Sorry Geoff, I was out of the office Friday. Who is the third potential
counterparty? JB




"Storey, Geoff" <Geoff.Storey@ENRON.com> on 11/01/2001 04:00:30 PM

To:   Jerry Burt/BIZSRV/TXU@TXUE
cc:
Subject:  Credit Ring



Jerry,

Here would be the prosed trade:


For example:

Counterparty buys from Enron  jan02-dec02 nymex swap 350 contracts/mo
@ current market + $2
Enron buys from TXU           jan02-dec02 nymex swap 350contracts/mo @
current market + $2
TXU buys from Counterparty    jan02-dec02 nymex swap 350 contracts/mo
@ current market + $2

There will be no net position change for anyone. It lowers TXU's and the
Counterparty's open positions and VAR with Enron. It will also replace
the Counterparty's Enron credit exposure with TXU.

Enron releases TXU margin and TXU posts margin with the Counterparty
based on their contractual obligations.

All the trades would fall within our existing ISDAs. Our lawyers have
added some language for the confirms that would tie the trades together.
That language is included below. If you have any legal questions feel
free to call our lawyer Mark Taylor at 713-853-7459.

If you have any questions feel free to call me at 713-853-7058. I'll
ring you latter this afternoon to go over the details and talk about
possible counterparties.

Thanks for your time.


Geof Storey


"Each of the parties to this Agreement recognizes and acknowledges that
the parties are acting and agreeing to perform their obligations
hereunder in reliance upon (i) the timely execution and delivery by
[legal name of other counterparty] ("Third Party") and Party A of a
transaction in substantially the form attached hereto as Exhibit A
("Third Party Transaction A") and would not otherwise agree to execute,
deliver and perform under this Agreement if Third Party and Party A were
not contemporaneously executing and delivering Third Party Transaction A
and (ii) the timely execution and delivery by Third Party and Party B of
a transaction in substantially the form attached hereto as Exhibit B
("Third party Transaction B") and would not otherwise agree to execute,
deliver and perform under this Agreement if Third Party and Party B were
not contemporaneously executing and delivering Third party Transaction
B. The effectiveness of this Agreement shall be subject to the condition
that contemporaneously with the execution and delivery of this Agreement
Party A and Third Party execute and deliver Third Party Transaction A
and Party B and Third Party execute and deliver Third Party Transaction
B."




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