Re: VEPCO/FYI

An email only a fellow turbine czarina could appreciate...

---------------------- Forwarded by Kay Mann/Corp/Enron on 07/24/2000 04:37
PM ---------------------------

Herman Manis
07/24/2000 10:13 AM
To: Kay Mann/Corp/Enron@Enron
cc: Lisa Bills/Corp/Enron@ENRON, Roseann Engeldorf/Corp/Enron@ENRON, Heather
Kroll/HOU/ECT@ECT

Subject: Re: VEPCO/FYI

Thanks. I think we have alot of the same accounting issues here if the PPA
is construed to be a lease. If it is a lease, we have similar spending and
EPC concerns as our other deals. Do we know who the O&M contractor will be?
If ENA or affiliate, we should not take on plant risk - just make sure our
fair value O&M fee is the only amount at risk under the O&M agreement. As of
Friday, AA told us that even in a non-offtake situation, they may say we are
in a lease if we take on plant risk through an O&M agreement. This was new
news to us.

To: Lisa Bills/Corp/Enron@ENRON, Matthew Berry/HOU/ECT@ECT, Roseann
Engeldorf/Corp/Enron@ENRON, Herman Manis/Corp/Enron@ENRON
cc: Ozzie Pagan/HOU/ECT@ECT, Heather Kroll/HOU/ECT@ECT, Jeffrey M
Keenan/HOU/ECT@ECT
Subject: VEPCO/FYI

I'm working with the commerial team on on PPA (and associated transactions)
for Virginia Power. The project involves the construction of a peaker to
supply some/most of the power, with the ability to supply from the market as
well. The plant has an 01 service date, so things are really picking up.

Matt and Herman, this is the transaction we discussed with Heather a few
weeks ago.

Items on the immediate to do list include:

Executing a land option agreement
Closing on the land (or assign to City of Rocky Mount, and let them close)
Selling/transferring the land to the City of Rocky Mount; negotiate long term
lease
Negotiating a PILOT agreement (payment in lieu of taxes) with the City
Negotiating fuel supply agreements
Selecting/contracting with EPC contractor - can it be NEPCO?
Long lead equipment purchases (?) - could be home for LM 6000's, but other
equipment may be needed
Negotiate interconnection agreement

This deal is showing a lot of life, so I thought it might be helpful to give
you a heads up.

Kay