This was the "explanation" that I forwarded to Shari for dealing with 
Canadian utilities, munis, etc.  I'll follow up with her when you have 
identified specific  Canadian counterparties or provinces which are needed 
for EOL.  Sara 
---------------------- Forwarded by Sara Shackleton/HOU/ECT on 02/14/2000 
02:32 PM ---------------------------


Sara Shackleton
02/01/2000 11:08 AM
To: Shari Stack/HOU/ECT@ECT
cc:  
Subject: I'd suggest the following:

Per our conversation with Dan F., ENA needs to understand issues related to 
the distinction between "investor owned utilities" (or "IOUs") and municipal 
utilities (or "municipals") in connection with derivatives activity.  In the 
U.S., this distinction enables us to treat IOUs as general corporates.  Thus, 
we negotiate our standard ISDA Master with an IOU, except that we add an 
Additional Termination Event to prevent the IOU from taking an adverse stance 
in its state public utility commission proceedings.  A copy of that 
Additional Termination Event is attached for your review.  Our approach with 
respect to municipals is dramatically different.  When negotiating an ISDA 
Master with municipals, we use a Schedule modeled after the 1992 U.S. 
Municipal Counterparty Schedule, having additional reps, the added concept of 
"Incipient Illegality" and an enforceability opinion.  A copy of that 
Schedule is also attached for your reference.

We would like to understand whether this distinction also exists in Canada, 
and if so, in all Canadian provinces, and whether there is a distinction when 
a municipal is an investor in an IOU (as we understand that the government 
may assist a utility to emerge from bankruptcy).  In that regard, would you 
recommend that ENA use distinct ISDA Schedules for these types of entities 
and/or would you recommend specific changes to our format?