Re: Tax issues

Matt and Patrick:
We're not sure exactly what tax exposures you're concerned about, but I'm
sending you the attached language, which was approved by Tax Dept. earlier
this year for use w/ EEI Master Agreements. We since decided, with Tax Dept.
approval, to go w/ the shorter standard language in the EEI Master, adding
this language only to longer term deals (< one year). Does the attached
language go far enough to address your concerns with the industrials? Please
advise.

Regards,
Janice

EB3861
Assistant General Counsel, Enron North America Corp.
713-853-1794 (Fax: 713-646-4842)

Edward D Baughman
11/07/2000 12:02 PM

To: Elizabeth Sager/HOU/ECT@ECT, David Portz/HOU/ECT@ECT, Janice R
Moore/HOU/ECT@ECT, Kim S Theriot/HOU/ECT@ECT
cc: Patrick Maloy/HOU/ECT@ECT, Matthew F Gockerman/HOU/ECT@ECT
Subject:

ENA East Power will be making an aggressive push to build industrial market
share in open access states in 2001. Pat Maloy and Matt Gockerman
in Enron's tax dept. have voiced concern over potential exposure to: 1.
sales & use tax, 2. gross receipts tax. Two primary questions I have are:

1. Legal: Can we craft standard language that pushes all tax consequences
onto the industrial ?
2. Do we need to alter the deal documentation mechanics (i.e., Enpower) to
adjust for this issue?

I request that Elizabeth Sager and Kim Theriot advise me on this issue.

Thanks, Ed