FW: Income Tax Issue ,
 Let's set something up for monday

-----Original Message-----
From: Burden, Bill M [mailto:BurdenBM@bp.com]
Sent: Friday, October 19, 2001 12:52 PM
To: Fuller, Dave; Barry, Penny
Cc: Burden, Bill M; Colburn, Kim W; Miller, Tim; Whitt, Mark; Miller,
Stephanie
Subject: RE: Income Tax Issue


Dave,
Our tax folks would like to talk to your accountants - is there a name and
phone number contact where we can arrange a call for the experts to talk it
through?

-----Original Message-----
From: Fuller, Dave [mailto:Dave.Fuller@enron.com]
Sent: Friday, October 19, 2001 1:12 PM
To: barryp@bp.com
Cc: BurdenBM@bp.com; ColburKW@bp.com; millertr@bp.com; Whitt, Mark;
Miller, Stephanie
Subject: Income Tax Issue


Hello Penny,

It was nice meeting you and your associates yesterday.  I presented the
income tax issue that we discussed to some of our accountants and they
see things a little differently.  It is our opinion, that since a cash
payment would be offset by the demand charge obligations associated with
the capacity contract, it is not income per se, but rather funds
dedicated to meeting an out-of-the-money contract obligation.  Depending
on your accounting method, that money would probably be amortized over
the term of the contract.  Let me know what you think, perhaps we should
have our accountants talk.

As for adjusting the cash amount after the San Juan/Permian allocation
issue is settled (I'm not sure you could hear all that at your end of
the table) we are not really interested in any type of post assignment
"true-ups".   But we are willing to talk about what those allocation
percentages should be.

Regarding next steps, on Monday I will provide you with some
"alternative" forms of payment and some ways we might spread the
payments out0.  After that we will look to you guys for your preferred
deal structure and payment terms.  I'll follow up this email with a
phone call today.

Dave Fuller
Enron North America
503-464-3732


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