Randy, looks like a good solution - well done.  

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 12/19/2000 
02:01 PM ---------------------------


Randal Maffett
12/19/2000 10:32 AM
To: David W Delainey/HOU/ECT@ECT
cc: Jeff Donahue/HOU/ECT@ECT, Mark E Haedicke/HOU/ECT@ECT, Mark 
Koenig/Corp/Enron@ENRON, Lisa Mellencamp/HOU/ECT@ECT 
Subject: Ecogas/Fidelity issue

Dave - I think I've worked out a solution to the Fidelity problem.  Enron 
North America and Fidelity will agree to a back to back Put/Call option 
whereby after closing the sale to PNE Enron has a 6 month Call option (thru 
6/30/01) to cash them out at the contract price (=$5.2MM less PV10 of accrued 
tax credits to date).  For the period of July 1-31, 2001 Fidelity would have 
a Put option at the same price.

This accomplishes the following:

Preserves $5MM cash for Enron by allowing us 6 months to find a new buyer for 
the tax credits and doing a back to back flip.
Preserves the integrity of the tax credits for cal 2001 (Gasco and Genco have 
to be unaffiliated) which will maximize our ability to recover our 
costs/minimize losses.
Gives Fidelity a date certain when they're out of the deal AND gives them 
optionality to stay in if they choose.
Gets the deal between Ecogas and PNE done structurally to PNE's satisfaction.

I spoke w/ Donahue about internal approvals and since Enron is already 
exposed for the $5.2MM, and the balance can only go down (not up), we didn't 
feel this would need anything other than ENA Legal and Office of the 
Chairman.  I'll assume this is correct unless I'm told otherwise.