This is the content of an email: I regret to report that I just ended a very unproductive phone conversation with Mr. Hertzberg. He thanked us for all our cooperation but politely declined to give me any information on what authority he was relying on to conclude that there is a jurisdictional problem. However, it sounded to me like whatever authority he does have is shaky at best. He also sounded interested in the possibility of our making some sort of anonymous inquiry at FERC (if such a thing is possible) on the issue. Obviously they are very leery of making that phone call themselves and risking revealing their identity. He said he would discuss it with Ed Meaders. Also, he mentioned that after tomorrow he will be on vacation for a month, and another attorney will be taking over in his absence. That could be good, or it could be bad. Maybe Lorraine can sweet talk Meaders into at least citing us some cases from Hertzberg's memo. At the very least, I hope he will show it to the Kinder Morgan lawyers.

Subject: Red Cedar

This is the content of an email: Elizabeth, Background: On Wednesday, October 10, the NPUC voted to authorize its General Counsel to seek to void or renegotiate certain SPP/NP long-term power contracts by either going to court or filing a complaint at FERC. According to the utilities, the contracts are out-of-the-money by approximately $800 million. Enclosed, you'll find. . . . : Attached is a spreadsheet showing all of the physical Enron-SPP/NP deals that are (1) currently flowing or (2) scheduled for future delivery. I have left off transactions that have been completed because the tenor of SPP/NP's statements indicates that they are seeking prospective relief, not refunds. I am also going to fax to you two pages showing our credit exposure to SPP and NP. Worst case, back of the envelope, we are looking at approximately $400 million in MTM exposure for all deals. However, the prices under these deals range from $27.50/MWh to $311/MWh (the $3.60 deal is for transmission). It's extremely unlikely that FERC would (1) void every transaction or (2) reduce the price for every deal to $0. Therefore, the true amount at risk is less than $400 million. Bottom line: All in all, I think the risk of FERC undoing these transactions is unlikely for the following reasons: 1. The ALJ in the Pacific Northwest refund case rejected claims for refunds of bilateral transactions because (1) the non-California long-term market was competitive, and (2) because of the concern about "ripple" claims. Although the Commission has not yet adopted the ALJ's recommendation, I expect they will because it's the path of least resistance and has popular support. 2. SPP/NP is the only party arguing that the Southwest market is uncompetitive. This aspect was fatal to the Pacific Northwest claims because the majority of the market did not want refunds. 3. SPP/NP was not required to buy power under these contracts----unlike the California utilities, which were required to buy from the PX. Presumably, these were the lowest prices available at the time.

Subject: Sierra Pacific Power/Nevada Power

This is the content of an email: Mr. Lay, I am a former employee of Enron and have been through many trials in the past few years. God has been faithful and seen me through them all. Dear sir, I can tell you that I can count it all joy. I just want to encourage you. These look like very dark times right now. Call upon the name of the Lord. Throw yourself on the mercy and grace of the Lord and remember all that he has done. He is a BIG, GOOD God that LOVES you! His arm hasn't been shortened that He cannot help you. You will be glad to know that the true testimony of you as a man is of a good report. You will glorify God in this. I am listening to a song right this minute that I so wish you could hear. It would bring you such comfort. It is based on the verse that talks about "all of my help cometh from the Lord". How true that is for you. Lord Jesus, you are a good God that sees all things. Mr. Lay is a man of God. That means he is your child. You tell us that you are an ever present help in time of trouble. These troubles are over his head but under your feet. Lord Jesus, show yourself strong on his behalf. Glorify yourself and Mr. Lay will give you the glory. He knows, Lord. Help him in this time when the waters are flowing over his head. Hear him from where you are. We are all but dust. Who are we that you are mindful of us but you tell us in your Word that You have good thoughts and plans for us and they are for good and NOT EVIL that we may have an expected end. (Jer 29:11-For I know the thoughts that I think toward you, saith the LORD, thoughts of peace, and not of evil, to give you an expected end.) Who can stand except you give us grace? Lord, you are so good. Remind Mr. Lay of who you really are. In the mighty name of Jesus!

Subject: Precious man of God.

This is the content of an email: Gentlemen: I have been advised by J. Nassos that Peoples (through WestLB) will be exercising the ABB option today. I have asked that they send me a copy of the notice of exercise of option, and I left Mike Sandridge a voice mail telling him to expect it this afternoon. Please let me know if you have any questions. Kay
Subject: Peoples/ABB