Subject: "Williams/Dynegy NDA's".

Body: Tom - Below is an NDA for Williams along the lines we discussed on Friday. It addresses the "System" as being the CommodityLogic products and, as to confidentiality, is intended to supercede the provisions of confidentiality found in the BETA agreement. I have not attached a similar agreement for Dynegy as I found we have a current NDA with Dynegy I.T., Inc. - signed in April, 2001. Though this agreement is not as specific as the form I have provided below, it should be able to be used provided (1) we are talking to the same Dynegy group and (2) we make them aware of the fact that it is applicable from the onset. Though Dynegy also has a BETA with confidentiality language, that language is not as vast as the standard NDA. Please take a look at the attached and let me know how you want to proceed with both interested parties. Thanks.

Subject: "BPA removal".

Body: I've simulated the Aggregate power portfolio's VAR with the BPA contract (approx. $51MM) as a stand alone (approx $3MM) and with the BPA position reversed out (approx $49MM). Only issue seems to be that the VAR related to the position per credit Agg does not "tie" with VAR related to position in Enpower - I'm attributed this to the peak/off peak simulation difference. Specifically, the credit agg file does not define what was peak or off peak, whereas file from Enpower did, resulting in more accurate measurement of risk. Bottom line is that BPA removal appears to be risk reducing. Frank

Subject: "TW Capacity Options meeting".

Body: Here is a quick summary of our meeting on capacity options on TW. Bill Cordes, Steve Harris, Shelley Corman, John Buchanan, Tony Pryor, and members of the TW Commercial Group (including Jeff Fawcett) were present. 1. The group all agreed that while it is probably a good idea to mention that the options could be sold in an online format, we do not want to limit ourselves at this point and should probably just state that a notice will be posted on the TW website whenever we have options for sale. 2. Price: the filing needs to include a discussion of how price will be determined, and how capacity will be awarded. We might also need to include an estimate of how much revenue options will generate in the first year. 3. Need to add a short explanation of where TW will get the capacity if a shipper exercises its call option. 4. Should frame the service as requiring an exception to current Commission policy on reserving capacity...not asking Commission to abandon its policy altogether. 5. May need to address: assignability of options; limitation on damages for nonperformance. 6. Timeline: - Turn around a new draft and get further comments (July 3 week) - Get Market Services started on its analysis of the new service - Begin contacting customers to get their buy-in (Lorraine already has a producer/customer very interested in supporting our filing) - Start the process of getting Board approval (sales of options require Board approval at Enron) - Meet informally with FERC to discuss (Shelley is working on) - Make the filing at FERC (we did not try to specify a date yet) If you have any further comments please let me know. I am going to try to get a new draft out by next Friday a.m.

Subject: "Wildhorse Gathering Agreement".

Body:
Dan, I have reviewed the Wildhorse (Mesa) Gathering, Processing, and Transport Agreement. This agreement is still valid and the gas is dedicated to this Agreement through 2013. The agreement present some problematic issues which I will outline. 1. Gas Quality - The gas quality provisions only require Wildhorse to transport the gas if the gas meets the downstream carriers (in this case Northwest Pipeline) gas quality specifications. We propose to put in a treating plant which would allow the gas to meet the specifications, however there are no provision in this Agreement which allow us to insert a plant between Northwest Pipeline and Wildhorse. Wildhorse could delay are extract value from us for this connection. This is an uncertainty. 2. Wildhorse Obligation to Perform - Based on my understanding of the facts, at some point during the term of this agreement, Northwest Pipeline enforced their gas quality specifications and refused to take the gas at the downstream side of Wildhorse's Gathering System. As a result, Wildhorse shut in Enogex's production and it has been shut in ever since. Wildhorse has a right to do this under this Agreement (see #1 above) and therefore Wildhorse has not breached its obligation to transport under this Agreement. Wildhorse's obligation was suspended when Northwest refused receipt of the gas. 3. Unprofitability - Assuming Wildhorse worked with us to install the treating plant which conformed the gas to Northwest Specifications, they could refuse to provide gathering service under this agreement if it was still uneconomical for them to do so. If they decided it is uneconomical for them to do so, they have the right to provide Enogex with various potential solutions which include (i) renegotiating the terms (ii) allowing Enogex to operate Wildhorse's equipment at Enogex sole cost, expense and risk, or (iii) release the gas from the Agreement. The problem here is that there is no time limit under which Wildhorse must reach a solution with us and no specific solution they must reach. Wildhorse could drag this out for some extended period of time and they could extract significant value. My recommendation is that we make Enogex's resolution of these issues with Wildhorse a condition precedent to closing and funding this deal. I know the timing is late. However if Enron funds this deal and takes on the risk of negotiating with Wildhorse to resolve either a new deal or a release of the gas, everyone needs to understand that such negotiation could take substantial time and Wildhorse will have significant leverage. Let me know if you wish to discuss this further or have any questions.