This is my draft.

 -----Original Message-----
From: 	Hall, Steve C.  
Sent:	Thursday, July 05, 2001 5:12 PM
To:	Yoder, Christian
Subject:	MPC Letter ---draft 2




July 5, 2001


The Montana Power Company
40 East Broadway Street
Butte, Montana  59701-9394

	Re:	 Arrangements to Accommodate FERC's June 19, 2001 Order

Dear ____________________:

	The Montana Power Company ("MPC") and Enron Power Marketing, Inc. ("EPMI") are parties to a Confirmation Letter dated December 20, 1999 (the term of which has been extended by letter dated __________________) under which EPMI has been purchasing energy for resale to MPC or selling energy received from MPC into the wholesale market.  As you are no doubt aware, the FERC issued an Order on June 19, 2001 that imposes new restrictions upon wholesale energy sales throughout the WSCC.  

One restriction that affects our agreement is that marketers, such as EPMI, may not sell energy at prices above the price cap set by the California ISO ("California Cap").  Generators are permitted to sell above the price cap if they can justify their prices.  As a result, at times (such as during this week's heat wave which caused blackouts in Las Vegas) EPMI may not be able to purchase energy anywhere in the West at a price below the California Cap.  Because EPMI cannot pass through costs of purchasing energy above the California Cap to MPC, we cannot purchase such energy on MPC's behalf for resale to MPC.  

However, in order to continue to serve MPC's needs at times of peak demand, scarce supply, and high prices, EPMI proposes the following solution:

1.	If EPMI is unable to acquire energy at a price at or below the California Cap, EPMI will strive to meet MPC's energy needs by arranging for a generator to deliver energy to MPC and for MPC to pay the generator directly. 
2.	EPMI will notify the seller that it is purchasing the energy on behalf of a customer, who will be paying the generator directly for that energy.
3.	EPMI will notify MPC of the identity of the seller, along with the amount to be paid the seller, and provide other information and assistance to enable MPC to pay the seller directly. 
4.	All other aspects of the existing agreement will remain unchanged.
 
	We believe this proposal allows EPMI to continue to meet MPC's needs, while complying with Federal law.  If you have another proposal, or would like to discuss this matter further, please feel free to call either Christian Yoder at (503) 464-7845 or Steve Hall at (503) 464-7795.  

Otherwise, kindly acknowledge your understanding and agreement to this amendment by signing in the place provided below.

						ENRON POWER MARKETING, INC.



						By:  						
						Name:  					
						Title:  						

Accepted and Agreed 
This _____ day of July , 2001.

MONTANA POWER COMPANY



By:  						
Name:  					
Title: