Ontario Standard Contract

Peter - I have just completed another drafting session with the Ontario
Standard Bilateral Contract Committee ("OSBCC"). To date I have been very
successful in keeping changes to the EEI form of agreement to a minimum
notwithstanding several parties' desire to make changes. The OSBCC has
bought into the premise that only changes to "Canadianize" the form should be
made.

Notwithstanding the success to date on the base agreement and progress on the
primary product descriptions we have run into a major roadblock. The
roadblock is Ontario Power Generation Inc.'s ("OPGI") insistence that, upon
further review of the efforts to date, it cannot support a physical contract
in the Ontario marketplace as the IMO market rules do not allow for physical
deals. My position, which is supported by TransCanada, Mirant, TransAlta and
other constituents representing consumers, is that the IMO is only a
settlement mechanism and the underlying market is physical.

To appease OPGI we had offered to make certain changes to the product
description that allow for the parties to satisfy, or be deemed to satisfy,
their obligations (of delivery and receipt) through the facilities and
operation of the IMO administered markets. Initially OPGI was satisfied with
this approach. However, it has become clear that their intention was to
continue to push for more and more changes until the obligations of the
parties were no longer physically based, but rather purely financial. I made
the point at today's meeting that Enron would not support a modification of
the EEI form into a purely financial document. If it was determined that
Ontario is a purely financial market, Enron would trade financially under an
ISDA. TransCanada and Mirant took the same position.

We have scheduled the next OSBCC meeting for May 14th. At this meeting OPGI
and its lawyers will make a final presentation on why the market is
financial. Enron, together with TransCanada, Mirant, TransAlta and others,
will put forth a presentation on why it is physical. I suspect that neither
party will be able to convince the other of its position and that the OSBCC
will move ahead without OPGI. However, without the support of the generator
that controls 85% of generation in Ontario, the entire process may lose
credibility.

I will keep you informed of any further developments.

Regards
CJG