Good Tuesday Morning - Comments From The Local Guys!

If the market has indeed put in a bottom over the last few days, be prepared
for us to 'retest' the lows. A successful test, is what is needed, followed
by a meaningful rally!
The market has already factored in most of the bad news from corporate
America. We may also see individual stocks rise after releasing bad news.
This would also prove to be very meaningful. Look to use this period to
upgrade portfolios.

The 30 -year bond yield is 5.57%.
The 10-year is trading at 4.70%.
The 5-year is trading at 3.81%.
Spot crude oil is trading at $21.81 p/b.
Natural Gas - Henry Hub -  is trading at $2.30 p/mcf after having dipped
below $2.00 earlier.

			Lehman's Research.

Banks  Henry Chip Dickson
Impact of Recession on Bank Trends (CD)
q Many expect that the precarious U.S. slowdown may already be in or tipping
toward recession after
the recent WTC incident. Regardless of whether the U.S. economy slips into
recession, it has been
undergoing a transition from rapid growth of the 1990s to a period of slow
growth. This transition
has created a challenging operating environment for banks.
q This week we take a look at historical bank trends before, during, and
after recessions.

Banks 		Jason Goldberg
Weekly Bank Facts (JG)
q The Lehman Brothers Bank Index ended the week down 7.2%. Our Large-Cap
Bank Index fell
11.2%, while the Mid-Cap Bank Index declined 6.7%.
q All major indices also were down this week. The S&P 500 fell 11.6%. The
Dow lost 14.3% and Nasdaq
was off by 16.0% for the week.

City National		 Brock Vandervliet
On Target With an Even Better Valuation 1 - Strong Buy / 39.85 (USD)
q Although the stock is still roughly 10% above where we upgraded it to
1-Strong Buy back in March,
it has retraced most of its intervening gains. Once again, we believe it
should be front and center
in any discussion with investors in the smaller-cap financials at this time.
q We carry a Q3 EPS estimate of $0.73 for CYN, expected to report October
12. Although confident in our
estimate this is $0.02 less than consensus.
q Given CYN's mildly asset sensitive positioning, we wouldn't be surprised
by some margin decline this
quarter, similar in magnitude to Q2.
q Due to the declining runoff of the non-relationship syndicated book, we
believe CYN's above average loan
growth should be increasingly visible

Commerce Bancorp		 Brock Vandervliet
Q3 Preview and Mtg On Manhattan Rollout 2 - Buy / $65.50 (USD)
q Although sharply below its highs along with so many other stocks, CBH
trades at a six multiple
premium to the rest of the group and we are maintaining our investment
rating of 2-Buy.
q We carry a Q3 estimate of $0.77, up $0.03 from Q2. CBH should report
October 10.
q We remain pretty confident in our numbers for several reasons. First, the
NIM, which was up 16 bps in Q2
to 4.81% should push higher still. Second, and perhaps more important from
the perspective of '02, CBH
is far less dependent than most banks on incremental loan growth.

Commerce Bancshares	 Brock Vandervliet
3Q Preview 2 - Buy / 35.99 (USD)
q Based on the likelihood of continued margin compression for the balance of
the year we are
trimming our estimates for the second half of 2001. Due to valuation we rate
the shares 2 - Buy
q We believe there is a chance CBSH could better our revised 2001 estimates
due to the quasi-non-recurring
items including branch sale and student loan securitization gains. CBSH
typically sells a portfolio
of student loans twice a year depending on supply and market conditions.
q We believe CBSH continues to repurchase shares at essentially the same
pace of 450,000 shares/quarter.

First Commonwealth Fin'l	 Brock Vandervliet
FCF 3Q Preview: Watching the Margin 3 - Market Perform / $10.85 (USD)
q Save the possibility of a sharp margin decline, which we view as unlikely
from this level, or
dramatically higher credit costs, we are confident in full year estimates of
$0.84 and $0.90 which
imply 7% EPS growth. FCF is rated 3-Market Perform.
q We carry a $0.21 Q3 EPS estimate, in line with Q2 and consensus as well.
We expect FCF will report
October 18. As with Q2, this is inclusive of what may be a penny or two of
investment securities gains.
q We have been concerned for sometime in the margin dynamic as Q2's NIM of
3.44% was an all time low
after falling 11 bps in the qtr. We believe it could fall somewhat further
although balance sheet trends
appear to be reasonably positive.

First Tennessee 	Jason Goldberg
3Q01 Preview: Further Upside Doable 2 - Buy / $34.03 (USD)
q We continue to be positive on our outlook for FTN and rate the stock
2-Buy. Not only lower interest
rates, but fundamental improvements within this organization should aid
results.
q Earlier in the quarter FTN announced it expects to post 3Q01 EPS of at
least $0.62. Our forecast pencils
out to $0.63. The company should report on October 17.
q We expect results to evidence continued strength in the net interest
margin and growth in both mortgage
banking and capital markets revenues. Asset quality metrics should remain
relatively stable.

Provident Financial Group 	Jason Goldberg
3Q 01 Keeping an Eye on Asset Quality 2 - Buy / $24.90 (USD)
q ? We rate PFGI 2-Buy and expect the company to put down EPS growth rates
ahead of its peers
once current issues are put to bed. However, we believe the next few
quarters could be bumpy and
that PFGI's business model, which is heavily exposed to commercial loans, is
more susceptible to
downturns in the economy.
q We expect PFGI to report 3Q01 EPS of $0.70 on October 17. This compares to
$0.63 in the prior quarter.
q While continued loan growth and fee income expansion should lead to
double-digit revenue growth, higher
credit costs and the lack of net interest margin expansion should restrain
further improvement.

Synovus Financial 	Jason Goldberg
3Q01 Preview: Keeping an Eye on TSYS 2 - Buy / $40.78 (USD)
q We rate SNV 2 Buy. SNV should benefit from its decentralized banking
approach in the Southeast,
the build-out of its wealth management unit and the growing contribution of
Total Systems.
q We expect SNV to report 3Q01 EPS of $0.27 on October 17.
q Continued net interest margin expansion and solid loan growth should lead
the bank's results.
q We will keep a close eye on TSYS, its 80.8% card processing unit, to see
if new business related to its
European rollout is enough to offset weaker than expected volume in
mid-September. TSYS should report
on October 16.
q We expect SNV to remain one of the few banks posting an ROE in the 20.00%
area and a ROA in the
2.00% range.

Ace Limited 		J. Paul Newsome
Upgraded to 1 Buy; Estimates Lowered 1 - Strong Buy / 23.71 (USD)
q We are upgrading ACE to 1-Strong Buy from 2-Buy with a $30 per share price
target. Among the
large cap. insurers ACE's stock is one of the most inexpensive and it has
among the most upside
to better prices in the future in commercial insurance and reinsurance.
q The stock is trading at about book value under what we feel would be a
worst-case scenario (double ACE
management's projected WTC loss). Historically ACE has traded at 150% of
book value.
q Our price target assumes the company trades at roughly a 40% discount from
its historic price-to-book
value one year from now.

Allmerica Financial J. Paul Newsome
Change of Recommendation 1 - Strong Buy / 45.04 (USD)
q We are upgrading Allmerica to 1 Strong Buy from 2 Buy following the
decline in its share price after
the World Trade Center disaster. Our new price target is $54 per share, down
from $65 per share.
q Allmerica, as a relatively large regional insurer, represents one of the
better "safe havens" among the
insurers largely unaffected by the World Trade Center disaster-little World
Trade Center loss exposure,
little investments in equities, and strong balance sheets.
q At just 87% of projected third quarter book value ($48.14 per share), we
think Allmerica represents
compelling value.

HCC Insurance Hldgs	 J. Paul Newsome
Rating Affirmed 1 - Strong Buy / $23.95 (USD)
q We are maintaining our 1 Strong Buy rating on HCC Insurance Holdings with
a price target of $27
per share, down from $30 per share.
q HCC Insurance Holdings falls nicely into the category of commercial
insurers well poised to take
advantage of the accelerating insurance prices following the tragic World
Trade Center disaster.

Countrywide Credit	 Makiko Coakley
CCR Will Report Its 2Q Earnings Tomorrow 2 - Buy / $40.21 (USD)
q Countrywide will report its fiscal 2Q earnings (for the quarter ending
August 30) on Tuesday 9/25.
The current consensus estimate for its 2Q is $1.19. We are raising our
estimate from $1.18 to
$1.20. Due to the fact that CCR typically benefits from lower interest
rates, and that it has very
limited credit risk exposure, the stock seems to be working as a "place to
hide." We believe this
trend will likely continue as long as the equity market remains volatile and
depressed.
q Mortgage rates declined and refinance activities picked up in Jul. and
Aug. CCR recently reported its
August production volume, which was the highest monthly number in CCR's
history. Thus, we are raising
our 2Q EPS estimate by $0.02 to $1.20.

Paychex Inc	 Adam Waldo
In-Line Qtr-Slight F2002 Guidance Reduc. 2 - Buy / $29.64 (USD)
q Reflecting F1Q02 results and new F2002 guidance, our DCF model shows the
current $30 share
price assumes a far too pessimistic low-teens EPS growth rate over the next
five years relative to
our 19% projection and management's 25% target. We would actively put new
money to work in
this blue chip Business & Professional Services company.
q On September 20, PAYX reported F1Q02 (ended August) EPS of $0.19 up 20%
year over year and in-line
with our estimates and the Street consensus.

Adept Technology 	Edward White
Insight into Photonics Area 2 - Buy / 4.25 (USD)
q While fundamentals in all of the company's served markets are particularly
weak, we believe the
company's position in photonics assembly automation supports purchase of the
shares for long-term
risk-oriented investors.
q Recently, we attended a presentation by Adept Technology, highlighting the
company's capabilities in
photonics assembly automation. We believe the key takeaway is that the
company's strategy of designing
and developing platforms is progressing well.
q We believe a critical differentiating factor for Adept in the photonics
market is the company's software
simulation capability, which has been critical to the co's initial successes
with customers, but is not
currently appreciated by investors.

JDS Uniphase A	Arnab Chanda
Preannounces; Remain Cautious 3 - Market Perform / 5.36 (USD)
q We continue to be cautious on JDS Uniphase and would look for entry points
once carrier capex
stabilizes.
q As we expected, JDS lowered its FQ1 rev forecast to $325M (down 46% q/q)
vs our previous forecast of
$400M (down 33% q/q). Although the company is seeing early signs of
stabilization in demand, we
continue to believe that margin compression could be a bigger issue due to
pricing.
q We are reducing CY01 revs from $2,281M (down 20% y/y) to $2,155M (down 24%
y/y) and CY02 from
$1,588M (down 30% y/y) to 1,356M (down 37% y/y). We believe gross margins
will continue to decline and
are modeling 38% in FQ1 and 36% in FQ2. We are also reducing FQ1 EPS from
($0.02) to ($0.03), CY01
EPS from $0.13 to $0.11, and CY02 EPS from $0.07 to $0.02

National Semiconductor
Shareholder Mtg.-FQ2 Guidance Reaffirmed 3 - Market Perform / $22.50 (USD)
q NSM hosted a shareholder meeting on Fri., reiterating FQ2 guidance of revs
up 5-7% q/q. Although
the company made positive comments on recent order activity, NSM was
uncertain about the near-term
prospects for end demand. This view is in-line with our concerns.
q National indicated that its turns business has remained healthy through
last week. The company is seeing
relative strength particularly in wireless (25% of revs) and displays (10%
of revs). Similarly to our view,
however, NSM is uncertain about the implications for real end demand given
the weakening economy and
this month's tragic events

David C. Morris
Sr. VP Lehman Brothers
713-652-7112/800-227-4537
dcmorris@lehman.com

Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the
past three years a public offering of securities for this company. B-An
employee of Lehman Brothers Inc. is a director of this company. C-Lehman
Brothers Inc. makes a market in the securities of this company. G-The
Lehman Brothers analyst who covers this company also has position in its
securities.
Key to Investment Rankings: This is a guide to expected total return (price
performance plus dividend) relative to the total return of the stock's local
market over the next 12 months. 1 = Buy (expected to outperform the market
by 15 or more percentage points); 2=Outperform (expected to outperform
the market by 5-15 percentage points); 3=Neutral (expected to perform in
line with the market, plus or minus 5 percentage points); 4=Underperform
(expected to underperform the market by 5-15 percentage points); 5=Sell
(expected to underperform the market by 15 or more percentage points);
V=Venture (return over multiyear time frame consistent with venture capital;
should only be held in a well-diversified portfolio).
This document is for information purposes only. We do not represent that
this information is complete or accurate. All opinions are subject to
change.
The securities mentioned may not be eligible for sale in some states or
countries. This document has been prepared by Lehman Brothers Inc., Member
SIPC, on behalf of Lehman Brothers International (Europe), which is
regulated by the SFA. ?Lehman Brothers, Inc.

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This message is intended only for the personal and confidential use of the designated recipient(s) named above.  If you are not the intended recipient of this message you are hereby notified that any review, dissemination, distribution or copying of this message is strictly prohibited.  This communication is for information purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy any financial product, an official confirmation of any transaction, or as an official statement of Lehman Brothers.  Email transmission cannot be guaranteed to be secure or error-free.  Therefore, we do not represent that this information is complete or accurate and it should not be relied upon as such.  All information is subject to change without notice.


First installment of finance comments.
---------------------- Forwarded by Kay Mann/Corp/Enron on 12/20/2000 07:55
PM ---------------------------

Lisa Bills
12/20/2000 07:14 PM
To: Kay Mann/Corp/Enron@Enron, Fred Mitro/HOU/ECT@ECT
cc:

Subject: Intergen Letter Agreements

I have reviewed the Transformer and Turbine Letter Agreements I received
today.

Transformer Letter

2(a) & 3(e):  why is there usage of "ABB et al." when ABB is defined?  Also,
the "certain agreement" referred to in both sections is NOT between ENA and
ABB.  It's now between E-Next Generation LLC as purchaser, ENA as agent for
purchaser, and ABB, as amended.

3(a):  have two sets of "(i), (ii)" in para.  It's also unclear what this
para actually says.

4:  definition of "Term" should go after (b) no?

Turbine Letter

3(a):  Para is clearer than in Transformer but still difficult to understand.

3(f):  Don't understand this para. and what happens with the final payment
due to GE.

3(g):  the "certain agreement" is not between GE and ENA.  See first comment
under Transformer Letter.  There is also the usage of "et al." after GE.

4:  same comment as in Transformer Letter.

I haven't had a chance to review the LLC Agreement yet.

Lisa


Please see attached memo
 - IPOemail.doc


We are long and short varying mws under different desks tomorrow at different
prices...  All deals need to be made per instructions.

First:
ST-CALI
We are short 100 mws for HE 7 in SP-15 at $220.  Please make the Enpower as a
buy from counterparty under ST-Cali.  We will then need to zero out a
imbalance purchase under ST-Cali and then zero out the short in ST-Cali in
SP-15 in CAPS.
We are long 25 mws for HE 7-22 in NP-15 at $290.  We can move this out using
Turlock, Modesto or Dynegy.  The account numbers are in the sheet.  The
newest account is Turlock to SNPD #790617.  All deals need to be under
ST-CALI.  Again we need to zero out the imbalance sale, so that we are flat.

WEST SERVICES
We are short 8 mws in SP-15 for HE 7-22 at $171.  The service desk has put in
a purchase from the imbalance (Enpower #579037).  We need to zero this out,
make a purchase from a counterparty under our book (ST-Whourly), then make a
sale to the services book in SP-15.

ST_WBOM
We are long 20 mws at MEAD 230 from the services desk tomorrow HE 11-16.  We
need to submit the transmission request to NEVP(services has already made the
enpower), then we need to either input the power and use NCPA to run it
across the path or sell it outright.  We are long at $150.  The Epmicalpoos
and the sales need to be under ST-WBOM.

Any questions...please give me a call.  503-887-3449.

Thanks in advance.
Bill


The information contained herein is based on sources that we believe to be
reliable, but we do not represent that it is accurate or complete.  Nothing
contained herein should be considered as an offer to sell or a solicitation
of an offer to buy any financial instruments discussed herein.  Any
opinions expressed herein are solely those of the author.  As such, they
may differ in material respects from those of, or expressed or published by
on behalf of Carr Futures or its officers, directors, employees or
affiliates.  ? 2001 Carr Futures

The charts are now available on the web by clicking on the hot link(s)
contained in this email. If for any reason you are unable to receive the
charts via the web, please contact me via email and I will email the charts
to you as attachments.

Crude     http://www.carrfut.com/research/Energy1/crude21.pdf
Natural Gas     http://www.carrfut.com/research/Energy1/ngas21.pdf

Dec/Red Dec WTI Spread
http://www.carrfut.com/research/Energy1/clz2-clz3.pdf
April Heat Crack     http://www.carrfut.com/research/Energy1/heatcrack.pdf
April Gas Crack     http://www.carrfut.com/research/Energy1/gascrack.pdf
Feb Gas/Heat Spread     http://www.carrfut.com/research/Energy1/hug-hog.pdf
June Gas/Heat Spread
http://www.carrfut.com/research/Energy1/HUM-HOM.pdf
March Gas/Heat Spread
http://www.carrfut.com/research/Energy1/HUH-HOH.pdf
Feb/May Unlead Spread
http://www.carrfut.com/research/Energy1/HUG-HUK.pdf
April/Dec Crude oil Spread
http://www.carrfut.com/research/Energy1/clj-clz.pdf

Nat Gas Strip Matrix
http://www.carrfut.com/research/Energy1/StripmatrixNG21.pdf
Nat Gas Spread Matrix
http://www.carrfut.com/research/Energy1/SpreadmatrixNG21.pdf

Crude and Products Spread Matrix
http://www.carrfut.com/research/Energy1/SpreadmatrixCL21.pdf

Scott Mollner Recommendation
http://www.carrfut.com/research/Energy1/recom1-19-02.pdf

Mean Reversion Data on CL & Products Spreads
http://www.carrfut.com/research/Energy1/crude01-24-02.pdf


Jeff,
I've spoken to Robin Hill's office, (EBS Legal) and this is what we need to
get the NDA shipped:
1) Legal entity name
2) Business Address
3) if possible, name and title of signatory party at IOS

Please get this information together and send to Robin Hill.  She should be
able to return the NDA in 2 business days.
By the way, I spoke with Matt Harris, and we think this opportunity would be
best handled by Kirk Neuner's group.  What is your take?
Thanks,

Dan Minter
V: (503)886-0452
F: (503)886-0441


PLEASE READ FOR INFORMATION ON UPCOMING CLASSES:

YEAR 2000 CALENDAR FOR

SCHEDULING INFRASTRUCTURE (SI)

& SETTLEMENTS TRAINING CLASSES

In keeping with the ISO's commitment to continue training, we are posting
the schedule for SI and Settlements Training for Scheduling Coordinators for
the balance of 2000.

The following classes will be offered:

SI Training for Scheduling Coordinator applicants and certified Scheduling
Coordinators that will cover scheduling and bidding guidelines and
scheduling processes. All SC candidates are required to attend and
successfully complete the class and testing for certification.  Priority
registration will be given to SC candidates.

SI Training Dates

July 25-26, 2000 Training/Aug 1-3, 2000 Testing

Oct. 25-26, 2000 Training/Oct. 31, Nov. 1-2, 2000 Testing

Settlements Training for Scheduling Coordinators, especially geared for
settlements and trading personnel.  This 2-day class covers all charge types
and how to validate each one.

Settlements Training Dates

Aug. 23-24, 2000

Nov. 15-16, 2000

Classes will be held at the ISO Headquarters in Folsom from 9:00 a.m. to
5:00 p.m. Each SC or SC candidate may send two (2) people at no charge to
one Settlements class and one SI Training class.  There is a $500.00 per
person per class charge for more than two people,  including past attendees.
Payment is required in advance or on the first day of class and can be made
by personal or company check or cash.  Checks should be made out to the
California ISO.

Sign-ups will be through e-mail only on a first come first serve basis for
requested dates.  Please complete the attached e-mail template and send it
to tborchardt@caiso.com. You will receive a confirmation via-e-mail within 3
business days. Incomplete enrollments will be returned.

OR

 Cut, copy and complete the following information and send to
tborchardt@caiso.com <mailto:tborchardt@caiso.com>

Name(s):

Position of each enrollee: (e.g. Dispatcher, real-time, Policy, etc.)

Training Class Requested:

Company:

Is your company a Certified Scheduling Coordinator or Applicant?

If no please state reason for interest in this class:

Billing Address:

Total Number Attending to all Classes:

E-mail address(s):

Telephone Number:

If you have any additional questions please forward them to tborchardt@caiso
<mailto:tborchardt@caiso.com> .com or call your Client Relations
Representative.

Message-ID: <132A7F5BA87AD311AB8200508B7306E1099074@csifiapp667.wepex.net>
To: "Borchardt, Tiffaney" <TBorchardt@caiso.com>
Subject: Training Enrollment:  SI and Settlements Training Year 2000
Date: Wed, 21 Jun 2000 10:23:32 -0700
MIME-Version: 1.0
X-Mailer: Internet Mail Service (5.5.2650.21)
Content-Type: text/plain; charset="iso-8859-1"

Attention: tborchardt@caiso.com <mailto:tborchardt@caiso.com>

Name(s):

Position of each enrollee: (e.g.Dispatcher, real-time, Policy,ect.)

Training Class Requested:

Company:

Is your company a Certified Scheduling Coordinator or Applicant?

If no please state reason for interest in this class:

Billing Address:

Total Number Attending to all Classes:

E-mail address(s):

Telephone Number:


12-21-99

Please mark your calendar to reflect this important meeting.

Topic:  Entex Transition
Date:  Friday, January 7, 2000
Time:  2:00-3:00pm
Location: EB37C1

If you have any questions,please contact me or Rita Wynne x3-7694

Many Thanks,
Pamela Chambers
x39680

	Rita Wynne @ ECT

	12/14/99 02:38:45 PM

To: Janet H Wallis/HOU/ECT@ECT, Ami Chokshi/Corp/Enron@ENRON, Howard B
Camp/HOU/ECT@ECT, Thu Nguyen/HOU/ECT@ECT, Kyle R Lilly/HOU/ECT@ECT, Stacey
Neuweiler/HOU/ECT@ECT, George Grant/HOU/ECT@ECT, Julie Meyers/HOU/ECT@ECT
cc: Daren J Farmer/HOU/ECT@ECT, Kathryn Cordes/HOU/ECT@ECT, Rita
Wynne/HOU/ECT, Lisa Csikos/HOU/ECT@ECT, Brenda F Herod/HOU/ECT@ECT, Pamela
Chambers/Corp/Enron@Enron

Subject: Entex Transistion

The purpose of the email is to recap the kickoff meeting held on yesterday
with members from Commercial and Volume Managment concernig the Entex account:

 Effective January 2000, Thu Nguyen (x37159) in the Volume Managment group,
will take over the responsibility of allocating the Entex contracts.  Howard
and Thu began some training this month and will continue to transition the
account over the next few months.  Entex will be Thu's primary account
especially during these first few months as she learns the allocations
process and the contracts.
Howard will continue with his lead responsibilites within the group and be
available for questions or as a backup, if necessary (thanks Howard for all
your hard work on the account this year!).
In the initial phases of this transistion, I would like to organize an Entex
"account" team.  The team (members from front office to back office) would
meet at some point in the month to discuss any issues relating to the
scheduling, allocations, settlements, contracts, deals, etc.  This hopefully
will give each of you a chance to not only identify and resolve issues before
the finalization process, but to learn from each other relative to your
respective areas and allow the newcomers to get up to speed on the account as
well.  I would encourage everyone to attend these meetings initially as I
believe this is a critical part to the success of the Entex account.

I will have my assistant to coordinate the initial meeting for early 1/2000.
If anyone has any questions or concerns, please feel free to call me or stop
by.  Thanks in advance for everyone's cooperation...........

Julie - Please add Thu to the confirmations distributions list


We have received the following executed Master Agreement:

Type of Contract: ISDA Master Agreement ( Multicurrency-Cross Border)

Effective Date:  April 12, 2000

Enron Entity:  Enron North America Corp.

Counterparty:     Westpac Banking Corporation

Transactions Covered:   Approved for all products except:          pulp and
paper and weather

PLEASE NOTE:   The Counterparty is the Calculation Agent.   The Counterpary
has three (3) Local Business Days after the receipt of a Confirmation from
ENA to accept or dispute the Confirmation.


Attached please find a Tax Review of California Assembly Bill No. 128 ("AB
128X").  The Tax Review sets out the practical implication (increased cost to
purchasers) and constitutional deficiencies of AB 128X.

The third paragraph of the Tax Review details the mathematical computation of
the tax and the resulting purchaser price increase.  The computation sales
price, $300/MWh, reflects the SP15 (Southern California) weighted average
index price ($302.88), rounded to the nearest hundred, as reported in
Megawatt Daily's May 8th MarketReport.  However, it may be more effective to
present the mathematical computation with a price closer to the proposed base
price of $60/MWh.  We are available to assist in presenting the computation
utilizing whichever numbers you deem appropriate.

The California Senate has passed SB 1X, Windfall Profits Tax on Electric
Generators.  We will forward a similar memorandum addressing SB 1X.

We are available to address questions and/or comments.  Thanks.

Ed Coats - 713.853.6369
Steve Douglas - 713.853.0938
Gavin Russo - 713.853.6296
Matt Gockerman - 713.853.3979