IN: The State of New Mexico conducted a surprise air inspection of the TW Atoka No.3 C/S. The agency found no non compliance issues or violoations during the inspection. The second quarter Transwestern/SoCal PCB management committee meeting was held this week. Transwestern's share of the PCB management and disposal activities on the SoCal system for the quarter was $125,950.00. The State of New Mexico has issued the settlement penalty for the turbine replacement issue at the P-1 C/S. The original amount levied against Transwestern in 1997 was $14,700. After the Air Quality Bureau sat on this issue for more than 4 years without resolution, they reassessed the penalty to be $162,770. A conference call will be set up to discuss Transwestern's next course of action. The summary report for due diligence conducted in Portland Ore. was completed and submitted to Environmental Affairs in Houston.

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OUT: Weekly Environmental Activity Report Roswell Area

IN: Attached is a revised checklist, which incorporates comments from Lance. <<Project Notre Dame Checklist.DOC>> ++++++CONFIDENTIALITY NOTICE+++++ The information in this email may be confidential and/or privileged. This email is intended to be reviewed by only the individual or organization named above. If you are not the intended recipient or an authorized representative of the intended recipient, you are hereby notified that any review, dissemination or copying of this email and its attachments, if any, or the information contained herein is prohibited. If you have received this email in error, please immediately notify the sender by return email and delete this email from your system. Thank You

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OUT: Project Notre Dame Checklist.DOC

IN: It was a beautiful day (and evening). Congratulations to you both. It is a very sweet thing for two very sweet people, and I'm sort of choked up for being asked to be in the wedding party. It was a great day for everybody. Congratulations. Best,

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OUT: Congratz

IN: Steven : I have finally had a chance to go over the outstanding credit issues with Rod Nelson, our credit person, and here are his responses: 1. We cannot agree to the additional language in the cross-default provision. We need a trigger that is not subject to interpretation and second-guessing and the language that you proposed does just that. 2. On credit event upon merger, we would prefer to define the standard for "materially weaker" as below investment grade. Is that a problem for you? 3. With respect to payment netting, we would prefer that netting apply to Transactions that are of the same product line (i.e. all commodity swaps). Is that a problem for you? We thought that your operational issue had to do more with netting across product lines. 4. In the Credit Support Annex, we would prefer that the number of days to resolve disputes over exposure and/or value be 2 business days instead of 1. I am in the process of reviewing the new drafts of ISDA and CSA Schedules and will get back to you shortly on remaining comments. Carol

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OUT:
Credit Comments