Subject: ENFOLIO Master Firm Purchase/Sale Agreements with PSCo and CLF&P

Gerald,  At long last I have been able to get input from others within our company such that I can provide comments our your drafts of the above-referenced Agreements for Public Service Company of Colorado ("PSCo") and Cheyenne Light, Fuel and Power ("CLF&P").
I apologize for the delay.
Our comments are as follows:  Public Service Company of Colorado Agreement  Disparity of Dollar Levels related to Credit Issues.
We request in Section 4.1 that the $20,000,000 dollar level be applicable to each of our companies.
We further request that the collateral trigger level in Section 4.6 be $25,000,000 as to each of our companies.
2.4 Confirmations.
In the second line, please change "may" to "shall".
We need to have written confirmations of gas transactions in our files for regulatory purposes.
We also request on the Confirmation form Exhibit that the confirms issued to reflect telephonic transactions likewise be signed and returned, in the same manner as indicated on the form for Section 2.21 Transactions.
3.5 Netting and 4.4.
Offset.
We cannot agree to the netting of payments in the normal course of business under these contracts.
Amounts due to and from a counterparty must be tracked separately for regulatory purposes, especially with respect to any sales proceeds that we might realize if PSCo or CLF&P acted as Seller to Enron in a Transaction.
Accordingly, we propose that the provision allowing monthly netting of amounts due between the parties be deleted from the contract and that the right of Offset be limited to be applicable only in connection with the occurrence of a Triggering Event and the calculation of any Termination Payment due under the Agreement.
4.1 Early Termination.
I am concerned that the date to be established for termination of Transactions is without definition.
I would prefer to see the language in subpart (i) modified to state that the Notifying Party may "establish a date, which shall be not less than two (2) nor more than ten (10) Business Days following the date of such notice."
4.2 Triggering Event.
In the 8th line down, I don't understand the inclusion of the phrase "or deemed to be repeated".
Unless I am missing something, it doesn't make sense with the rest of the sentence.
Please delete this phrase in the Agreement.
4.1 and 4.5 References to Affiliates.
In numerous places throughout the Agreements and, in particular, in Sections 4.1 and 4.5, reference is made to Affiliates.
For regulatory reasons, we cannot intermingle the account status of our affiliated companies.
Moreover, neither PSCo nor CLF&P is authorized to contractually bind its Affiliates in the manner indicated.
Please delete all references to Affiliates of PSCo or CLF&P in the respective Agreements.
Article 5.
Force Majeure.
The language in this Article is not typical of most Force Majeure provisions, which allow a Party to claim Force Majeure for the duration of a Force Majeure event and place no limitation on the ability to claim Force Majeure within a given time period.
The language in your draft can be read to allow a Party to claim Force Majeure one time only, for a duration of up to 60 Days, after which time Force Majeure no longer applies to any of the obligations under the Agreement.
In other words, Force Majeure could not be claimed later for an unrelated occurrence involving a separate and independent Transaction.
This is not acceptable.
We therefore request that you substitute your language with more standard Force Majeure provisions consistent with these comments.
Section 8.1.
Notices.
Prior to the language in the parenthetical, please insert "provided that receipt thereof has been confirmed electronically".
Section 8.2.
Transfer.
We would prefer that this language be revised to the more traditional language requiring the consent (rather than approval) of the other Party, "which consent shall not be unreasonably withheld".
Please modify this provision accordingly.
Section 8.3.
Limitation of Remedies.
We are in general agreement with this provision, however we cannot agree to a disclaimer of implied warranties of merchantability or fitness for the ordinary use.
The gas sold and purchased under the Agreement should be of merchantable quality and fit for the ordinary use to which it is intended.
Please modify this Section accordingly.
Definition of Confirm Deadline in ENFOLIO General Provisions.
The GISB Standard contract and all other contract forms that we use have a 2 day confirm deadline, rather than 24 hours as reflected in your definition.
We request that you revise this Agreement to be consistent with this industry standard.
Definition of Material Adverse Change.
This definition needs to be expanded beyond a review of the level of each company's credit rating.
Please replace your definition with the following:  	"Material Adverse Change" with respect to a Party means (i) any downgrading of any unsecured, long-term senior debt of such Party 	or any entity that has provided a guaranty or other form of credit support for the obligations of such Party (each such entity being a "Credit Support Provider" for such Party) such that such debt is rated below "BBB-" or its equivalent by Standard & Poors or below "Baa3", or its equivalent, by Moody's Investor Services, Inc.; 	provided, that if a Party or its Credit Support Provider does not have 	any unsecured, long-term, senior debt that is rate by either 	Standard & Poors or Moody's Investor Services, Inc., then a 	Material Adverse Change shall mean the occurrence of one or more 	events which, in the reasonable judgment of the exposed Party 	constitutes a material adverse effect on the creditworthiness, 	financial responsibility, or ability of such Party or its Credit Support 	Provider, as applicable, to perform its obligations in connection 	herewith.
Definition of Replacement Price Differential.
Although we are in general agreement with your definition of Replacement Price Differential, it seems preferable that where the Minimum Monthly Quantity is applicable, cost of cover should be the difference between the contract price and a 30 or 31 day average of Spot Prices for the Month in which the deficiency occurred.
Please modify your definition accordingly.
Cheyenne Light Fuel and Power Company Agreement  Our comments with respect to this Agreement are identical to those stated above regarding the PSCo Agreement, with the following exceptions:  Section 4.2.
Triggering Event.
The dollar levels near the end of the Section should be equivalent between our companies.
Please make each $75,000,000.
Section 4.7.
Collateral Requirement.
Similarly, the dollar trigger levels in this provision should be equivalent between our companies.
Please make each $25,000,000.
Except for the foregoing, please make changes to the Cheyenne Agreement consistent with our comments to the PSCo Agreement as set forth above.
Should you have questions or wish to discuss any of our requested changes, you may contact me via return e-mail or at the phone number listed below.
Thank you for your consideration.
I look forward to working with you to finalize these Agreements.