I just left Derrick a voicemail so I should have an answer shortly.



	"Fergus, Gary S." <GFergus@brobeck.com>
	02/02/2001 08:50 AM
		 
		 To: "Richard B. Sanders Esq. (E-mail)" <richard.b.sanders@enron.com>
		 cc: 
		 Subject: Request for Conflict Waiver to Represent City of Palo Alto in Ban 
kruptcy matters


Richard,
 Here is the status of the information we have about the City of Palo
Alto's request that our firm represent them in connection with the potential
bankruptcy of PG&E.  It is my understanding that the City of Palo Alto has
agreed that in the event that Enron and the City of Palo Alto become adverse
in any proceeding, then agree that our firm will have to withdraw from
representation of the City of Palo Alto and that we will be able to continue
to represent Enron notwithstanding the fact that they will have provided to
our firm confidential information.  In particular, if Enron and the City of
Palo Alto become adverse in connection with the California electricity
litigation  (including class actions, governmental investigations and the
recent decision of Enron Energy Services to transfer customers back to PG&E
for physical delivery), our firm will be able to continue to represent Enron
even against the City of Palo Alto. One of the reasons that the City of Palo
Alto is willing to do this is that they do not believe that it is likely
they will become adverse to Enron and their desire to have the specialized
expertise of Larry Engel.  The City of Palo Alto has its own generation
capacity through WAPA (the Western Area Power Administration), NCPA (the
Northern California Power Agency), and TANC (the Transmission Authority of
Northern California).  The City does buy a small amount of power from Enron,
as I understand it.  We have specifically identified the City and County of
San Francisco suit and asked if Palo Alto has any intention of joining that
suit.

 Would you please let us know Enron's view of this proposed
bankruptcy representation in view of these disclosures?

Thanks
Gary

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