Re: FERC Issues

Also, I would add that another reason we didn't submit the O&M agreement is
that we considered it to be confidential.

Gerald Nemec@ECT
03/23/2000 11:47 AM
To: Susan Scott/ET&S/Enron@ENRON
cc:

Subject: FERC Issues

Susan, Attached is the text I am forwarding to the investors. Please let me
know if you have any comments. Thanks for your help.

I talked further with Transwestern Counsel today concerning the issues and
have the following points;

1. FERC was made aware of the Compression Services arrangement with ECS (at
that time via Enron Capital & Trade Resources Corp.) in the filings for the
certification of the Kachina units. FERC simply didn't ask any further
questions in that proceeding. The Operation & Maintenance Agreements in
place for the Kachina units essentially accomplishes the same things as the
Operational Control Agreement in Gallup. TW feels the O&M agreements would
be adequate to answer any questions that possibly FERC might ask regarding
this subject matter. The Operational Control agreement was put into place in
Gallup because it was thought to be easier to give FERC exactly what is was
looking for rather than show them the Gallup O&M Agreement which might slow
down the process at that time.

2. There is no basis in FERC Regs or the NGA for FERC to impose any type of
penalty or discontinue the Compression Service's due to TW's operation of
Kachina without the Operational Control Agreement. No regs or law address
this situation. Again this is tempered by the fact that FERC was made aware
of the arrangement and didn't ask any questions and the O&M agreement is in
place to accomplish control for TW.

3. I also faxed you a copy of Section 19© of the NGA which indicates that
the petition for rehearing does effect the status of the certificate.
Construction is moving ahead and the anticipated start date is May 1.

I will forward the filing TW made wrt to the Operational Control Agreement as
soon as I recieve it. Let me know if you have any further questions (713)
853-3512.