Tom --

Where do we stand with this?

Jim

 -----Original Message-----
From: 	Hoatson, Tom  
Sent:	Thursday, September 20, 2001 9:42 AM
To:	Sharp, Vicki; Keller, James
Cc:	Montovano, Steve; Steffes, James D.
Subject:	Pennsylvania $147,000 EES Assessment

EES was recently assessed $147,000 by the Pennsylvania PUC as a method of recovering their costs.  Enron's local PA attorney, Kevin Moody of Wolf, Block, Schorr and Solis-Cohen LLP, notified us that he has taken the lead for a group of natural gas suppliers to challenge the assessments and inquired if Enron wanted to be a part of the group.  The group includes IOGA (an association of oil & gas suppliers in PA), TXU, Hess, New Power, and 4 others.  Moody successfully got a postponement of the payments until Oct 16.  EES is included in the postponement at this time.  The options are to litigate the assessment (Moody feels we are on solid ground to prevail) or to negotiate a settlement with the PUC where we agree to some assessment to be determined.  Litigating the assessment could cost about $50K - $60K (in addition to the $25K to date) whereas settling would obviously be less expensive initially but would provide an assessment for each year going forward.  Moody id meeting with the PA PUC this Friday to determine what would be the best way to proceed (he is hoping to convince them that the statute is quite clear that they cannot make the assessment and that they withdraw it).  We will have a better grasp of the situation and clearer path for the direction we should pursue after that meeting.  I will keep you informed.