FW: Beck Comments

Kay, we are working on the Bogey Exhibit and the Profit/Savings Calc. Will=
get back with you re: items 1d. and 2.

See assignments and comments in red. Reagan/Kayne/Dave/Jeff responses due =
to Kay by noon today.

1)=09General comments -=20
a)=09We have not seen a draft of the MPPSA or the MGPSA for review and comm=
ent. Kay
b)=09All section references in the draft should be reviewed and checked. T=
he majority of the references checked were incorrect. Kay
c)=09Since financial security is still an outstanding issue, all comments r=
egarding the provisions in the draft pertaining to that subject have been e=
xcluded. Kay
d)=09The draft contains references throughout to exhibits that will be atta=
ched to the agreement that were not included in the draft. See bleow. =20

2)=09Article 1, pages 6 and 7 - Profit and Savings: These definitions refer=
ence exhibits that were not included in the draft. One of the most signif=
icant issues we had with the prior drafts were with the definition for "sav=
ings" so it is important to review a draft of these exhibits as soon as pos=
sible. Reagan/Kayne/Dave/Jeff to chech with Marvin. He should have forwa=
rded exhibits with everything else. time is running out on them to do anyt=
hing here. Will report more on this issue.
=20
3)=09Section 3.1(b): This section obligates EPMI to "Propose" a load projec=
tion and stack model. Should this say "Prepare" as opposed to "Propose". =
"Prepare" is fine.

4)=09Section 3.1©: First line refers to a "request by Customer". Custome=
r is not defined, is this intended to refer to MDEA? If not, include a def=
inition of Customer. "...upon request by Customer" is not necessary. This=
has already been done.

5)=09Section 3.2(a): Provides that EPMI will use "commercially reasonable e=
fforts". The draft does not include a definition for this term. Suggest i=
ncluding a definition since this standard is used throughout the draft. Ka=
y

6)=09Section 3.2(a): Suggest adding the following phrase in the second line=
after "schedule Products", "in a manner intended to minimize the cost of s=
erving MDEA's native load". Adding this seems fine; however, are there any=
legal implications, Kay? If not, add it in.
=20
7)=09Section 3.2©: Line 3 refers to Cajun and EPI, which are not defined =
in the draft. Suggest including definitions or inserting the phrase "Exist=
ing Contract Resources" in place of "SEPA, Cajun, EPI". The substitution i=
s fine.

8)=09Section 3.2(h): Line 1 provides "EPMI will optimize scheduling and usa=
ge or resale (when appropriate)". Would suggest deleting "when appropriate=
" and inserting "(in accordance with the terms and conditions of each Exist=
ing Contracted Resources contract)". The suggested change is OK.

9)=09Section 4.1(a): Line 1 requires MDEA to operate and maintain its nativ=
e load distribution system in accordance with Prudent Operating practices?.=
". Would suggest deleting the phrase "and the Native Load distribution sys=
tem". This agreement does not bear on how the cities would operate and mai=
ntain their distribution systems. Reagan/Kayne/Dave/Jeff
[Rorschach, Reagan] (a)=09Operate and maintain the Facilities and Entergy =
interconnection obligations in accordance with Prudent Operating Practices =
and in accordance with the terms of this Agreement.
(b) Responsibilities for operating reliably with respect to Native Load lie=
s solely with MDEA and the Cities.

10)=09Section 6.4: The fourth sentence states " due to the use of imprecise=
data such as weather reports, heat rate estimates and the like, it is unde=
rstood between the Parties that the resulting projections, recommendations =
and daily plan are consistent with commercially reasonable industry practic=
es". According to this provision, the parties agree in advance that the r=
esulting projections, recommendations and daily plans are consistent with c=
ommercially reasonable industry practices. We believe that the "use of tha=
t type of data" is consistent with commercially reasonable industry practic=
es, but do not believe that that this automatically translates into the pro=
jections themselves being consistent with commercially reasonable industry =
practices. Text should be changed as appropriate to reflect this change. =
Reagan/Kayne/Dave/Jeff
[Rorschach, Reagan] Section 6.4=09Each day, EPMI shall provide a projectio=
n of the next day's Native Load, and project the need for gas, fuel oil and=
power. Each day, EPMI and MDEA shall jointly run the Load Projection Model=
and the Facility Stack Model. EPMI and MDEA will then (1) compare and ver=
ify assumptions and results from the models, (2) develop recommendations an=
d (3) decide upon the operating plan for the day. This analysis will take =
into account such considerations as weather conditions, business day/weeken=
d and holiday load conditions, historical loads, gas/power pricing, unit av=
ailabilities, unit operating data, and prior commitments to buy and sell po=
wer. The Parties understand and agree that the development of the projectio=
ns, recommendations and daily operating plan is complex and requires an ele=
ment of judgment. Further, it is understood that the use of imprecise data=
such as weather reports, and heat rate estimates to make such projections,=
recommendations and daily plan are consistent with commercially reasonable=
industry practices.=20

11)=09Section 7.1: Second sentence provides "Risk of loss and all price and=
unit contingency and transmission risk shall be borne by Customer". Sugge=
st adding the phrase " For Back to Back Transactions" at the beginning of t=
his sentence. MDEA should not be responsible for unit contingency, transmi=
ssion risk etc. for an EPMI Transaction. Reagan/Kayne/Dave/Jeff
[Rorschach, Reagan] Delete the sentence "Risk of loss...shall be borne by =
the Customer."

12)=09Section 10.2(a): Line 3, change " MDA" to "MDEA". Kay

13)=09Section 14.6: Line 3, change "and the MPPSA" to "the MPPSA and the MG=
PSA". Kay

14)=09Section 15.1(d): provides three business days written notice to the d=
efaulting party to cure a Financial Event of Default, otherwise the agreeme=
nt can be terminated. Three days is too short of a time period for MDEA. =
Kay/David Hunt

15)=09Section 17.1: Second sentence, provides that an independent auditor r=
easonably acceptable to EPMI is entitled to audit all books and records of =
EPMI. However this provision goes on to state that EPMI shall be entitled =
to audit MDEA's books, not an independent auditor subject to MDEA's approva=
l. Suggest deleting "EPMI shall be entitled to audit" and adding "An indepe=
ndent auditor reasonably acceptable to MDEA". Kay

16)=09Article 28: As we have previously noted, this section contains langua=
ge related to conflict of interest issues and the lack of notification rela=
ted to conflicts of interest that should be read carefully reviewed by MDEA=
and the Cities. Kay/David Hunt