New Albany Booking

Below are the assumptions agreed for booking the New Albany spread option:

EPMI East Power Book pays New Albany a fixed demand charge for the next 5
years as follows:

2001 $4.72/k/mo
2002 $4.63/kw/mo
2003 $4.54/kw/mo
2004 $4.45/kw/mo
2005 $4.36/kw/mo

As consideration for the demand charge, EPMI has the right to "toll" gas
through the facility and receive power in return at a fixed heat rate
conversion factor of 12.5 MMBtu/Mwh. In addition EPMI will pay New Albany
$1000 per start (for maintenance reserve fund) and $1.00/Mwh for variable
operating costs.

The New Albany, LLC will receive an 8% return on capital. Book value will
be depreciated from $409/kW basis on 1/1/2001 to $336/kW on 12/31/2005.

The facility output assumption is 360 MW with a 95% availability in the
summer and 75% availability in the winter.

Jenny - Please revise the booking of New Albany in Rogers book effective
tonight.
---------------------- Forwarded by Kevin M Presto/HOU/ECT on 12/20/2000
08:41 AM ---------------------------

John J Lavorato@ENRON
12/11/2000 07:47 AM
To: Kevin M Presto/HOU/ECT@ECT
cc:
Subject:

The following points refer to the methodology that we are taking to rebook
the New Albany Plant. Please send me a note immediately if you disagree.
Assume that NewAlb is a non mark to market entity and Enron is the mark to
market entity. However, it is fully owned and operated by us for now.

* The power mark to market book will pay NewAlb a capacity payment of $4.87
for 5 years. We shaped this payment as follows:

2001 - $5.06
2002 - $4.96
2003 - $4.86
2004 - $4.75
2005 - $4.65

* This payments allows Enron to supply gas to NewAlb and receive power.

* Enron will pay NewAlb $1000 per unit start.

* Enron will also pay NewAlb $2.00/MW hour for varialbe o&m.

* This will create an entity "NewAlb" that will return 9% assuming a book
value of $336/kw on 12/31/2005 vs. 409 currently.

* If NewAlb pays the 9% out that entity should be relatively flat each year
for the next five.