Kevin, as we discussed last Wednesday, following is a listing of the
issues addressed during our conversation concerning the Proposed
Transaction Between Panda and Transwestern.  I have also included some
additional questions which I thought of later.  Although I think I have
covered most of the issues, I am certain there will be more as we
continue our discussions.  As I currently understand, we are going to
try and continue our conversation on Wednesday.  Hopefully you will have
time to complete your hydraulic study and answer these questions/issues
by that time.  If you have questions concerning the following, please
feel free to contact me at (972) 361-1332 and I will try to help
clarify.

Maximum Hourly Quantity - Panda will require the minimum capability to
burn the Maximum Daily Quantity in a 16 hour period with the potential
flexibility to burn the plants complete hourly capability over a shorter
time frame.  Your voice message to Jim on Thursday, regarding a scaled
burn window based on notification timing, should address this issue. 
Although there may be instances where the actual burn will be over 24
hours, the assumption should be that under even the shortest
notification timing, 16 hours would be needed.  Something to consider
would be how to incorporate this schedule into the contract. 
Consideration would also need to be given in how this, and in general
the operations and requirements of a power plant, would potentially
deviate from the standard GISB nomination cycles and corresponding gas
flows and how to incorporate that into the contract.

Contract Rate - Although approximately $0.45/MMBtu has already been
mentioned, it should suffice to say that the lowest possible cost of our
gas supply, transportation and storage services is the goal.  There are,
however, a couple of points that could use some clarification.  First,
would the rates in the proposal be maximum rates as defined by a tariff
filing or would these be negotiated?  The current assumption is that
they are negotiated because of the increase for years 6 through 10 and
the escalator for the remaining 20 years.  The preference would be for
negotiated rates in order to eliminate any rate risk the project would
hold if they were tariff based.  If they are negotiated, a better
understanding of how the rate is broken into its various components
would be helpful.  If they are tariff based, a better understanding of
the anticipated increase and the escalator would be needed.

Fuel Rate - A better understanding of the reasoning and numbers behind
this rate would be beneficial.  Also, how does Transwestern track and
adjust for actual fuel percentages?

Delivery Term - A shorter term would be required, somewhere in the 10
to 20 year range.

Services - Although 500 psi may not be quite enough pressure at the
facility, the hydraulic study should give a better indication of the
actual pressures at the plant and should be discussed further after the
study is complete.  It should be noted that Transwestern's interconnect
with the facility could still be some distance from the plant,
therefore, increasing the pressure requirement at the interconnection
point to be greater than the plant's requirements.

Other Questions - What is the planned capacity of the lateral from
Copper Eagle to the TW/EPNG interconnect?  Would alternative receipt and
delivery combinations be charged based on the tariff commodity and fuel
for the particular path?  Since there is already alternate receipt and
delivery point capabilities, is the 50,000 MMBtu/day backhaul a
guarantee?  Although storage is planned at Copper Eagle, how can
Transwestern help manage daily imbalances and short notice start up and
shut downs in order to minimize penalty exposure?

Thanks for your help in trying to address these issues.  I look forward
to talking with you on Wednesday if not sooner.

Steve