RE: Phelps Dodge

Chris:

I received a call from Mike Danielson today. He works for the West Power
Origination group under Chris Calger. He was interested in learning more
about what has been transpiring with PD. He recently met with Ariz. Elect.
Power Coop, (AEPCO) who floated the idea of Enron selling them fixed price
power at Palo Verde and AEPCO selling phyiscal to meet PD needs after the
AEPCO contract with PD expires.

We got Joe Robertson on the telephone who indicated you are meeting with PD
perhaps today.

As we have discussed, our strategy is to not call PD and allow you guys to
work your magic and let us know when you need assistance on gas or energy
pricing or physical delivery.

Can you give us an update of your efforts so far? Is there anything that we
should be doing at this time?

Thanks!

Chris