PGE due diligence effort

My asst., Kaye Ellis, will be calling each of you this morning to see if you
can attend a short meeting today to discuss a due diligence effort with
regard to Pacific Gas and Electric Company and its various subsidiaries. We
have an overall exposure report from Credit which shows that Enron is exposed
to PG&E in virtually all of the commodities that we transact.

In the meeting today - Travis and I will help you identify the PG&E
entity/entities which may have transactions with Enron concerning your
particular commodity. We will ask you to pull the relevant master agreement
and provide the information set forth below.

Thank you in advance for your help,

Shari

----- Forwarded by Shari Stack/HOU/ECT on 01/09/2001 09:57 AM -----

Travis McCullough
01/09/2001 09:12 AM

To: Shari Stack/HOU/ECT@ECT, Andrew Edison/NA/Enron@Enron
cc: William S Bradford/HOU/ECT@ECT
Subject: PGE due diligence effort

Here is a list of the information that we will need to collect from each
master agreement:

Governing law;
summary of setoff provisions (in particular, does the contract give us the
right to setoff (i) only those transactions under the specific master, (ii)
transactions under other agreements between the same counterparties; or (iii)
transactions under other agreements between affiliates of the counterparties;
(v) all transactions or only those transactions that we elect to offset;
summary of termination provisions (automatic upon bankruptcy or insolvency of
a party? any notice requirements?)
summary of liquidated damages provisions (how computed? provision for
two-way LD's (such that even the breaching party gets a payment if they are
in the money?)

We also need to discuss how we can get comfortable that all transactions were
properly booked under the correct master agreement, and that there are no
significant "glitches" in our transaction documentation.

Travis McCullough
Enron North America Corp.
1400 Smith Street EB 3817
Houston Texas 77002
Phone: (713) 853-1575
Fax: (713) 646-3490