On February 14, 2000, Enron North America (Enron) filed a declaratory  judgment action against the Tennessee Valley Authority ("TVA") in the Federal  District Court for the Eastern District of Tennessee, Chattanooga Division,  requesting that the court determine whether TVA defaulted under its power  purchase agreement with Enron by failing to pay undisputed invoices.
On  March 6, TVA filed a counterclaim against Enron alleging that Enron  wrongfully terminated the power purchase agreement.
Although no assurances  can be given, Enron believes that the ultimate resolution of these matters  will not have a material adverse effect on its financial position or results  of operations.

TVA