Comments on Mary Hain's Memo

You all should have Mary Hain's original analysis. Bracewell Patterson has
reviewed her analysis and agrees. It looks to me like we may have some
procedural firepower here as well. I have been working the last few days
crafting a response to Dave Germaine's letter. I have been working with
Ellen Banaghan from Tabors Caramanis and Associates -- I think we are close
to boiling our rather technical explanation into a digestable story.
Depending on how Greg's efforts set up meetings with Sladoje and Germaine, we
should have a strategy call soon.
---------------------- Forwarded by Tim Belden/HOU/ECT on 12/29/99 08:08 PM
---------------------------

Enron Capital & Trade Resources Corp.

From: "Ronald Carroll" <rcarroll@bracepatt.com<
12/29/99 02:53 PM

To: Tim Belden/HOU/ECT@ECT, jhartso@enron.com, mary.hain@enron.com
cc:
Subject: Comments on Mary Hain's Memo

I've attached our comments on Mary's analysis of the PX's authority re: the
Silver Peak Line investigation. As you will see, we agree with Mary's
analysis, subject to minor quibbles that do not affect the conclusion, that
EPMI should not be found to have violated the literal terms of the PX's
tariff, that the PX has no sanction authority over this matter, and that
publication of the Compliance Unit's findings would be inappropriate.

We would, however, take a harder line on the proposed compromise. In our
view, we should insist that the PX never publicly link EPMI to the events of
Mary 24-25. Thus, we should agree to support a tariff filing by the PX to
clean-up the loophole in its tariff revealed by these events, as long as the
tariff filing does not mention either EPMI or these events as the basis for
the filing.

- 0118351.01