IN: Just to follow-up on our discussion yesterday regarding the accounting treatment assuming that USTeleNet owns the switch and that we purchase the switch and lease it back to them under a "capital" lease, the following would occur: The asset would stay on their books (however it would be "marked-up" to FMV as evidenced by the purchase price) They would defer the gain, if any, over the asset's life. They would record a payable on their balance sheet and recognize interest expense in their P&L as payments are made We would record the payment of cash to them and book a receivable and deferred interest income (to be recognized over the lease term) Essentially we are lending them money equal to the FMV of their asset and receiving interest payments in return (i.e. direct financing lease) I would be happy to go into more detail at your request. Please let me know as issues develop and I will assist as necessary. Regards,

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OUT: USTeleNet Transaction

IN: I have created a "Forms" sub-subdirectory under my "Confidentiality" subdirectory. You can now find the latest online forms there if you need one and I'm not around. The other forms in my confidentiality subdirectory are earlier drafts of the forms.

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OUT: Online/Network NDA Forms

IN: Please ammend our WIC contract number 41066 to have the term match up to the MDQ. Currently the MDQ goes to 0 after November 30,2009 but the term continues with a 0 MDQ through November 30, 2013. We would like to match up the term with the MDQ so that the term expires on Nomber 30,2009. Your earliest attention to this matter would be greatly appreciated. Thanks,

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OUT: Enron North America WIC contract number 41066 ammendment

IN: DICTATION DRAFT FROM GREG PORTER I just spoke with Georgetta Baker, lawyer for SoCalGas, and Rick Miles, FERC's ADR group. We discussed the possibility of mediation based upon both parties representing in pleadings filed in Docket No. RP01-620 (TW Complaint) that both companies were interested in alternate dispute resolution (ADR). After discussing the various types of ADR, we agreed to begin with mediation. Rick Miles will be the mediator. The mediation process that was discussed was an evolutionary one whereby parties would meet in a neutral location to discuss resolution (i.e., settlement) of its claims. Both parties indicated a willingness to settle. Rick Miles will act as a facilitator. Mr. Miles' function will be one of moderating discussions and not evaluative. As the mediation process continues without resolution, Mr. Miles' role will evolve. Later on, if the parties desire, Mr. Miles offered to bring in a FERC staffer that is a subject matter expert to offer his or her views of each party's case. Also, if the parties desire, the subject matter expert would indicate how he or she would recommend the Commission rule on the merits. Initial dates of November 7-8 or November 13-14 were offered as potential dates for the first meeting. A neutral location needs to be agreed upon. Once additional information is learned, I will advise. In the meantime, if you have any questions, please do not hesitate to contact me.

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OUT:
TW v. SoCalGas (Dictation Draft from Greg Porter)