Subject: Answers to interrogatories
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked]
Date: Thu, 21 Sep 2000 03:32:00 -0700 (PDT)

As you all may remember we have answers to Calpine's interrogatories which
are due tomorrow. I am inserting the draft responses and a verification
form. Please review the draft answers and call me with any questions. I
would like to get them finalized and signed today as I am leaving to go out
of town this afternoon.

I think that Elizabeth may be the person with the most knowledge and
therefore, the best person to sign the verification.

Please call me with any changes or if you have any difficulty in reading the
answers. My direct line is 713-844-3003. I apologize for the short notice.

IN THE UNITED STATES DISTRICT COURT
 FOR THE SOUTHERN DISTRICT OF TEXAS
 HOUSTON DIVISION

ENRON POWER MARKETING, INC. o
 o
   Plaintiff, o
 o
V. o CIVIL ACTION NO. H-00-0885
 o
CALPINE POWER SERVICES o
COMPANY o

 PLAINTIFF,S ANSWERS TO DEFENDANT,S
 FIRST SET OF INTERROGATORIES

TO: Defendant, Calpine Power Services Corporation, by and through their
attorneys of record, Mr. David J. Beck, Mr. Thomas E. Ganucheau, Beck,
Redden & Secrest, L.L.P., 1221 McKinney, Suite 4500, Houston, Texas 77002.

 Pursuant to Rule 33 of the Federal Rules of Civil Procedure, Plaintiff
Enron Power Marketing, Inc. (&Enron8) files its Answers to Defendant,s First
Set of Interrogatories.
      Respectfully submitted,

      Laura Gibson
      Federal I.D. No. 81
      State Bar No. 07869350

      ATTORNEY-IN-CHARGE FOR PLAINTIFF

OF COUNSEL:

William W. Ogden
Federal I.D. No. 2172
Texas Bar No. 15228500
OGDEN, GIBSON, WHITE & BROOCKS, L.L.P.
2100 Pennzoil South Tower
711 Louisiana Street
Houston, TX 77002
(713) 844-3000
(713) 844-3030 (Facsimile)
 CERTIFICATE OF SERVICE

 I hereby certify that a true and correct copy of the foregoing has been
served on all counsel of record, by first class U.S. mail, on this _____ day
of September, 2000 as follows:

  David J. Beck
  Thomas E. Ganucheau
  BECK, REDDEN & SECREST, L.L.P.
  1221 McKinney, Suite 4500
  Houston, Texas 77010-2010

      Laura Gibson

 ANSWERS TO INTERROGATORIES

INTERROGATORY NO. 1:

Please describe in detail the factual and legal basis for your contention
that CPSC &breached the Assignment Agreement8 by allegedly &failing to
endeavor in good faith to obtain the consent from LCRA.8

ANSWER:  On July 30, 1999, Calpine entered into an agreement with Enron in
which it agreed to assume Enron,s obligation to supply power to the LCRA
under the Enron/LCRA Power Purchase and Sale Agreement dated August 31, 1995
and as it was amended on April 15, 1999.  The July 30, 1999 Assignment
Agreement contains a condition that Calpine will obtain LCRA,s written
consent to the assignment and a release of Enron and its affiliates from any
and all obligations and liabilities under the Agreement.  Calpine
specifically agreed to endeavor in good faith to obtain LCRA,s consent as
soon as practicable following Enron,s execution of the Assignment Agreement.
Shortly after the execution of the Assignment Agreement, Ed Baughman and
Steve Snow spoke to determine the status of Calpine,s efforts to obtain LCRA
,s consent.  Mr. Baughman followed up with Mr. Snow during the week of
August 16, 1999 to determine the status of Calpine,s efforts to obtain LCRA,
s consent.  It was clear from Mr. Baughman,s conversation with Mr. Snow that
Calpine was not exercising its best efforts to obtain LCRA,s consent.  When
this became apparent, Mr. Baughman and others at Enron began making
inquiries of LCRA to determine what would be required to obtain LCRA,s
consent.  These conversations made it clear that Calpine had not explored
the issue with the LCRA.  Further, Enron representatives were advised by
representatives of the LCRA that Calpine had not furnished any financial
information to the LCRA to make it comfortable with Calpine,s assumption of
the delivery obligations.  Such failure by Calpine to use due diligence in
obtaining LCRA,s consent combined with its failure to provide the LCRA with
any financial or credit information demonstrates that Calpine did not
endeavor in good faith to obtain the LCRA,s consent.

INTERROGATORY NO. 2:

Please describe in detail the factual and legal basis for your contention
that CPSC failed &to exercise  good faith in agreeing to reasonable requests
relating to the assignment,8 specifically identifying each and every alleged
&reasonable request8, and when, how, by whom, and under what circumstances
the request was made, and CPSC,s response to each request.

ANSWER:  Calpine failed to exercise good faith in agreeing to reasonable
requests relating to the assignment by failing to endeavor in good faith to
obtain LCRA,s consent to the assignment, failing to provide LCRA with
financial information and failing to provide LCRA with a parent guaranty
guaranteeing Calpine Power Services Corporation,s performance of its
assumption of the Enron/LCRA Power Purchase and Sale Agreement.
Additionally, Calpine failed to agree to reasonable requests when it failed
to provide an indemnification from its parent corporation indemnifying Enron
in the event that Enron paid any money out on its guaranty to the LCRA.  On
or about August 26, 1999, after it became clear that Calpine was not taking
any effort to endeavor in good faith to obtain the LCRA,s consent, David
Portz of Enron sent Ron Fischer of Calpine the documents necessary to
provide Calpine,s parent guaranty and indemnification of any payment by
Enron under the LCRA agreement.  Calpine refused to execute these documents
or to negotiate in good faith for any necessary modifications thereto.
Additionally, in a telephone conversation between Enron and Calpine
representatives, Calpine conceded that in the past, it had traditionally
provided a parent guaranty.

INTERROGATORY NO. 3:

Please describe in detail any and all damages allegedly suffered by you and
for which you seek redress herein, and describe in detail the method by
which such damages are calculated.

ANSWER:  Enron has not yet calculated the damages it has incurred as a
result of Calpine,s breach of its obligations under the Assignment
Agreement.  Enron continues to have an obligation to supply the LCRA with
power and will be required to do so until the contract terminates on
December 31, 2002.  Enron will supplement this interrogatory in accordance
with the Federal Rules of Civil Procedure.

INTERROGATORY NO. 4:

Do you contend that CPSC was obligated under the July 30, 1999 Letter to
seek and/or secure a guarantee from Calpine Corporation?  If you answer to
either is &yes,8 please describe in detail the legal and factual basis for
each such contention.

ANSWER:  Yes.  Beginning during approximately the summer of 1998, it became
customary in the wholesale power market to provide a parent guarantee when
the power was either being purchased by or sold to a marketing affiliate.
In a telephone conference on the afternoon of August 27, 1999, Calpine
representatives conceded that they generally provided a parent guaranty.
Additionally, the representatives conceded that it did not cost Calpine
Power Services Company any money to provide a parent guaranty.  In the
negotiations between Enron and Calpine prior to the execution of the
Assignment Agreement, it was understood that Calpine would provide a parent
guarantee.  When the transaction changed from the back-to-back transaction
to the assignment, in recognition of the increased risk, Enron increased the
amount that it was willing to pay Calpine to assume its obligations under
the Enron/LCRA Power Purchase and Sale Agreement to $1.8 million.  In
recognition that parent guarantees are customary in the industry, in
December of 1999, Calpine and Enron exchanged parent guarantees.

INTERROGATORY NO. 5:

Identify each action which you contend is &customary and reasonable in the
industry8 and which you contend CPSC failed to undertake in order to &obtain
LCRA,s consent8 to the assignment of the Power Agreement.

ANSWER:  Calpine failed to act in a customary and reasonable manner by
failing to act promptly to obtain the LCRA,s consent to Calpine,s
assignment.  Further, Calpine failed to act in a customary and reasonable
manner in failing to provide LCRA with any financial information concerning
Calpine Power Services Corporation or its parent in order to assure the LCRA
of Calpine,s financial ability to perform under the Assignment Agreement.
Calpine also failed to provide either Enron or LCRA with a parent guarantee
and to provide parent indemnification to Enron for any amounts paid by Enron
to the LCRA as a result of Calpine,s failure to perform its obligations
under the Power Purchase and Sale  Agreement.

INTERROGATORY NO. 6:

Identify and describe in detail each and ever action taken by you to
mitigate your alleged damages in this matter.

ANSWER:  On December 8, 1999, Enron gave notice to the LCRA of its
termination of the Enron/LCRA Power Purchase and Sale Agreement dated August
31, 1995, as amended on April 15, 1999 effective December 31, 2002.  On
December 31, 1999, Enron entered into an agreement with Oxy Vinyls, L.P.
wherein Enron Power Marketing, Inc. purchased electrical capacity and energy
from Oxy.  Additionally, Enron has purchased the power necessary to supply
the LCRA at the lowest prices available to it in the market.

S:\Enron\Calpine\resp to rogs.wpd

 VERIFICATION

STATE OF TEXAS   o
     o
COUNTY OF HARRIS  o

 BEFORE ME, the undersigned authority, on this day personally appeared
____________________________, an authorized representative of Enron Power
Marketing, Inc.  I state that I am legally competent to make this
Verification, which is based on my personal knowledge, and that the factual
statements contained in these answers to interrogatories are true and
correct.

       ____________________________________

 SWORN TO AND SUBSCRIBED BEFORE ME on this _____ day of ____________, 2000.

       _____________________________________
       NOTARY PUBLIC IN AND FOR THE
       STATE OF TEXAS