Thanks, Nigel.

Gang, we really should get a group together to discuss this issue and how it 
impacts the project development, EPC, and insurance approaches. A common 
response to the change in the insurance coverages would seem appropriate. 
Owners will want EPC contractors to take this risk if they cannot get it 
covered by operational insurance, EPC contractors will be very loath to take 
such a risk as this if not completely and securely back-to-back with the 
turbine boys or compensated significantly for taking the risk without the 
back-to-back. GE et al can be expected to resist taking the risk. 

Sheila, would you and Kay check and see who might like to sit in on a 
dicussion on this matter, I will check with Keith Dodson, and Mr. Lund could 
you check with Mr. Gillis? Maybe meet or have a call next week?

 JWVS



	Nigel Carling
	04/02/2001 12:59 PM
		 
		 To: John Schwartzenburg/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
		 cc: 
		 Subject: WARRANTIES & INSURANCE
LATEST MARKET DEVELOPMENT #2

FYI
----- Forwarded by Nigel Carling/ENRON_DEVELOPMENT on 04/02/2001 12:59 PM 
-----

	Paul E Parrish@ENRON
	04/02/2001 10:29 AM
		
		 To: Nigel Carling/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Spencer 
Burton/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John 
Cullen/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michael 
McGarry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bob 
Meckna/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, James 
Naeger/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Donald 
Reid/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michael Guerriero/SA/Enron@Enron, 
Kevin Ruffcorn/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Rafi 
Khan/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Richard Quek/SIN/ECT@ECT, Manuel 
Gallego/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt, John R Ayres/NA/Enron@Enron, 
Brett R Wiggs/SA/Enron@Enron, davidlu@nepco.com, Dag Adolfsson/HOU/EES@EES, 
Curly Baca/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Brian D 
Barto/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Kenneth Bean/HOU/EES@EES, Karl 
Breckon/NA/Enron@Enron, John Cates/HOU/EES@EES, Ed Cattigan/EU/Enron@ENRON, 
Ned E Crady/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Greg Curran/CA/Enron@Enron, 
Scott Dieball/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt, Roberto 
Figueroa/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, David 
Glessner/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, David Howe/Enron@EnronXGate, 
James A Hughes/Enron@EnronXGate, Christopher b Hunt/Enron@EnronXGate, Michael 
Oehrle/ENRON_DEVELOPMENT, Larry Reynolds/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Rob Walls/ENRON@enronXgate, David K Bargainer/Enron@EnronXGate, Cheryl 
Costa/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Ed 
Dannhaus/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Phillip 
Foster/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt, Gavin 
Gaul/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruce 
Golden/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Steve 
Heck/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Edward J Hlopak 
Sr/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Edward Hlopak Jr/Enron 
Communications@Enron Communications, Ed 
Husami/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John G 
Rigby/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Robert Lundin/NPNG/Enron@ENRON, 
Michael Ranz/ENRON@enronXgate, Scott 
Laidlaw/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Joe 
Lakes/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Martin Penkwitz/HOU/EES@EES, Jim 
Sutherland/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Brian Stanley/EU/Enron@ENRON, 
Roger Tietz/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Richard 
Vincent/ENRON_DEVELOPMENT, David Marshall/HOU/ECT@ECT, Terry 
Yamada/Corp/Enron@ENRON, James L Bouillion/HOU/ECT@ECT, Paul 
Clayton/HOU/ECT@ECT
		 cc: 
		 Subject: WARRANTIES & INSURANCE
LATEST MARKET DEVELOPMENT #2

To Distribution:

Recently we sent out a notice that the insurance market is requiring that 
warranties from major equipment manufacturers [mainly prototype turbines] 
were to come first before insurance. Following is a summary of recent market 
changes that underwriters are requiring related to the vendor,s warranty 
issues on prototype machines. Please note that the market could become more 
restrictive and require the following on proven technology as well. This 
market change should be incorporated into the contracts between Enron and its 
vendors for the purchase of major equipment for power plants.

Underwriter requirements during:

Construction Period:

1. Vendor,s Warranty for the part that failed - required as builder's risks 
policy does not cover it.
2. Vendor,s Warranty for resultant damage within the casing - now being 
required by underwriters.
3. Vendor,s Warranty for resultant damage within vender,s scope of supply - 
now being required by Underwriters.
4. Vendor,s LD's following all of the above - underwriters now requiring 
before DSU [delay in start up] insurance responds on at least prototype 
machines. 
5. Vendor,s responsibility for collateral damage to items not within their 
scope of supply and resultant LD's ) underwriters are not asking for this.

Operating Period [Permanent Insurance]:

1. Vendor,s Warranty for part that failed - required even though machinery 
breakdown [boiler & machinery] coverage will respond.
2. Vendor,s Warranty for resultant damage within the casing - now being 
required by underwriters.
3. Vendor,s Warranty for resultant damage within their scope of supply - now 
being required by underwriters.
4. Vendor,s LD's following all of the above - underwriters not asking for 
this.
5. Vendor,s responsibility for collateral damage to items not within their 
scope of supply and resultant LD's - underwriters not asking for this.

We have been told that two-year warranties after Taking-Over are generally 
all that underwriters expect.  We also have been told that if there were 
problems such as we have experienced at Dabhol, longer warranties would be 
extremely useful in arranging favorable terms and conditions on the permanent 
insurance. If there were no problems after two years it would not make much 
difference. 

If you find that someone is not listed in the distribution list, please pass 
this email to them. If you have any questions please call or email one of us 
listed below:

Richard Vincent
David Marshall
Terry Yamada
Paul Parrish
Jim Bouillion
Paul Clayton