CY please work through w Tim
thanks
----- Forwarded by Elizabeth Sager/HOU/ECT on 12/28/2000 02:54 PM -----

	Vicki Sharp@EES
	12/28/2000 02:48 PM
		
		 To: "JOHN G KLAUBERG" <JKLAUBER@LLGM.COM> @ ENRON, Wanda Curry/HOU/EES@EES, 
Don Black/HOU/EES@EES, Marty Sunde/HOU/EES@EES, Kevin Hughes/HOU/EES@EES
		 cc: <Elizabeth.Sager@enron.com>@ENRON, <Mike_D_Smith@enron.com>@ENRON, 
<vsharp@enron.com>@ENRON, "MICHAEL W E DIDRIKSEN" <MDIDRIKSEN@LLGM.COM>@ENRON
		 Subject: Re: Draft Letter

In the interest of time, I am forwarding the attached contract to Kevin 
Hughes, Wanda Curry, Don Black, Ron Adzegary, and Marty Sunde.  Please read 
the attached and confirm that this is your understanding of the  PGET/EPMI/ 
EEMC assignment.  

I am also at this time forwarding to the working group my four main points, 
which I think reflect my main areas of concern under the drafts:

1.  I would like to say  that  the price is the same under the transactions.  
Transaction costs should be dealt with separately. 
2. While we have agreed to take a pass through of the bankruptcy risk,  this 
draft provides that we take on all contract dispute risk.  As I understand 
it, EPMI intends to pass through all risk, such as change in delivery point 
risk, under the contract.  Since EPMI is our sole provider of power to EES 
(other than  the PGET contract), EPMI is in the best position to manage  
general contract risk with its counterparties, as it does today with all our 
physical electricity purchases.  EPMI may  have disputes under contracts for 
many reasons that EEMC is not aware of and will not be in a position to 
influence once the contracts are  assigned to Avista.
3. I assume if EPMI  trades out of  these positions as it manages its own 
portfolio, the credit risk would not follow to subsequent counterparties and 
the EPMI/EES confirm terms would revert to typical confirm language.
4.  I was operating under the assumption that the tax issue would be resolved 
with Steve Douglass prior to signing the main documents.  I am not sure 
whether this issue can be quantified by EES tax today.  Any suggestions or 
ability to resolve/quantify today?  Same concern for the accounting issues.  
My concern here is that if the transaction leaves us in a worse economic 
position as a result of making EPMI whole, this would need to be addressed 
with our business people. 

Elizabeth and JOhn, what are the next steps. 





"JOHN G KLAUBERG" <JKLAUBER@LLGM.COM> on 12/28/2000 12:08:34 PM
To: <Elizabeth.Sager@enron.com>, <Mike_D_Smith@enron.com>, <vsharp@enron.com>
cc: "MICHAEL W E DIDRIKSEN" <MDIDRIKSEN@LLGM.COM> 
Subject: Draft Letter


PRIVILEGED AND CONFIDENTIAL:ATTORNEY WORK PRODUCT

As requested, attached is a draft of an internal letter between EEMC and EPMI 
relating to the PG&E transaction.  I will touch base to review the issues 
associated with it.  John

"This e-mail, including attachments, contains information that is 
confidential and it may be protected by the attorney/client or other 
privileges.  This e-mail, including attachments, constitutes non-public 
information intended to be conveyed only to the designated recipient(s).  If 
you are not an intended recipient, please delete this e-mail, including 
attachments and notify me by return mail, e-mail or by phone at 212 
424-8125.  The unauthorized use, dissemination, distribution or reproduction 
of the e-mail, including attachments, is prohibited and may be unlawful.

John Klauberg
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
212 424-8125
jklauber@llgm.com

 - EEMC-EPMI.doc