Nancy,

Please incorporate this language from Enron's Tax Guys.

Thanks,

Kay
---------------------- Forwarded by Kay Mann/Corp/Enron on 08/04/2000 12:48 
PM ---------------------------
   
	
	
	From:  Matthew F Gockerman @ ECT                           08/03/2000 08:02 PM
	

To: Heather Kroll/HOU/ECT@ECT
cc: Kay Mann/Corp/Enron@Enron 

Subject: VEPCO Tax Language

Heather:

My recommendation is that we "tighten up" tax  language in the ENA - Virginia 
Electric and Power Company ("VEPCO") Power Purchase & Sale Agreement.  Below 
please find my recommendations.  Please note that the New Tax burden is upon 
VEPCO.  This is in keeping with our standard power contracts.

- Matt
x33979

1) Replace the "Tax" definition with the following:

"Taxes"  means any or all ad valorem, property, occupation, severance, 
generation, first use, conservation, Btu or energy, transmission, utility, 
gross receipts, privilege, sales, use, consumption, excise, lease, 
transaction, and other taxes, governmental charges, licenses, fees, permits 
and assessment, or increases therein, other than taxes based on net income or 
net worth.

2) Insert definition for "New Taxes":

"New Taxes"  means (i) any Taxes enacted and effective after the Effective 
Date, including, without limitation, that portion of any Taxes or New Taxes 
that constitutes an increase, or (ii) any law, order, rule or regulation, or 
interpretation thereof, enacted and effective after the Effective Date 
resulting in the application of any Taxes to a new or different class of 
parties or transactions.

3) Replace Sec. 11.2 with the following:

Applicable Taxes  The Contract Price shall include full reimbursement for, 
and Seller is liable for and shall pay, or cause to be paid, or reimburse 
Buyer if Buyer has paid, all Taxes applicable to a Transaction arising prior 
to the Delivery Point. If Buyer is required to remit such Tax, the amount 
shall be deducted from any sums due to Seller.  Seller shall indemnify, 
defend and hold harmless Buyer from any Claims for such Taxes.  The Contract 
Price does not include reimbursement for, and Buyer is liable for and shall 
pay, cause to be paid, or reimburse Seller if Seller has paid, all Taxes 
applicable to a Transaction arising at and from the Delivery Point, including 
any Taxes imposed or collected by a taxing authority with jurisdiction over 
Buyer.  Buyer shall indemnify, defend and hold harmless Seller from any 
Claims for such Taxes. Either Party, upon written request of the other, shall 
provide a certificate of exemption or other reasonably satisfactory evidence 
of exemption if either Party is exempt from taxes, and shall use reasonable 
efforts to obtain and cooperate with obtaining any exemption from or 
reduction of any Tax.  Each Party shall use reasonable efforts to administer 
this Agreement and implement the provisions in accordance with the intent to 
minimize Taxes.  Buyer shall be responsible for all New Taxes.