fyi
---------------------- Forwarded by Kay Mann/Corp/Enron on 08/16/2000 03:52 
PM ---------------------------


Herman Manis
08/16/2000 03:36 PM
To: Kay Mann/Corp/Enron@Enron
cc: Lisa Bills/Corp/Enron@ENRON, David Leboe/HOU/ECT@ECT 

Subject: Re: VEPCO  

The current structure (including VEPCO in Cornhusker under our Fair Value 
Model) does not contemplate credit support.  There currently is not credit 
support of the actual project co (Ponderosa Pine) under the Cornhusker 
structure.  ENA typically does not provide credit support of project co's 
under the fair value model because of certain bright line tests under the 
fair value model for an asset purchase to qualify for fair value.  

From a bank financing and economic perspective, ENA has a total return swap 
with Delta Power, the 100% owner of Ponderosa Pine (Ponderosa Pine is 
bankruptcy remote).

There possibly could be credit support from ENA for the project co if we were 
compensated a fair value fee for the support, but this issue has never been 
tested with AALLP (would need third party fairness opinion).  In the end, 
there could only be a form of financial support, not a performance 
guarantee.  



To: Herman Manis/Corp/Enron@ENRON, Lisa Bills/Corp/Enron@ENRON
cc: Ozzie Pagan/HOU/ECT@ECT, Heather Kroll/HOU/ECT@ECT, Jeffrey 
Keenan/HOU/ECT@ECT 
Subject: VEPCO

Virginia Power has raised a question about wanting some type of guaranty or 
other form of performance security should an Enron LLC sign the contract.  
What can we propose (or exclude) under the contemplated structure?

Thanks,

Kay