---------------------- Forwarded by Elizabeth Sager/HOU/ECT on 03/09/2000 
02:07 PM ---------------------------


"JOHN G KLAUBERG" <JKLAUBER@LLGM.COM> on 03/09/2000 12:14:39 PM
To: Elizabeth Sager/HOU/ECT@ECT, Janet H Moore/HOU/ECT@ECT
cc:  
Subject: PRIVILEGED AND CONFIDENTIAL: ATTORNEY WORK PRODUCT



 Elizabeth & Janet:

Attached is a draft of the memo we spoke about the other day.  We tried to 
come up with as many arguments as possible, recognizing the strong commercial 
desire to put in the second interconnect.  As we have discussed, certain 
language in the Interconnect Agreement is troublesome, generally due to the 
fact that it does not appear that a second interconnect was contemplated at 
the time the project was initially developed.  Nonetheless, we believe that 
Caledonia does have a number of arguments in favor of the position that it 
should be able to build the second interconnect without a contractual block.  
The strength of some of these arguments will turn in large part on further 
factual development with the commercial group, as noted in a number of places 
in the memo.

Please let me know when you wish to follow up.  And, as I noted in my 
conversation with Elizabeth this morning, there is a possibility I may be in 
Houston next week and perhaps we could meet with the commercial folks at that 
time.  I think it would be advisable to walk through the various possible 
scenarios/strategies with them so that we have the benefit of the TVA 
"history" and likely responses of TVA to some of the arguments noted in the 
memo.

Thanks  John

 - 6Z3601!.doc