Insurance Difficulties

Rod,

As I understand it from the last staff meeting we had, you are taking the l=
ead (for Stan's group of businesses) in dealing with the many insurance iss=
ues we have. I want to add to the list as follows:

-=09Panama: after many months of work with the CPA and adjuster on a claim=
of approximately $3.5 million, we are still waiting to receive an advance =
payment of $1.5 =09million which was recommended by the adjuster. The unde=
rwriter is simply using delay tactics. I understand from my team that the =
overwhelming conclusion is that =09this will take at least initiating a leg=
al procedure. =20

-=09Dominican Republic: steam turbine claim of approximately $16 million. =
This claim has been sitting with HSB for months. HSB has simply refused to=
recognize any =09of the BI beyond the 90 day deductible. Several meeti=
ngs/conference calls have taken place and our view is that we will have to =
apply high leve pressure (potentially =09using Ken Lay's relationship with =
AIG) or pursue them legally if we want anything to happen in the near futu=
re. Unfortunately, it appears that due to the absence of a =09cut-through =
clause we would have to pursue them in DR courts through the fronting compa=
ny. On top of all this, in securing this year's insurance coverage (which =
as =09you know was allowed to expire without notice), we asked that the cut=
through clause be dealt with this time around (apparently, this was someth=
ing that was =09pursued last year and didn't get done). We have made the p=
ayment of the policy and after being told that the insurer (verbally) appro=
ved the cut through, now it =09appears that is no longer the case! To top =
it all off, it looks like we have lost 5% of our underwriting coverage. In=
short, we are about to go to litigation on a $16 =09million claim against =
HSB; our current policy still lacks a cut through clause, and we have lost =
5% of our underwriting coverage. SECLP can hardly afford these =09types of=
problems.

-=09Nicaragua: the situation there hasn't changed much. We are being asked=
to pay $1.2 million (for a 70 MW project!) with a deductible of $5 million=
for physical =09damage and 90 days for BI. Essentially no coverage for a =
project of this size. We are told we should be very happy (!) to be able t=
o have the possibiilty of securing =09this, which, by the way, hasn't even =
been fully secured. Note that this is adding one more plant (with a fairly=
clean loss record) to the existing Enron umbrella. =09Finally, although a=
t the beginning we were told that we could cancel at any time with the only=
cost being the pro-rata portion of the annual premium, now, upon our =09ve=
ry clear request for confirmation of such right, we have yet to receive sam=
e.

I wanted to make sure that you had this information as we attempt to find s=
olutions to our insurance problems. =20

Thanks=09