On Friday, July 6th, we had an excellent first meeting with Com Ed. 

In attendence from Enron were Rogers Herndon, Marc Ulrich, Jeff Merola, Brad 
Snyder, Guy Sharfman and myself.  (Roy Boston and our attorney Chris Townsend 
attended our pre-meeting discussion but did not attend at ComEd to keep our 
numbers down).

In attendence from Com Ed were Pam Strobel President, Exelon Energy Delivery 
Company and Vice Chair, ComEd; Frank Clark, Ex. V.P. Customer Marketing and 
Energy Delivery Services, ComEd; Gerald Rhodes, President, Exelon Energy; 
Arlene Juracek, Vice President, Regulatory & Strategic Services, ComEd; John 
McCawley, Director, Electric and Gas Choice; and Michael Freeman, Long-Term 
Trader, Exelon Power Team.

During the course of the meeting, we delivered our message that we, like 
ComEd, wanted to see a competitive market emerge in Illinois, but that we had 
concern that lifting the PPO early without the presence of a competitive 
market could create a California-like situation - which is what they were 
striving to avoid - because their approach would leave buyers on the 
competitive market without having any sellers due to problems with physical 
delivery.  We indicated our concern for our existing customers and our 
ability to grow our business in Illinois.  We stressed the PJM model as a 
workable solution that creates a liquid market.  There was much enthusiasm on 
the part of ComEd for focusing ICC attention on creating that kind of a 
solution for Illinois.  Arlene Juracek encouraged us to work with them on 
this and to meet with Steve Nauman and Celia David.  Since Mike Roan and I 
will be in Illinois on this Tuesday and Wednesday, first to hear the 
Alliance's presentation to the ICC and then for Mike to make a presentation 
the following day, we are going to try and meet with them.

One of our objectives was to set up a team between Enron and ComEd to go 
through the requirements and nuts and bolts of physical delivery into 
Illinois.  This was accomplished and Jeff Merola and Mark Ulrich witll be 
meeting  with Ann McGlin at ComEd to get a better understanding of what we 
can and cannot do to achieve physical delivery.  Also, Michael Freeman 
indicated a willingness to sell us a structured retail product to help us 
achieve physical delivery (energy and/or load following services), and made 
it clear that whatever deal we do with the Exelon Power team would be 
independent and separate from any deal we might do with ComEd on the PPO 
front.  Once we have completed our discussions with Ann McGlin and with 
Michael Freeman, we will meet again with ComEd to negotiate what we need for 
physical delivery.  

We also discussed other aspects of the ComEd letter to the ICC and received 
the following clarifications.  Customers going off the PPO before 2004 would 
be offered rate 6L which is a bundled rate.  After 2004, ComEd plans to go to 
real time pricing on a day ahead or hourly basis.  As to whether the CTC 
could be reinstated after a customer was dropped from PPO, they indicated 
that they had not thought about it, but believed the law would allow this.  
Arlene Juracek, however, commented that they could lock in a CTC agreement 
with a customer.  I interpret that to mean that as part of an agreement to 
support ComEd in its proposal, we may be able to guarantee that for our 
customers, the CTC will not reemerge if market prices go down or that we can 
negotiate a limited CTC, etc.  

We also pointed out that we had other concerns like ComEd's unwillingness to 
negotiate the Supplier Agreement.  Not much time was spent on that but my 
sense is that if this is an obstacle to getting our concurrence, we may be 
able to work through this as well.

Frank Clark asked us about our willingness to take on the role of supplier of 
last resort and we responded that we needed first to be sure that we could 
physically deliver to customers.  Once that hurdle is addressed, we would be 
willing to consider that possibility.

The ComEd negotiating team will meet in Houston on either the morning of July 
16th or 17th when we believe the tasks with ComEd will be completed, in order 
to evaluate what we have learned and what our next steps should be.  I will 
then arrange a follow-up meeting with Pam Strobel and her team.  

Janine