Re: ET&S 2nd Quarter Earnings

Thanks Bob. I'm out sick today (my wife made me stay home until I quit
griping about a sore throat I can't seem to shake), but I forwarded your
voicemail on item 3 to Kent yesterday. I'll forward this to him as a
reminder. ON the other two items, I'll send you separate emails on each. DF

From: Bob Chandler 06/29/2000 10:26 AM

To: Drew Fossum/ET&S/Enron@ENRON
cc: Rod Hayslett/FGT/Enron@Enron, Allison Millan/ET&S/Enron@ENRON, Elaine
Concklin/ET&S/Enron@ENRON, Bill Cordes/ET&S/Enron@ENRON

Subject: ET&S 2nd Quarter Earnings

As you know we have been developing a list of possible earnings items to be
moved out of 2nd quarter. The list now totals $7.5MM and has been approved
by Stan and Rod. We're now in the "make it happen" stage.

We have 3 items that we'll need your assistance with:

Increasing the Conoco litigation reserve from $1.0mm that we now have on the
books to a new balance of $3.0MM -- a $2MM increase. To accomplish this we
need a memo from you to request and support the increase. The fact that we
laid $3MM cash on the settlement table is good. It you mention that it was
$3MM plus Hobbs 12" line, then please qualify that with an indication that
the market value of that line is de minimus.

Increasing the accrual for the Duke/Coyanosa obligation from $600,000 to
$800,000. I'm not sure what the basis for this increase is (continuing cost
incurrence?), but your help in supporting the increase is solicited.

Need a copy of the SBA Transaction Fee agreement with TransCanada Energy
Marketing so that we can accrue (and expense) the obligation in June
(assuming it's not payable until July). As we discussed earlier this week,
we also need this document for AA's final review of base gas sale documents.