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Project Revenue Account

Project Revenue Account. Flow of Funds. Variable O&M Account. EPMI Fin-Buy (“FB”). Buyside Swap Payment Acct. e- FB. Fixed FB. Fixed O&M Acct. Buyside Swap Revenue Acct. Debt Service Pmt. Acct. Fixed-FB. EPMI Fin-Sell (“FS”). Sellside Swap Revenue Acct. e- FS. Sellside Swap

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Project Revenue Account

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  1. Project Revenue Account Flow of Funds Variable O&M Account EPMI Fin-Buy (“FB”) Buyside Swap Payment Acct. e- FB Fixed FB Fixed O&M Acct. Buyside Swap Revenue Acct. Debt Service Pmt. Acct. Fixed-FB EPMI Fin-Sell (“FS”) Sellside Swap Revenue Acct. e- FS Sellside Swap Pmt. Acct. Fixed-FS Monthly - Blue Arrows Annually - Green Arrows Trustee Depository Acct. - Red Circle - EPMI Contract e- FS - Index Financial Sell Fixed-FS - Fixed Fin. Sell e-FB - Index Fin. Buy Fixed FB - Fixed Fin. Buy Amts owed under either swaps or Reimbursement Agreement Debt Service Reserve Acct. Working Capital Reserve Acct. Equity

  2. Project Revenue Account Underlying Flow of Funds Variable O&M Account Fixed O&M Acct. Debt Service Pmt. Acct. Monthly - Blue Arrows Annually - Green Arrows Trustee Depository Acct. - Red Circle - EPMI Contract e- FS - Index Financial Sell Fixed-FS - Fixed Fin. Sell e-FB - Index Fin. Buy Fixed FB - Fixed Fin. Buy Amts owed under either swaps or Reimbursement Agreement Debt Service Reserve Acct. Working Capital Reserve Acct. Equity

  3. TECO/Mosbacher Delmarva ProjectBasic Credit Structure Revenues $ Demand = D/S O & M EPMI Fin - Buy $ formula e- D/S EPMI Fin - Sell Fin - Sell $ Demand $ formula e- Equity • $ Formula e-: Positive difference, if any, between the hourly PJM • index at the plant bus and a formula equal to: fuel*HR + VOM • Credit Contribution is from inserting contracts on either • side of D/S in the flow of funds • Expected result: BBB- / Baa3

  4. TECO/Mosbacher Delmarva ProjectBasic Contract Structure Trustee LLC e- • EPMI Financial Buy directly with trustee to make bankrupt remote • EPMI Financial Sell with LLC • Reimbursement Agreement covers monies owed to Enron under either agreement • Bankruptcy treatment of e- revenues from Financial Sell through LLC? Reimbursement Agreement $ Demand e- $ Demand e- EPMI Fin. Buy EPMI Fin Sell ENRON Baa2/BBB+ guarantee guarantee

  5. Expanded Delmarva Structure with Financing $ Neg. Loan $ funding loan LLC SPV Capital Mkts $ NL D/S $ FL D/S D e D e FB FS ENE Bermuda Guarantee of $ Neg. Loan Ins. Co. “B” FB FS D e D e EPMI • Because we’ve engineered all defaults in to the FB demand, charge, Ins. Co. “B” is comfortable insuring NL D/S. • The capital markets extends funding loan based off insured cash flows. A much easier sell. • Basically, we sell LLC credit enhanced with EPMI contracts to only one institutional entity (I.e. Ins. Co. “B”). Re-insurance, if necessary Insurance policy to mitigate risk Ins. Co. “A” Enron Re Re-insurance reflecting deductible and co-pay

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