of the Chairman
	      ' Featuring Ken Lay, Chairman and CEO
	       September 26th, 2001 10:00 AM CST

	       Transcript Generated on Tuesday, October 23, 2001 6:31:25 PM OST

  KEN.L.AY COMMENTS (POSTED ON 09/26/2001 10:00 AM.)
  Good morning! I'm looking forward to all of your questions. I'm sure there are many and I will attempt to
  answer them as fully as possible. I should advise you up front, however, that we are in the process of
  finalizing an email to all employees in response to the Lay It On the Line employee survey, and that should
  be sent out before the end of this week. So, In some cases, I may defer an answer to your question or some
  of the details in your question until you receive the email.

  Otherwise, I'll try to give you my best thoughts an anything you ask. So, here goes!

  POCHSNER ASKS (POSTED ON 09/26/2001 10:00 A.M)
  Who is our chief competitor and what will enable us to outperform them in the future?

  KEN.LAY REPLIES
  We have a number of strong competitors. Certainly among those that do many of the same things we do
  would be Dynegy, Duke, El Paso, AEP and several other energy companies. I would say the one that
  operates the closest to our business model is Dynegy, although they are probably somewhat more asset-
  intensive. I think the main reason we will continue to outperform these competitors on a financial basis
  (whIch will lead to outperforming them on a stock basis), is the quality of our people.

  I also believe we have a strong advantage in our Enron Energy Services business, which virtually no other
  company has, at least from the standpoint of offering these services on a nationwide, and increasing a North
  American and European basis. The other competitive advantage we have is EnronOnline, which has
  accelerated growth in our volumes and made our scale about twice as large as that of any of our
  competitors.

  CVERNON ASKS (POSTED ON 09/26/2001 10:03 AM.)
  Mr. Lay. Can you clarify something? At last year's mandatory harassment training, Enron's lawyer
  specifically mentioned to us we could be fired for our political beliefs. Can a liberal Democrat work here, and
  do things like ask tough questions of the high-pm file Republican CEO, without fear of losing his Job? If so,
  can I ask you why your close friend Tom Ge Lay has orchestrated for Dallas to receive three times the
  federal mass transit funding as Houston? Why does Ge Lay want for Dallas to have light rail but Houston
  not? Why does a Houston Congressman, friend of our Chairman and CEO, do so many things to damage our
  shareholders huge investments in Downtown Houston?

  KEN.LAY REPLIES
  Certainly, a liberal Democrat can work very happily at Enron, and we do have many Enron employees that
  are Democrats. It mIght surprise you that I even financially, and otherwise, support Democrats, both within
  Texas and across the country, although I am largely identified with the Republican party.

  As to Tom DeLay, I do not have the exact figures at my fingertips, but I think the record would show that If
  you look at all federal transit and transportation dollars over the last few years, Houston has received
  significantly more money than Dallas.

  Your comments on light rail are directly on point. Congressman DeLay is not a big believer in rail, and
  believes that the economics of all the systems built around the country Indicate that rail is not the most
  efficient mass transit system. That notwithstanding, I and Enron strongly suppport the main street initiative,
  which is currently under construction. Once that is completed, I am sure there will be an effort to see If it
  can be expanded. But that will take both a local vote as well as support from Washington.

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					     *     EXHIBIT
					     *      7644
						     No H 04-0025



POCHSNER ASKS (POSTED ON 09/26/2001 10:07 AM.)
How are we doing in the Texas retail electricity market?

KEN.LAY REPLIES
We are having significant success in the small commercial market in Texas. We're using our Enron Direct
business model to address that market. Across the country now, we are adding thousands of customers per
week through Enron Direct. As you may know, this model was developed in the UK and has been very
successfully applied there and was brought Into the U.S. only earlier this year.

Currently, only a small percent of the Texas market is open for competition, but we are hopeful that ERCOT
will meet the target of opening the entire market for competition in Jan. 1, 2002. Enron Is well positioned to
be one of the major participants In this large, newly deregulated retail market.

HOWARD.ZALL ASKS (POSTED ON 09/26/2001 10:12 AM.)
Why Is there not a present Initiative to have our management encouraged (with muscle) to buy Enron stock?

KENLAY REPLIES
I have strongly encouraged our 168 officers to buy additional Enron stock. Some, including myself, have
done so over the last coupje of months and others wIll probably do so In the future, But, I'm sure you can
understand that many of our senior management, as well as many of our employees, have been badly
damaged financially by the drop In Enron's stock price as well as by the overall stock market, and have
certain limitations as to how many of each stock they can purchase at this time. My personal belief Is that
Enron stock Is an incredible bargain at current prices and we will look back a couple of years from now and
see the great opportunity that we currently have.

CVERNON ASKS (POSTED ON 09/26/2001 10:13 A.M.)
Mr. Lay- Enmn has been aggressive in the use of SPy's collateralizing future cash flows for the sake of
present earnings. I couldn't help but notice our auditor, Arthur Andersen of Houston, recently admitted guilt
and paid the largest fine ever for criminal falsifications related to SPY's on behalf of another large Houston
corporation. You are a man of integrity, so my ~question~ is a chance for you to so reassure us we have no
such problems here at Enron.

KEN.LAY REPLIES
To begin with, I can assure you that I or the Board of Directors, would not approve the use of any SM/s or
other types of financial vehicles unless we were convinced both by all or our internal officers as well as our
external auditor and counsel, that they were legal and totally appropriate. That is the standard that we have
used for as long as I have been with Enron, and we will continue to use. In many cases, not only has the
local Arthur Anderson office approved these vehicles, but they have also been approved at Arthur
Anderson's headquarter office from some of the world's leading experts on these types of financing.

Now having said this, in the case of LJM2, which was a related party transaction, of which virtually every
Fortune 500 has such transactions, because there was significant static raised by that within the financial
markets, that was restructured so that there is no related party Involved at the current time.

In addition to both approval internally and externally, certainly I or the Board also apply the concept of what
appears to be right, using a great deal of experience and common sense. And I believe overall, this has led
to both creative transactions, which are beneficial for the company and Its shareholders, as well as an
abundance of safeguards that what is done is totally appropriate and acceptable.

MARGO.REYNA ASKS (POSTED ON 09/26/2001 10:15A.M.)
Mr. Lay, I would like to thank you for all that Enron is doing to help people cope with the tragic events of
September 11. 1 am proud to work for a company that has such a strong sense of community.

KENLAY REPLIES
I appreciate your comment. Enron does take Its community and social responsibilities very responsibly.
Certainly, the tragedy in New York and Washington touched all of our hearts, and we responded quickly. I
want to express my appreciation to all employees who gave blood and money to the relief effort. There was
a tremendous outpouring and concern and wanting to help, and as CEO of the company, I am very proud of
all of you who participated.



CVERNON ASKS (POSTED ON 09/26/2001 10:16 AM.)
Mr. Lay- Are you aware it is Microsoft's willful design of its software that makes It vulnerable to the viruses
which shut Enron down last week? Are you aware of Microsoft's License Agreement for wExchangew that not
only holds Microsoft harmless from any data loss or corruption but amazingly daims Microsoft owns the
information itself? Can Enron balance our desire to do business with Microsoft with an arms-length
consideration of Microsoft's ever-lengthening tentacles on Information?

KEI4.LAY REPLIES
To begin with, I do not pretend to be an expert in Microsofts licenses or even an expert on Information
technology. I am certainly aware of the problems that are being caused by viruses, which did shut down a
number of servers last week. And it does appear that these viruses are appearing somewhat more
frequently. I personally believe the problem can better be solved by going to the source as to who is
creating and spreading the virus than by attempting to place the ilability back on Microsoft or some other
supplier.

Given the incredible pervasiveness and importance of IT to everything we do today, 1 think we should
seriously consider as a country, imposing very stiff criminal penalties on anyone that is Identified and proved
guilty of sending out these viruses. Hopefully, one or two cases where Individuals are given large financial
penalties, as well as some time in prison, might make this a less attractive activity.

LENGLAND ASKS (POSTED ON 09/26/2001 10:24 A.M.)
Recent PRCs have seemed more a black ball vote of popularIty - with people with limited exposure or people
with personality conflicts having a significant and unbalanced affect on an Individual's ranking. What plans
are there to change the PRC for the end of the year to make it less a NpopularityM contest and more a
reflection of actual performance by the individual?

KENLAY REPLIES
I will be commenting on the PRC changes in the Lay It On the Line memo, so will do so only in a very limited
way here. I, and the Management Committee, fully understand that the way the PRC has been conducted
over the last couple of years has created its own morale problem with our employees.

We will continue to need a review process that will assure that we are a meritocracy, but at the same time,
we will make changes such that it is fairer to all employees and achieves the desired results without
damaging employee morale.

DANABRYANT ASKS (POSTED ON 09/26/2001 k0:28 AM.)
In addition to working hard at our jobs in order to make Enron more successful, what can we, as employees
of Enron do to help increase our stock price?

KEN.LAY REPLIES
In addition to what I said to an earlier, similar question, I believe that the other thing employees can do is
talk up the stock and talk positively about Enron to your family and friends. In part, because there have
been so many short sellers of the stock over the last several months, there have been all kInds of reckless
and unfounded rumors about Enron and the flnancial condition of Enron. To the extent that our employees
begin repeating those rumors and spreading those rumors to other employees as well as family members
and friends outsIde the company, It gives them a level of credibility that they do not deserve. And, thus
damages the stock price.

The company is fundamentally sound. The balance sheet is strong. Our financial liquidity has never been
stronger. And we again have record operating and financiai results. At current stock prices, were selling for
about 13-14 times earnings and for a company that has been growing earnings per share at about 20% per
year for some time, this seems to be an incredibly cheap stock.

MARGO.REYNA ASKS (POSTED ON 09/26/2001 10:29 A.M.)
Mr. Lay, I think morale at Enron has really decreased over the pest few months and that our falling stock
price has contributed significantly to this. The message from management Continues to be if we all do our
jobs to the best of our ability, we should be able to bring the stock price back up. lam wondering if there
are very specific things that you can point to that would help with this. I want to do whatever I can to help
increase our stock price, and sometimes just doing my job doesn't seem enough.

									   EC50849B0101061
KEN.LAy REPLIES
I agree, and the recent Lay It On the Line survey confirmed, morale has decreased over the past few
months and that the fail in the stock price is one key element of that. No one Is more concerned about that
fall in stock price than I am, and certainly I and the senior management_are doing everything we can to stop 3



the decline and restore a lot of the value that has been lost this year.

The best way to restore the value us to continue to show strong financial and operating results. I am
convinced we have a good business strategy and strong fundamentals that will allow us to do this. We are
continuing to address some of the separate issues, such as broadband, California, India and some of the
more complex financial vehicles. And over time, all of these will be resolved satIsfactorIly and It our financial
performance and operating performance continues to be strong, then I am very confident that we will regain
the value that we have lost and see new highs in our stock price.

So, I encourage you to continue to do the very best job that you can and If you, and all of our other
employees, do the same thing, we will ride the up trend in the stock price together. I will have a little more
to say about this subject in the Lay It On the Line email that will be coming Out shortly.

MATT.WYMER ASKS (POSTED ON 09/26/2001 10:33 AM.)
ENRON's stock is continually failing. Why the drastic changes? I feel the stock is trading lower than it is
worth. Why the disconnect? Thanks, Matt

KEN.LAY REPLIES
I agree with you. As my previous answer indicated, there is a disconnect. As rye mentioned earlier we
clearly do have some issues that we're addressing, but the underlying fundamentals are strong. Markets
tend to overreact both on the up side and the down side. But over time, they do correct and I think that will
happen to our stock If we keep performing well.

DAVID.OSBORN ASKS (POSTED ON 09/26/2001 10:37 AM.)
Is NEPCO going to be sold to Calpine or another company in the near future?

KEN.LAY REPLIES
This Is always a very difficult question to answer. It depends a lot on the kind of market we are In.
Obviously, the current market is very conservative and thus tends to give much lower P/Es than certainly
what we've experJenced in recent years.

Having said that, if we can continue to sustain at least 15-20% growth in earnings per share and
demonstrate returns on equity of over 20% In our growth wholesale and retail businesses, we should have
at least a 20-30 P/E in the current market and probably a 30-40 P/E in a more normal market, which we all
hope to see within the next 6-12 months.

JPKELAN ASKS (POSTED ON 09/26/2001 10:40 AM.)
I have seen articles to the effect that we ~masked our 2nd quarter shortfall in earnings by selling assets to
one of our subsidiary companies'~ If I am independently challenged on this Issue, how should I respond?
What Is the official company line?

KENLAY REPLIES
To the best of my recollection, the only asset we sold in the second quarter to a subsidiary company was our
Clean Fuels business, which we sold to EOTT, and on that transaction there was virtually no profit.

RAJENDRA.LALWANI ASKS (POSTED ON 09/26/2001 10:48 AM.)
Dear Sir, 4 years back, we joined Enron here in India at Dabho/ site (OPOCY)and at that time only 50
engineers out of 18,000 were selected as a part of 0 & N team. Many of us left well settled job and joined
esteemed group of Enron and we were more than happy to be part of this renowned group. After 4 years of
servIce, this plant (Dabhol Power Plant) stands on the brink of closure. We would like to know what is our
future in this organisation and what is the future of this plant?

KEN.LAY REPLIES
Let me first say, I personally am very saddened by what has happened to the Dabhol project. It is a world-
class project and one that Maharashtra and all of India should be very proud of. Moreover, India continues
to suffer signfpcant brownouts and blackouts, and continues to indicate that the country needs at least
100,000 MW of new power generating capacity over the next decade.

Yet, Dabhol, which Is 95% complete and capable of producing the lowest cost power from any new liquid
fuel plant in the country, is shut down because neither the state of Maharashtra or the government of India
are willIng to live up to the contractual commitments they have signed. We are working hard to solve this
problem, both through negotiations with the Government of India, as well as through the legal system in
India and the UK, where we are undertaking arbitration as per the contracts.

								   -       EC50849B0191068



Both the future of the project and the future of our very talented staff at Dabhol will be determined in this
process. It is my sincere hope that we will be able to reach an amicable and quick solution to this problem
with the Government of India. But at this time, I cannot provide any predictable odds on whether that can
be achieved. In the meantime. I hope that all of our very valuable employees at Dabhol will continue to do
everything they can to make it possible that we can complete construction and renew operations as soon as
we can if an amicable solution is found.

RBLACK ASKS (POSTED ON 09/26/2001 10:53 A.M.)
Why is our net income percentage so low compared to others In our industry? DO you agree that this is an
Issue? ANd what steps can we take to improve it?

ICEN LAY REPLIES
I presume you are referring to our net income as a percent of our total revenue. For Enron and for our
business model, this Is virtually irrelevant. Because of the way the accounting profession requires us to
report revenue, we have to report all of the revenue on everything that we sell, not just the margin between
the cost of what we paid to buy the supply of natural gas or electricity or other commodity and the amount
that we received when we sold it, which would be a more meaningful margin or revenue number.

The more appropriate financial measurement is return on invested capital. As to this measure, we have very
attractive returns on invested capital in our wholesale, retail and transportation services businesses and
very low returns on invested capital in our global assets (developing countries) businesses.

As you know, we have announced intentions to monetize many of these global assets over the next two to
three years.

RICHARD.BLACK ASKS (POSTED ON 09/26/200.110:53 A.M.)
Is our current period net income percentage something that concerns you?

KEN.LAY REPLIES
I believe this is a similar question to the one that I just answered. If not, if it could be clarified, I will still
answer it before we finish today.

MARK.LEAHY ASKS (POSTED ON 09/26/2001 1.1:01 A.M.)
InstItutional Investors have learned a hard lesson in the last .18 months - that they do better holding stocks
they undertsand and can analyse than stocks that have better stories than financial information. Enmn is
considered to be in the latter category. How are we dealing with transparency ? How will we get the markets
to trust the quality of our earnings ? How wi/i the change In Investor appetite affect our business strategy
with respect to non-core busInesses?

KEN.LAY REPLIES
We have indicated that we are going to begin providIng the financial community more information in our
operations and financial performance. At the same time, we have made it very dear that we will not provide
the kind of detail that our competitors would benefit from.

I personally believe that the issue of quality of earnings is overstated. We have now had 24 consecutive
quarters of over year increases and income in our wholesale business, which Is where this quality of
earnings issue is usually raised. If we somehow are filling holes in our operating income in this business, it
would be virtually impossible to continue doing that for six years. Hopefully, as we do provide more detail to
the financial community as well as continue to show good strong quarter-on-quarter financial performance,
this issue will begin to fade.

As to business strategy, we are certainly deemphasizing broadband and certainly reemphasizing our strong
energy busInesses. We are also having good success In some of our new industrial markets businesses. I
think part of what we have seen recently on Wail Street Is that any glass is a best half empty and there is no
glass that is half full. Hopefully, this will change as the markets settle and we begin to see same recovery in
the economy.

									EC~O849BO1S1O69



JAMES.GOUGH ASKS (POSTED ON 09/26/2001 12:0? AM.)
Why Is Enron Direct so dependent on Houston for everything and Enron Direct considered to eb a sateiite'
office when we are in fact a totally seperate business entity? Example: Remedy goes through the Houston
server which results in our support dept. being severely slowed in the work flow and being unable to tailor
the system to their own requirements. Especially in light of recent US events, if Houston (or London for that
matter) encounter a problem that results in their network being severed~, then we are totally cut-off and can
not continue to work. Would It not be a better idea to have a self sufficient system?

KEN.LAY REPLIES
rm not sure I can give you much help with this question. i'm sure there are some economies by having
Enron Direct's U needs aggregated with the needs of other businesses. But I expect you will need to
address this directly to our Net Works department. Sorry I cant be more helpful.

RXCHARD.BLACK ASKS (POSTED ON 09/26/2001 11:03 AM.)
Jeff SkilIIng had started to spend time explaining more about Enron's strategy to us all. Will anybody
continue this Initiative?

KEN.LAY REPLIES
As you will see when you receive the Lay It On the Line email, we are addressing the whole issue of
employees not understanding Enrons strategy well enough. I and the other senior management will
continue to talk to you about our strategy. But we also are going to require a lot of our managers to take
personal responsibilty on this Issue.

R1CHARD.BLACK ASKS (POSTED ON 09/26/2001 11:05 AM.)
How Is Jeff SKilling these days?

KEN.LAY REPLIES
I've not talked to Jeff for several days, but last time I talked to him he was doing fine. He Is spending a lot
more time with his children. He said for the first time in years he was able to take his children to school on
the first day of school and spend a lot more evenings and weekends with them. He is also working on some
community activities. And at least when we met last, he had shaved hIs beard -- Just so you know.

KSTRADER ASKS (POSTED ON 09/26/2001 11:08 AM.)
Mr. Lay Would you know if there any plans to supplement/replace the Enron downtown campus or Ardmore
generators with fuel cell technology from our partners FuelCell Energy?

KEN.LAY REPLIES
I do not know. I know the energy system in the new building is supposed to be the latest greatest state of
the art. I seriously doubt that we would consider replacing that since it has just been Installed. And to my
knowledge we dont have any plans to replace the system In this building.

RICHARD.BLACK ASKS (POSTED ON 09/26/2001 11:08 AM.)
If we have to~y our way out of Dabhol, will the multI-billIon dollar charges force Enron into bankruptcy?

KEN.LAY REPUES
Absolutely not. We still expect to recover most or all of the costs of Dabhol. But even if we do not, our
balance sheet is very strong and would have no difficulty absorbing a charge.

RICHARD.BLACK ASKS (POSTED ON 09/26/2001 11:12 AM.)
How are we going to get grip on technology (Enron Net Works) costs that are currently spiraling out of
control?

KEN,LAY REPLIES
Our IT costs are large, but I don't think they're spIralling out of control. We are currently beginning our
annual budget cycle and we will be reviewing all budgets very carefully, including the budgets of Enron Net
Works.

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STEPHEN.WOLFE ASKS (POSTED ON 09126/2001 11:12 A.M.)
Mr. Lay, if you can comment on this, Is there any truth in the possibility of Enron being acquired by another
company? Since our strengths seem to lie in our Intellectual capital (top-class traders, dealmakers, etc), and
not Thard" assets, whose number we continue to reduce Vbr return-on-investment reasons, I would have
guessed that we would not be a prime acquisition target.

KEN LAY REPLIES
I certainly have no information or expectation that any other company might be considering acquiring
Enron. As to selling off hard assets, we are primarily selling some of our assets In developing countries,
which have very low returns on invested capital. We continue to look for opportunities to build or purchase
assets related to our main businesses, particularly in North America and Europe.

MARIE.NEWHOUSE ASKS (POSTED ON 09/26/2001 11:15 A.M.)
Mr. Chairman...Are we to nominate someone for the Chairman's Award because they embody one value or
all Enron values?

KEN.LAY REPLIES
~f this individual is an outstanding role model for one value, he or she should be nominated for the
Chairman's Award. I would certainly hope that the nominee also embodies the other values, but the
nomination should emphasize the one where this particular nominee is an outstanding role model.

RICHARD.BLACK ASKS (POSTED ON 09/26/2001 11:15A.M.)
Is there any risk that Greg Whalley will return to active duty in the US armed forces?

KEN.LAY REPLIES
I hope notl Greg is not in the active reserves and certainly is more than fully employed in his new position
and he's doing a great job for Enron.

RICHARD.BLACK ASKS (POSTED ON 09/26/2001 11:19A.M.)
What~s is going to happen to ENron in ten years time, when all the curmet MTh tricks come home to roost?

KEN.LAY REPLIES
I assume 14Th means market to market. The market to market rules that we apply are indeed required by
the SEC and by the Financial Accounting Standing Board. These are also the sames rules that we have
applied for almost 10 years. I would guess 10 years from now our net income will be tour-to-six fold what it
is today and our market cap will be eight-to-iD times what it is today.

DMILLER5 ASKS (POSTED ON 09/26/2001 11:21 A.M.)
Hi Ken, Thank you for sticking It out with us In these challenging times. What Impact wIll the events of
September 1.1 th have on our current international postion, and on our future strategy? Do you think It will
Increase opportunites for Enron, or has uncertainty been elevated to a level where the potential risk will
dIctate an even more conservative approach?

KEN.LAY REPLIES
In as much as we have already Initiated a strategy to be less involved In parts of the developing world, I
believe the events of Sept. 11 will have very little impact on our overall stategy going forward.

There is some possibility that with all of the developing countries pulling together to respond to Sept. 11,
there will also be even a stronger push for further trade liberalization and maybe other economic
cooperation among the industrlail~ed countries. TIgs would enhance Enrosis opportunities.

MITESH.MASTER ASKS (POSTED ON 09/26/2001 11:23 AM.)
Mr. Lay, What do you feel each employee needs to know about Enron in order to succesfully further our
endeavors? How do we dessimlnate this knowledge?

KENLAY REPLIES                                                           EC5084960101071
First and foremost, I would hope that each employee knows what is the truth about Enron. It seems over
the last few months, there have been numerous rumors about Enron that had no factual basis. I believe
many of these have been promegated by short sellers, but unknowingly maybe have been spread by Enron
employees and others. I suppose on a more positive note, I would like for all Enron employees to fully
understand the fundamentals of our business and how strong they are. This would also include a good



understanding of the companVs stategy, which I have previpusly spoken to.

TLEHN ASKS (POSTED ON 09/26/2001 11:26A.M.)
Can you describe how decisions are made whether to evacuate the building given what happened on
September 11 ? How is It determined whether there is imminent danger? Also, does our dense-packing of
floors create a hazard in the event that we would have to evacuate the Enron Building?

KEN.LAY REPLIES
As a result of what happened on Sept. 11, we have undertaken a complete and thorough review of all of our
security measures, as well as all procedures related to any possible emergency. Clearly, there is a great
deal of attention being paid to this concern. We do have a specific procedure as to any possible evacuation
of the building, and If we ever have any reason to think our employees might be at risk, we will Implement
this procedure immediately.

As to density, the evacuation plan would allow us to still evacuate the building in very quick order as per fire
marshali and other requirements.

RIONES? ASKS (POSTED OH 09/26/2001 11:28 AM.)
flow's the third quarter looking?

KEN.LAY REPLIES
The third quarter is looking great. We will hit our numbers. We are continuing to have strong growth in our
businesses, and at this time I think we're well positioned for a very strong fourth quarter.

FADAMS2 ASKS (POSTED ON 09/26/2001 12:29 A.M.)
Mr. Lay I was a victim of Tropical Storm AllIson and I would like to let you know how much the $1000 we
received from Enron was appreciated. What a Joy to work for a company that diplays love and kindness to
lt's employees.

KEN.LAY REPLIES
I am sorry that you were a victim of Allison, but thanks for the kind words. We wanted to give our
employees at least a little Jump start in getting their lives back together.

MITESII.I4ASTER ASKS (POSTED ON 09/26/2001 11:30 Alt)
Would you mind explaining what an Spy is? It was referenced in a previous question.

KEN LAY REPLIES
An SPV is a special financing vehicle that can be set up for a number of different purposes, such as hedging
certain transcations.

FELIPEOSPINA ASKS (POSTED ON 09/26/2001 11:31 AM.)
Mr Lay - we have all seen the surprising numbers behind transactions in pulp and paper, steel, coal and
other commodity groups. However, are these business units currently profitable and if so how much are
they adding to Enron's bottom line?

KENLAY REPLIES
These businesses are currently p-oTiable and, as you indicated, are growing at an incredibly rapid rate. I
would expect these businesses to be a significant part of Enron's growth story going forward.

ROB BROWN ASKS (POSTED ON 09/26/2001 11:33 A.M.)
fir. Lay, We hear a lot of talk in the market place about a short recession that seems to loom on the
immediate horizon that will last through the 4th quarter of this year. flow well do think Enron's business
model is insulated from the effects of a recession In term s of slower growth, etc.?

KEN.LAY REPLIES
The recession could be somewhat deeper as a result as what happened on Sept. 11, but most economists
believe we will begin to see a recovery by the second quarter of 2002. Our businesses, like all businesses,
will be somewhat impacted by a slower economy, but will probably not be as nearly as adversely impacted
as more traditional manufacturing or cyclical industries.

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ROBERT.GERRY ASKS (POSTED ON 09/26/2001 11:34 A.M.)
In talking with business people outside of Enron, I find that there are still many managet3 and executives at
a wide range of companies who are unaware of the broad range of services that Enron Energy Services
provides. I'm wondering If Enron might consider rolling out an advertising campaign specifically designed o
raise awareness about EESs products and services?

KENLAY REPLIES
We have done some advertising about EES' products and services and I believe a campaign Is currently
being designed that would target EES' most likely future customers.

SCANTRE ASKS (POSTED ON 09/26/2001 11:37 AM.)
Do you have any plans to respond to the iess-than-compiimentai'y article in Forbes? It certainly didnt do
Enron any good in the eyes of some Investors. And thanks for emphasizing Integrity. It makes it much easier
for some of us to stand up to questionable practices we see going on around us.

ICEN.LAY REPLIES
Usually responding to an article such as this just gives it more attention. it wasn't complimentary, and
certainly I didn't enjoy it. it does seem that some publications are now going out of their way to regurgitate
old Information or trying to put Just a little different twist on old Information. This will also eventually end
and perhaps we needn't look forward to getting back into a more vituous cycle where all of the same
publications will be trying to outdo each other on how great Enron is.

KEN.LAY COMMENTS (POSTED ON 09/26/2001 11:40 AM.)
i'm sorry I had to skip a few of the questions, but I have run out of time. I very much appreciate your
Interest and your questions. These are difficult times, but we will come through them. The company is doing
well. We will resolve the outstanding Issues and we will return to a time when we will be excited about how
much the stock price has gone up versus our painful experience over the last few months.

Thanks for everything all of you do to make Enron one of the greatest companies in the world.