AGREEMENT WITH RESPECT TO GAS TRANSPORTATION

Lisa,

This looks pretty good to me. The addition to Section 18 is fine.

Steve Van Hooser
Enron North America Corp.
1400 Smith
EB3877
Houston, Texas 77002
713-853-7238
----- Forwarded by Steve Van Hooser/HOU/ECT on 04/18/01 02:18 PM -----

"Meier, Peter" <peter.meier@neg.pge.com<
04/18/01 01:59 PM

To: "'gerald.nemec@enron.com'" <gerald.nemec@enron.com<,
"'wbradfo@enron.com'" <wbradfo@enron.com<, "'lisa.mellencamp@enron.com'"
<lisa.mellencamp@enron.com<, "'steve.van.hooser@enron.com'"
<steve.van.hooser@enron.com<, "'stephanie.miller@enron.com'"
<stephanie.miller@enron.com<, "'barry.tycholiz@enron.com'"
<barry.tycholiz@enron.com<
cc: "Sarti, Daniel" <daniel.sarti@neg.pge.com<, "Barron, Bob"
<bob.barron@neg.pge.com<, "Hein, Jennifer" <jennifer.hein@neg.pge.com<,
"Barpoulis, Sarah" <sarah.barpoulis@neg.pge.com<
Subject: AGREEMENT WITH RESPECT TO GAS TRANSPORTATION

<<Gas Transaction Collateral Agreement(4-18-01)ENA.doc<<

Attached please find a revised draft of the Support Agreement
reflecting a release of the capacity without recall rights, but with our
right to subsequently instruct ENA to release the capacity back to us if
permitted in accordance with the terms of the Agreement. We continue to be
concerned about the protection of our rights in the event that ENA is
unwilling or unable to release the capacity back to us when and as required.
However, in the interest of wrapping this up, we are prepared to move
forward with this structure, with some words added as indicated.

With regard to other open items.

- the text of the Spread Value Calculation needs a little tweaking
to have its terms correspond with those in the Support Agreement. For
example, defined terms such as ENA and Pipeline Capacity should be used.
Also, the 200 basis points added to Libor should be deleted. Gerald, are
you going to conform or should I?

- The Amendment to the Master Netting Agreement looks fine.

- Stephanie should work with Bob and El Paso to agree on the form of
release needed to implement the Initial Release with El Paso.

Peter

PG&E National Energy Group and any other
company referenced herein that uses the PG&E name or
logo are not the same company as Pacific Gas and
Electric Company, the regulated California utility. Neither
PG&E National Energy Group nor these other
referenced companies are regulated by the California Public
Utilities Commission. Customers of Pacific Gas and Electric Company
do not have to buy products from these companies in order
to continue to receive quality regulated services from the utility.

- Gas Transaction Collateral Agreement(4-18-01)ENA.doc