-----Original Message-----
From:  Cross, Edith  
Sent: Thursday, April 12, 2001 4:53 PM
To: Morse, Brad; Rorschach, Reagan
Subject: MDEA Comments

Here are my comments on the MDEA draft:

1)  It is my understanding that the TECO-Frontera contract was used as a 
template for MDEA.  I would like to clarify the differences between the TECO 
deal and the MDEA deal.  The TECO-Frontera deal consists of EPMI marketing 
the excess capacity off the Frontera plant.  TECO has some existing sales off 
that plant which are not incorporated in our profit sharing arrangement 
("Existing Transactions").  Also, we agreed to work with them to sell 
"Structured Transactions" off the plant.  The "Back-to-Back Transactions" 
refer to the daily sale of MW off the plant, that EPMI is sleeving for TECO.  
I understand that we may have opportunities to sell excess generation off 
MDEA's generation assets, however, I don't think the bulk of the contract 
should focus on this.  There is little mention of the obligation to serve the 
Native Load through 3rd party transactions, which as I understand it, is the 
intent of the MDEA deal.  

2)  Definitions section:

 Existing Transactions - defined as MDEA having prior obligations to sell 
energy etc.  - I don't think MDEA has any of these outside of their Native 
Load.

 Marketing Strategy - This mentions a Trading and Risk policy.  The policy 
used for TECO  mentions that EPMI will provide VAR reports.  This will not be 
done for    Clarksdale/Yazoo.

3)  Section 4 - Availability of Products; Metering

 Risk of loss and all price, credit, and unit contingency....      I thought 
we were bearing credit risk with 3rd parties.

 Further down in the paragraph in parens... (and execute a Confirmation 
evidencing such obligation)...   We need to check with the Deal Clearing 
group what they will be   confirming.  Normally, hourly trades do not get 
confirmed.  I have not yet informed anyone in confirms about this deal 
because I was assuming we would not have to provide   confirms to MDEA.  
Please let me know if this is not the case.

4)  Section 8 - Performance Standards

 (b) (1) Availability calculation is using 480 MW, this is the Frontera plant 
capacity.

5)  Section 9 - Delivery Point and Title

 What about sales to MDEA from EPMI (this goes back to my statement in #1 
that this contract focuses more on the buy side instead of the sale). 


6)  Section 11 - Fuel management services

 I thought we were sleeving the gas, therefore, EPMI will be a party to the 
Fuel Related Transactions.

6)  Section 16 - Payment and Fees

 Existing Transaction Costs are mentioned - These may be irrelevant to this 
section

 "Market Proceeds"  - I think this should more specifically state that this 
is only in relation to the Mwhrs sold off their facilities to a 3rd party.

 MOST IMPORTANTLY - There is no mention of how EPMI will be reimbursed for 
the power that we purchase on MDEA's behalf.  I expect that this will be most 
of the    settlement activity related to this deal.    

7)  Exhibit [] REPORTS
 
 1) Profit & Loss, Risk Statement - This says that we will track the change 
in value of the power output.  We are not going to monitor the forward value 
of their positions.

 2)  Position Statement - This will not be done at all.  To truly give an 
accurate position statement, we would need to forecast their load for the 
next two years, and then   economically dispatch the plants to see what their 
net short position is.  I don't think this is relevant, and per my previous 
conversations with Reagan, we are not doing this.

 In the TECO agreement, we are giving a forward view of the value of the 
plant.  This cannot be done for MDEA because we cannot determine when we are 
dispatching to   serve their load or to sell to a 3rd party.  

This is all for now....

E