IN: 1. Be sure to verify that the underlying contracts do not allow cherry picking under any default scenario. If it does, amend the express language. 2. We have made 2 changes to the netting agreement forms on the basis of further review by Leslie Hansen of some provisions in our trading forms. The first change is in paragraph 2(a) to clarify the definition of Default. The second change is in paragraph 14(b) to delete the day limitation on claims of Force Majeure. We feel this should not be included in any physical contract that will be included in a master netting agreement, especially because of the current international situation and security concerns. See attached reline version to read the changes. 3. No changes have been made to the Collateral Annex. 4. Attached below are the new forms. Rather than continue with forms with and without the user notes, I put the user notes in a separate document. They are not at the back of the forms. Simpler. The attached forms are Master Netting & Security Agmnt 10 h a v1 (to use without collateral annex) and Master Netting & Security Agmnt 10 h v1 (to use with collateral annex).

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OUT: FORM CHANGES: READ

IN: Dear Mr. Lay: I would like you to know that I appreciated your decision to waive your change of control payments. I found your decision an encouraging action during this challenging period. Sincerely,

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OUT: Recent Announcement

IN: Attached is a file we put together with the daily figures on them for Central 1 & Central 2. The total page should tie to what I gave you last week. I highlighted the five days on each month the highest absolute value change. I then attached those days P&L top sheets. Please review this information and let us know what type of detailed support you will need. Thanks. PL

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OUT: Nov & dec central p&ls

IN: NNG had EDI problems this morning, Evidently TMS ran out of disc space cau= sing all of the files to get hung up in the HUB for the Final cycle and the= ID1 cycle. The help desk was paged at 7:35 a.m. to report the problem , To= by responded, but was having trouble reaching the on call TMS. We did not g= et a response until 8:55 a.m. from TMS , the EDI files were in the HUB for = over two hours. Mary Draemer was very helpful and made follow up calls so w= e could relay an estimated time frame to our customers when this problem wo= uld be resolved. Monday 12/31/2001 we also experienced printer problems , w= e were told that a print server was down, the Solution Center was redirecti= ng print servers on an individual basis at our work stations. Kathy Washing= ton could not print this morning and had tried to contact someone at the So= lution Center, and did not receive a response back for quite a while, we we= nt through the Help desk (Toby) and either he contacted Glen or Glen respon= ded to the earlier page, We had several technical problems to work through = this morning, but the most critical problem was trying to reach our support= people. New Years Morning Crew, Kathy Washington Chris Greaney

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OUT:
New Years Day