David Marshall (ECT risk management) insurance review.  Note the issue about 
the Delay in Start Up insurance (DSU).  I will contact Lyn Bellenhausen to 
see if she anticipated a pipeline project in the original LLC insurance 
requirements.

---------------------- Forwarded by Gerald Nemec/HOU/ECT on 08/09/99 08:49 AM 
---------------------------
   
	Enron Capital Management
	
	From:  David Marshall                           08/06/99 09:47 AM
	

To: Gerald Nemec/HOU/ECT@ECT
cc:  
Subject: Re: Construction Agreement  

Gerald,

I've reviewed the facilities construction agreement "FCA"and the Exhibit F to 
the LLC agreement that you provided.  Suggest that we simply incorporate the 
Exhibit F requirements into the FCA by reference, and add an additional 
requirement that Independent procure Builders All Risk insurance coverage in 
an amount sufficent to cover the full replacement cost of the 'work' and its 
components while intrasit to the jobsite, in temporary offsite storage and 
while awaitng installation at the site.  Additionally, if the project is 
finaced, lenders may require insurance coverage for scheduled p & i payments 
if the proejct suffers a delay in start-up as a result of a physical damage 
loss.  In the absence of a lender mandate, the purchase of DSU coverage 
becomes a commercial decision.  Suggest the following  sample wording:


A.  Builders Risk Insurance

Naming Owner, Contractor, Lenders, (the &Project Counterparties8) as Insureds 
and providing coverage for physical loss of or damage to property intended 
for incorporation into the Work:

i) While at the jobsite awaiting installation, during testing and 
commissioning and at all times prior to Final Completion (use appropriate 
term as is  consistent with the EPC document) 
ii) While intransit to the jobsite.
iii) While in temporary offsite storage

Subject to limits of liability as follows:

i) Equal to the full insurable vale of the EPC Contract, $                    
              .
ii) Adequate to cover the exposure or $10,000,000 per conveyance, whichever 
is greater.
iii) Adequate to cover the exposure or $15,000,000 per occurrence, whichever 
is greater.

B.   Delay in Start Up Insurance

In an amount sufficient to cover x months fixed operating expenses and debt 
service obligations.  Such coverage to apply in the event of the occurrence 
of a physical damage loss covered under the Builders Risk policy.

Additional Requirements 

Coverages A and B herein shall apply as primary insurance for the Work and 
shall be without any rights of contrbution from any similar insurance whihc 
may be maintained by the parties hereto. 

In the event that any insurance (including limits and deductibles thereof) 
hereby required to be maintained under this Insurance Coverage section A or 
B, shall not be available at commercially reasonable terms because of the 
refurbished nature of any equipment to be incorporated at the Facility, 
(Project Counterparties) shall not unreasonably withhold its agreement to 
waive such requirement, provided that Independent shall first request any 
such waiver in writing.