In furtherance of discussions between our commercial counterparts (Barry Tycholiz, Eric Le Dain and Ray Welch) and our meeting tentatively scheduled for next week, we have made certain anticipatory revisions to the agreement reflected in the document attached entitled the "Comprehensive Blackline". 

We also attach a blackline of the agreement which separately indicates these most recent changes (as compared to the version which we sent to you on July 3, 2001)(the "Incremental Blackline").

The Incremental Blackline includes a number of changes which address concerns communicated by Ray Welch.  Most importantly, we have removed the concept of set-off of obligations of the affiliates of non-defaulting parties.  We have also reinserted the concept of "Interruptible" transactions; however, we have clarified that "Baseload Gas", "Multi-Month Gas" and "Swing Gas" transactions shall be firm.

In addition to the foregoing, we have proposed a number of other amendments which help clarify the representations, obligations and transacting procedures under the agreement.  For example, we have distinguished payment defaults from other failures as events constituting "Defaults".

Similarly, we have amended the confirmation procedures of Article 2 to clarify the mechanics of transacting.  As you saw in our previous comments, Enron Canada wants to clarify that, although the practice is to always send a Confirmation Notice, a transaction is not dependent on a Confirmation Notice.  In addition, the Incremental Blackline includes amendments which eliminate the potential confusion/uncertainty which would arise in the event that Confirmation Notices were issued by both parties.  Section 2.4 has been amended such that only one party confirms the transactions.  In this case, because Enron Canada will be issuing the Confirmation Notices for all Enron Online transactions, we have inserted Enron Canada as the party to issue the Confirmation Notice for all transactions, subject to a three business day review period. 

Should you have any questions or concerns relating to our proposed changes prior to the meeting, please give me a call.  You can reach me directly at (403) 974-6708.

Regards,

Mark Powell