Clarksdale

Kay,

We had a good conversation with Marvin and Bob today regarding the ancilliary
services. They liked the strategy of going with Entergy (although they were
nervous about some of the people we might have to deal with) and looking at
other alternatives. Initially our empahsis is to get them up and running
without delay. Any other plan would not be prudent.

They would like to have the LOI reference our plan to provide the ancilliary
services. Not play attorney again but....can we add some language like the
following:

Ancilliary Services: EPMI would arrange for The cities to contract for
ancilliary services with Entergy in accordance
with the Entergy tariff for an interim period beginning May 1, 2001. During
that interim period, EPMI would solicit ancilliary proposals from other
control areas, as feasible. If an alternate to Entergy is identified, EPMI
may recommend that The Cities contract with the alternate for the balance of
the EPMI term.

Christi has reservations about this maybe not having enough wiggle room for
us, and I agree. There are a few other places in the LOI we will need to
reference the ancilliary management responsibility EPMI is contemplating.

Also, I think this creates a need to have a definition of ancilliary services
in the LOI.

We have a meeting scheduled with Entergy for Tuesday morning to discuss Enron
buying ancilliary services. Further I have called several of the other
control areas (CLECO, Alabama Electric Co-op, NRG, SMEPA, and LEPA) to assess
their interest in providing ancilliaries and wait for return calls.

Marvin promised to light a fire under David Hunt ASAP. You should already
have heard from him.

I will call you tommorrow. Thank you very much,

Reagan
5.3363