Tim,

Further to our discussion this morning, I have attached a draft of a term 
sheet regarding the development of generation at REU's Clear Creek site with 
the intent of marketing the output to DWR under a 3-6 year tolling agreement.


We think this summer will afford us a great opportunity to negotiate with DWR 
to obtain significant value substantially offsetting the installed cost of 
the unit.  To that end, we want to position ourselves so that we can move 
quickly should DWR make a strong bid for capacity and energy.  
Notwithstanding, we appreciate Redding's obligations regarding its load and 
think that there will be a lot of flexibility with DWR in structuring a 
transaction that meets everyone's needs.

If you are interested, we propose entering into an MOU that summarizes the 
general terms of the transaction and roles and responsibilities.  Let's talk 
after you have reviewed the attached term sheet.

Thanks for your time and interest regarding this opportunity.

Laird