Subject: "European Physical Power".

Body: I'm just sitting here worrying about one of my side deals with Frank, so just to reiterate a global shut down (like-no one does Credit Derivatives unless we really mean it), no non-European based counterparty (in all probability, no counterparty originating from U.S. Credit) should be approved to trade European physical power products. They have licensing requirements similar to our FERC licensing. Thanks!

Subject: "Board Mtg.".

Body: The Board meeting is confirmed for tomorrow, Sunday, Nov. 4, at 3 p.m. CST in the Board Room. Most of our Board will be here in Houston. If you are not available and would like to call in, please contact me (either at the office or via cell phone at 713 962 2109). Ken may chose to hold an executive session at the beginning and the end of the meeting, but at this time I expect the business discussion to be an open session if you chose to attend. 'Will keep you advised if that changes. Thanks, Paula

Subject: "Sempra Damages".

Body: Yesterday we received a supplement to the plaintiffs' discovery that contained a damage report from the plaintiffs' damage experts. Plaintiffs are claiming $71 million. This number takes into account the amounts allegedly lost from breach through March 2002, the date the plaintiffs claim they will have both machines up and running. More specifically, this number is based on: 1. The alleged actual costs associated with moving, operating and using the machine that was moved back to Somerset. ($12 million for 2001/ $5 million for 1/02-3/02- Total $17million) 2. Lost tax credits "grossed-up" for the machine that remained at Pier IX but, according to plaintiffs, was unable to make any synfuel because the plaintiffs purportedly could not get the coal to operate it. ($54 million) By only using the period from breach through March 2002, the plaintiffs have avoided having to make any assumptions about the spread and also have avoided having to take into account any long-term cost-savings that Enron's alleged breach provided which, we argue, they would have to apply to offset their early damages. We are analyzing the plaintiffs' numbers and will get back to you.

Subject: "RAC Presentation for Bloomberg".

Body:
Rick, Attached is the significantly scaled down version of the RAC presentation we anticipate using for the taped Bloomberg mid-year credit review. Please let me know if you have any comments or other changes once you have had a chance to review. As we discussed earlier, we do not yet know when the taping will be. If it is after August 15th, we will plan on working with Bill Bradford and Dave Gorte on this. Thanks. Shirley