Subject: PGE / Sierra Transaction Costs
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked]
Date: Fri, 4 May 2001 12:56:00 -0700 (PDT)

As a result of the termination of the Sierra transaction we are taking steps
to write off our capitalized investment costs associated with software systems
(Peoplesoft) that we incurred to integrate PGE with Sierra Pacific. 
Specifically we spent $2.7 million on a material management system to allows
us to move from Enron's SAP system to Peoplesoft and  $.4 million on  systems
for migration of our HR system to Peoplesoft.  (total $3.1 million)

Here is what I would like to propose and would like to get your concurrence
and support for this plan.

We previously informed Bob and Mark Lindsey that we want to reestablish
Enron's overhead charges to PGE.  Kirk Stevens from PGE is working on this
project to make it happen.  These charges did not occur in the first quarter
and we believe we should pay for those costs for regulatory reasons (currently
part of our approved revenue requirements).  What I would recommend is that
you bill us for the total 1st quarter overhead allocations in April and at the
same time Enron would  provide us a credit for the cumulative incurred charges
of $3.1 million.  The net effect of this would be a small catch up payment by
PGE for the overhead allocations as well as the ongoing payments for April
overheads.  This would get our books back on a consistent basis and would have
a minimal impact on PGE and Enron's IBIT and net income.  This is because
Enron did not assume any allocations to PGE during the first quarter.

If you find this to be a workable proposal let me know and I will have Kirk
Stevens work with Mark and Bob to implement the charges to the appropriate
accounts.  This will clean up our books on anything remaining from the Sierra
transaction.

Thanks for your attention to this matter.  (we have been having some e-mail
address problems please let me know that your received this e-mail.  thanks)