All,

Herewith my attempt at summarizing comments and building a collective response from our conference call earlier this week.  Please review and comment asap.  I would like to start feeding responses into Tony Palmer and Murray Birch on Monday.

Paragraph 1
Enron aknowledges that releasing any and all potential claims against the ANNGTC Partnership is an important principle to adopt to secure commercial commitments from the Alaskan gas producers.  In principle, Enron is prepared to release claims for the accrued AFUDC component but is not prepared to release claims for the initial ~$300 MM because regulators may allow a mechanic to recover the earlier investments, which could present future upsides to the Withdrawn Partners.  Enron thus proposes to modify this principle to provide for the inclusion of the ~$300 MM investments, but specifically exclude the AFUDC component.  Ultimately, the toll for transport services will result through negotiations with the Producers, and their concerns can be addressed by expressly excluding surcharges/other regulatory mechanics approved by the regulators for the initial investments.

Paragraph 2

Paragraph 2a
Enron would like to change this principle to include an immediate cash payment equal to such Rejoining Partner's pro rata share of the lesser of-
i) US$10 MM and
ii) properly documented and audited costs incurred by TCPL-USA and UAFC-Foothills during the years 2000 and 2001

Paragraph 2b
Enron believes it is inappropriate for TCPL-USA and UAFC-Foothills to obtain a success payment/distribution equal to US$40 MM.  The parents of both companies will enjoy the benefit of increased revenues resulting from volume flows on B==>C segments owned by themselves, which should be a significant financial incentive.

Paragraph 3
Conform to comments outlined above in Paragraph 1.

Paragraph 4
A Rejoining Partner who subsequently withdraw should be allowed to recover its capital contributions without interest/AFUDC at some future date, preferably the first day of commercial operations.  New Percentage Interest will revert to all partners in proportion to their respective current percentage interests.

Paragraph 5
Enron would like to eliminate this principle.  It would be appropriate for change of control principles to be developed.

Paragraph 6
Ok.

Paragraph 7
Please clarify the principles in which the Partnership Agreement will be amended in order to "modernize" provisions for the management of the ANNGTC Partnership.

Paragraph 8
???

Paragraph 9
Ok.

Paragraph 10
Enron can not agree to the principles in a) and b)

Paragraph 11
Arguably, all the partners in ANNGTC would be capable of becoming the pipeline operator in Alaska.  The size of ANNGTC is such that it could hire its own pipeline operating management and staff in Alaska.  Enron believes it is inappropriate to appoint NAPC as the pipeline operator in Alaska and that it would be a straightforward exercise for ANNGTC to appoint an Operator by utilizing a competitive process amongst the Partners.

Paragraphs 12 and 13
Ok.

Paragraph 14
Enron proposes to eliminate the principle as stated and conform to the comments outlined above in Paragraph 4.

Balance of MOU
Ok.