RE: SCE QF Meeting

For information purposes I am attaching a spreadsheet showing what the
potential value of this transaction may be given various terms and volumes.
Given the scenario outlined in the recent draft decision from the CPUC
regarding back payments, there may be an oportunity on behald of the QFs to
negotiate a modified agreement with dispatch in return for relief on payables
by the IOUs.

Mike

-----Original Message-----
From: Parquet, David
Sent: Monday, June 04, 2001 10:29 AM
To: Calger, Christopher F.
Cc: Dasovich, Jeff; Etringer, Michael
Subject: Re: SCE QF Meeting

The structure is the same as we tried 4 years ago with no success. ("ABE" -
"anybody but Enron", being the primary reason we failed.) The deal we were
offering was the option to supply from the market in exchange for a 20%
discount in the capacity payment. At the time, we WERE going to shut down
the QF and pay them more PV than they would have gotten by running, the
"grease" coming from the relatively high O&M, which could be extinguished
with the proposed structure.

This structure sounds like a strict option, but should still work great. The
"grease" in this case is the arbitrage between market price and QF operating
cost.

In the past, I have called John Fielder, VP Regulatory Affairs, when I want
to talk about something strategic with SCE. He was my fellow board member on
the ISO board. I could call him for you.

Christopher F Calger/ENRON@enronXgate 06/04/2001 09:33 AM To: David
Parquet/SF/ECT@ECT, Jeff Dasovich/NA/Enron@Enron cc: Michael
Etringer/ENRON@enronXgate Subject: SCE QF Meeting

Guys,

Mike Etringer has a real good structure to present to SCE. Basically, Enron
would pay for the right to dispatch the QF so that their obligations to the
utility could be met by either the plant or the market. For that right,
Enron would be able to pay for/absorb most of the past due receivables owed
to the QF. Several QF's have expressed interest, but the utility wont return
calls. We could not do this for the whole QF group, but we could do it for
500MW+, which could save everyone $200MM+ in past due receivables.

Who should we meet with to putch this idea?

Chris