FYI, I have attached a payment schedule for the turbine.

Please let me know if you have any other questions. Also, I have attached an updated site bank map which includes our Texas site which was inadvertently left off the previous e-mail.

Regards,

Ben

  



Louise Kitchen
03/28/2001 08:56 AM
To:	Ben Jacoby/HOU/ECT@ECT
cc:	 
Subject:	

This was the response from Jim - if you have all the answers already - please give me a ring - otherwise can you pull the answers together and then give me a ring.

Thanks

Louise


Louise:

I need to know two things: (1) Have the carrying costs been expensed through Jan. 1 and (2) Is there commercial value to the turbine?  If there is value to the turbine, then I really don't understand allocating costs to a business unit that doesn't own the turbine in order to create the illusion of a profitable transaction.  I also need to know on what basis and against what agreement CALME agreed to bear the carrying costs.  The project it supposedly related to has been dead for several years.

Jim





<Embedded StdOleLink>