Message-ID: <32975624.1075845920088.JavaMail.evans@thyme> Date: Tue, 13 Jun 2000 06:45:00 -0700 (PDT) From: kay.mann@enron.com To: fred.mitro@enron.com Subject: RE: Torrence Cost Sharing Agreement Cc: ben.jacoby@enron.com, laura.luce@enron.com, rusty.stevens@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: ben.jacoby@enron.com, laura.luce@enron.com, rusty.stevens@enron.com X-From: Kay Mann X-To: Fred Mitro X-cc: Ben Jacoby, Laura Luce, Rusty Stevens X-bcc: X-Folder: \Kay_Mann_June2001_3\Notes Folders\Sent X-Origin: MANN-K X-FileName: kmann.nsf Fred, My understanding (which I will verify) is that Enron would still be at risk from an environmental standpoint with a lease. We could try to lessen our exposure as much as possible with the lease, and get indemnity from PGL. Kay Fred Mitro@ECT 06/13/2000 01:37 PM To: Kay Mann/Corp/Enron@Enron cc: Ben Jacoby/HOU/ECT@ECT, Laura Luce/HOU/ECT@ECT, Rusty Stevens/Corp/Enron@ENRON Subject: RE: Torrence Cost Sharing Agreement Attached is the cost sharing agreement proposed by PERC on the Torrence site. It proposes that ENA agree to share all future development costs and environmental liabilities on the Torrence parcel on a 50/50 basis. I believe that there are some inconsistencies between the language in this Agreement and the PDA signed in April of 2000 (i.e. dates, terms, and the members of the management committee). I have informed PERC that it is ENA's policy not to step in the chain of title on properties with known environmental liabilities. I have recommended to PERC that PGL (Peoples regulated utility) buy the Torrence property (they want if for remediation purposes anyway) from Air Liquide on June 26th and hold it while PERC and ENA complete the due diligence required to develop a commercially viable power plant development project. It will be my recommendation that ENA does not execute this cost sharing agreement as written. If the environmental liability risk was removed and stronger language inserted on the control of going-forward development expenditures then it would represent a commercially reasonable agreement. Ideally we would like this agreement to provide for ENA to market the Torrence and other development sites (ENA's sell-down strategy) under a known value sharing formula and transaction financial "triggers". I will discuss this approach with Laura Luce and Curtis Cole this week. From a legal perspective, could we structure a long-term lease between PGL and Torrence Power LLC (PERC & ENA as owners) that could provide commercial site control to PERC/ENA while leaving the environmental liabilities on the Torrence property with PGL? (this would be fitting, because PGL has owned the property in the past and have likely been the major contributor to the site's environmental contamination). Call me to discuss these issues. Fred ---------------------- Forwarded by Fred Mitro/HOU/ECT on 06/13/2000 01:58 PM --------------------------- s.stawasz@pecorp.com on 06/12/2000 12:59:56 PM To: Fred.Mitro@enron.com, lluce@enron.com cc: j.nassos@pecorp.com, j.badeusz@pecorp.com, c.cole@pecorp.com, de.anderson@pecorp.com, w.morrow@pecorp.com Subject: RE: Torrence Cost Sharing Agreement Sorry. Attachment was missing <> > ---------- > From: Stawasz, Stanley M. > Sent: Monday, June 12, 2000 11:39 AM > To: 'Fred Mitro-Enron'; 'Laura Luce - Enron' > Cc: Nassos, John G.; Badeusz, John; Cole, Curtis; Anderson, Dean; > Morrow, William > Subject: Torrence Cost Sharing Agreement > > Attached for your review is the Letter Agreement to share expenses for the > development of the Torrence project. > ---------------------------------------------------------------- The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the material from any computer. - Enron cost sharing ltr Ag v2.doc