IN: Dear Michelle: I just finished my conference call with Liz Miller (counsel for Calpine), Christina Solomon, and Steve Schuler (Steve is co-counsel for Miller with Christina). Christina had passed along to Liz the various points I made at the meeting last week, so Liz was prepared to address our primary concerns. She made the following points: (1) She has talked with several different people at various levels of authority in Calpine's trading area, and insists that Calpine treats the power grids as "completely different" regions, strategies for which are not shared internally among those regions. (2) She asserts that "how we do it at Calpine is totally different from Enron," since Calpine is "trading around a portfolio of assets that we own." She asserted that Enron, not owning power generation assets, trades differently. When I replied that Enron does have power generation assets, she acknowledged the fact but insisted that Enron's trading style is vastly different due to the difference in emphasis vis a vis the power generation assets. (3) Liz claims that Miller works almost exclusively in "Urcot" (sp??) in Texas, with some participation in Entergy in Louisiana. According to Liz, Calpine's strategies concerning these specific regions is divorced from and not related in any way with any trading Calpine does in the East or West. (4) Liz is of the opinion that Miller "is not senior enough that we would be looking for what he knows." He has no role whatsoever in discussing or formulating strategy for trading. Miller, she insists, is on the receiving end only. He takes orders, dispatching and scheduling solely in response to orders he receives from others. (5) Liz acknowledges that, were Miller in a more senior, responsible position, she would have the same concerns we are expressing were the tables turned. Miller is "so slotted," however, that she believes that he is not in a position to use any Enron trade secret that he might possess (though she and Miller's attorneys expressed doubt that he could retain any critical information, that the most critical information changes on a day-to-day basis). We ended the conversation with the following understandings: (1) Liz will explore whether Calpine could put Miller in a non-trading function for a period of two months or so.

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OUT: ENA v. Miller

IN: After our meeting yesterday, I asked Mark Taylor whether under the revised version of the CEA there was any restriction on one's ability to cash settle physical transactions. He confirmed that so long as the parties to the transaction are "Eligible Contract Participants", then there is no restriction and our physical contracts can expressly permit cash settlement. Enclosed is a summary of the ECP definition.

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OUT: Csah Out Option

IN: I thought that you might be interested in our new monthly newsletter, ENERGY COMPETITION STRATEGY REPORT. It contains detailed strategies on how to tackle the complex challenges of deregulation. Topics covered include customer education; retail marketing; telecom and other value creation strategies; investor relations; marketing programs that land big commercial accounts; CIS and related information technology challenges; new services and creative ways to package them; relationship-building with regulators, customers, and employees; and much more. To receive a 3-month, no-obligation free trial and a $100-off charter discount, just e-mail your mailing address, phone and fax number to nhi@nhionline.net or call 1-800-597-6300 and mention offer "CSRE51." David Schwartz Publisher NHI Publications

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OUT: Deregulation

IN: I have listed a few pertinent facts about Jeff for your upcoming meeting. Let me know if you need more information. 1. Jeff joined ENA Legal on September 1, 1993. His title is currently Assistant General Counsel. 2. Jeff leads a group in the legal department that focuses on physical trading. Jeff spends most of his time on structured deals like Brooklyn Union and physical gas trading. He also has lead the legal team on acquisition deals such as Columbia Energy Services. He has a strong work ethic and an excellent record in closing important transactions. 3. He has good legal judgment and is described by his clients as a knowledgeable and practical trading lawyer. 4. Jeff has consistently ranked "excellent" in the performance review process.

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OUT:
Jeff Hodge's Election to Vice President