Daren, per review of the Gas agreements between Tenaska IV and 
Williams/Apache and our understanding of the Agency agreement, I had a few 
items I  wanted to discuss with you (in lieu of our meeting today that was 
cancelled):

1. Looking at the October gas supply to the plant, I think Tenaska IV should 
have been charged at the contract prices with Williams & Apache (i.e.  2.285) 
and not at what the final price that was actualized per Megan's summary - 
230,406 at $710,616.70, price of $3.084.  If this volume was charged  at 
2.285 the total would have been $526,477.71, a difference of $184,138.99.

2. Looking at the November gas supply to the plant, Tenaska IV was charged 
$2.91 per MMbtu, instead of $2.285 for volumes of 267,300.  At the $2.91  
price, the total settlement price was $777,843 instead of $610,780.50 at 
2.285, showing a difference of $167,062.50.

I reviewed the gas supply agreements and the Williams gas price (pg. 19) for 
2000 gas is 2.32, which can be adjusted by the Waha Transportation Adjustment 
if delivered at Waha.  This adjustment started in 1997 at $.03 per MMbtu and 
increase by 5% per year.  Thereby currently, the adjustment factor is at 
.0347, giving us a price of $2.2853 per MMbtu.

In reviewing the Apache gas agreement (pg. 22), I noticed that the gas price 
is 2.285 at Waha & 2.315 at Katy/Carthage for 2000.  Per review of the Apache 
invoices, it appears that we are not getting our gas at these points but at 
other places (i.e. Lomak-Sterling & Mendell CDP) at a price of $2.175.  If 
Enron has a separate agreement at these delivery points and can capture a 
margin difference then that is upside to Enron.  However, I think the plant 
should not be charged above the contract price of $2.285.

Looking at the daily gas that was scheduled to the plant for November and 
October, I did not see that their use went over the contracted volumes from 
Williams and Apache of 45,000 MMbtu per day.  Therefore I don't think spot 
prices are part of the equation here.  Additionally, I recall from our 
meeting last month that all Enron makes on this deal is the Agency Fee of 
$.04 per MMbtu (excluding the margin difference that Enron has on Apache gas 
delivery points if my scenario above is correct).

So based upon items 1 & 2 above, I am suggesting that Tenaska IV adjust their 
November invoice owed to Enron for gas used by the plant by the gas price 
differences showed above.  Therefore, I am planning to wire a payment of 
$484,234.03 (see breakout below) on Friday, 12/22, to Enron on behalf of 
Tenaska IV Texas Partners, Ltd. for this activity.

  Month   Plant Gas Price Amount
  November  267,300  2.91 $777,843 
  November adjustment    $(167,062.50)   
  October adjustment    $(184,138.99)
  Nov. Agency Fee 1,350,000 .04 $54,000
  Sept. Agency Fee 98,813  .04 $3,592.52
       Total $484,234.03

I discussed these issues with Mike Mazowita, Rick Hill & Jody Pierce before 
reaching this conclusion.  Should you have any different ideas or thoughts 
that I am not covering, please call me at 3-7280 and we can discuss.  Thanks.

James