As you will see this has now been finalised and is attached below.
---------------------- Forwarded by Paul Simons/LON/ECT on 08/05/2000 16:35 
---------------------------


Ali Lloyd
08/05/2000 09:44
To: Paul Simons/LON/ECT@ECT, David Hardy/LON/ECT@ECT, Diana 
Higgins/LON/ECT@ECT, Janine Juggins/LON/ECT@ECT, Richard Lewis/LON/ECT@ECT, 
Eric Gadd/LON/ECT@ECT, Rob Bayley/LON/ECT@ECT, Simon Hastings/LON/ECT@ECT, 
ECT London UK Power Trading, Peter Morris/LON/ECT@ECT, Gail Hill/LON/ECT@ECT, 
Jonathan Bond/LON/ECT@ECT, James New/LON/ECT@ECT, David 
Hutchinson/LON/ECT@ECT, Paul Dawson/Govt. Affairs/LON/ECT@ECT, Lee 
Munden/LON/ECT@ECT
cc:  

Subject: Grid Trade Master Agreement

Attached is a copy of the final version of the new Grid Trade Master 
Agreement developed by Allen & Overy on behalf of the UK Electricity Industry 
(specifically the EFA Association).  The agreement is designed to replace the 
EFA Standard Terms and Condition as the standard contract for OTC electricity 
trading post-NETA.  The agreement is for physical delivery 'on the system' 
achieved by notification of Energy Contract Volumes to BSC Co.  (Hence it is 
similar to the NBP Contract in gas).  The agreement is heavily influenced by 
ISDA language.

Enron (through Paul Simons and others) has contributed significantly to the 
development of this contract.  Hence I would hope we are happy to trade on it 
unamended.  However if anyone has any significant concerns about the contract 
or would like us to agree any extra clauses bilaterally with counterparties 
then please speak now (by the end of this week) or forever hold your peace.  

Later this month we will begin the process of signing up with 
counterparties.  With each party we need to agree a number of items as 
follows (see Schedule 2):

Who acts as no the ECV Notification Agent (can be one of the parties or a 
third party).  My view is we would do it at a price (to compensate us for the 
assymetrical risk we would be taking on) - we are currently thinking about 
what this price should be.  The contract default is that the Buyer acts as 
the ECV Notification Agent.

Method of transmission of confirms (default fax) - Gail please comment.

Compensation Threshold.  If a party fails to perform its obligations relating 
to contract notification or nomination then it pays damages to the other 
party to keep it whole (ie it pays the cash out charges incurred by the other 
party).  The Compensation Threshold allows termination if these damages reach 
a certain level in any month.  The default is 'not specified' - ie no 
termination.  Legal please comment.

Cross Default Threshold - this defines a minimum payment default level above 
which cross-default applies.  Credit Department please advise.

Termination Payment Method.  The contract has two approaches to calcualting 
termination payment - the "Loss" method and the "Market" method.  
Leagl/Credit - please advise on preference.

Change in Taxes - this clause can be switched on or off - Tax Dept please 
advise.

Credit Support - to be discussed with Credit Dept on a case by case basis.

Rollover Clause - the Agreement has a clause in it which automatically 
converts existing EFA deals to Grid Trade Master deals when NETA starts.  
This clause can be switched off, but presumably we would wish to keep it 
switched on.

In agreeing GTMs withg counterparties, we should start with our biggest 
counterparties first.  I would suggest:
 Entergy
 Dynegy
 Accord
 National Power/npower
 TXU
 AEP
 Aquila
 British Energy
 Yorkshire
 Scottish & Southern
I understand Richard has nominated Derek to start this process.

Any comments?

Ali