Re:

Following are the working transactions in the Central Region/Gas that include
utility/producer outsourcing:

3rd Quarter

Peoples Energy Production Company
PEPC is a wholly owned subsidiary of Peoples Energy/Chicago. Transaction
consists of back-office, risk management and production management for their
Production company. Currently performing due diligence and will be making
proposal (in conjunction with Jean Mrha's group). Total volume of 30,000
MMbtu/d oil/gas equivalent for 3 years. 50% probability for closure.

4th Quarter

MGU-Michigan Gas Utilities
MGU is wholly owned subsidiary of Utilicorp. Transaction is a complete
outsourcing for the utility (28 BCF/year) for a term of 3 years beginning
October 2001. MGU will choose a singular counter-party to proceed to
structure/negotiations in the next few weeks. We have received very positive
feedback from MGU and place our success rate at < 50%. Original transaction
priced as Michigan Index trade, but effort was to determine their choice
counterparty. Initial indications are that the final structure will consist
of a basket of index Daily/FOM and fixed price. Russell Murrell and I have
been working closely with the decision makers at MGU to ensure success.

SEMCO (Project Pluto)
Utility based in Port Huron, Michigan with sales load of approximately 37
BCF/year. Portfolio currently outsourced to TransCanada (4/1/1999-3/31/2002)
and has been extremely beneficial to SEMCO. TransCanada (See Gas Daily
4/30/01) currently holds all fixed priced risk for load following and
management at around $3.60 and SEMCO was the only Michigan utility who
effectively managed the arrangements the Michigan utilities negotiated with
their commission. Bids are due in August and a counterparty will be chosen
3rd/4th quarter 2001 for a 3 year transaction commencing 4/1/2002. Visited
their office with Sylvia Pollan on 4/11 and our risk is removing the
incumbent, TransCanada. SEMCO will be proposing a fixed price structure to
Michigan commission.

On MGU and SEMCO, the Michigan commission will play a significant role in
dictating final structures. If Enron is not successful, these utilities will
be managed by other 3rd parties and we will keep you abreast of structure
outcomes.

Thanx,
Laura

John J Lavorato/ENRON@enronXgate
04/25/2001 05:48 PM

To: Jean Mrha/ENRON@enronXgate, Barry Tycholiz/NA/Enron@ENRON, Frank W
Vickers/NA/Enron@Enron, Laura Luce/Corp/Enron@Enron
cc: John Arnold/HOU/ECT@ECT
Subject:

John Aronld was curious about the outsourcing deals we were pursuing. Could
you please update him on the deals we are getting close on.

John