IN: Mark - I received your message and agree that this is probably a better way to communicate. I spoke to Tom this morning. There is an industry hub meeting next week - with limited attendance. While continuing to promote the neutrality of the CL hub, Tom would also like to move this industry issue forward by possibly promoting the sale of interests in the CL hub. I asked whether or not the hub can be separated from the base CL product (e.g., the general infrastructure and individual modules) and Tom responded that it is quite possible to separate the hub (and its support mechanisms - including the data base information) from the CL product. I suggested that we may want to consider separating the hub from the product (by formation of a different legal entity), but would imagine that we would need tax and other approvals. Tom would like assistance in the following areas: 1. General overview of the antitrust arena he would be dealing in. I provided this consistent with my current understanding of antitrust matters in the e-commerce world (as confirmed by Ken Reisler at SC by previous discussions) 2. General overview of the vehicles that could be used to form the hub organization (e.g., profit vs. non-profit companies, LLC's vs. other corporate forms, alliance/joint ventures). While I have some background in a lot of these type of organizations, I do not have any experience with non-profit entities. Should I get someone at V&E or Sullivan & Cromwell to assist or is there anyone internal you could suggest? V&E may be a better choice here only because of the probability that all potential owners are located in Houston. 3. General issues relating to confidentiality of discussions between potential hub owners. While there is currently an NDA in place with a number of companies in relation to these discussions, Tom really sees only a handful being serious players. Accordingly, it is possible Tom may want to spearhead conversations with only those few and possible move a project forward on a faster track. The questions that have been raised are in relation to the manner in which these discussions should take place and how (if at all) they should be documented. While I suggested that they should be under a secondary NDA and probably based upon some form of LOI or other intention memorandum, I believe we should get a clear indication of how to move forward so that we can ensure confidentiality, neutrality and avoidance of any future claims or concerns (e.g., antitrust concerns). Is V&E the choice here also or should we talk to Sullivan personnel? Tom will need some of this information for his meeting on Thursday. Since I will be out of the office on Tuesday and Wednesday next week, I wanted to get the ball rolling this week. Thanks.

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OUT: CommodityLogic

IN: Today FERC issued the following draft orders: NYISO TEP and Bid Cap (ER01-3001): Commission granted NYISO's request to extend the currently effective $1000/MWh Bid Caps on certain NYISO adminstered markets, and to extend its Temporary Extraordinary Procedures for Correcting Market Design Flaws and Addressing Transitional Abnormalities, until the Northeastern RTO is operational. The Commission ordered NYISO to narrow the scope of the TEP, and to file tariff sheets doing so within 30 days. NYISO proposed virtual bidding procedures (ER01-3009; ER01-3153): Tariff changes to implement virtual bidding were approved. The changes would allow market participants to bid non-physical generation and load into the day-ahead market and settle the bids in the real-time market. Also accepted were NYISOs Market Mitigation Measures to address gaming or market power strategies that might emerge as a result of the virtual bidding. NYISO - Cost responsibility for new interconnections. (ER01-2967): Tariff changes allocating cost responsibility for interconnection facilities. The provisions allocate to developers 100% of the cost of facilities necessary to physically interconnect the project. Additionally, developers are allocated the coswts for transmission system upgrades that would not have been made "but for" the interconnection, minus the cost of any facilities that the NYISO's regional plan dictates would have been necessary anyway for load growth and reliability purposes. ISO-NE - Interim Bid Caps (ER01-3086): Commission approved extension of bid caps until the Northeastern RTO is operational. Calpine v. ISO-NE (EL01-124): Commission granted complaint by Calpine and Mirant, finding that ISO-NE has amended Market Rule 5 to exclude external contracts from setting the energy clearing price, in violation of a Commission order. If you need further information, please let me know. Susan Lindberg x30596

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OUT: Orders issued today in NYISO and ISO-NE proceedings

IN: Mark: I'm looking forward to seeing you on the 21st and getting somewhat caught up. I thought that it might be helpful to you to let you know what I have been thinking about in terms of work, although I would ask that you keep this confidential until we have had a chance to talk further and make some decisions. First, if I do return to work, it will not be until sometime in January and you and I can talk about a date that makes sense. I think that this is consistent with what we had talked about before I left. Second, I would like for you to give some thought to the idea of me working part-time for a period of time. Bill and I have talked about this alot, and I feel that I need some time at the outset to make the transition from what I have been doing to going back to work. We can discuss further what this means, but I really feel that it would not be good for me or my family for me to start off working full time. Next, I would like to talk with you about what my responsibilities would be in the swap group if I return and have a clearer understanding of the areas in which you would want me to work, particularly now that we have more people. I know that alot of chnages have occurred in the last few months and I'm hoping that there are specific work areas that I could devote my attention to. Those are my thoughts for now. As for my office, I really don't care where it is or how large it is so just do what you need to do. I hope that you are doing well and I'm really looking forward to seeing you. I will bring pictures of Charles. He is doing great! Take care. Carol St. Clair

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OUT: Lunch

IN: Brent, FYI: I am taking my name off of this list. I am not up to date on any activity in South America. However, to the extent that you are unable to travel, I am glad to back you up. Do we need to talk about South America as I sign off? Sara

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OUT:
REMINDER - ESA Legal Management Meeting