Louise,

I understand there is concern that the value associated with the assignment of the Lincoln Electric Sales Agreement to OPPD is not sufficient to justify paying $1.3 million to OPPD in order for them to assume this contract. 

There are some considerations on this contract which I think are important and which may not have been mentioned to you:

- The original sales contract to Lincoln was entered into several years ago and is one of the contracts sometimes referred to internally as "toxic waste".
- About a month ago, we agreed verbally with OPPD to accept assignment of the sales contract, as OPPD is one of the few parties which can serve it.
- The execution of the documents has been delayed by Lincoln, who were initially refusing to consent to the assignment
- We have another, larger under-water transaction with OPPD which we would like to move off the books at some point. We'd like to keep OPPD happy to improve the chances that we can negotiate their buyout of our other sales contract to them)
- If we fail to deliver, we will be subject to penalties in the amount of $45,0000 per MW on top of Liquidated Damages (Lincoln is 15 MW for 02 and 30 MW for 03).
- This is a highly constrained area (only 6 counterparties can physically deliver in this area and OPPD is the only one which has the surplus power in order to serve Lincoln): the chance that we will be unable to deliver is high.
- There is intangible value associated with not being in a situation where Enron fails to deliver.
- Even if we do wind up serving the contract, the highly constrained nature of the area means we will likely be forced to pay extortionate prices for the power we do acquire.
- Trading wishes to be out of this contract for aforementioned reasons and the fact that it will be very labour intensive to serve (day-ahead notice on 20% monthly load factor)

Obviously, if the above is not sufficient justification to put the money out the door now, then we will smooth things as much as possible with OPPD - but I wanted to make sure you had all the info. before we kill the deal. 

Terri has stalled OPPD until Monday.

Dave