Kim,
 I am reviewing the changes you made to see if they conform to our 
discussion.  I understand from your comments in the email that you disagree 
with the items we discussed and are attempting to go back to the previous 
language which I indicated would be unacceptable.  As such, I have gone back 
over the redlined contract and have only commented on the things that differ 
from our previous agreement.  Please review these and call me in the morning 
if you feel that your client cannot agree to these changes.  
1. The sentence added at the end of 9.1 should be deleted.  Any differences 
between the DCQ and actual is to be handled between the party and its 
transporter.  As I explained, if we schedule a DCQ of 10,000 with you and the 
pipeline and only deliver 9,500 to the pipeline, the pipeline will deliver 
10,000 to you and collect the 500 shortfall from us.  Likewise, if we 
schedule 10,000 with you and the pipeline and you only take 9,500, we still 
sell you the 10,000 and the 500 you didn't take is between you and your 
pipeline transporter.
2. 10.3 and 10.4 need to be deleted.  What we agree to say was as follows:
  "10.3  Buyer represents that no taxes are applicable at the Point of Sale.  
In the event such representation is false, then such misrepresentation shall 
be a Triggering Event allowing Seller to terminate the Contract pursuant to 
Section 17.1."
3. Delete the language "not otherwise due to an event of force majeure" that 
you added in the 2nd and 8th lines of 12.3.  
4. Delete the language added at the end of 12.5 and add language after the 
word "expired" at the end of the second sentence.  "In no event shall any 
event of force majeure extend for a period in excess of 10 days during the 
term of this Contract.  After such 10 day period, the parties shall be 
obligated to resume performance as if the event of force majeure had been 
remedied, and if such party does not resume performance, such nonperformance 
shall be deemed a Triggering Event allowing the other party to terminate 
pursuant to Section 17.1."
5. Delete item (vii) added in 17.2 because it is adequately covered by my 
inserted language in 12.5.
6. The $15,000,000 changed in the 3rd line of 17.4 needs to be changed back 
to $10,000,000.  If the exposure exceeds $10,000,000, that is the reason 
additional security would be required.  This contract contemplates that 
Seller has to provide security for any exposure in excess of $0 whereas the 
Buyer only has to provide security for exposure in excess of $10,000,000.  
Not a very balanced obligation because the Seller is bearing all risk of 
payment after it makes deliveries under the contract.




	"Kim Decell" <kdecell@gassupplyconsulting.com>
	12/07/2000 11:51 AM
		 
		 To: <Dan.J.Hyvl@enron.com>
		 cc: 
		 Subject: Wisconsin Public Service contract




Dan,

Attached is a redline document which compares our current version to your
11/22 version.  I have summarized our differences below, but I will call you
at about 10:30, subject to your calendar, to discuss the items.

Significant Differences
(1) Taxes
 I deleted Enron reference to Buyer paying taxes AT the Point of Sale.  I
(a) kept our 10.3 but added sentence that "no taxes currently applicable at
POS and (b) added Sec 10.4, which we discussed gives either Party right to
terminate contract if they are assessed an unduly burdensome tax.

(2) Exceptions to Force Majeure
 I added "not otherwise due to an event of force majeure" to the section
addressing failure of reserves/insufficient production from reserves.  This
should clarify that if a force majeure event, ie explosion, occurred at
Seller's supply point, Seller would NOT be obligated to perform (except as
identified in Triggering Events).

(3) Billing
 We cannot accept Enron's requested changes.  It is the industry-standard to
bill Buyer's based on what WAS, not what was TO BE, delivered.  If actuals
are not available, it is acceptable to bill based on DCQ, but once actuals
are available, prior period adjustments would be made to the next invoice.
 To demand a procedure different than the accepted industry-standard is
something that should have been stipulated by Enron at the time the Contract
Terms were established in 8/00.
 Given the tremendous progress we've made to this point, I am hopeful that
Enron will accept the industry-standard (billing on actuals) for this
contract.  We can address this issue next month when we begin preparation of
the future Enron/WPS Master Contract.

(4) Credit Terms
 Based on our 12/6 discussion, I (a) removed Enron's Material Adverse Change
definition, (b) removed Enron's Sec 17.2(vii) regarded MAC and (c) added
back our Section 16.10 Credit Terms, whereby either Party has the right to
demand credit support if in their sole and non-discriminatory assessment the
other Party might not be able to meet its financial obligations pursuant to
the Contract.  Failure to provide credit support is considered a Triggering
Event per Enron's language.

(5) Effect of Force Majeure
 Based on our 12/6 discussion, I (a) removed language referring to
consequences of extended force majeure but revised to refer to Sec 17.2
Triggering Events and (b) added Sec 17.2 (vii) to make extended FM a
Triggering Event.

(6) Collateral Requirement
 THIS IS A NEW REQUEST.  I would like to change the Termination Payment
threshold from $10MM to $15MM.  In light of soaring gas prices, WPS could
find itself owing more than $10MM strictly based on standard,
full-performance Accounts Receivable (for example:  15,000 (MDQ) * $10 (gas
price) * 60 (days) = $9MM.)  I believe your provision was intended to keep
Buyer's from having multi-month A/R and/or non-performance charges.
 Since I believe we agree WPS is fully capable of meeting its financial
obligations, we should not set a threshold below potential standard,
full-performance A/R.


MINOR ITEMS
(1) Throughout document, I made changes to your comments to make consistent
with form of entire document, including changing Daily Contract Quantity to
DCQ and putting days in words (ie 20 days became twenty (20) days).
(2) Deleted Nominated Quantity definition as this term was replaced by DCQ.
(3) Other changes that we agreed to yesterday.

Dan, please let me know the earliest, convenient time for you to discuss
these items with me on the phone.

Thanks for your help.

Kim



Gas Supply Consulting, Inc.
(281)558-0735
kdecell@gassupplyconsulting.com

 - WPS Enron 3 mo ANR Swing 12-6-00 COMPARE Enron response.doc