Larry, this is a potential issue, at least from an accounting perspective. 
The total dollar amount for 1999 Expense in the ET&S Albuquerque Region is 
$345,000 (excluding Gomez, Bell Lake, & N. Crawar remediation projects which 
are accounted for separately due to sale agreements). This amount is not 
allocated for specific projects but includes all environmental O&M costs for 
the region. As it is, this amount may not be sufficient to cover costs for 
the ongoing Expense projects, including: Thoreau Lease Payment, Roswell 
Remediation, WT-1 Dehy Area Remediation, WT-1 Pit Area Remediation, Eunice 
Monitoring, & Puckett Monitoring. The Albuquerque Region 1999 Capital budget 
for remediation projects is about $270,000; this includes: Thoreau 
Remediation, Laguna Groundwater Remediation, Lockridge Remediation, and 
Atoka-1 Remediation. If the capital projects are rolled into O&M, the O&M 
budget will be far too insufficient. A related issue is concerning the 
allocated AFUDC costs. These costs will add about $60,000 to the Thoreau 
Remediation project cost and about $10,000 to each of the Laguna and Atoka-1 
Remediation projects. These costs were not budgeted for because I was under 
the assumption that new work orders would be issued for 1999, in which case, 
AFUDC costs would only be allocated based on 1999 spending charged to the new 
work orders. New work orders were not issued and the 1999 budgeted amount for 
the Thoreau Remediation of $78,000 can not possibly absorb the anticipated 
AFUDC costs. 

I will keep you posted of any further developments. Thanks, George


---------------------- Forwarded by George Robinson/OTS/Enron on 05/03/99 
10:11 AM ---------------------------


Vera Jones
05/03/99 09:38 AM
To: George Robinson/OTS/Enron@Enron
cc: Earl Chanley/ET&S/Enron@Enron 
Subject: AFUDC on Remediation Projects

George,
This whole deal is still up in the air.  When I brought up the subject of 
AFUDC to Property Accounting, they started questioning whether these 
particular projects qualify to be "CAPITAL" at all.  I discussed the matter 
with Dan Pribble and he says to leave them as capital as long as I can but 
Property Accounting is going to want some real substantial justification 
before long for continuing to carry them in their arena.

And, if we end up having to dump a substantial portion of the total costs in 
all 5 of the current workorders to O&M, that will really kill the O&M budgets 
of the affected Teams.

So, don't do anything different from what you have been doing until we tell 
you different.

Thanks.