Bid Deposit - Alberta PPAs

Milly asked that I clarify briefly the Bid Deposit risks. The Bid Deposit is
due Monday, June 12, 2000 by 5:00 p.m. MST.

General Rule: The Bid Deposit is at risk of penalties being assessed against
it if a bid is made and accepted but we fail to close on the bid. Otherwise,
the Bid Deposit is returned (with interest if posted in cash rather than a
letter of credit) if we do not bid or if our bids are not accepted. The
maximum "points" available in the Auction is 20 and the Bid Deposit is Cdn.
$2 million per point for a total of Cdn. $40 million.

There are, however, three indirect problems:

1. related to Project Stanley, a Winning Bidder may be in default under the
Auction Participation Agreement for non-compliance with the licensing,
registration and membership requirements of the Power Pool, and if the result
of that default was an inability to close on a Winning Bid, the Bid Deposit
could be at risk of penalties;

2. also related to Project Stanley, representations and warranties are given
in the Auction Participation Agreement at the time of its delivery on Monday,
June 12th, and which must be "brought forward" at closing of a Winning Bid to
the effect that we are in compliance with all legal requirements, and if the
result of not being able to make that representation or warranty was an
inability to close on a Winning Bid, the Bid Deposit may be at risk of
penalties;

3. unrelated to Project Stanley, there is the potential for other penalties
to be imposed between the time the Bid Deposit is posted on Monday and
closing of the Auction through amendments to the Electric Utilities Act
and/or the Auction Rules, and which therefore, would be unknown at the time
the Bid Deposit is posted. Although I would like to say this is an unlikely
event, to date the Government has been amending documents and rules fairly
freely.

Mark, I understand Dave Delainey may have had some concerns with this and I
will leave it up to you to discuss this with him.

Regards, Peter