An Agreement to Interconnect and Operate Natural Gas Pipeline Facilities has 
been executed between HPL and the Rio Nogales Power Project, L.P.  This 
agreement will provide for the physical means by which gas can be delivered 
from the HPL South Texas Joint Venture Pipeline System and the Rio Nogales 
Power Plant located near Seguin, Texas.  The interconnect will be built on 
the South Texas System near the city of Prarie Lea.  

The power plant is presently in construction.  The plant owners will build a 
new pipeline to connect to the HPL system.  The new pipeline is anticipated 
to commence construction around June 1, 2001.  Under the Interconnect 
Agreement HPL will, at its expense, install the hot tap and valve and then be 
reimbursed for its actual expenses.  Expenses are estimated to be less than 
$150,000.

A Guaranty Agreement has concurrently been executed between HPL and 
Constellation Power, Inc.   This agreement by the parent of Rio Nogales Power 
Project, L.P. provides a corporate guaranty for payment of the work by HPL up 
to $300,000.  With receipt of the executed Guaranty, Facility Planning and 
Enginneering are released to recommence discussions with Rio Nogales and 
thier pipeline constructor, Pinnacle, to finalize details of the 
interconnection.

In recognition of the prospective close between HPL and AEP, HPL will attempt 
to have the work performed after the close.  If the currently anticipated 
close date of June 1st occurs, this schedule should not be a problem.  If the 
work can be scheduled after close, the receivable to HPL should be 
straightforward and not require any special handling.  I therefore request 
that Jim Haden and Bob Camp coordinate with me regarding the schedule for the 
work.

I would also request that Ken Kaase provide our Joint Venture Partner 
notification of the interconnection agreement or whatever advice is required 
under the JV Agreement.  Ken, I will provide you whatever details are needed 
for this purpose.

The interconnect is located on the system that would deliver future volumes 
to the City of San Antonio should HPL be sucessful in negotiating such a 
contract.  It is also the system that could service the new Austin peakers 
either through new pipe or through a third party transport.  To date, there 
is no gas sales or transportation agreement with Rio Nogales.  Because of the 
current state of hydraulics on this system, and the multiple potential loads, 
all  interested individuals need to be cognizant of a need to coordinate and 
plan for handling these prospective loads towards maximizing the benefit of 
the asset .

Please advise if there are any questions or concerns.