Below is a summary of the surety bond issues that I believe we need to 
resolve in order to feel comfortable accepting it as a form of collateral to 
secure a counterparty's obligations with respect to physical power purchase 
and sale transactions:

1.  Determine whether an issuer can refuse to honor a draw made under a 
surety bond if after issuance, it determines that the bond was issued in 
violation of the appleton statute.  What type of legal comfort should we 
receive from the issuer at the outset to get comfortable that the bond was 
validly issued and is enforceable against such issuer?

2. Determine the proper minimum credit rating(s) that should apply to the 
issuer.

3. In the form of bond that we were given, the "Now Therefore" language in 
the third paragraph is not acceptable.  Determine what can be said in its 
place to establish the necessary linkage back to the transaction covered by 
the Confirmation.

4. Make sure that the bond can be drawn down no matter what type of Event of 
Default occurs, even if such event is not related to the transaction that the 
bond references.  The Notice of Claim language needs to be written more 
generically to accommodate this. 

5. Does credit need a "pre-bankruptcy" trigger that would require Reliant to 
convert all outstanding bonds into LC's or cash collateral?  If so, what 
would this trigger be?

Let me know if you have any additional issues.  I will be discussing some of 
these with our outside counsel shortly.     

Carol St. Clair
EB 3889
713-853-3989 (Phone)
713-646-3393 (Fax)
carol.st.clair@enron.com