Here is a summary of my telephone conversation with Jay Hopper of KN Energy:

1.  KN has permitted its 550 MW Arkansas plant (and received its Entergy 
interconnection agreement) and is out for bid on tolling agreements.  They 
have two counterparties who have bid a 15 year tolling agreement --437 MW, 
mid 7,000 heat rate; 5.75 KW-mo.; 113 MW duct firing, 4.75 KW-mo.; 3.00 mill 
escalating variable O&M charge.  KN has also conducted construction bids. 
[For our LM-6000 activities, seeing all this information would be extremely 
valuable].

2.  KN has a draft air permit on its Jackson Michigan plant.  They will know 
in 45 days if approved.  All other permits received. Since this project was 
first in the cue when we last talked to KN, I suspect something negative has 
happened to slow it down.

3.  KN has sites in Oklahoma, Dallas and Chicago (4).  

4.  KN and another party have 6 7FA turbines for June '01 projects in 
Illinois.  KN supposedly controls the turbines.  I asked KN if they would be 
interested in doing deals in other states with these turbines.  They said 
possibly.  The other counterparty would need an equity participation in the 
end project.  I also told them that to the extent that they did Illinois 
projects, we could be of assistance to them on reg. cap. pricing and sales 
tax strategies.

5.  KN has sites in Ohio and Geary, Indiana where a coal affiliate would take 
back a 30 year 100 mw PPA for both sites.  Given this contract, KN may 
entertain doing a deal with a merchant component.

6.  I asked Jay how KN would be interested in ENA participating in these 
projects.  KN is not interested in taking too much commodity risk.  Hence, 
our proposal of doing a fixed price toll for 5 years and a floating index 
price for an additional 15 years would not be of interest to them (evidently 
Kinder laughed at the proposal; though in Jay's telephone message he 
indicated that Kinder was interested in the structure).  If there was a floor 
that covered debt service in the merchant years (along with some upside 
participation for KN--Jay threw out a 20% participation), then they would be 
interested in doing a deal.  

7.  They would also entertain selling a 50% or 100% interest in these 
projects.

8.  Jay told me that KN is looking to make a steady and predictable income 
from these plants.  Thus far, his group has not made any money.  My sense is 
that they are looking for money or a story (ENA name).  I would suggest 
taking a pass at purchasing the Arkansas plant (to get their attention and 
see their project information) in an effort to get involved in the 7FA and 
ECAR projects.  If KN does have a long-term tolling agreement, then would 
should be able to lay off a large portion of the financial risk associated 
with the Arkansas transaction.  We could also look at applying Don's 
structure to the Arkansas transaction.  Needless to say, the 7FAs slots, if 
real, would allow ENA to do something strategic in Florida and Iowa.