Jeff,
I had a good discussion with Milton Schultz, GM of Burney Forest Products.  
Milton indicated they have 19 years left on a PPA (SO4) with PG&E.  Their 
plant provides 31 MW of peak generation (with firm capacity on 24 MWs and as 
available on volumes above 24MW)  which Milton indicated has the flexibility 
to be turned down  on off peak hours.  In addition, their fuel costs are a 
function of demand and if they were able to fill the energy from the market 
it would likely lower the overall cost of fuel (wood chips).  The economics 
of the deal for ENA appear to be good enough for ENA to be able to pay a 
decent option premium up front which could be structured as partial relief of 
the PG&E receivable ( Milton indicated that the PG&E receivable is approx $10 
).  

Below is the email I sent Milton and an attached outline sheet.  Milton 
indicated the he would discuss the idea with Rich Purcell, apparently a main 
partner in the project.  He seemed to be genuinely interested and felt it was 
something Rich would also like.  

The question is, "Can we facilitate, through the QFs, a contract 
restructuring with PG&E and if so what steps would we propose at this point 
?"(assuming I get interest back from Burney Forest Products.)  I would 
propose that ENA work with the QF to structure the terms of the "restructed" 
PPA between the QF and PG&E and that simultaneous with that agreement, ENA 
enter into a long term services deal to supply the market based energy as 
well as provide for an up-fron option premium for the right to "put" market 
based power to the QF/utility.

Let me know your thoughts.

Mike
---------------------- Forwarded by Michael Etringer/HOU/ECT on 05/03/2001 
01:38 PM ---------------------------

Michael Etringer

05/03/2001 12:57 PM

To: bfpjv@c-zone.net
cc: Chris H Foster/Enron@EnronXGate 
Subject: Proposal for QF Contract Restructure

Milton,

I very much enjoyed talking with you today.  As we discussed, please find 
attached a general discussion outline for the QF restructuring proposal.  I 
hope this gives a fair assessment of the proposal but as usual words are 
always subject to interpretation so I would look forward to discussing these 
ideas in greater detail.   Although the landscape is currently a "mess" at 
best, I do believe it provides some unique opportunities to explore 
alternative solutions to the current  energy crisis.  As I indicated, Enron 
would be very interested in working with a QF or group of QFs to explore and 
develop an approach which the QFs can take to the utilities and potentially 
the PUC and bankruptcy courts.

Look forward to talking with you and Rich after you've had a chance to 
further consider the proposal.

Thanks again for your time.

Sincerely,
Mike Etringer
West Power Origination
503-464-3836