Coastal Merchant Energy--Outgoing Gty ,
 Clement, Dan,

Below is an e-mail from my counterpart at Coastal with comments to the 
revised Enron Corp draft that Clement provided to me in his e-mail on Dec.. 
21st.  Can each of you please review these concerns.  If the Master will not 
be executed until after their merger with El Paso, I think it is OK to accept 
a Unified guaranty cap instead of specifif limits.  I was origninally thought 
the reason for the specific dollar limits was because of Contracts.

Thanks
Russell


---------------------- Forwarded by Russell Diamond/HOU/ECT on 01/05/2001 
01:55 PM ---------------------------


Kiran.Parthasarathy@CMenergy.com on 01/04/2001 01:46:03 PM
To: Russell.Diamond@enron.com
cc: Porter.Ryan@CMenergy.com, Don.Fishbeck@CMenergy.com 
Subject: RE: Pending Guaranty for Physical Business




Russell, 

We looked at the revised redline on the Enron physical business sent by you 
on Dec 21st 00. 

We have the following important comments: 

(1) The first page of the Guaranty refers to specific Contracts that will be 
covered by the Guaranty and one identified Contract is the Enfolio Master 
Firm Purchase/ Sale Agreement.? As you are aware, this Contract has not been 
signed between Coastal Merchant Energy and Enron companies and will not 
probably be signed (if and) until our pending merger is completed.? Therefore 
we request that the Guaranty language be broadened to include all Obligations 
of the Enron entities to CME (and not be Contract specific).

(2)The third page of the Guaranty discusses Maximum Limit (Section 2) and 
sets specific numerical caps for each of the covered Enron entities.? We had 
requested for a unified Cap earlier and once again request that a unified Cap 
be set for all entities.? 

(3)The fifth page of the Guaranty (Section 9), says that this Guaranty will 
supersede the Old Guaranty that was issued jointly to Engage US and Engage 
Canada.? As you are aware, we are not affiliated or connected with Engage 
Canada and therefore cannot bind Engage Canada whatsoever in the proposed 
Guaranty.? That was the rationale for our insert in that paragraph ("insofar 
as it respects Contract Party").? This was deleted in your revised redline.

We are anxious to complete this Guaranty as soon as possible.? We suggest, if 
it is necessary, a conference call involving ourselves and our Counsel.

Please respond at your earliest convenience. 

Thanks 
Kiran 


-----Original Message----- 
From: Russell.Diamond@enron.com [mailto:Russell.Diamond@enron.com] 
Sent: Thursday, December 21, 2000 10:24 AM 
To: Kiran.Parthasarathy@CMenergy.com 
Cc: veronica.espinoza@enron.com; Michael.Hugetz@CMenergy.com; 
Dai.Nguyen@CMenergy.com; Don.Fishbeck@CMenergy.com 
Subject: Re: Pending Guaranty for Physical Business 


Kiran, 

Please see attached comments from our legal group.? If there are any 
additional concerns regarding the comments please contact Clement Abrams- 
713-853-5986. 

Thank you, 
Russell 

(See attached file: Coastal Outgoing.doc)
clement.abrams@enron.com, dan.hyvl@enron.com