Meeting with Com Ed

On Friday, July 6th, we had an excellent first meeting with Com Ed.

In attendence from Enron were Rogers Herndon, Marc Ulrich, Jeff Merola, Brad
Snyder, Guy Sharfman and myself. (Roy Boston and our attorney Chris Townsend
attended our pre-meeting discussion but did not attend at ComEd to keep our
numbers down).

In attendence from Com Ed were Pam Strobel President, Exelon Energy Delivery
Company and Vice Chair, ComEd; Frank Clark, Ex. V.P. Customer Marketing and
Energy Delivery Services, ComEd; Gerald Rhodes, President, Exelon Energy;
Arlene Juracek, Vice President, Regulatory & Strategic Services, ComEd; John
McCawley, Director, Electric and Gas Choice; and Michael Freeman, Long-Term
Trader, Exelon Power Team.

During the course of the meeting, we delivered our message that we, like
ComEd, wanted to see a competitive market emerge in Illinois, but that we had
concern that lifting the PPO early without the presence of a competitive
market could create a California-like situation - which is what they were
striving to avoid - because their approach would leave buyers on the
competitive market without having any sellers due to problems with physical
delivery. We indicated our concern for our existing customers and our
ability to grow our business in Illinois. We stressed the PJM model as a
workable solution that creates a liquid market. There was much enthusiasm on
the part of ComEd for focusing ICC attention on creating that kind of a
solution for Illinois. Arlene Juracek encouraged us to work with them on
this and to meet with Steve Nauman and Celia David. Since Mike Roan and I
will be in Illinois on this Tuesday and Wednesday, first to hear the
Alliance's presentation to the ICC and then for Mike to make a presentation
the following day, we are going to try and meet with them.

One of our objectives was to set up a team between Enron and ComEd to go
through the requirements and nuts and bolts of physical delivery into
Illinois. This was accomplished and Jeff Merola and Mark Ulrich witll be
meeting with Ann McGlin at ComEd to get a better understanding of what we
can and cannot do to achieve physical delivery. Also, Michael Freeman
indicated a willingness to sell us a structured retail product to help us
achieve physical delivery (energy and/or load following services), and made
it clear that whatever deal we do with the Exelon Power team would be
independent and separate from any deal we might do with ComEd on the PPO
front. Once we have completed our discussions with Ann McGlin and with
Michael Freeman, we will meet again with ComEd to negotiate what we need for
physical delivery.

We also discussed other aspects of the ComEd letter to the ICC and received
the following clarifications. Customers going off the PPO before 2004 would
be offered rate 6L which is a bundled rate. After 2004, ComEd plans to go to
real time pricing on a day ahead or hourly basis. As to whether the CTC
could be reinstated after a customer was dropped from PPO, they indicated
that they had not thought about it, but believed the law would allow this.
Arlene Juracek, however, commented that they could lock in a CTC agreement
with a customer. I interpret that to mean that as part of an agreement to
support ComEd in its proposal, we may be able to guarantee that for our
customers, the CTC will not reemerge if market prices go down or that we can
negotiate a limited CTC, etc.

We also pointed out that we had other concerns like ComEd's unwillingness to
negotiate the Supplier Agreement. Not much time was spent on that but my
sense is that if this is an obstacle to getting our concurrence, we may be
able to work through this as well.

Frank Clark asked us about our willingness to take on the role of supplier of
last resort and we responded that we needed first to be sure that we could
physically deliver to customers. Once that hurdle is addressed, we would be
willing to consider that possibility.

The ComEd negotiating team will meet in Houston on either the morning of July
16th or 17th when we believe the tasks with ComEd will be completed, in order
to evaluate what we have learned and what our next steps should be. I will
then arrange a follow-up meeting with Pam Strobel and her team.

Janine