New Master Energy Agreement Form

Carol St. Clair
EB 3889
713-853-3989 (Phone)
713-646-3393 (Fax)
carol.st.clair@enron.com
----- Forwarded by Carol St Clair/HOU/ECT on 06/07/2001 12:16 PM -----

Mike D Smith@EES
06/04/2001 04:54 PM

To: William S Bradford/Enron@EnronXGate, Connie Estrems/HOU/EES@EES, Denise
Furey/Enron@EnronXGate, Sean A Holmes/HOU/EES@EES, Cheryl
Lipshutz/HOU/EES@EES, James M Wood/HOU/EES@EES, Evan Hughes/HOU/EES@EES,
Jason Woodward/HOU/EES@EES, Richard L Zdunkewicz/HOU/EES@EES, Scott
Gahn/HOU/EES@EES, Angela Schwarz/HOU/EES@EES, Jeremy Blachman/HOU/EES@EES,
Greg Sharp/HOU/EES@EES, Eric Letke/HOU/EES@EES, Gregory T Adams/HOU/EES@EES
cc: Vicki Sharp/HOU/EES@EES, Michelle Maynard/HOU/EES@EES, Deborah
Culver/HOU/EES@EES, Edwin Essandoh/HOU/EES@EES, James E Keller/HOU/EES@EES,
jmaas@llgm.com, Carol St Clair/HOU/ECT@ECT, Jeffrey T Hodge/HOU/ECT@ECT
Subject: New Master Energy Agreement Form

Attached for your review is the latest version of the new master form we have
been working on. We have tried to incorporate all of the changes and
comments we have received in our last three offsite meetings. We have left
some questions and open issues in brackets. I addition, we have highlighted
some areas for extra attention, some of which are explained below:

Section 1.2: The term of the master is month to month; each transaction will
have a specific term, as set forth in the applicable confirmation
Section 1.3: We need to make a final decision on whether all credit terms
will be in the master or whether some will be in the confirmation
Section 1.4: We have made the usage bands monthly by account; this can
easily be changed if there is business consensus to do so.
Section 2.7: Instead of utility non-performance (physical or financial)
being an event of force majeure, we have added a new section addressing
that. It provides for a free termination by EES in such event; we need to
consider whether there should be a payment.
Section 3.1: subsections (v), (vi) and (vii) need credit review as indicated
Section 3.3: termination payments are now bilateral (defaulting party gets
paid if non-defaulting party has a Gain).
Sections 3.6 and 3.7: Probably can be shortened while keeping the concepts;
is the first sentence of Sec. 3.7 needed?
Section 3.9: Need input on highlighted language; need to decide whether we
want a bilateral early termination payment here.
Special Utility Charges definition: we pass through surcharges here.
Assignment: do we want to give customer right to assign without consent in
any circumstances (like to an affiliate)?
Confirm: Transaction Term: need to confirm that this is how we want
start/end dates to be determined.