Comments on Mary Hain's Memo

---------------------- Forwarded by Mary Hain/HOU/ECT on 01/04/2000 08:45 AM
---------------------------

Enron Capital & Trade Resources Corp.

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

To: Joe Hartsoe/Corp/Enron@ENRON, Mary Hain/HOU/ECT@ECT
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