Don, in my opinion options 1 & 2 are the same and 3 is not an option.  I 
would like to provide an outsourcing deal that earns us fees and provides 
information.  We will manage the internal issues.  A properly priced and 
scoped term outsourcing deal should be doable.  Please speak with Sally Beck 
and Beth Perleman.

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 06/28/2000 
12:31 PM ---------------------------


Don Miller
06/27/2000 07:16 PM
To: David W Delainey/HOU/ECT@ECT, Jeff Donahue/HOU/ECT@ECT
cc: Mike J Miller/HOU/ECT@ECT 
Subject: Genco Services Agreement

Dave,

We had a good meeting with Presto today.  We came away with a broad T&M 
outline.  One concern that Kevin raised is our ability to actually do a 
"services agreement" for the risk management and back offices aspect of 
NewCo.  Apparently, he said a number of issues have bubbled up recently with 
our systems in terms of manpower, age of system, and ability to take on 
additional load.  He said throwing on an incremental 4000-5000 MWs with NewCo 
may prove to be too much to handle.  He also raised the "confidentiality 
issue".  It is his view that NewCo should have this capability in-house 
anyway (obviously that was always the long term intent, with this services 
agreement more a bridge).

Several options exist.
1.  Force a 12-24 month services agreement through the system (solve our 
problems with more people, etc).

2.  Agree to set up NewCo's system using our unique expertise and experience. 
We would do this for a fee (say $15MM?).   One issue here is just NewCo's 
ability to get this done in conjunction with everything else in time to do 
IPO.

3. Investigate what type of system FPLe is using today.  Since we are not 
increasing net merchant MWs on day 1, FPLe's system could serve as the 
platform for future MW expansion.  Maybe Enron comes in and expands/redesigns 
system for a fee?  I believe that FPLe has just recently expanded/updated 
their system.  I would like to try to learn more about their system.

Let me know if you have a preference or any additional thoughts.  I think we 
can make money off of all three options.

Thanks,

Don