Chuck, I appreciate the note - I just like to ensure that everyone is aware 
of the various issues and that we are managing our risk appropriately.  I 
have a great deal of confidence that you have this handled.

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 08/30/2000 
09:55 AM ---------------------------


Charles Ward@ENRON
08/30/2000 08:45 AM
To: David W Delainey/HOU/ECT@ECT
cc: W David Duran/HOU/ECT@ECT, Carl Tricoli/Corp/Enron@Enron, Jeff 
Donahue/HOU/ECT@ECT 
Subject: Ada pump and QF concerns in general

I wasn't sure whether you were messing with me or serious during the QBR 
about the Ada boiler pump.  It was a $10k issue which was fixed in the normal 
course of operations and NBD in the scope of things.  The QF was never at 
risk as the pump is a standard part which is commonly available.

The QF loss issue I typically worry about usually derive from an outage 
sourced at the counterparty level (cashflow problems, operational 
difficulties, etc.)  I've seen this cause a few projects tense moments, 
although FERC has always allowed the projects to recover.  Typically the 
utility will protest the loss of QF but since the QF's are self-certifying 
with FERC right to protest, the utility can typically only make noise and or 
cease paying.  

Recently, FPL attempted to not let the Indiantown QF IPP back on-line after a 
technical shutdown (and thereby bust their QF), but FPL lost their case in 
court (wrongful act) and has had to let the project return to on-line status 
(financing and QF remained intact over the +6 month ordeal).

To me the general theme is that an executed and performing (energy is being 
delivered) PPA will survive incredible QF stress.  The plant managers 
typically have the highest level of understanding of the intricacies of the 
PPA's vis-a-vis the relationship between plant, utility and QF host.  
Historically, FERC is not looking to kick out a project's contract based upon 
a QF technicality, although charged with enforcement of QF.  If FERC was a 
tough enforcer, Cleburne and a few other similar QF projects would rate high 
on their hit list and the past speaks well to the future in this case.

Chuck