Cleburne and Westinghouse invoices

We (Mike Gough, plant manager, Mike Mazowita and various Westinghouse "SWPC"
commercial folks) have had a few lengthy discussions concerning the February,
April and August outages. The current issues and their status is as follows:

Outstanding Invoices: The Feb and April invoices total to $1,627,541.81.
The breakdown is 2 times $420,388.06 Labor and $786,765.69 Parts. We have
analysed the Parts invoices and have determined that the calculation
correctly (or favourably in some cases) determines the correct useful life
charge.

Tenaska Invoice Dispute: Tenaska asserted that they should not be required
to pay either the parts or the labor for these outages (and would have held
similar for the August outage). The parts which were the source of the
failure, the transition pieces and seals (including allocable labor), were
noted on the invoices as "Warranty." The invoices were for the "actually
used life" for the repaired/replaced components as well as the incremental
labor associated with replacing these components. Tenaska believes the
incremental should be covered under consequential damages under either the
warranty provisions of the maintenance agreement or the individually signed
labor agreements. SWPC contends that there is no consequential damage
concept in either agreement.

Temporary resolution as of today: We have agreed with SWPC to pay all parts
life charges and hold aside the labor charge in escrow pending legal review.
The review and either concurrence with SWPC or Tenaska needs to be reached
immediately. I would like Richard Sanders of legal to spearhead this review
and deliver a preliminary view by cob tomorrow. We will execute some form of
escrow and or payment depending upon Richard's determination.

Power Systems root cause analysis: We will have PS at the site during next
weeks outage and will be required to pay for 1 full 8 hours of shift
downtime. Once we know the legal review from 3 above, I will inform SWPC of
this issue. The plant personnel already know and will fully cooperate.

At this time, I would not expect that we have a potential disclosure issue on
the invoices (certainly open to change).

Chuck Ward