MDEA, Clarksdale and Yazoo City

Another research report. Miss. Code Ann Sec 21-27-59 provides that nothing in
the law pursuant to which CPU was created shall be construed to prohibit the
municipality from using general revenues to pay the "immediate expenses of
operation and/or maintence" of the system. However, the statute provides that
nothing requires the municipality to do so either.

We've found no case law expanding on this statute. Thus, there is no clear
answer whether obligations of CPU to Enron would be considered the kinds of
expenses which may be paid. If a guarantee by CPU of the obligations of MDEA
is insufficient, then it may be worth raising this issue with David Hunt.

As I mentioned in my voicemail last week, I do have some comments on the
proposed agreement. Please let me know if you wish to discuss.