You've summarized things nicely and I think the ultimate P/L assessment will 
reside with Wes with he, in turn, needing guidance on the tax consequences.  
Wally, as discussed during the call yesterday, I would like for you to assess 
the likelihood of the tax result (both as to the options idea and the Papier 
Masson settlement) obtaining given the change in law risk mentioned.  After I 
have your assessment of such risk, I will then speak with Wes to discuss the 
book consequences.  Finally, Morris and I will be in Calgary on Wednesday 
Nov. 29th thru Friday Dec. 1st and thus able to personnally address these 
matters (as well as others).  Best regards.  Steve.


   
	Enron Capital & Trade Resources 
	Canada Corp. 
	
	From:  Peter Keohane                           11/16/2000 11:06 AM
	

To: Morris Richard Clark/HOU/ECT@ECT, Stephen H Douglas/HOU/ECT@ECT, 
wys@blakes.com
cc: Rob Milnthorp/CAL/ECT@ECT, Paul Devries/TOR/ECT@ECT, Wes 
Colwell/HOU/ECT@ECT, Sharon Crawford/CAL/ECT@ECT, Mark E Haedicke/HOU/ECT@ECT 
Subject: Tax Planning - Privileged Solicitor/Client Communication

Thanks for the call yesterday.  Milly would like to have a decision on how we 
will proceed for execution by the end of November.  At the tail end of the 
call, alternatives were discussed, but I just wanted to confirm the action 
plan.

Morris/Stephen/Wally will consider and then review with Wes two alternatives:

1.  option purchases (or other deferral strategies), and whether, if those 
can be rolled year-on-year for a considerable period of time (ex. 10 years) 
without reasonable anticipation of legislative amendments restricting such 
deferrals, such that most of the present value of the deferral can be booked 
as earnings currently;

2.  Papier Masson newsprint swap termination structure, in particular, 
whether the transaction is worth pursuing considering three issues:  (i) 
present value of the tax deferral;  (ii)  option value to the deferral 
becoming permanent if the swap is re-transacted in the future if the market 
moves down from where the termination value was obtained;  and/or  (iii) 
although from a corporate perspective Enron would remain in the same hedge 
position, accounting for future P&L swings at the ECC level and at the ENA 
level if Leg 1 (PML/ECC) is unhedged from Leg 2 (ECC/ENA).

If I have it wrong, please let me know.  Otherwise, we look forward to 
hearing from you.

Again, many thanks, Peter.

Mark, FYI.