----- Forwarded by Richard B Sanders/HOU/ECT on 02/27/2001 08:58 AM -----

Ron Tapscott
02/27/2001 08:06 AM

To: Richard B Sanders/HOU/ECT@ECT
cc:
Subject:

Richard,

I have attached an e-mail forwarded to Claude Chandler (FM Global) in
response to an earlier e-mail from him and another e-mail received last
Friday stating their new position. I will also send to you the e-mails from
Claude I mentioned in the preceeding sentence.

I will follow this with a phone call to you this morning so I can bring you
up to speed on the activity associated with this insurance claim. One item
that needs your immediate attention is a provision in the Insurance Policy
that could hamper our ability to litigate if this becomes our only viable
alternative to resolve the differences. There is a deadline for litigation
tied to the date of the initial failure (one year which would make it June
15, 2001). It also requires that prior to litigation, the parties need to
first resolve through dispute resolution/arbitration. It has been my
experience that arbitration normally takes 90-120 days. There is only one
defined action with days attached to it in the policy (60 days to establish
reps for each party). I think you see the dilemna.

I look forward to our discussion.

Thanks, Ron.
---------------------- Forwarded by Ron Tapscott/HOU/ECT on 02/27/2001 07:52
AM ---------------------------

Ron Tapscott
02/26/2001 04:59 PM
To: claude.chandler@fmglobal.com
cc: James L Bouillion/HOU/ECT@ECT, David Marshall/HOU/ECT@ECT, Robert P
Virgo/HOU/ECT@ECT
Subject:

Claude,

In regard to your e-mail dated February 7th, we will be sending to you
(tomorrow for overnight delivery) documentation in support of our claim and
responses to address other open issues as stated in your e-mail. The
information will address the following:

Previous detail and summaries of the original insurance claim amount of
$6,452,318.02
New detail and summaries for Enron's current position, including --
detailed labor breakdowns for services provided by Elliott and NEPCO. This
will identify labor hours and charges by: day, craft, individual, rate
classification if applicable (i.e., straight time, over time and double
time), etc.
Support for overhead charges applicable to NEPCO's billing
Support for other charges associated with Unit I claim not previously
identified (i.e., insurance for the repair period for Unit I)
Detail and summaries of other NEPCO services provided but not associated with
Unit I repair/claim
Letters or documentation in support of major scope differences

Note: The detail related to the NEPCO charges will follow (by end of this
week).

In addition, I spoke with Grady James, the Doyle Facility Plant Manager, and
he indicated that the "System 700" documentation prepared by NEPCO was made
available to you at the site. This documentation was provided along with the
Unit 1-3 refurbishment documentation. Fortunately, this information
continues to be maintained at the site and is available for your review (at
the site) if you wish. In regard to other documentation or notes, the
information forwarded by Russ Porter in early February should have satisfied
all previous requests. If there is a specific request beyond what we have
already forwarded, we will respond accordingly.

You also indicated in your e-mail a desire to directly contact
sub-contractors to discuss their scope of work. As a result of
confidentiality provisions within the service agreements, I would request
that you indicate to me who you would like to contact and we will provide the
necessary waivers to those parties.

Last, we just received your e-mail (dated Friday, Feb. 23) related to FM
Global's current position. Obviously we are disappointed that the two
parties are this far apart. Can I assume that this position reflects
everything you characterized as outstanding in your e-mail (i.e., awaiting
signoff from Charlie McCorckle and others)? I assume we will have questions
as we continue to review the material. Should we forward those to you?

Please call me if you have any questions or comments on 713-853-9298.
Thanks, Ron.