CDWR Credit Proposal

FYI. Calger is in active talks with Freeman and DWR lawyers about the offer
letter we submitted on Tuesday. Freeman's very anxious to do a deal for 200
MWs from the West Desk and then start talking about a deal for power from
Parquet's Pastoria plant. Credit is of course the issue and Calger's told
them that unless the credit issue is bulletproof it's not going to work. See
Chris' comments below. It looks like progress is being made, but the details
will make it or break it. Any thoughts? Might make sense to discuss on the
call. Please forward along to others. Thanks.

Best,
Jeff
----- Forwarded by Jeff Dasovich/NA/Enron on 02/09/2001 10:22 AM -----

Christopher F Calger@ECT
02/08/2001 06:11 PM

To: Tracy Ngo/PDX/ECT@ECT, Christian Yoder/HOU/ECT@ECT, Jeff
Dasovich/NA/Enron@Enron, Chris H Foster/HOU/ECT@ECT, Tim Belden/HOU/ECT@ECT
cc:
Subject: CDWR Credit Proposal

CDWR is proposing to all potential suppliers the following security package
for new PPA's:

1) Irrevocable PUC Order / Agreement that "locks in the revenue stream" for
CDWR to cover the PPA costs.

2) PPA covenant that the power supplier has payment priority over any debt,
including the contemplated debt issue
- the concept is that the supply is the operating cost and any debt would
be subordinate

3) PPA Covenant that their is a uniform package to all suppliers; no more
favorable terms or priority to ayone, no L/C, etc.

Subject to definitive language, CDWR is trying to get people to buy into this
general plan. What do people think? Please try to shoot holes in this.
Please forward to the appropriate legal, regulatory and credit folks to air
this out.

Thanks,

Chris