Rogers,

Enron Energy Services Operations, Inc. ("EESO") and General Services Administration ("GSA") entered into an agreement, effective November 1, 1998, which provides for commodity pricing and value added services, specifically related to GSA Region 1 -New England and runs through October 31, 2003.  EESO agreed to provide a "Discount to Standard Offer" commodity price for GSA's "Core Load" associated with facilities in Massachusetts, New Hampshire and Rhode Island at such time as the utilities met certain conditions regarding deregulation (State commission formally approves UDC's restructuring plan and State Commission formally approves the UDC's sale of non-nuclear generating assets).  Individual agencies that have elected to participate under the GSA agreement are: Veterans Administration, Coast Guard, National Parks Service, Internal Revenue Service, Department of Agriculture, National Archives and Records Administration, Hanscom Air Force Base, and Department of Labor, with the total core group consisting of approximately 60 MW's.  The UDC's that have met the above referenced criteria above are Massachusetts UDC's (MECO, BECO WMECO, Fitchburg Gas & Electric, Eastern Utilities, and Commonwealth Electric, Cambridge Electric Company) and Rhode Island UDC (Narragansett Electric).  The only location where EESO currently delivers physical commodity is Massachusetts - BECO, which represent approximately fifty percent of the total "Core Load" or approximately 30 MW's and commenced in October 2000.

The agreement has provided other commodity upsell opportunities such as (i) physical delivery of comodity GSA accounts and Coast Guard accounts in Maine behind Central Maine Power (June 2000 thru October 2003)  and (ii) sale and delivery of "renewable energy" to GSA and Hanscom Air Force Base (October 2000 thru December 2001, with opportunity to extend thru October 2003).

Value Added Services under the agreement has been responsible for (i) solar panel project development and installation (ii) cogeneration project development and installation (in progress) (iii) chilled water project and (iv) maintenance agreement, all which total additional 50-55 million dollars.  EESO had asked GSA to allow the contract to be split between commodity and value added services and GSA refused. A decision was made that would allow Enron Facilities Services (EFS) to perform the value added services portion of the contract, on behalf of EESO.  To the best of my knowledge the cogeneration projects would affect only the Veterans Administration sites, behind Massachusetts-BECO only.  

There is another issue that we can discuss at your convenience which relvolves around the Master Subcontracting Plan and the requirement, in the last two years of the agreement for EESO to spend 1 million each year of the last two years of the agreement utilizing small business concerns, small disadvantaged business concerns, and women-owned small business concerns.

Let me know if you would like to discuss any of the above referenced information.

Regards,

Richard      

 -----Original Message-----
From: 	Herndon, Rogers  
Sent:	Wednesday, October 03, 2001 8:25 AM
To:	Wheeler, Christopher
Cc:	Ring, Richard
Subject:	RE: GSA Region 1 Projects Transition

No acceptance.

This is not enough info for me to accept anything.  We have a process which you will need to follow.  I suggest you talk to Sean Holmes and ultimately EWS' structuring group will have to get comfortable with all/any of the issues before I accept.  I expect better documentation than just an e-mail.

Richard what are the issues - this is the first thing I have EVER heard about this?

Rogers



 -----Original Message-----
From: 	Wheeler, Christopher  
Sent:	Tuesday, October 02, 2001 9:55 PM
To:	Herndon, Rogers; Ring, Richard
Cc:	Longbottom, Eric; Nanof, John
Subject:	GSA Region 1 Projects Transition

Rogers & Richard,

We are in the process of selling (transitioning) the Projects piece of the GSA Region 1 Deal to Enron Facility Services, with the commodity piece to remain the responsibility of EES. We would like to confirm that when EFS completes a project, the resulting reduced consumption figures will not adversely affect your commodity risk position.

Please indicate your acceptance of this transaction by responding to this email.

Regards,

Chris Wheeler