Recommendations:

As the General Manager of the PERC/Enron Joint Power Development Program, 
Enron hereby submits its recommendations to the Management Committee for 
their consideration regarding the pending Torrence south parcel land 
acquisition decision.

After reviewing the relevant commercial, legal and environmental issues with 
the respective Project Managers and development personnel, Enron recommends 
that the following courses of action be undertaken:

1.  PERC should notify Peoples Gas, Light & Coke (PGL) on 6/16/00 that PERC 
does not intend to assume the role of Buyer as provided for in the terms of 
the land purchase Agreement executed between PGL and Air Liquide on 
4/11/2000. 

2.  Assuming that PGL assumes the role of Buyer under the terms of the land 
purchase Agreement executed between PGL and Air Liquide on 4/11/2000 and PGL 
proceeds to the scheduled 6/26/00 closing, PERC and Enron should continue 
their due diligence and development activities on the Torrence south parcel.  
Upon establishment of a proposed budget and schedule, these activities should 
be focused on achieving the goals of minimizing out-of-pocket development 
expenses and implementing prudent risk mitigation strategies on behalf of 
PERC and Enron.

3.  Assuming that PGL assumes the role of Buyer under the terms of the land 
purchase Agreement executed between PGL and Air Liquide on 4/11/2000 and PGL 
plans to proceed to the scheduled 6/26/00 closing, PERC and PGL should 
immediately begin preparation of the documents necessary to achieve the ICC 
approval of any future transfer (sale,lease, or alternative structure) of the 
Torrence south parcel from PGL to Torrence Power LLC.


Other Issues/Risks:

1.  This recommendation is based upon the belief that although the Torrence 
south parcel does hold potential value to PERC and Enron as a project 
development site, the overall viability and risk/reward profile of the 
commercial opportunity has not yet been sufficiently finalized.  

The potential sources of value associated with this site are listed below:

 a. The site/project currently hold a priority position in the ComEd 
interconnection queue.
 b. The site (in combination with the Calumet project) captures the majority 
of available interconnection capability (500-600 MW) in the Calumet region of 
the ComEd system.  This would force competing IPP projects (i.e. Wizvest) to 
bear the financial burden of ComEd system upgrade costs.
 c. The site (in combination with the Calumet project) represents an integral 
component of developing a commercial solution to the Mission Energy/ComEd 500 
MW "in-city" regulatory obligation to the city of the Chicago.
 d. The site represents one of the unique in-city sites capable of supporting 
a power project from a zoning, fuel supply, and transmission perspective.

The factors contributing to the recommendation for PERC and Enron not to 
proceed to closing on 6/26/00 are listed below:

 a. The existence of known environmental contamination and the liabilities 
associated with entering the chain of title on the Torrence south parcel.
 b. The indemnification language contained within the land purchase Agreement 
executed between PGL and Air Liquide on 4/11/2000.
 c. The incomplete status of the overall commercial development opportunity 
associated with the Torrence south parcel.
 d. PERC and Enron's desire to maintain the flexibility to minimize 
development costs while further developing the commercial development 
opportunity and associated value proposition prior to executing an 
ICC-approved land transfer from PGL to Torrence Power LLC.


2.  It is PERC and Enron's understanding that PGL plans to proceed to the 
closing on 6/26/00 and assume the role of Buyer under the terms of the land 
purchase Agreement executed between PGL and Air Liquide on 4/11/2000.  

3.  The south parcel represents a potential power plant development project 
site upon which PERC and Enron will continue to conduct due diligence and 
development activities.  The site is currently being evaluated as a candidate 
for a 6 x LM 6000 facility with either an '01 or '02 in-service date.

4.  PERC and Enron have decided that it would not be prudent for either of 
their respective organizations to assume any form of environmental liability 
associated with the Torrence south parcel. PERC and Enron shall work to 
develop risk mitigation strategies including land options, environmental 
indemnifications, and other structures which protect their respective assets 
and the overall economic viability of a development project on the Torrence 
south parcel.

5.  A potential risk associated with the above recommendations is that the 
time required to complete the ICC approval process necessary to transfer the 
Torrence south parcel from PGL to Torrence Power LLC.  PERC development 
personnel have estimated that the ICC approval process could require up to 6 
months (The transfer of the Calumet parcel was "fast-tracked" and took 3 
months to achieve ICC approval).  This risk could impact the viability of an 
'01 in-service date for a Torrence Power LLC development project.  PERC and 
Enron will work to minimize the impact of this risk.

6.  PERC and Enron shall work to develop a binding agreement which specifies 
an approval and cost-sharing mechanism for future development decisions on 
the Torrence south parcel.  Such an agreement shall also specify a formula 
for the sharing of proceeds associated with the marketing/selldown strategy 
currently under development by PERC and Enron for all of the Chicago 
development projects.


Feel free to contact me if you have any questions or wish to discuss the 
above recommendations and information.

Fred Mitro
General Manager