<<2R6L03!.DOC>>  <<2R6LRED.DOC>>  <<2r6k03!.DOC>>  <<2R6KRED.DOC>>

Kay:

Pursuant to your request, we have enclosed revised drafts of (i) the Letter
Agreement pertaining to CA Energy Development I, LLC and (ii) the First
Amended and Restated Limited Liability Company Agreement of CA Energy
Development I, LLC.  Also enclosed are redlined drafts of each marked to
reflect revisions from the initial drafts furnished earlier today.

We believe that our revised description of the "transaction" in the Letter
Agreement (which now provides that each event is a condition precedent to
the other and is deemed to have occurred simultaneous with the other) should
satisfy your concerns as to both the creditworthiness issue and the timing
issue.  At the closing, the signed Facility Agreement will not be
"delivered" unless the loan is funded by Tejas.

With respect to your concern about confidentiality, we have reviewed the
confidentiality provisions of the master contract.  One might conclude that
the master contract does not expressly permit the disclosure of confidential
information by Enron to prospective assignees, as a "Permitted Assignee"
seems to include only an assignee who has received an assignment.  On the
other hand, it is arguable that there would never be any assignee without
some disclosure, so that disclosure to prospective assignees must have been
intended by the parties.  Alternatively, query whether Enron's "performance
of its obligations" under the master agreement could be construed to include
using [and disclosing] confidential information in discussions with
prospective assignees and their lenders, thereby permitting disclosure to
Coral/Tejas under the second full paragraph of Section 21.1.

Assuming that we can satisfy ourselves with respect to this issue, it then
seems prudent to require Coral/Tejas to immediately execute a
Confidentiality Agreement containing confidentiality restrictions comparable
to those set forth in the master agreement.  In the alternative, you may
wish to revise the letter of intent (assuming it is to be executed
momentarily) to include comparable confidentiality provisions.

Please review the enclosed and advise of any additional comments.  If we may
be of any further assistance, please do not hesitate to call.  Thank you.

Carolyn M. Campbell
King & Spalding
713-276-7307 (phone)
713-751-3280 (fax)
ccampbell@kslaw.com <mailto:ccampbell@kslaw.com>

Enclosures: 128540v3
  128540vR3/2
  128541v3
  128541vR3/2



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 - 2R6L03!.DOC
 - 2R6LRED.DOC
 - 2r6k03!.DOC
 - 2R6KRED.DOC