Lets schedule a time to review his changes.  We also need to focus on the set 
off languange which was left as an open issue at the time in your comments.
---------------------- Forwarded by Peter Keohane/CAL/ECT on 05/22/2001 08:40 
AM ---------------------------


"Anderson, David W (Law)" <DWA3@pge.com> on 05/21/2001 12:09:35 PM
To: "'Mark.Powell@enron.com'" <Mark.Powell@enron.com>, 
"'Peter.Keohane@enron.com'" <Peter.Keohane@enron.com>
cc: "Welch, Ray" <RXWc@pge.com>, "Clare, David" <DWC3@pge.com>, "Baxter, 
Charlotte" <CRB0@pge.com> 
Subject: Enron Canada Corp. Comments on the PG&E Form of Master




Mark --

Attached is PG&E Core's response to Enron Canada's comments (sent in March)
on the Core Gas Supply Contract.  We have been able to incorporate many of
your suggestions.

In addition to Enron's suggestions, I have made some additional revisions,
some stylistic, some substantive, which I believe improves the draft.

I have highlighted the revisions in Word's "Track Changes" (Word 2000),
based on the original draft sent to Enron Canada earlier this year.

In addition, we recieved Enron Canada's modification suggestions for a
pre-pay arrangement.  We have incorporated many of EC's suggestions there as
well.

Please don't hesitate to give me a call, at 415-973-6659, to discuss and to
move this to conclusion.

Thank you,

Dave Anderson, PG&E Law Dept


-----Original Message-----
From: Welch, Ray
Sent: Wednesday, March 28, 2001 8:27 AM
To: Anderson, David W (Law)
Subject: FW: Enron Canada Corp. Comments on the PG&E Form of Master

-----Original Message-----
From: Mark.Powell@enron.com [mailto:Mark.Powell@enron.com]
Sent: Thursday, March 22, 2001 2:23 PM
To: Welch, Ray
Subject: Enron Canada Corp. Comments on the PG&E Form of Master
---------------------- Forwarded by Mark Powell/CAL/ECT on 03/22/2001 04:18
PM ---------------------------
(Embedded
 image moved
 to file:      From:  Mark Powell
 pic19353.pcx) 03/22/2001 04:19 PM

To:   RXWc@pg&e.com
cc:   Peter Keohane/CAL/ECT@ECT
Subject:  Enron Canada Corp. Comments on the PG&E Form of Master

Pursuant to your meeting at our office yesterday, Peter Keohane asked me to
provide you with a brief list of key issues/amendments relating to the
Pacific Gas and Electric Company form of Master Gas Purchase and Sales
Agreement (the "Master").  In this regard, we have tried to restrict our
comments to those of our concerns which are most important to us.  Please
be aware that these comments are subject to Enron Canada Corp. ("Enron
Canada") being satisfied with all other matters which were discussed during
the meeting (i.e. set-off issues, credit issues, issues relating to the
Confirmation and Amendment to Gas Supply Agreement, the security and
inter-creditor agreement and the side letter agreement currently being
negotiated with Travis McCullough of Enron North America Corp., etc.).

Our concerns, in the order of the Master, are as follows:

1.Verbal Agreements.

We need to ensure that the agreement contemplates the fact that agreements
(whether they be for Baseload Gas, Multi-month Gas or Swing Gas) will be
binding upon the parties agreeing to the terms of the transaction (i.e.
determination of the buyer/seller, the DCQ, the period of delivery, the
delivery point, etc.) regardless of whether the transaction has been
reduced to writing.

This should be a relatively easy fix to:
a.   s.2.1 of the Transaction Procedures,
b.   modifying a number of definitions in Article 1 so that they do not
refer to "as agreed upon in Exhibit A" or "as set forth in Exhibit A" but
refer to "as agreed      upon by the Parties";
c.   modifying the definitions of "Baseload Gas", "Multi-month Gas" and
"Swing Gas";
d.   modifying sections such s.4.1, s.5.1, s.6.1, etc. accordingly.


2. Confirmation by Seller.

In connection with the issue above, the confirmation procedure should be
amended such that "Enron Canada" (as opposed to "Buyer" in s.1.1 and 1.17
and as opposed to "PG&E Core" in s.2.3) "may" confirm the transactions.
This change is in line with issue number 1 above and allows for the
potential for Enron Online transactions.

Please note, the Exhibit A will need to be slightly modified to account for
this change.


3. Canadian Delivery Points

Enron Canada requires s.4.2 to be amended such that transactions with "at
the border" delivery points will be deemed to occur on the Canadian side of
the border.  The section should state:

     "The Delivery Point for any Gas sold and purchased at Easport, Idaho
     or Sumas Washington by Seller or Seller's Transporter to Buyer or
     Buyer's Transporter shall be on the Canadian side of the international
     border at the interconnection of Kingsgate, British Columbia and
     Huntington, British Columbia, respectively, where Buyer will take
     title of the Gas, unless otherwise agreed."

4.   Invoicing.

Enron Canada requires that the clause ", subject to receiving a confirming
statement from Buyer's Transporter for the quantity of gas actually
delivered," be deleted from the second sentence of s.7.1.  Further, the
second to last sentence of s.7.1 should be replaced with the following:

     "If actual quantities are not available by the billing date, billing
     and payment will be prepared based upon the scheduled contract
     quantities."

In this regard, s.7.4 should also be deleted.


5.  Enron Canada Credit Support.

In s.8.1, any guarantee provided by Enron Corp. must be construed and
enforced under the laws of Texas.

Secondly, Enron Canada requires the following clause to be inserted at the
end of the first sentence of s.8.2:

     ", provided that Enron Canada shall only be required to provide
     assurances of payment in the event that PG&E Core's net exposure to
     Enron Canada under all Transactions under this Agreement exceeds US
     $ (to be determined upon completion of credit analysis)".


6.  Force Majeure

Enron Canada requires the removal of s.11.1, s.11.2 and s.11.3 relating to
"Force Majeure".  These sections are to be replaced with the following:

     11.1   Suspension   for  Force  Majeure.   This  Article  11  entitled
     Non-Performance  is  the sole and exclusive excuse for non-performance
     permitted  under  this  Agreement,  and all other excuses at law or in
     equity  are waived.  Except with regard to payment obligations, in the
     event  either  Party  is  rendered unable, wholly or in part, by Force
     Majeure  to  carry  out  its  obligations  under this Agreement, it is
     agreed  that  upon  such Party's giving notice and full particulars of
     such  Force Majeure to the other Party as soon as reasonably possible,
     such  notice  to  be confirmed in writing, then the obligations of the
     Party giving such notice, to the extent that they are affected by such
     Force  Majeure,  shall  be  suspended,  from  its inception during the
     continuance  of  the Force Majeure for a period of sixty (60) Days, in
     the  aggregate,  during  any  twelve-Month  period,  but for no longer
     period.   After  the  sixtieth  Day, the Parties shall be obligated to
     perform.


     11.2      Force Majeure for Transactions with a Delivery Point at NOVA
     Inventory  Transfer  ("NIT").   If  the  Delivery  Point  is NIT, this
     Article 11.2 shall apply.  "Force Majeure" means only an interruption,
     curtailment  or prorationing by NOVA of NIT service, which affects all
     NOVA  shippers  who  had  nominated for deliveries or receipts to take
     place  by NIT on that Gas day.  On any Gas day or any portion of a Gas
     day  that there is a Force Majeure and either Party provides notice of
     the  Force  Majeure  to  the other, Seller shall deliver to Buyer, and
     Buyer  shall  receive from Seller, that percentage of the DCQ which is
     equal to the percentage amount of Gas which according to NOVA had been
     nominated  by  all  NOVA  shippers  for  NIT  and  which  NOVA  is not
     interrupting,  curtailing  or  prorationing  on  that  Gas day or that
     portion of a Gas day.


     11.3       Force  Majeure for Transactions with a Delivery Point other
     than  NIT.  If the Delivery Point is other than NIT, this Article 11.3
     shall  apply. "Force Majeure" means only interruptions or curtailments
     of  firm  service  at the Delivery Point(s) by Seller's Transporter or
     Buyer's  Transporter,  regardless  of  whether  Buyer's Transporter or
     Seller's  Transporter is declaring any event of force majeure.  On any
     Gas  day  that  Force  Majeure  applies,  both Parties' obligations to
     deliver  and  receive Gas shall be reduced by the same percentage that
     Buyer's  Transporter  or  Seller's  Transporter interrupts or curtails
     firm service at the Delivery Point(s) on such Gas day."

Please note, the reference to Article 11.2 in s.11.4 should be amended to a
reference to Article 11.1 once the changes indicated above are made.


7.  Liquidated Damages Calculation

The calculation of liquidated damages in s.11.4 uses the highest daily
price and lowest daily price "in the index below".  However, I could locate
no reference to an index below to make the calculation.  As are result, we
need to specify an index.

We should probably insert a provision to deal with circumstances in which
the index ceases to be reported or there is a material change in the
formula for or method of calculation is changed (as per the recent CPGR
AECO "C" Daily Index changes).


8.   Eligible Financial Contract Representation

As a supplement to the provisions of s.12.6, Enron Canada requires the
following provisions to be added to the Master:

     "12.7      Eligible Financial Contract.  This Agreement, all
     Transactions under this Agreement, and any guarantee thereof as
     applicable, each and together constitute an "eligible financial
     contract" under and in all proceedings related to the Bankruptcy and
     Insolvency Act (Canada), the Companies' Creditors Arrangement Act
     (Canada) or the Winding-up and Restructuring Act (Canada), as the same
     may be amended, restated, replaced or re-enacted from time to time,
     and will be treated similarly under and in all proceedings related to
     any bankruptcy, insolvency or similar law (regardless of the
     jurisdiction of application or competence of such law) or any ruling,
     order, directive or pronouncement made pursuant thereto."


9.   Assignment

Enron Canada requires the assignment provisions of s.14.1 be replaced with
the following:

     "14.1      Transfer  or  Assignment.   Neither Party shall transfer or
     assign  this Agreement without the prior written approval of the other
     Party,  which approval may be withheld or given entirely at the option
     of  such Party; provided, however, either Party may transfer or assign
     its interest hereunder to an affiliate, subsidiary or to any person or
     entity  succeeding  to  all or substantially all of the assets of such
     Party,  all without the prior written approval of the other Party, but
     no such assignment will relieve the assigning Party of its obligations
     hereunder."


Further, a new s.14.3 should be inserted stating:

     "14.3      Enurement.   This  Agreement  shall enure to and be binding
     upon the successors and permitted assigns of the Parties hereto."


10.  Canadian Law Issues

Enron Canada requires the first two sentences of s.17.4 to be replaced with
the following:

     "This Agreement shall be governed by and construed, enforced and
     performed in accordance with the laws in force in the Province of
     Alberta, without regard to principles of conflicts of law, and each
     Party hereby submits to the non-exclusive jurisdiction of the courts
     of the Province of Alberta."

     For the purposes of this Agreement and all Transactions hereunder,
     unless otherwise specified, "dollars" and the symbol "$" means dollars
     in the lawful currency of Canada.


11.  Representations

Enron Canada requires the following section to be inserted in Article 17 ?
Miscellaneous:

     s.17.8     As  a  material inducement to entering into this Agreement,
     including each Transaction, each Party, with respect to itself, hereby
     represents  and warrants to the other Party, continuing throughout the
     term  of  this  Agreement  and  on  the  date that each Transaction is
     entered into, as follows:

(a)  there are no suits, proceedings, judgments or orders by or before any
court or any governmental authority that materially adversely affect its
ability to          perform this Agreement or the rights of the other Party
under this Agreement;
(b)  it is duly organized and validly existing, and it has the legal right,
power, authority and qualifications, and has obtained all necessary
consents and        regulatory authorizations, for it to conduct its
business, to execute and deliver this Agreement and to perform its
obligations hereunder and under each     Transaction;
(c)  (i) each Transaction shall constitute a "commodity contract" or an
"OTC derivative" or such other similar term as defined pursuant to the
securities          legislation in force in Alberta and British Columbia
and pursuant to the securities legislation of any other jurisdictions
having application to the          Transaction, and
     (ii) it is a "Qualified Party" within the meaning of paragraph 9.1 of
Alberta Securities Commission Order Doc.#394043 and paragraph 1.1 of the
British        Columbia Securities Commission Blanket Order BOR 91-501, in
any such case, as amended, restated, replaced or re-enacted from time to
time, and      pursuant to any equivalent order or other enactment made
pursuant to the securities laws of Alberta, British Columbia and any other
jurisdictions having     application to the Transaction;
(d)  the making and performance of this Agreement are within its powers,
have been duly authorized by all necessary action and do not and will not
violate   any provision of law or any rule, regulation, order, writ,
judgment, decree or other determination presently in effect applicable to
it or any provision of its    governing documents; and
(e)  this Agreement constitutes a legal, valid, and binding act and
obligation of it, enforceable against it, in accordance with its terms,
subject to bankruptcy,   insolvency, reorganization and other laws
affecting creditors' rights generally, and with regard to any equitable
remedies, to the discretion of the court           before which proceedings
to obtain such remedies may be pending.


Please give me a call when you have the opportunity to discuss the above.
You can reach me at (713) 345-2520 for the next few weeks and you can reach
Peter Keohane directly at (403) 974-6923.


Yours truly,

Mark Powell



 - Prepay dwa May '01.doc
 - ENRON Canada 5-21-01 Draft.doc