Hey Russell (as well as Dan and Debra),

Pursuant to our conversation of this morning, I just want to confirm the 
following.

1.   We have agreed that we will use separate guarantees (for the obligations 
of Engage Energy Canada, L.P. ("Engage Canada")) with respect to each of 
Enron Canada Corp. ("ECC") and Enron North America Corp. ("ENA").  This will 
allow for the appropriate guarantees to reference the peculiarities of each 
of Canadian and American law (as applicable) as well as deal with the 
potential "permanent establishment" tax issues we discussed.   As a result, 
Dan does not need to review the draft guarantee I sent to him on Wednesday.

2.  You are going to send me a revised credit sheet for the ECC-Engage Canada 
master physical agreement which removes references to the obligations of 
Engage Canada to ENA (likely requiring a guarantee of Westcoast Gas Inc. (on 
behalf of Engage Canada) to ECC in the amount of US$15million (the "New ECC 
Guarantee").

3.  Dan is to coordinate negotiating/obtaining a new guarantee from Westcoast 
Gas Inc. (on behalf of Engage Canada) to ENA in the amount of US$5 million 
(pursuant to the master physical agreement between Engage Canada and ENA).

4.  I am still not sure what we are doing with respect to the "Enron Corp." 
guarantee which was provided to Engage Canada and Engage Energy US, L.P. 
("Engage US") in the amount of US$35million (which guarantees the obligations 
of ENA, EPMI and ECC) (the "Existing Enron Corp. Guarantee").   According to 
the credit sheet last provided to me, Enron Corp. is to provide a guarantee 
in the amount of US$25million but you were going to check to see if we were 
leaving the Existing Enron Corp. Guarantee in place.  

If we are replacing/amending the Existing Enron Corp. Guarantee, we need to 
coordinate with counsel from all three of ENA, EPMI and ECC to ensure that we 
are properly revoking the Existing Enron Corp. Guarantee or amending it 
appropriately.  Ultimately, I would prefer that the Existing Enron Guarantee 
be amended to remove the references to ECC such that we can arrange for a 
separate Enron Corp guarantee on behalf of ECC.  This would allow for greater 
flexibility/efficiency in the event that the industry or trading relationship 
between ECC and Engage Canada develops and future amendments are required.  

Please let me know how you would like me to proceed with respect to point 4.

Thanks,

Mark Powell




To: Mark Powell/CAL/ECT@ECT
cc: Dan J Hyvl/HOU/ECT@ECT, Debra Perlingiere/HOU/ECT@ECT 
Subject: Re: Engage Energy Canada L.P. Guarantee  

Mark,

The guaranty you are providing to Engage Energy Canada should cover both ECC 
and ENA although should only reference the Master Firm Contract between ECC 
and Engage Canada.  Dan has been working on a separate guaranty that will 
reference the Master Contract between ENA and Engage US that is currently 
being drafted.  The reason ENA is included on the guaranty for Engage Canada 
is because of business done at Dawn in Eastern Canada through ENA.  

If you and Dan want to issue one guaranty to Engage US and Engage Canada 
referencing both contracts I think that would be a good idea, the guaranty 
amount should be between $45MM and $50MM and include several Enron entities:  
ENA, HPL, EPMI (referencing the Master Energy agreement), Clinton Energy 
Management Services, Inc and ECC.

Let's discuss further in the morning as to how about resolving this.

Thanks
Russell




   
	
	
	From:  Mark Powell\CAL\ECT                           09/20/2000 02:53 PM
	

Sent by: Mark Powell
To: Dan J Hyvl/HOU/ECT@ECT
cc: Russell Diamond/HOU/ECT@ECT 
Subject: Engage Energy Canada L.P. Guarantee

In furtherance of the message which I left for you, please find attached a 
copy of a replacement guarantee for your review.

As you are aware, Enron is currently in the process of amending a number of 
guarantees with respect to various Engage Energy entities.  Under the 
project, the 
 US$25 million guarantee provided to Enron Corp. and its subsidiaries to 
guarantee the obligations of Engage Energy Canada L.P. and Engage Energy  US 
L.P. ,as provided by The Coastal Corp. (the "Existing Guarantee"), is to be 
replaced with a number of guarantees which are segmented by the Engage Energy 
entities and the type of contract (i.e. physical v. financial).  

As part of this project, Russell Diamond has provided Enron Canada Corp. with 
revised credit terms for dealing with Engage Energy Canada, L.P. under which 
Westcoast Gas Inc. is to provide a US$20million guarantee of the obligations 
of Engage Energy Canada L.P. under the existing master physical gas 
purchase/sale agreement between the Engage Energy Canada L.P. and Enron 
Canada Corp. (the "ECC Physical Master") as well as the master physical gas 
purchase/sale agreement between Engage Energy Canada L.P. and Enron North 
America Corp. (the "ENA Physical Master").   Russell had allocated US$15 
million of the replacement guarantee to the ECC Physical Master and 
US$5million to the ENA Physical Master.

Due to other inadequacies in the ECC Physical Master, we have prepared an 
"Amended and Restated" ECC Physical Master which includes a number of 
significant terms in addition to referring to the replacement guarantee 
(which we are quite eager to have Engage execute).  As a result, I have 
prepared a draft of  replacement guarantee (to be received from Westcoast Gas 
Inc.) to accompany the Amended and Restated ECC Physical Master.  However, to 
ensure that the replacement guarantee meets your requirements, I am looking 
for your input.  Please find attached a copy of the draft replacement 
guarantee as blacklined to indicate the changes which have been made to the 
Enron Canada Corp. standard guarantee to incorporate the obligations owing to 
Enron North America Corp.  As you will see, there are a few bullets for which 
I require your assistance in completing (i.e. date the of ENA Physical Master 
and the appropriate contact information for notices).

When you get the opportunity, could you please review the blacklined 
replacement guarantee?  Once again, we are quite eager to send out the 
Amended and Restated ECC Physical Master.

Thanks for your help.

Mark Powell ((403) 974-6708)



Note to Russell:  Russell, you were going to confirm for me that the existing 
Enron Corp. guarantee delivered to Engage Energy Canada L.P. and Engage 
Energy US L.P. to secure the obligations of Enron Canada Corp., Enron North 
America Corp. and Enron Power Marketing, Inc. (in the amount of $35 million) 
dated June 1, 1998 is NOT to be replaced.  Has there been any progress on 
this front?