---------------------- Forwarded by Elizabeth Sager/HOU/ECT on 12/30/99 09:08 
AM ---------------------------


Tracy Ngo
12/28/99 12:30 PM
To: Sara Shackleton/HOU/ECT@ECT, Elizabeth Sager/HOU/ECT@ECT, Stuart 
Zisman/HOU/ECT@ECT
cc: William S Bradford/HOU/ECT@ECT, Debbie R Brackett/HOU/ECT@ECT, Rick 
Buy/HOU/ECT@ECT, Rodney Malcolm/HOU/ECT@ECT 
Subject: Project Moosehead - Revised Terms

Pursuant to my recent conversation with Rodney Malcolm, I am detailing below 
newly negotiated terms that have been accepted by Credit in regards to the 
contracts/confirms for the Merrill Lynch physical and financial transactions:

on behalf of EPMI, Enron Corp. will provide a $60MM guaranty to Merrill Lynch 
Capital Services covering exposures under both Master contracts (either amend 
existing $30MM physical guaranty or supersede existing guaranty with a new 
guaranty)
usage of the the stair-step Threshold that is currently in the Credit Support 
Annex (Paragraphe 13) of the existing Master power contract will remain 
effective for the specific power confirmation.  However, the valuation of the 
parties' exposure will be defined as exposures under the existing physical 
power Master agreement as well as the new financial ISDA Master.  [both the 
physical confirmation and the ISDA Master will need to reference this 
stair-step Threshold provision that will govern margin calls under both 
transactions]
deletion of the investment grade MAC for both credit worksheets (replaced by 
stair-step Threshold discussed above)
third party cross-default amounts:  Merrill Lynch & Co. Inc. is $100MM and 
Enron Corp. is $50MM (contingent upon approval by Andy Fastow or Jeff 
McMahon.  I have left a voice message and an email for Jeff McMahon 
requesting approval of the third-party cross-default exception.)

Tracy
x3-0554
---------------------- Forwarded by Tracy Ngo/HOU/ECT on 12/28/99 11:50 AM 
---------------------------


Tracy Ngo
12/28/99 11:14 AM
To: Sara Shackleton/HOU/ECT@ECT, Elizabeth Sager/HOU/ECT@ECT, Stuart 
Zisman/HOU/ECT@ECT
cc: Mark E Haedicke/HOU/ECT@ECT, Rick Buy/HOU/ECT@ECT, William S 
Bradford/HOU/ECT@ECT, Rodney Malcolm/HOU/ECT@ECT 

Subject: Latest Credit Worksheets for Project Moosehead

Attached please find the latest credit worksheets for the physical and 
financial transactions between EPMI and Merrill Lynch Capital Services, Inc.  
The credit worksheet for the physical transaction is in the form of a 
specific confirmation that will be confirmed under the existing Master Energy 
Purchase and Sale Agreement between EPMI and Merrill Lynch Capital Services.  
The credit worksheet for the financial transaction is in the form of a new 
ISDA Master Swap Agreement.  Per Bill Bradford, please note that Credit 
approval for both worksheets are contingent upon legal approval by Mark 
Haedicke of the physical and financial setoff/netting assumption.

I have requested and am waiting approval from Jeff McMahon to accept the 
counterparty's request to set the third party cross-default amount of 
$50,000,000.  For the purposes of these credit worksheets, the amount 
proposed remains at $100,000,000 for both parties.

Please call should you have any questions, x3-0554.

Regards,
Tracy



  

(physical confirm - credit worksheet)  (new ISDA Master - credit worksheet)