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  r
i
I

3ENTIAL

-XH006-01196

Finance Committee Meeting
April 30, 2001

  Committee Members

  Mr. Herbert S. Winokur, Jr., Chairman
Mr. Robert A. Belfer
  Mr. Norman P. Blake, Jr.
Mr. Ronnie C. Chan
  Mr. Jerome J. Meyer
  Mr. Paulo V. Ferraz Pereira
Mr. Frank Savage
  Mr. John A. Urquhart,

E0004403740

Endless possibilities:-

  GOVERNMENT

  EXHIBIT
  310
  Crim. No. H-04-25 (S-2)


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  Agenda
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EXH006-01197


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AGENDA
Meeting of the Finance Committee
of the Board of Directors of Enron Corp.
4:00 p.m. (CDT), April 30, 2001
50th Floor Boardroom, Enron Building
Houston, Texas

,; 1. Approval of February 12, 2001 Finance Minutes subject to final legal review Mr. Winokur
ti 2. Financial Reports
  A) Chief Financial Officer Report Mr. Fastow
B) Deputy Treasurer Nomination Discussion

L~J
  3. Treasurer Report Mr. Glisan
11 4. Chief Risk Officer Report Mr. Buy
Quarterly Risk Update
  Enron's Assets
  - Trade Credit Update
-~ - Investment Portfolio
  - Enron Energy Services
- Market Risk Update

  5. Projects and Amendments
  A) Revision to the Risk Management Policy Mr. Buy
Approve for Recommendation to the Board
  B) Revision to the Transaction Approval Process Mr. Buy
Approve for Recommendation to the Board
  C) Minority Financing Vehicle Mr. Causey
- Approve for Recommendation to the Board
  D) Las Vegas Cogen II Mr. Calger
- Approve for Recommendation to the Board
t E) Cuiaba Integrated Energy Project Ms. McDonald
l
~" - Approve for Recommendation to the Board
  F) CEG Rio Divestiture Mr. Stabler
t - Approve for Recommendation to the Board
j
  G) Project Red Rock Mr. Horton
Approve for Recommendation to the Board

  6. Other Business
9
J
  7. Adjourn
T'
  i) E0004403742
i
  See Addendum for Deal Approval Sheets approved between Board meetings

Page
  1-1

  2-1
2A-1
2B-1

3-1
4-1

4-2
4-3
4-11
4-16
4-23

  5-1
5A-1
5B-1
5C-1
5D-1
5E-1
5F-1
5G-1

  6-1
7-1

XH006-01198


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  Agenda Item I
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EXH006-01199


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  MOM, zz

Enron Corp

Finance Committee Minutes

from February 12, 2001 meeting

m
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0
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1-1

EXH006-01200


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  MINUTES

MEETING OF THE FINANCE COMMITTEE
OF THE BOARD OF DIRECTORS
ENRON CORP.
FEBRUARY 12, 2001

DRAFT

  Minutes of a meeting of the Finance Committee ("Committee") of the
Board of Directors of Enron Corp. ("Company"), noticed to begin at 4:00
p.m. C.S.T., but actually begun at 4:05 p.m., C.S.T., at the Enron Building,
Houston, Texas.

The following Committee members were present constituting a

quorum:

Mr. Herbert S. Winokur, Jr., Chairman
Mr. Robert A. Belfer
Mr. Ronnie C. Chan
Mr. Jerome J. Meyer
Mr. Paulo V. Ferraz Pereira
Mr. Frank Savage
Mr. John A. Urquhart

  Committee member Blake was absent from the meeting. Directors
Wendy L. Gramm, Ken L. Harrison, Kenneth L. Lay, John Mendelsohn, and
Jeffrey K. Skilling, Messrs. William S. Bradford, Richard B. Buy, Richard A.
Causey, Timothy A. DeSpain, Andrew S. Fastow, Ben F. Glisan, Jr., David
G. Gorte, Mark E. Koenig, and Jordan H. Mintz, and Ms. Rebecca C.
Carter, all of the Company or affiliates thereof, and Mr. -Richard N. Foster,
of McKinsey & Company, Inc., also attended the meeting.

  The Chairman, Mr. Winokur, presided at the meeting, and the
Secretary, Ms. Carter, recorded the proceedings.

  Mr. Winokur called the meeting to order, noted that a draft of the
minutes of the meeting of the Committee held on December 11, 2000 had
been distributed to the Committee members, and called for any corrections
or additions. There being none, upon motion duly made by Mr. Winokur,
seconded by Mr. Meyer, and carried, the minutes of the meeting of the
Committee held on December 11, 2000 were approved as distributed.

  E0004403745

N
vt

=XH006-01201


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Page 7 of 208
=============

~ Mr. Winokur called upon Mr. Fastow to present the Chief Financial
Officer's report, a copy of which is filed with the records of the meeting. Mr.
Fastow discussed the Company's current and projected key financial
lsi
  ratios, including coverage and leverage ratios, and stated that the ratios
were based on the current plan. He noted that since the beginning of the
year there had not been any purchases of the Company's stock for the
trading portfolio but that during January the Company had purchased
approximately one million shares now held in treasury. He presented a
chart depicting the Company's interest rate exposure and noted the dollar
amounts at fixed and at floating interest rates. He then reviewed the
-; Company's cost of capital, utilizing the CAPM Black Scholes valuation
1.,J method, and discussed changes from the last report to the Committee.

  Mr. Winokur changed the agenda to discuss the Company's
transactions with LJM later in the meeting and called upon Mr. Glisan for
the Treasurer's report, a copy of which is filed with the records of the
meeting. Mr. Glisan reviewed the liquidity report as of January 29, 2001
and noted that the Company's total liquidity was currently over $8.3 billion.
He then reviewed the Company's outstanding letters of credit and
discussed the changes since yearend. He presented the Company's
guarantee portfolio as of yearend and noted that required guarantees
continued to be higher than normal due to the significant increase in the
volumes transacted by the Company. He then stated that there had not
been any change in the Company's ratings by the rating agencies but
noted that the Company was working on being upgraded to "positive
outlook" by Standard & Poors. Mr. DeSpain joined him for a discussion of
the zero coupon convertible debt security recently issued by the Company.

  Mr. Winokur called upon Mr. Buy to present the Chief Risk Officer's
report, a copy of which is filed with the records of the meeting. Mr. Buy
distributed a handout titled "Supplemental Schedules", -a copy of which is
filed with the records of the meeting. He reviewed the Company's major
relationship credit exposures and all of the Company's trade credit
exposures that were in excess of $50 million. He then discussed the
Company's internal rating of each company, the Company's total exposure,
and any collateral held by the Company. He noted that only three of the
major relationship credit exposures had a below investment grade rating.
He then reviewed the cash and other collateral that the Company had
received from or paid to its counterparties as of February 8, 2001. Mr.
Skilling joined him for a lengthy discussion of the situation in the California
energy markets and the efforts by the Company to mitigate its credit
exposure.

F
4 -iP
Z

E0004403746

=XH006-01202


=============
Page 8 of 208
=============

r

  Mr. Buy then began a discussion of the Company's merchant
portfolio and noted that there had been a significant increase in the
  j Company's gross and net credit exposure since the end of the third quarter
J 2000. He then moved to a discussion of the Risk Assessment and Control
("RAC") group's analysis of Enron Energy Services LLC ("EES"). He noted
that EES had made significant progress in continuing to develop projects
~.j
  and obtaining customer approvals and that EES's project installation phase
was now ahead of the plan. He stated that the RAC group had completed
an energy asset management verification project to evaluate EES's actual
performance relative to its initial engineering estimates. He stated that the
total net present value of all projects was close to the original projected
  j value but the standard deviation was quite high. He noted that the RAC
group had determined that the issues facing EES included a wide range of
distribution of the energy efficiency of the outcomes and an increased need
for a premeasurement process to validate actual energy savings on
individual projects. He reviewed the additional steps that were being
undertaken by the RAC group to complete the analysis of EES's business
and commented on the impact of the California energy crisis on the
-; business efforts. He updated the Committee on the efforts of the EES and
RAC task force and Mr. Skilling joined him for a discussion of certain recent
management changes at EES.

  Mr. Buy then began the market risk update by discussing the profit or
loss that each commodity group had earned during 2000 compared to the
average Value at Risk ("VAR") it had taken. He then presented the same
information by business unit and specific commodity. He reviewed the
VAR limit utilization by commodity for each quarter of 2000 and gave an
overview of the VAR backtesting. He then presented four stress scenarios
that had been analyzed by the RAC group and commented on the potential
impact of each scenario on the Company's earnings. He noted that the
potential impact of one of the scenarios had already been somewhat
mitigated since the analysis was done. He then presented stress testing of
the Company's exposure under "worst case" scenarios of 5% and 25%
shifts in commodity prices.

' Mr. Buy then discussed the Company's foreign exchange exposure
by business unit and commented on the amounts that would be recorded in
the Company's currency translation account and income statement. He
reviewed a sensitivity analysis comparing the Company's foreign currency
exposure in South America to that of all the other business units and
{ provided an update on the status of the RAC group's overall foreign
exchange project. He then began a discussion of the proposed changes to
the Enron Corp. Risk Management Policy ("Policy"). He noted that the first
change was to increase the aggregate VAR limit by $25 million and Mr.

E0004403747

(H006-01203


=============
Page 9 of 208
=============

r

rrs
  E Skilling joined him for a discussion of the reason for the purposed increase.
Mr. Buy then stated that the remaining changes to the Policy related to the
following areas: 1) increases to the net open position limit, maturity /gap
limit, and/or VAR for certain existing commodity groups, 2) establishing
permanent net open position limits, maturity /gap limits, and/or VAR limits
for certain commodities currently under the interim limit section of the
L 1,
  Policy, 3) providing for notification of limit violations and loss notifications to
the President and CEO ("CEO") at the discretion of the Chief Risk Officer
("CRO"), rather that the existing structured reporting, 4) delegation to the
CRO the authority to allocate the discretionary VAR to facilitate a new
market-driven allocation framework, rather than requiring both the CRO
and the CEO to approve, 5) clarifying certain aspects related to the cross-
commodity trading section of the Policy, and 6) specifying the operational
t control requirement that all trades executed over the telephone must be
recorded electronically. Following a lengthy discussion, upon motion duly
made by Mr. Ferraz, seconded by Mr. Chan, and carried, all of the
proposed changes to the Policy with the exception of items 3 and 4 above
were approved for recommendation to the Board.

  Mr. Winokur then called upon Mr. Buy to discuss the proposed
changes to the Transaction Approval Process ("TAP"). Mr. Buy stated that
the proposed changes to the TAP were recommended to take into account
certain reorganizations at the Company and to add capital expenditures to
the risk adjusted capital definition to determine the aggregate exposure in
transactions. Following a discussion, upon motion duly made by Mr.
Ferraz, seconded by Mr. Urquhart, and carried, the proposed changes to
the TAP as presented at the meeting, were approved for recommendation
to the Board.

  Mr. Winokur then called upon Mr. Gorte to begin the Eli Lilly
presentation. Mr. Gorte noted that the Board approved a transaction with
Eli Lilly in December of 2000 and the Company was recommending
  j adjustments to the deal structure to: 1) decrease the approved energy
asset project capital, 2) add LLC capital and mobilization costs, and 3) add
a lease component to finance capital replacement expenditures. He
` reviewed each of the recommended adjustments and noted that it would
`"' not cause a significant increase in the risks of the project. Following a
discussion, upon motion duly made by Urquhart, seconded by Mr. Savage,
w and carried, the proposed Eli- Lilly project presented at the meeting, was
approved for recommendation to the Board.

  Mr. Winokur then called upon Mr. Glisan to begin the Project Crane
presentation. Mr. Glisan stated that when the Board initially approved
Project Crane the resolution did not provide the Company the flexibility to

E0004403748

H006-01204


=============
Page 10 of 208
=============

  close the transaction on balance sheet, therefore, management was
recommending an additional resolution to provide this flexibility. Following
ri a discussion, upon motion duly made by Mr. Meyer, seconded by Mr.
Urquhart, and carried, the modification to Project Crane as presented at the
meeting, was approved for recommendation to the Board.

  Messrs. Bradford, DeSpain, Glisan, Gorte, and Koenig and Directors
Gramm and Skilling left meeting.

  Mr. Winokur called upon Messrs. Causey and Fastow to review the
Company's procedures regarding transactions with LJM and the
transactions completed in 2000. Mr. Fastow began with a discussion of the
Company's utilization of the LJM vehicles. Mr. Causey reviewed each of
LJM's investments with the Company that were made during 2000. He
categorized the investments into four areas, balance sheet, hedges,
income statement, and other, and presented a brief description of each
transaction and the notional dollar amount. He then reviewed the
Company's internal policies and procedures that were in place to monitor
transactions between the Company and LJM, stated that the items had
also been discussed with the Audit and Compliance Committee, and
commented that the process was working effectively. He also noted that
the Company had implemented supplemental efforts to complement the
Board-established guidelines regarding transactions between the Company
and LJM.

  There being no further business to come before the Committee, the
meeting was adjourned at 5:45 p.m. C.S.T.

Secretary

APPROVED:

Chairman

E0004403749

-1006-01205


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Page 11 of 208
=============

Agenda Item 2


=============
Page 12 of 208
=============

  Enron Corp.

Financial Reports
April 30, 2001

E0004403751

2-1

XH006-01207


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  Agenda Item 2a
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EXH006-01208


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=============

q E,

  Enron Corp.

Chief Financial Officer Report
April 30, 2001

E0004403753

(H006-01209


=============
Page 15 of 208
=============

Finance Issues/Exposures

   Stock Activity
   _Interest Rate Exposure
 Refinancing Risk

   Stock Price Risk in Financings

   Finance Related Asset Sales
 Funding Sources

   Liquidity
 Workouts

E0004403754

2A-2

EXH006-01210


=============
Page 16 of 208
=============

C F, am
  L_-_73 EM

  Enron Stock Activity
  (000) except Share Price
Stock Trading Activity MTM
Description Shares (000) Avg Price Amount

Opening Balance - - -
Transactions - - -
Ending Balance - $ - $ -

EGF Equity Position Limits V@R Notional open
Limit ($N M) $10.00 $300.00
Current position ($MM) $0.00 $0.00
Position limits exclude ENA position w hich is relflected in BVA
equity book position report
-Includes 60% of JEDI if an open position

Stock Purchase Activity (Treasury)
Description Shares (000) Avg Price Amount
Opening Balance 577 $ - $ -
Repurchases 4,199 $ 78.95 $ 331,520
Other Activity (851)
Ending Balance 3,925

  Authorization, Subject to Jim Derricks approval 20,000,000
Activity 4,199,000

2A - 3 ECO04403755

7,

:XH006-01211


=============
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=============

2A - 4 E0004403756

142,789
336,409

Bo l
i

Total

0 Floating - 16%
 Fixed - 84%

J",~

EXH006-01212


=============
Page 18 of 208
=============

Refinancing Risk

As of December 31, 2000

LTD Maturities

	2,500,000		--	-- 8.00%
			,,	7.50%
6	2,000,000			U)
a				w
w	1,500,000			6.50%
C
c				6.00% c
	1,000,000			
5.50%

3					m
5.00%
O	500,000					U
				1
1	
~	-4.50%
	0			1 El 1
{~, - !	I	4.00%
	N N
0 0	N N) N N N N
O O O
0
O N	N N N N
N N 0 0	
	0
2
A	_
0
J O W O 0 N	Ln 00 A	
		Year		

-Average Life: 6.33 years

Proforma 2001

LTD Maturities

	2,500,000	7-,-" ~~ s a	8.00%
						7.50%
	2,000,000					00%
7
r		~/ -	c
'	Y	S"ix`	.
			
~			_
6.50%
eq	1,500,000	-					e
`		
~					6.00% o
	1,000,000	`						5.50% +~
2								
							-	
00%
5
	500,000							i	.
U
					k	$			4.50%
	0				Ill lei			Ir a' .I
oil	4.00%
		N N N N N N N
O
O O O	N N
N N	N
N	N N
W W	
		_
O O O
A J O W d) (O	N (n	00	
A	
		Year				

-Average Life: 9.31 years

-$1 billion tender and exchange will extend short term
debt out five years
-$1.25 billion Convert issued in January

2A _ 5 E0004403757

IX

EXH006-01213


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=============

  LIU

Stock Price Risk in Financings
  Potential Required Future Equity issuance

			
(/s...	r		
	
Equivalent Shares	r

s)
( 0C )o
	$40	$50	$60 $70 $80
Osprey	10,688	-	- - -
Raptor 1	11,683	7,149	2,666 1,197 95
Raptor 2	11,733	5,219	- - -
Raptor 4	11,237	7,358	4,771 - -
	45,341	19,726	7,437 1,197 95

  i ~~

-Osprey matures in 2003
-Raptor vehicle share issuances are triggered by date
-Osprey shares trigger in 2003
  -Q101 Restructuring shares trigger in 2005

2A-6 E0004403758

EXH006-01214


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Page 20 of 208
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Finance Related Asset Sales
($MM)

Sales of Financial Assets (125)

Total Shortest Longest

  Enron Americas
Enron Broadband
Enron Europe
  Enron Energy Service
Enron Global Finance
Enron Net Works

  '(

Crude Prepays
Gas Prepays

225.2	Dec-01	Dec-13
150.6	Jun-02	Nov-02
347.2	Jan-02	Dec-32
197.4	Jun-02	Dec-13
517.0		May-02
200.0		Sep-01
1,637.4	Dec-01	Dec-32

Prepays

  Total Earliest Latest

2,116.2 Dec-01	Feb-07
1,822.4 Dec-01	Apr-11
3,938.6 Dec-01	Apr-11

2A _ 7 E0004403759

EXH006-01215


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Page 21 of 208
=============

  Funding Sources

2000

1998

0CapMkt- oCapMkt-
US on US

   Bank

1999

  o Cap Mkt-
Non US
 Cap Mkt -
  US

   Bank

  Cap Mkt-
Non US
Cap Mkt-
  US

  Bank

1998	1999		2000
Funds Raised	% of Total	Funds Raised	% of Total	Funds Raised	% of Total
					
Bank 15,8,87	86%	12,400	68%	15,557	73%
Cap Mkt - US 2,661	14%	4,855	26%	4,156	20%
Cap Mkt - Non US -	0%	1,037	6%	1,569	7%
Total $ 18,548	100%	$ 18,292	100%	$ 21,282	100%

E0004403760

2A-8

EXH006-01216


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Page 22 of 208
=============

LIM

Liquidity - Margin Activity

Daily Net Margin Activity (000)
March 2000 - March 2001

  $800,000
$600,000
$400,000
$200,000
  $0
($200,000)
($400,000)
($600,000) o
  0
L
  t4

Margin Activity Statistics ($000)
	Net Margin		
	Activity for	Maximum	Minimum
	Month	Daily Net	Daily Net
April-00	82,512	51,596	(30, 384)
May-00	(659,172)	76,863	(137,606)
June-00	4,227	165,527	(129, 599)
July-00	129,450	119,191	(104,974)
August-00	814,103	576,012	(96,635)
September-00	(389,317)	77,234	(237,176)
October-00	130,520	130,780	(225, 314)
November-00	(10,487)	186,115	(138,954)
December-00	855,778	431,775	(403,472)
January-01	370,465	273,098	(274,559)
February-01	(399,766)	218,525	(226,934)
March-01	(453,293)	133,952	(364,801)

2A-9
  E0004403761

=XH 006-01217

  0 0 0 0 0 0 0 0 0
  0 0 0 o 0 0 0 0 0 0 0 0
L
  Q N C 0) a) V 0 U C .Q (II
Q -3i Q :3 (D
  U O Z 0 -, u


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Page 23 of 208
=============

  ).

.

.

  Workouts
Dabhol

Cuiaba

Azurix

Trakya

Other

E0004403762

2A - 10

.1 X,

EXH006-01218


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=============

  Agenda Item 2b
m
  n
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w
v
rn
w
EXH006-01219


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=============

Enron Corp.

Deputy Treasurer Nomination
Discussion

E0004403764

2B-1

EXH006-01220


=============
Page 26 of 208
=============

m

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0
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  c .

  Enron Corp.

Treasurer Report
April 30, 2001

E0004403766

EXH006-01222


=============
Page 28 of 208
=============

  LZi

Enron Corp.
Liquidity Report
As of April 18, 2001
($000)

  Overnight 2-30 Days 31-60 Days 61-90 Days 91+ Days Total
Commercial Paper & Uncommitted Lines 2,754,000 2,754,000
Bank Facilities
  BHF 18,571 18,571
Accounts Recievable 250,000 250,000
Whitewing 164,000 164,000
Shelf Registration - Debt 1,000,000 1,000,000
Shelf Registration - Equity' 930,000 930,000

Merchant Portfolio Monetizations (as of:04/17/01)

  Public Equity 617,349 617,349
Debt Instruments 450,425 450,425
Private Equity 1,306,183 1,306,183
Total 2,772,571 2,961,349 450,425 - 1,306,183 7,490,528

1 Reflects 15mm shares at $62 per share.

E0004403767

3-2

  . f1J

=XH006-01223


=============
Page 29 of 208
=============

  Enron Corp.
Active Letters of Credit by Category
($000)

Bids
Debt,
EOTT
Leases
Other
Other Third-Party
Performance
Trade '

Grand Total

04117101	12131100	12131199
		
$ 7,332	$ 6,321	$ 5,968
40,241	24,241	52,946
123,265	102,089	150,310
12,672	12,750	15,604
59,330	280,179	80,071
5,193	6,605	24,078
441,611	425,210	522,006
875,244	634,300	76,269

  $ 1,564,888 $ 1,491,695 $ 927,252

E0004403768

3-3

r

=XH006-01224


=============
Page 30 of 208
=============

Enron Corp.
Guarantee Portfolio
  (ooo's)

Trade (Payment & Performance)
EOTT Trade

Swap Agreements
(Master & Individual)
Projects (Non-Debt)
Debt

  03/30/01
$21,949,022

  5449744

11,471,408
5,724,732

  Consolidated Subsidiaries 3,001,223
Unconsolidated Subsidiaries 337,746

  Grand Total $43,0283875

E0004403769

3-4

12131100

$21,197,904
544,744

10,878,431
4,632,739

3,084,698
337,746

  12/31/99
$17,316,817

  4405375

7,148,443
4,756,470

2,155, 303
337,746

$401676,262 $32,155,154

1)

EXH006-01225


=============
Page 31 of 208
=============

  IF M m ._tL^'~m 00 ~`e-'rte MEN,

5

4

3

2

1

55%
45%--
35%
25%
15%

5%

i,0

.0

.4

1996 1997 1998 1999 2000 2001P 1996 1997 1998 1999 2000 2001P
~ Total Obligations/Total Capital
  Funds Flow Interest'Coverage ~+- Debt/ B/S Capital

  "O" Interest Coverage ~* M1 FF0/Total Obligation

Leverage

	V ~	c
3	i
			r
C	
E0004403770
			y	
				
				
				'3-5
				
				

Targeted Key Financial Ratios

Coverage

EXH006-01226


=============
Page 32 of 208
=============

Rating Summary

		Commercial	
Rating Agency	Long Term	Paper	Outlook
			
Fitch IBCA	BBB+	F-2	Stable
Moody's	Baal	P2	Stable
R and I(Japan)	A-	nla	Stable
Standard & Poors	BBB+	A2	Stable

E0004403771

3-6

0)

EXH006-01227


=============
Page 33 of 208
=============

- - - '~J

35%
30%
25%
20%
15%
10%
5%

Market Cost of
After Tax Debt
Equity

  Cost of Capital

  \~ Equity Analyst Forecasted Stock Prices
5 year annualized return T2 Month
Firm Recommendation Target Price
A.G. Edwards Hold 75
  ENE Bear Steams Attractive 98
Bemstein Hold
  Bank of America Strong Buy 105
294% 8%
  CIBC Oppenheimer Buy 95
CSFB Strong Buy 110
Dain Rauscher Wessels Strong Buy 105
First Albany Strong Buy 100
Goldman Sachs Buy 110
Howard Weil Hold
  J.P. Morgan Buy 120
Lehman Bros. Strong Buy 100
Merrill Lynch Buy 99
Morgan Stanley Outperform 100
Prudential Strong Buy 89

  Salomon Smith Bamey Buy 100
Simmons Buy 100
UBS Warburg Strong Buy 102

  % of Capital
Cost Structure

4.8%
29.8%
WACC

Enron Stock Price Date
12/29/2000
  1/31/2001
2/28/2001
3/30/2001

Average 100.5
Closing Implied
  Price Equity Return
83.125 20.9%
80.000 25.6%
68.500 46.7%
58.100 73.0%

  % of Capital
Cost of Capital Cost Structure
  N, After Tax Debt 4.8% 42% 2-0%
17.3% Equity 20.9% 58% 12.1%
19.3% WACC 7 14.1%

s' E0004403772

EXH006-01228

0%
Mar-98 Jun-98 SeP98 Dec-98 Mar-99 Jun99 SeP99 DecA9 Mer-00 J-00 Sep-00 Deco
WACC using rolling 5 yr equity returns.


=============
Page 34 of 208
=============

Market Structure
Benchmark Yields Local Currency

USD LIBOR

  8.00
7.50
7.00
p 6.50
d 6.00
>- 5.50
  5.00
4.50
  'Ile all,
4.00
  ep Cp tlp O O aD O O) D) O M M O O O O O O
  O O O Ol D) O) O O O W O) m O O O O O O O O
  a a 0 10 N- a
  M ~ e- M
M N r ~ ~ M t0 n o~ ~ ~ M N t- M M

  -3Year , -5 Year 10 Year

GBP LIBOR

6.75 T	t?i~o "'	.}.,	n x a	
8.25				
".	
775
7.25	kJ .!L .~ U h~ H~T	Ia ~'~'	'WfahltL. ~ . fh	
6
75			I		
.
i
A
>		,	l!		
6.25		~	1		
5.75					
5.25				
4.75
(0
0)	
(0 (0 I- I- I--
0) 0) 0) rn rn	
ao Co O
rn 0) rn	
0) 0) 0)
rn rn m	
O C3 O
o 0 0 0
	N ) U) 0)	U) 0)	M 0)	U) m
	-3 Year	-5 Year		10 Year
				

	EUR LIBOR	
6.50	
ary r
6.00	
550
~
_

.00
5	MV -21641
75 --	-	
4.00		
3.50
-mss
3.00
r
"~..
2.50		
O m O O
d) m m O)
'- M N t`	op m O) O m a1 Q) O
m W D) Q) m D) M O
O ~ M I17 f~ O	O O O O O O
O O O O O O O O
M ~!] (` Q) r" M
- 3Year - 5 Year	10 Year
		

Yen LIBOR

3.00		Wu w'	v		~a	
2.50				C	s	
.
2.00-
g					w
W
I
y 1.50		;i			I
W
1.00 -	_				
0.50					
					
0.00 --	-
,				_'
Oo 00
0) O)
a
M
~ M	ao co 0 00
a) 0) 07 0,-
a N- 0)
In
n m ~	0) rn Co
0)a 0) 0)
a

r- M M to	rn rn m
0) O1 Q)
a a

t` M	o 0
O O
a	0 o O o
o 0 0 0 0 0

U) I- C a
U) I- O) .- M
					
	-3 Year	-	5 Year		10 Year
					

E0004403773

3-8

EXH006-01229


=============
Page 35 of 208
=============

			
				Market	Health
----	---			Mutual Funds Flows
1					
		t_ ~,3			
~		Figure 1.	investment Grade Corporate Debt	Figure 2. Emerging Markets Debt
			(4-wk. avg., $ in millions, 111/97-317101)	(4-wk. avg., $ in millions, 111197-317101)
		750			120
		600				90	
		450				60	
		300		
iL	
j	30	
		150				
0	k
		
0					I
T
						(3a)	j
		(150)			(60)	
		1197	1 /38 V-99	1100 1101	1/37 1/98 1R39 1100 1101
		Source: AMG Data Services		Source: AMG Data Services
				
		Figure 3.	All Equity		Figure 4. International and Global Debt
			(4-wk. avg., $ in mil	lions, ,111/97-317/01)	(4-tiwk. avg., $ in millions, 111W-W101)
		12.0			300
		8.0				200	
		4.0 -	J	A	
4	100	
		OD		H	-		
						0	
		(4.0)				(100)	
		(8.0)				(200)	
		(12.0)				(300)	
		1/97	1198 1 / 9	1100 1101	1 /.37 1198 1199 1 MO 1101
		Source: AMG Data Services		Source: AMG Data Seniices

3-9

E0004403774

=XH006-01230


=============
Page 36 of 208
=============

Market Indicators

YTD Max
  YTD Min YTD Change pr 4--A*r 78-Mar

  3 yr Treasury 5.14% 4.28% 0`.66% 5.13% 4.47l0 4.49% 4.2

- 5_y_r Treasuryy
-	5.01% _~- _	_ -4.45%	-0.27%--	,----- _ 4.98%	4.711%	4.69%	4.50%	4.64%_
_
10 Yr Treasury	5.31 l0	4.76%a .	0.03%	5.11%	5.1.4%	5.12%	4:91 %	4:98% {
Libor (3M)	6.40%	4.74%	-1.57%	6.40%	4.83%	4.76%	4.81%	4.90%
							
Dow Industrials	10,984 , -	- 9,389	~ _ (171)	~ 10,787	~ 10,616	i0,0139,515 t~	9,785
1
P Index	1,374	1,103	(82) _	1,320 __	.____1,2-38-_	_ ,~ 36.	1,_103	1,153
_
NASDAQ	2,859	1,639	(391) ,	2,471	2,079	1,899	1,639 -	1,854
Commn~ ltiae								
Natural Gas (Henry Hub)	10.50	4.92	(5.34)	10.50	5.16	5.46	5.21 '	5.64
Crude (NYMEX)	32.19	25.59	1.15	26.80	27.95	28.18	27.12	26.31

3-10

E0004403775

=XH006-01231


=============
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=============

  L -j
  ~

HISTORICAL 3-YEAR YIELD

		
3		-Treasuries
				
				Enron
				
				
				-Duke
r				-El Paso
				
r				-Dpnegy
s		-- ~		
				-W1lIams
				
				
		4 y	

Market Structure
  Sector Spreads

HISTORICAL 5-YEAR YIELD

t
1						
r						
						
'-						
s						
4						
14,11,
1	'Al				4\1	
0						
						

-Treasuries
Enron
-Duke
-El Paso
-Dynegy
-Wilams

  HISTORICAL 10-YEAR YIELD

  -Treasuries
~_ Enron
u -Duke
  ' T -ElPaso
>= Dynegy
s -
  Wifiams

Historical 3-Year Treasury Spread (bps	)		
	3/3012001 3/23/2001	3/2/2001	12/31/2000
Enron	139	141	140	138
(BBB+/Baal )				
Duke Energy	144	144	117	118
(AA /Aa3)				
Dynergy (111nova)	152	174	173	154
(BBBIBaa3)				
El Paso (Coastal)	160	144	138	128
(BBBBaa2)				
Williams	160	154	143	122
BBB-Baa2				

Historical 5-Year TreasurSpread b s			
	3130/2001 312312001	31212001	121 3112000
Enron	161	162	165	154
(BBB+/Baa1)				
Duke Capital	104	106	108	113
(AM)				
Dynergy	186	187	190	169
(BBB+/Baa2)				
El Paso (Coastal)	172	174	173	171
(BBB/Baa2)				
W illiams	176	177	178	176
BBB-lBaa2				

3-11

Historical 10-Year Treasury Spread b s			
	313012001 3/23/2001	3/2/2001 1213112000
Enron	178	193	173	187
(BBB+/Baa1)				
Duke Energy	168	168	163	158
(A+/AI)				
Dynergy (IL Power)	193	193	193	186
(BBB+/Baal)				
El Paso (Coastal)	186	178	183	193
(BBB/Baa2)				
Williams	198	193	210	210
(BBB-/Baa2)				

E0004403776

EXH006-01232


=============
Page 38 of 208
=============

  ,:.,..

Monthly change in Sector Spreads

40
30
20
10

0

U)
Q
  -10
-20

-30
-40
-50
-60

w Energy as Pipelines N Oil/Gas  Telecom  Finance

Dec-00 Jan-01 Feb-01 Mar-01

-5	-23	4 4
-5	-20	4 8
-8	-26	3 2
20	-56	30 2
-15	-29	-2 3

Implied Spread Moves for the Corporate Sector of the Salomon Smith Barney BIG Index

  E0004403777
3-12

EXH006-01233

  Dec-00 Jan-01 Feb-01 Mar-01


=============
Page 39 of 208
=============

Estimated New Issue Cost

Enron Estimated New Issue Cost

  3y 5y 10y
USD fixed 5.90% 6.51% 7.09%

USD Equivalent libor Funding Spreads

USD	0.85%	1.04%	1.08%
Sterling	0.87%	1.04%	1.29%
Euro	0.85%	0.96%	1.16%
Yen	1.00%	1.25%	1.35%

Enron Activity 2001
Completed
Convertible Note, $1.25 billion face, Maturing 2/8/2021, Cost 2.125%
TGS, $150 MM face, 5 year, libor + 298

Deal Pipeline
Enron Credit Linked Note, $750-$1,000 MM face, Expected in 2Q
Marlin, $800 MM face, Expected in 3Q
Tender and Exchange, $750-1,000 face, Expected in 2Q

3-13
  E0004403778

=XH006-01234


=============
Page 40 of 208
=============

  E-1,01 CIZ"

Other Notable Issuances

Daimler Chrysler issued $3.5 billion
 3 currencies: USD, GBP, Euro
 2, 3, 5, 10, and 30 year tranches
 Spreads ranging from 125 to 304

  France Telecom issued approximately $16 billion
 3 currencies: USD, GBP, Euro
   Maturities ranging from 2 to 30 years
 Spreads ranging from 125 to 308

Williams Communications issued $1.4 billion
Osprey like structure
 Matures 2/15/04
 Paid 398 bps with a coupon of 8.25%

Calpine issued $1.15 billion
 Senior Notes
 Maturity 2/15/11
 Paid 345 bps with a coupon of 8.50%

3-14

E0004403779

EXH006-01235


=============
Page 41 of 208
=============

~; m_-=

Funding Sources and Fees
(MM)

2000				Top Five Fee Earners	
	Funds Raised	Fees Paid	% of Total Fees	CSFB/DLJ	,' 47.2
Bank	15,556.8	60.2	45%	Chase	12.6
Cap Mkt	5,725.0	36.6	28%	Citigroup	12.1 U
Equity	504.0	33.1	25%	CIBC	8.2
M&A	-	2.6	2%	West LB	6.9
	Total $ 21, 785.8	$ 132.5	100%	$	87.0

1999

Fee Type	Funds Raised	Fees Paid	% of Total Fees	Merrill Lynch	26.8
Bank	12,400.0	105.5	40%	CSFB	23.7
Cap Mkt	5,892.0	53.7	21%	Citigroup	21.0
Equity	2,400.0	99.6	38%	Chase	19.2
M&A	-	3.3	1 %	Bank of America	18.3
	Total $ 20,692.0	$ 262.1	100%	$	109.0

1998 ,

Fee Type	Funds Raised	Fees Paid	% of Total Fees	DLJ	19.4
Bank	15,887.0	90.9	65%	Bankers Trust	15.8
Cap Mkt	2,661.0	21.5	15%	Citigroup	14.4
Equity	836.0	19.7	14%	Chase	12.8
M&A	-	7.6	6%	CSFB	11.5
	Total $ 19,384.0	$ 139.7	100%	$	73.9

E0004403780

3-15

EXH006-01236


=============
Page 42 of 208
=============

  Agenda Item 4
m
  n
0
0
A
0
w
w

EXH006-01237


=============
Page 43 of 208
=============

  2LID L.

Enron Corp.

Chief Risk Officer Report
April 30, 2001

E0004403782

4-1

EXH006-01238


=============
Page 44 of 208
=============

  ~
E, LJ

TOTAL
BALANCE SHEET
ASSETS

$65.5 Bn

0 In

  T Wholes
investmE
America
Industrip

  Works, E
Global A
  EBS ve
my

Enron's Assets
  as of December 31, 2000

Part 1  Trade Credit Update

Trade Credit Part 2 Investment Portfolio
22.7 Bn

  price risk management assets,'-'.,
  art 3 Enron Energy Services
accounts receivable
  art 4. Market Risk Update

  4-2 E0004403783

V

EXH006-01239


=============
Page 45 of 208
=============

-a

  Trade Credit Update

  E0004403784
4-3

EXH006-01240


=============
Page 46 of 208
=============

_712 ~L~

Trade Credit Portfolio
  as of March 31, 2001 U Investment Grade
In $Bn's
  0 Non-Investment Grade
  i
96%

  4%
  ($0.16) 82% - .
  Ann/

7

Gross Exposure Cash Collateral*

  $19.93 ($3.90)
$22.67 ($4.28)
* Only includes collateral utilized.
Numbers in italics represent comparable amounts at December 31, 2000.
  4-4

Other Collateral*
(including monetizations)
($1.79)
  ($1.30)

E0004403785

Net Exposure

$14.24
$17.09

  v

=XH006-01241


=============
Page 47 of 208
=============

					
Net	Credit	Exposure	by	E-	Rating	

0

0
4-
L
0
0

0

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

12131100
$17.09 Bn

4-5

03131101
$14.24 Bn

E0004403786

EXH006-01242


=============
Page 48 of 208
=============

  31
  l

Major Relationships
  as of March 31, 2001
  Total Net Exposure $14.24 Bn

  c
1 \I z ~,
  r~

		Gross	
	Parent		Exposure	Collatera' \
	E-Rating	Relationship
--------- ---- - ---	In $MM's	In $MM's
	4	TXU Corp.	1,563	(99)
	12	PG&E Corp.	964	(130)
i	2	Bonneville Power Administration	769	-
	5	Sithe/Independence Power Partners, L.P.	661	-
	4	TransAlta Corporation	527	(5)
	4	American Electric Power Company Inc.	291	-
	3	Koch Petroleum Group, LP	268	-
	3	Sempra Energy	309	(85)
	~	Calpine Corporation	274	(75)
	3	TransCanada Pipelines Ltd.	189	-
	4	Petro-Canada	175	
	11	Edison International	173	-
	4	El Paso Corporation	157	-
	4	Reliant Energy Inc.	712	(588)
	5	Avista Corporation	121	-
	5	The Williams Companies, Inc.	791	(686)
	4	The Southern Company Inc.	475	(379)
	4	Nicor Inc.	76	-
	5	Utilicorp United Inc.	71	(2)
	3	Duke Energy Corporation	1,332	(1,297)
		Major Relationships Total	9,898	(3,346)

  Counterparties new to "Major Relationships" list
Non-Investment Grade Credit Exposures

4-6 E0004403787

  Net
Exposure `,
Jn $MM's
  1,464

769
661
522
291
268
224
199
189
175
173
157
124
121
105
96
76
69
35

EXH006-01243


=============
Page 49 of 208
=============

Top 25 Net Credit Exposures for March 31, 2001
  In $MM's

	k E-Rating	Counterparty Name (Legal Entity)	December 31, 2000	March 31, 2001
4	TXU Europe Energy Trading Ltd.	1,238	1,435
	2	Bonneville Power Administration	606	769
	5	Sithe/Independence Power Partners, L.P.	632	661
	3	TransAlta Utilities Corporation	836	521
	12	Pacific Gas & Electric Company	808	474
	2	Koch Petroleum Group, L.P.	N/A	255
	O	Calpine Energy Services, L.P.	N/A	195
	3	PG&E Gas Transmission, Northwest Corporation	N/A	166
n		
12	
Southern California Edison Company	
320	
156
	5	PG&E Energy Trading-Gas Corporation	N/A	155
	4	Petro-Canada Oil and Gas	N/A	151
	3	AEP Energy Services, Inc.	123	151
	4	Canadian Natural Resources	160	132
	4	American Electric Power Service Corporation	137	131
	5	Avista Energy, Inc.	181	118
	3	Axia Energy, LP	N/A	107
	2	Florida Power & Light Company	134	106
	5	Williams Energy Marketing & Trading Company	N/A	105
	3	TransCanada Energy Ltd.	N/A	103
	1	Coral Energy Holing, L.P.	N/A	96
	4	Coastal States Trading Inc.	N/A	96
	2	Southern California Gas Company	N/A	89
	5	PPL Montana, LLC	N/A	78
	OSempra Energy Trading Corp.	N/A	76
	5	Marathon Ashland Petroleum, LLC	N/A	73
			Top 25 Total	6,399
		Other	Net Credit Exposures	7,843
		Total Net Credit Exposure	14,242
	
Counterparties n	.... _
ew to "Top 25" list		
O	Non-investment Grade Credit Exposures 4-7	EOO04403788	

EXH006-01244


=============
Page 50 of 208
=============

Collateral*
as of March 31, 2001
In $MM's

	Counterparty	Amount	Counterparty	Amount
				
	CASH POSITIONS		INCOMING LETTERS OF CREDIT	
x;	The Chase Manhattan Bank	1,234	Duke Energy Trading and Marketing, L.L.C.	577
	Duke Energy Trading and Marketing, L.L.C.	731	Reliant Energy Services, Inc.	361
a	Williams Energy Marketing & Trading Company	686	Mirant Americas Energy Marketing, L.P.	201
	Reliant Energy Services, Inc.	201	Allegheny Energy Supply Company, LLC	184
	Mirant Americas Energy Marketing, L.P.	178	Morgan Stanley Capital Group Inc.	144
	J. Aron & Company	174	TXU Energy Trading Company	99
	BP Amoco Corporation	131	Calpine Energy Services, L.P.	75
	PG&E Energy Trading - Power, L.P.	130	Reliant Energy Services Canada Ltd.	62
	Sempra Energy Trading Corp.	75	Mieco Inc.	28
	Credit Suisse First Boston International	66	Woodward Marketing, L.L.C.	23
	Kinder Morgan, Inc.	57	Other	299
	Cargill, Incorporated	49	Total Incoming Letters of Credit	2,053
	Bank of America, National Association	45		
e	Bankers Trust Company	31		
	CMS Marketing, Services and Trading Company	22	OUTGOING LETTERS OF CREDIT	
			Powerex Corp.	(200)
	Other Cash - Incoming	87	Duke Energy Marketing Limited Partnership	(113)
	Other Cash - Outgoing	(54)	TransCanada Energy Financial Products Limited	(109)
			California Power Exchange Corporation	(107)
	Morgan Stanley Capital Group Inc.	(21)	Pacific Gas & Electric Company	(100)
	Hess Energy Trading Company LLC	(26)	Southern California Edison Company	(34)
	General Re Financial Products Corporation	(26)	Louis Dreyfus Corporation	(26)
	Aquila Risk Management Corporation	(48)	Mittwell Energy Resources Pty., Ltd.	(23)
	Citibank, N.A.	(49)	Other (28)
	Merrill Lynch Capital Services, Inc.	(82)	Total Outgoing Letters of Credit	(740)
	Williams Energy Marketing & Trading Company	(93)		
	NYMEX	(96)		
	Mirant Americas Energy Marketing, L.P.	(116)	OUTGOING SURETY BONDS	
	El Paso Merchant Energy, L.P.	(169)	Mahonia Ltd.	(1,266)
	Duke Energy Trading and Marketing, L.L.C.	(185)	ISO New England Inc.	(40) f
	Powerex Corp.	(340)	Total Outgoing Surety Bonds	(1,306) E
	Mahonia Ltd	(872)		
	Net Incoming Cash	1,720		
	Total Incoming Cash	3,897		
	Total Outgoing Cash	(2,177)		
' Includes all collateral, including collateral not utilized.		4-8 E0004403789	

EXH006-01245


=============
Page 51 of 208
=============

Top 5 Country Net Credit Exposures
  In $MM's

		% of		% of
E-Rating Country	December 31, 2000	Total	March 31, 2001	Total
I United States	11,729	69%	9,977	70%
1 United Kingdom	2,246	13%	1,817	13% '
I Canada	2,254	13%	1,755	12%
1 Germany	115	1%	150	1%
I Switzerland	100		50	
Top 5 Total	16,444		13,749	
Other Net Credit Exposures	644		493	
Total Net Credit Exposure	17,088		14,242	

Canada
$1,755
$2,254

I United
States
$9,977
$11,729

United
Kingdom
	$1,817

4
$2,2

* Calculated based on country of incorporation.
Numbers in italics represent comparable amounts at December 31, 2000.
  4-9

Germany
$150
$115

EOO04403790

00

EXH006-01246


=============
Page 52 of 208
=============

  Credit Reserve Historical Comparison
  In $MM's

420
400
380
360
340
320
300
280
260
240
220
200
180
160
140
120
100

  C% 00
  ~~ CP
  ~~ ~~ ~~ o~ o~ 00 00 00 00 0^
t' o~ a `o A o` e~ e`o ~t Jo O~ G~ e~ e~
Fe QQ ~~ P~ O pe Qe P~ ,~ P~ O O Q P Q. O p Q

* Required Reserve: Amount of reserve required for existing portfolio after simulating defaults and assuming 50% recovery.

4-10

E0004403791

EXH006-01247


=============
Page 53 of 208
=============

  E

Investment Portfolio

4-11

E0004403792

EXH006-01248


=============
Page 54 of 208
=============

  - 7

Investment Portfolio Summary

  In $MM's

perty

3131/01
Net Portfolio Carry Value $8,622

Structured Equity
Debt $47
$607 1%
  7% Q1 2001` Activity

  $8,636

  $610 ($466) ($10) ($148) $8,622

4-12 E0004403793

12/31/00
Net Portfolio Carry Value $8,636

Net Portfolio
Carry Value
  12/31100

Debt
$598
7%

Property
city
$219
2%

  ' Net Portfolio
Net Net Change in Carry Value
Additions Disposals Syndications Valuation 3/31101

EXH006-01249


=============
Page 55 of 208
=============

Summary of Investment Portfolio
  as of March 31, 2001
In $MM's
  Net Portfolio Carry Value $8,622
by Business Unit

  EB
  by Industry $78
  1%

j Regulated	

I .
Utilities	
	~

$351
4%

  i
nergy
Services
$244
3%

Markets Global
$92 Markets
1% $190
  __. 2%

4-13

E0004403794

  J

EXH006-01250


=============
Page 56 of 208
=============

  Portfolio Summary
  as of March 31, 2001
In $MM's
  Net Portfolio Carry Value $8,622

fWj El Paso (East Coast Power proceeds)

  ,z EcoElectrica, L.P. Equity
Vengas
  by Performance Category .. HanoverCompressor
Meets Expectations

261
203
172
138

	k`	Mariner	487
Below
io
p		TGS - Transportadora De Gas Del Sur	429
ectat
ns
Ex	r
r		
$4,648	
1	
Gaspart	
193
54i	: s	KCS	171
			

		Below Expectations		
				
aA		Elektro	1,995 i	
:ceeds 10% N	
P1
-1	Dabhol Power Company	851	
uctations

-984	
1
,	

Sarlux S.R.L.	

350	
		SK-Enron	265	
	{	Companhia Estaudal De Gas (CEG)	198	
	_
,.
~	Promigas	155 c	
	,	
COPEL	120	
		Bahia Las Minas	102	
		Troubled		
		Cuiaba	432	
		Trakya	214	
		Transredes	138",,'	
	4-14	
E0004403795		

EXH006-01251


=============
Page 57 of 208
=============

  _ ..~.
-j =7772- C Z3 =1

  RAC Portfolio Initiatives

Expanded the Investment Portfolio to include April 2001
all former Enron International assets (these
are now held for sale by Enron Global Assets)

Major assets in the Investment Portfolio August 2001
(including Enron Global Assets) will be
revalued quarterly to facilitate asset disposals

Investment rates of return to be reported to the August 2001
Board quarterly

RAC to monitor Off-Balance Sheet Vehicles August 2001
including syndications (Merlin, total return
swaps/FAS 125) and accounting hedges
(Raptor)

4-15 E0004403796

~c~

XH006-01252


=============
Page 58 of 208
=============

Enron Energy Services

E0004403797

4-16

EXH006-01253


=============
Page 59 of 208
=============

EES Reorganization

   Wholesale and tariff positions as well as other risk
management functions transferred to Enron Wholesale
Services

   Recent reorganization in EES has positioned the structuring
and pricing organizations with more independence from
origination

   The EES Office of the Chairman is participating in the
approval process to a larger extent to improve deal
profitability and provide better coordination between
origination and deal booking / implementation

E0004403798

4-17

  \A
~@6N

EXH006-01254


=============
Page 60 of 208
=============

	
Major Challenges	
	Responsible
 Tariff Exposure	
Business Unit
- Continued unfavorable changes of tariff components including	transferred to
generation charges and Competitive Transition Charges	
- Retail tariff risks are not currently characterized as a "Market	Wholesale
Position" subject to Enron Corp. Risk Management Policy	Services
 Credit Exposure	
- High working capital requirements due to contract structures	
- A disproportionate number of bankruptcies have occurred in EES'	Wholesale
portfolio; Enron Credit Policy not consistently adhered to	Services / EES
- Credit exposure is not fully aggregated and system deficiencies	
continue	
 Demand Side Management / Operations &	
Maintenance Exposure	
measuring actual project performance is lagging and no
- Progress in	
,
validation of the Demand Side Management business model	EES
assumptions exist	
- Demand Side Management risk premium is still being quantified and	
is not yet implemented in the portfolio valuation	
- Operations & Maintenance business infrastructure is grossly	
inadequate to determine deal-specific profitability	
 Operational Risk	
- Contractual deal terms and embedded options are not appropriately	Wholesale
captured and managed	Services / EES
4-18	
E0004403799	

EXH006-01255


=============
Page 61 of 208
=============

EES / EWS/ RAC Task Force
Status as of April 15, 2001

			Qtr 3, 2000	Qtr 4, 2000	Qtr 1, 2001	Qtr 2, 2001	Qtr 3, 2001	Qtr 4, 2001 Qtr 1, 2002
ID	Task Name	Completed Task	Jun Jul Au Se	Oct Nov Dec	Jan Feb Mar	r Ma	Jun Jul Au Se	Oct Nov Dec Jan Feb

1	
Tariff Exposure and Curve Management							i
2	Models							
i
3	Review all tariff curves			_	1 J. Lewis	
4	Review all valuation models to ensure logic/mechanics of pulling curves properly			-(	i J. Lewis	
5	Institute scenarios/stress testing for all tariff risks (Le. CTC, fuel,			':.	D. Black	
i
6	interest rates, dereg dates, rate increases)			I
I		
7	Institute monthly reporting for credit exposures by utility				i J. Lewis	
8	
Build the capability for monitoring regulatory switch options on all contracts			
-		
i D. Black
9	Establish V 6 R Models for tariff exposure					

10	
_
Development of model for interest rate				
S. Stoness
!	l
11	- Development of model for fuel costs				s. Stoness	
12	Back Test to establish V C@ R limits for tariff exposure					
13	back test V @ R model for interest rate			!		, S. Stoness
14	- back test V @ R for fuel costs			
i
i		stoness
is
15						i
16				
[	
'	
1
17

18	Credit Exposure

Aggregate Credit Exposure			I
E
r		
19	Phase I			'		I
20	Establish daily feeds for high priority A/R systems (gas, power, bundled)	Complete		P. Ho		
21
22
23

24
25	Establish daily feeds for MTM positions - RPS (power)
Establish daily feeds for MTM position - RGS (gas)
Establish daily feeds for intramonth forward - power west desk

Setup global counterparty ID's for customers (630) with Dec. MTM >
$100,000 and AIR > $50,000	Complete
Complete
Complete

Complete		S. Yeargainj
T. Donovan BM
S. Yeargaln;
E
K. Williams		

I
26	Phase II					
27
28
29	Establish daily feeds for other AIR systems (Clinton, Bentley, etc.)
Establish daily feeds for A/P
Setup and establish daily feeds for intramonth book - RPS - East Desk			
-
-- !	P. Ho,B. Mahendra
P. Ho,B. Mahendra
S. Mills	
30	Setup and establish daily feeds for intramonth book RGS;				S. Mills	
31	Set up and establish daily feeds for shipped not billed - Power			S. Mills	
32	Set up and establish daily feeds for shipped not billed Gas	E0004403800	a	' s.Mills	I
33	Improve system and business processes of RGS to allow validated data to		i	s. Mills,iBM	
34	be transmitted daily by 5:00 a.m.					
35	Consolidate benchmark & credit exposure to feed Risk TRAC (by 5:00am)				s. Mills	
36	Setup global counterparty ID's at average rate of 100 per week.			!	l K. Williams	i
37
38	Implement global analysis of EES Credit Reserve (after Phase II)
Daily new deals report to assist in daily credit monitoring			
^ '		M. Ruane
39	Harris'
Gas	Complete		M. Hwang / M.		
	Power	j Complete		N. Hong / M. Harris t		
41	Review credit policy with Origination	Complete		Harris		
42	Review Transaction Approval Process	Complete		M.Tribolet		

Arrows indicate status (incomplete items only): Red-as of 12100 BOD meeting; Blue -as of 2/01 BOD meeting; Green -as of 3101 Task Summary ^ Progress

4-19

EXH006-01256


=============
Page 62 of 208
=============

r" f

EES / EWS/ RAC Task Force
Status as of April 15, 2001
			Qtr 3, 2000	Qtr 4, 2000 Qtr 1, 2001 Qtr 2, 2001 Qtr 3. 2001 Qtr 4, 2001 Qtr 1, 2002
ID	Task Name	Completed Task	Jun Jul Au Se	Oct Nov Dec Jan Feb Mar r May Jun Jul Au Se Oct Nov Dec Jan Feb
43	Review credit policy with Trading ! Complete	Harris
44	Review EES Clients and Evaluate Portfolio Quality of Credit Exposure	t
45	Compare EES booked credit reserves to Credit Department reserve calc Complete	i E- Kingshitl
46	P P
n 9
l
-
_	s. vasan
a7	a lua t e
ate portfolio quality alitY of credit ex Pos-un
Review EES cp's, assign E ratings
,
P ev
P	
I T. Selbel,D. Furey
ae	Review EFS c-p's, assign E ratings, evaluate portfolio quality of credit exp	D. Furey,T. Seibet
49	Review Enron Direct cp's,assign E ratings, evaluate portfolio quality of credit a;!	TBD
so	Review Clinton cp's, assign E ratings, evaluate portfolio quality of credit exp Complete	T. Seibel ;
51
s2	Review EES Accounts Receivable
Identify EES AR systems (listing) Complete	
- J. Fisher ,
53	Establish consolidation timetable & establish plan	J. Fisher ,
54	Manual Preparation of AR aging with listing of obligors Complete	J. Fisher
ss	Automated AR aging with listing of obligors	
1 J. Fisher
ss	Define negative balance reporting criteria
-	; M. Tribolet[

s
7
56	gin payment rate reporting

Be
Deal Capture Controls	
j J. Fisher

,
;
59
60	Hire Deal Capture group lead Complete
Establish centralized deal capture /confirm group (commodity deals)	
M. Eggleston
! 1
61
62
63	Redesign Credit Model to accommodate larger volume of deals
Develop Credit Process for Mass Market, Mid Market. Fast Track
Implement Credit Process for Mass Market, Mid Market, Fast Track E000440	M. O'Leary/Research-TBD
M. Tribolet,M-Wilson ;
3801 ; M. Tribotet,M. Wilson
64
ss	
EAM/AOPS Exposure	
i
ss
67	EAM Risk Book
-Segregation of duties surrounding asset performance validation Complete	
; I D. Roberts
68
69	- Engineering Audit Control function established
- EAM Position Reporting (Time, Capital, Efficiency) Complete
'	i D. Roberts j
D. Draper I'D. Roberts
70	philosophy and methodology Complete
- Delivery Performance Risk (DAPR)	! -- D. Roberts i
71	Site Level Actualization w/ Variance explanations	' TBD
72	-Dally Position Report includes EAM Options Complete	 ! I '
73	- Establish DASH EAM capital monitoring process Complete	C. Morrow ;
74	Establish Approval Policy for Incremental Capital (DASH Addendum) Complete	! -- J. Hachen/C. Morrow'
75	LAMP
roject valuation	
; ;
7s	Project valuation personnel in regions for consistency ; Complete	D. Roberts
r
77	Project valuation of projects in system (measure 20 projects per month)	D. Roberts
78	- Initial RAC audits (intermediate control) 'Complete	J. Hachen
79	EAM_Options volume	
80	Establish options valuation & MTM Complete	D. Draper ! i
81	Develop V Q R model !	- D. Roberts
82	Deal Pricing	,
l
83	- Develop EAM volatility model Complete	M.?riboiet,J. Soo
--
84	RAC / EES agreement on handling implementation risk - pricing through MTM	M. Tribolet,J. Wilitams,J. Hachen
		
Arrows indicate status (incomplete items only): Red-as of 12/001301) meeting; Blue -as of 2/01 BOD meeting; Green -as of 3101 Task Summary _ Progress

4-20

EXH006-01257


=============
Page 63 of 208
=============

	EES / EWS/ RAC Task Force		
		Status as of April 15, 2001		
			Qtr 3, 2000	Qtr 4, 2000 Qtr 1, 2001 Qtr 2,	2001 Qtr 3, 2001 Qtr 4, 2001 Qtr 1, 2002
ID	Task Name	Completed Task	Jun Jul Au Se	Oct Nov Dec Jan Feb Mar r	May Jun Jul Au Se Oct Nov Dec Jan Feb
85				}	
86	Establish AOPs Risk Book				
87	Establish Risk Analytics group for AOPS	Complete		C. Morrow
f	
88	- Inventory AOP's deals	] Complete		C. Morrow I	;
89	-Develop financial models supporting deal risk exposure				; C. Morrow/D. Roberts
so	Review Accounting Process			1 I	C. Morrow
91				
E	
92					
93	Operational Risk				
!
94	Bill Payment/Invoicing System Reconciliation to Commodity Books			I	
95	Establish plan for legacy deal reforecast			
!	
s6	- Deep Dive process established/participation in ongoing deep dives			v V
I	N. Hong
97	Reforecasting performed on legacy deals & ongoing process implemented	{ Complete			
98	Cash Reconciliation of Liquidation				
99	
Establish plan	
; Complete		
ML Ruffer	
100	- Define data requirements; develop reconciliation process				ML Ruffer
101	- Implement ongoing reconciliation, PPA process				ML Ruffer
102	Capture Tariff Price From Utility Bills				
103	Develop & implement tariff price update process				ML Ruffer
104
105	Address Working Capital Issue - Invoice and Payment System	
i			'
i
	- Establish plan	Complete		E. Hughes	
106	Risk Analytics			t	
107	Position Report			i	

{ {
MOW
108	Intramonth reporting for Power West	; Complete		N. Hong j	
109	Create Intramonth reporting for Power East in excel	Complete		N. Hong j	
110	Create East intramonth book in Access Database			!	N. Hong I
111	Intramonth reporting for Gas				'
	Validate ALTRA positions /verify spot curves / IM Gas P&L Reporting	Complete		- N. Hong	
113	- Develop & implement a plan for systems support from ALTRA To RGS	,			N. Hong
114	Canadian Risk Position Reporting			
;
	
115	
- Gas Positions captured in excel model revalued and reported monthly	.
Complete		

~ ;	

{ !
116	- Conversion of Position from excel to RGS	! Complete		N. Hong	

117	
__Power_ Canadian wholesale curve developed	._
'Complete		
D. Benevides	
118	- Power T&D curve development	Complete		s. Stoness	
;
119	- Timely value / report of Power Canada Positions	Complete			
120	
Stress testing procedures	
Complete	

!	
I

i 4
WNW	
! !
121	Ad Hoc stress testing procedures	I Complete		N. Hong	
122				i	
123				
!
}	
!
i I
124	Ne				

125	...."
Improve and streamline transaction valuation and market risk models	
E00	
04403802	
  	
` M. Tribofet/c. Esteems
128	Enhance Risk TRAC to handle risk analytics of EES portfolio (V @ R analysis)				P. Layton / v. Gorny
				
Arrows indicate status (incomplete items only): Red-as of 12200 BOD meeting; Blue -as of 2/01 BOD meeting; Green -as of 3/01 Task	Summary V	MMMOV Progress

4-21

EXH006-01258


=============
Page 64 of 208
=============

CEO ED

  160

140

  120
5
  _ 100
Z 80
0
  R3 60
E
  4I
  W 40
20
0

  00
. r
  0 or w
  .: MEN main .. a a. a ae - -- - -- - -- - - -- - -

  O O O O O O O O O O O O ^ ^ ^ N N N N N
  10O ~O ~O X O ~O ~~O o0 O O ,O GO i O ~O O ~,O ~O JO ~O ~,O C. O O O
  ~C',~~~ ~`a Of
  ~t`a ~J ~` P~ 5p o~ mod,. O~G,

   Progress slowed in January and February after strong performance in end of 2000:
Clean-up of 2000 project work
  California volatility mitigation-
~ ~ 0~
  Owens Corning delays t - Q.i > l
 Project performance measurement process in place, but execution is lagging
   NPV shown above is all estimated savings, no actual savings have been validated
4-22

E0004403803

Energy Asset Projects
  Net Present Value
  as of March _31, 2001.___,

-  Step I - Enron Approval Plan / Actual
- ..... Step 2 - Customer Approval Plan / Actual
. . Step 3-Installed Plan /Actual -

  Step 4-ACTUAL SAVINGS VALIDATED - /' ' r

						r	
							
					.		
							
							
							
							
							
							
							
							
							
							
	.00						
							
							
							
							
i							

EXH006-01259


=============
Page 65 of 208
=============

  Market Risk Update

  I`xJ;
4-23 E0004403804

EXH006-01260


=============
Page 66 of 208
=============

Finance Committee

  Table of Contents

   Risk Profile by Product

   Risk Profile by Primary Commodity and Business Unit
 Relative Risk Comparison

   Backtesting of Enron Corp. Aggregate VaR
 Utilization of VaR Limits

   Potential Losses from Various Market Scenarios
 Enron Foreign Exchange Update

   Trading Limit Changes
Policy Changes

4-24 E0004403805

EXH006-01261


=============
Page 67 of 208
=============

						
				Risk Profile by Product	
			Quarter Ended March 31, 2001 and 2000	
				
	541				Trading P&L			3 B
Q1 2001 P&L = $1	
	($MM)								.		
			429	
209					
Q1 2000 P&L = $0.5 B		
									
	150				141					
		
104		113							
	100	

IN			
,

..		

I Ilk
.;

y						
		fl								
39			
	50								37 31				
									21 4	19	
` 41	17 17 15 4	11 (19) 9 6	3 (10) (34) 5	
																	
	0									
	(50)	NA	NA	UK	Global Coal	Financial European Pulp &	Other(1) Weather	Metals Bandwidth Nordic	
	Gas	Power	Power	Products	Gas Paper		Power
($MM)					Average VaR		Q1 2001 Avg VaR = $64 MM	
									Q1 2000 Avg VaR = $28 MM		
																	
	(2)							a			-				
	
(4)			i									
	(s)											
									
		(42) (13)	(34) (19)	(14)					
		NA	NA	UK	Global Coal	Financial European Pulp &	Other(1) Weather	Metals Bandwidth Nordic	
	Gas	Power	Power	Products	Gas Paper		Power
								Enron
	Return on	VaR
2001 163%	
158%	
185%	
70% 104%	
156% 35% 201%	
45% 77%	
10% nil nil	
251%
		2000 99%	76%	244%	71% 61%	148% 143% 74%	nil 41%	nil nil 395% 201%
(1) includes commodities with 2001 prof!t/loss less than $7 MM	
4-25	
E0004403806	

EXH006-01262


=============
Page 68 of 208
=============

Risk Profile by Primary Commodity and Business Unit
Quarter Ended March 31, 2001 and 2000

  Commodity Comparison
Trading P&L Q1 2001 P&L = $1.3 B
($MM) 617 Q1 2000 P&L = $0.5 B
557
goo
460
300 -1237
  Ll 20
160 - 57 35 19 39
  15 14
not _9
  0
  Power Gas Products(1) Financial Other

  Business Unit Comparison
Trading P&L r Q1 Trading P&L = $1.3 B
($MM)
  950 971
700

  460
  209
200 77 18 (10)
(60) Americas Europe Global Industrial EBS
Markets Markets

			
Average VaR	Q1 2001 Avg VaR = $64 MM		Average VaR	Q1 Average VaR = $64 MM
($MM)	- Q1 2000 Avg VaR = $28 MM		($MM)	
			
0				0		
(1) (0.2)
(15)			(7) (6) (1) (3) (4) (2)	
(20)		(7)
		(13)			16)	
(30)	(20)		(40)		
(45)	(37) (43)		(60)	(54)	
(60) Power Gas	Products(1) Financial Other	(60)	Americas Europe	Global Industrial EBS
			Markets Markets

  Return on Enron; i Return on
  VaR 209% 166% 101% 156% 44% I 251% J f VaR 226% 163%

  Enron
130% 218% nill 251%

(1) Global Products and Coal

4-26

E0004403807

EXH006-01263


=============
Page 69 of 208
=============

Relative Risk Comparison
Year Ended December 31, 2000

		.24%		Average Daily VaR as a Percentage of Market		
o			20%		Capitalization			
								
				.08%				
.08				.06%	.06%			
.06					.05%	.05%		
						.04%		
.04							.03%	.03%
.03					
J	
U		.01 %
					_			IL_
0	Williams	Mirant (1)	Enron Dynegy	Merrill _
Duke	Goldman Dell	Morgan	JP Morgan Citigroup
				Lynch Energy	Sachs Computer	Stanley	
							
		9.0%		Average Daily VaR as a Percentage of		
					Net Income			
			5.3%	6.1%				
5								
4								
3				2.2%				
2					0.8% 0.9%	0.9% 1.0%	0.5%	0.5%
0
2%
1								.
								
0							
	Williams	Mirant (1)	Enron Dynegy	Merrill Duke	Goldman Dell	Morgan	JP Morgan Citigroup
				L nch Energy	Sachs Computer	Stanley	
Avg Daily VaR ($MM)	47	19	50 11	32 16	28 17	28	29 26
Market Cap at 12131100
($Bn) 19	
10	
62 18	
55 31	
51 45	
87	
88 254
Net Income ($MM)	524	359	979 501	3,784 1,776	3,067 1,666	5,456	5,727 13,519
(1) 2000 spin-off of Southern Company's non-regulated business				
				4-27			
					EO004403808		

EXH006-01264


=============
Page 70 of 208
=============

  77-1
7777- r 2- --D

Backtesting of Enron Corp. Aggregate VaR
12 Months Ended March 31, 2001

($MM) Curve Shift P/L - VaR ~~ VaR Limit
600

  8/24/00 - $165 MM ~/ 12/4/00 - $485 MM
150 8/25100-$195M /M

  Loss Notifications >VaR Limit T.1
($194) MM 8130 ($136) MM 1217
100 ($ 87) MM 911 ($630) MM 12/12
  ($105) MM 11116 ($215) MM 12113 I I I I~ I. I n I

50
0

(50)

(100)
  Conclusion:
VaR Model is acceptable.
(150) ( piec Test)
  Ku. _ 12112100-($551 MM)
8/30/00 - ($212 MM)
(600) 12/13/00 - ($204 MM)
O O O O 0 0 0 0 O O 0 0 0 0 0 O 0 0 0 0 0 O O O 0 O O O
  0 0 0 0 0 0 O O O O 0 0 0 0 0 0 0 0 0 0 0 O O O 0 0 O O O 0 0 0 O O O O
M M M M M M N N N N N_ N r O O O O O O 0) 0) 0) 0) 0) 0 W M n n ti 0 0) 0)
d. N N N N N M N M r N M N N N N N N M N
  U) Uf) (0 cp N- r 00 W W 0) ) 0) O O O N N ~- N N M M

12 Month Corp. Limit Evolution:	2/7/00	6/1/00	10/7/00 - 12/6/00	12/7/00 - 12/27/00	12/28/00 - 2112/01	2113/01 - Present
($MM)	60	75	100	140	100	125

4-28 E0004403809

EXH006-01265


=============
Page 71 of 208
=============

Utilization of VaR Limits
Quarterly Comparison

($MM)
120

100

80

  60
40
20

  Average VaR Limit Average VaR

4-29

E0004403810

EXH006-01266

  Q2 Q3 Q4 Q11 Q2 Q3 Q4' Q1 Q2 Q3 Q4 Q11 Q2 Q3 Q4 (q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 21
2000 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000 2001
  NA Gas NA Power UK Power Products Financial TOTAL ENRON


=============
Page 72 of 208
=============

Potential Losses from Various Market Scenarios
as of March 31, 2001

What if... ($MM) (100) (200) (300) (400) (500) (600) (700) (800)
 California regulates natural (750)
gas prices

 New York markets mirror recent
California activity

 California maintains bundled
tariffs for 10' years; wholesale
prices stabilize

 UK power prices increase due to
closing of nuclear power plants

 European gas prices increase due
   (60)
to offshore problems at terminals

 Continental power prices drop due (40)
to wet weather

 Copper and aluminum prices
  increase due to demand in China (30)

(130)

4-30

  (425) (70)
  (495)

(230)

(105) (60)

(395)

  _ Gas

  - Retail Power Market
Wholesale Power Market
Metals

E0004403811

EXH006-01267


=============
Page 73 of 208
=============

  j
-D LZ-D LID aj cm

800

700

600

Top Five Foreign Exchange Exposures
Net Notional Position by Business Unit
  as of March 31, 2001
2,532 ($MM)
Total $3,317
Exposure Impact

   CTA Impact - $2,561
i  P&L Impact - $756

524

500

400

300 -I

200

100

  0 ' ~~ -
South America Asia India Canada Central America

*Asia's P&L exposure represents payments received on sale of Hainan of $157MM, and SK-Enron exposure of $68MM
4-31
  E0004403812

EXH006-01268


=============
Page 74 of 208
=============

Cumulative Translation Adjustment (CTA)
Balances
  as of March 31, 2001

  South America

  $MM
900
800
700
600
500
400
300
200
100

  0

  Dec-00 Mar-01
Total Devaluation of 99.3% to 2.1525 BRUUSD
since purchase of CEG, CegRio and Gaspart in
Jul-97 at 1.0803 BRL/USD

  Asia

$MM
30

25

20

  15

10

  5

0

  Dec-00 Mar-01
Total Devaluation of 13.8% to 1331 KRW/USD
since purchase of SK-Enron in Jan-99 at
1170 KR W/USD

4-32 E0004403813

zl-~

EXH006-01269


=============
Page 75 of 208
=============

P&L Impact from Top Five Foreign Exchange
Exposures
  Quarter Ended March 31, 2001

$MM
35

30

  25

20

  0
Loss on Canadian Translation loss Translation loss Quarterly FIX loss
Fair Value of Net Income of Net Expenses on Top Five
Investments Exposures

4-33

E0004403814

EXH006-01270


=============
Page 76 of 208
=============

  71

Summary of Trading Limit Changes

  Recommended Changes to Policy Limits:
  Note: Enron Corp. Aggregate VaR Limit --- NO CHANGE REQUESTED --- $125 MM

Recommended
Permanent Limit

UK Electricity
Net Open Position Limit
Maturity / Gap Limit
VaR Limit

i

  Freight Markets Trading
Net Open Position Limit
Maturity / Gap Limit
  VaR Limit

60 Twh
15 Twh
$ 30 MM

83,000 Full Truckload Units
103,750 Full Truckload Units
$ 2 MM

  Global Risk Markets Trading

  Net Open Position Limit
Maturity / Gap Limit
VaR Limit
  Lifetime Capital at Risk (P95)
Notional Maximum Loss (P95)

300,000 Mwh

  N/A
$ 3 MM
$ 30 MM
$120 MM

Existing
Permanent Limit

35 Twh
15 Twh
$10 MM

Interim Limits Granted

41,500 Full Truckload Units
51,875 Full Truckload Units
$ 1 MM

100,000 Mwh
N/A
$ 1 MM
$ 10 MM
$ 40 MM

4-34

E0004403815

EXH006-01271


=============
Page 77 of 208
=============

Summary of Trading Limit Changes

Recommended Changes to Policy Limits (continued):

  Recommended Existing
Permanent Limit Permanent Limit

Advertising

Net Open Position Limit 28,000 Cost Per Point * 54 Cost Per Point
Maturity / Gap Limit 56,000 Cost Per Point * 108 Cost Per Point
VaR Limit $ 2 MM $ 2 MM
  Position limit changes not substantive; due to benchmark measurement adjustment
EES:
VaR Limit Terminated ** $ 5 MM
** Termination of business unit sub-limit due to transfer of wholesale trading to Enron Americas

  DRAM Chips
  Net Open Position Limit
Maturity / Gap Limit
VaR Limit

Interim Limit Extension for 6 additional months

2 MM Benchmark Equiv. Chips
1.5 MM Benchmark Equiv. Chips
$1 MM

4-35

E0004403816

EXH006-01272


=============
Page 78 of 208
=============

  Summary of Policy Changes

  We recommend BOD approval of the following amendments to the Risk Management Policy:
 Modify the reporting requirements to the Enron Corp. Office of the Chairman as follows:

  - make the reporting requirements to the Chairman of the Board the same as those to the Chairman
of the Finance Committee; (ie. limit daily reporting of individual commodity group
violation/notifications to the Business Unit Office of the Chair and to the Enron Corp. President
and CEO)

- replace the current level of reporting to the Chairman of the Board with reporting to the Enron
Corp. CEO (no immediate impact on reporting as the President is currently also the CEO)

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  Enron Corp.

Projects and Amendments
April 30, 2001

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To: The Finance Committee of the Board of Directors

  a
  From: Jeff Skilling and Rick Buy

Recommended Changes to the Risk Management Policy

Interoffice
Memorandum

Department: Risk Assessment and Control

Date: April 30, 2001

I. We are recommending BOD approval of the following trading limits as amendments to the Risk Management Policy:
	Recommended	Existing
	Permanent Limits	Limits
UK Electricity		
Net Open Position Limit	60 Twh	35 Twh
Maturity / Gap Limit	15 Twh	15 Twh
VaR Limit	$ 30 MM	$ 10 MM
		Interim Limits
		Granted
Freight Markets Trading		
Net Open Position Limit	83,000 Full Truckload Units	41,500 Full Truckload Units
Maturity / Gap Limit	103,750 Full Truckload Units	51,875 Full Truckload Units
VaR Limit	$ 2 MM	$ 1 MM
Global Risk Markets Trading		
Net Open Position Limit	300,000 Mwh	100,000 Mwh
Maturity / Gap Limit	N/A	N/A
VaR Limit	$ 3 MM	$ 1 MM
Lifetime Capital at Risk (P95)	$ 30 MM	$ 10 MM
Notional Maximum Loss (P95)	$120 MM	$ 40 MM
	Recommended	Existing
	Permanent Limits	Limits
Advertising		
Net Open Position Limit	28,000 Cost Per Point *	54 Cost Per Point
Maturity / Gap Limit	56,000 Cost Per Point'	108 Cost Per Point
VaR Limit	$ 2 MM	$ 2 MM
Position limit changes not substantive; du	e to benchmark measurement adjustment	
EES		
VaR Limit	Terminated `"	$ 5 MM
"' Termination of business unit sub-limit due to transfer of wholesale trading to Enron Americas	
	Interim Limit Extension for 6 additional months
DRAM Chips		
Net Open Position Limit	2 MM Benchmark Equivalent Chips	
Maturity / Gap Limit	1.5 MM Benchmark Equivalent Chips	
VaR Limit	$ 1 MM	

II. We are recommending BOD approval of the following amendments to the Risk Management Policy:
 Modify the reporting requirements to the Enron Corp. Office of the Chairman as follows:

  - make the reporting requirements to the Chairman of the Board the same as those to the Chairman of the Finance Committee; (ie. limit daily
reporting of individual commodity group violation/notifications to the Business Unit Office of the Chair and to the Enron Corp. President and
CEO)
  -
  replace the current level of reporting to the Chairman of the Board with reporting to the Enron Corp. CEO (no immediate impact on reporting
as the President is currently also the CEO)
  E0004403821

  aspect
irm 000-469-1 (7/92)

EXH006-01277

Integrity

Communication Excellence

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  ENRON CORP. Proprietary and Confidential
RISK MANAGEMENT POLICY
Approved by Enron Corp. Board of Directors

Approved:	October 1, 1996
Amended:	December 8, 1998
Amended:	May 3, 1999
Amended:	August 10, 1999
Amended:	October 20, 1999
Amended: December 14, 1999

Amended: February 7, 2000

Amended:	May 2, 2000
Amended:	August 8, 2000
Amended:	October 7, 2000
Amended:	December 12, 2000

Amended: February 13, 2001
Amended: May 1, 2001

I. General Authorization

Enron Corp. is authorized to execute Transactions and manage these Transactions within certain authorized
Portfolios in support of its businesses.

All Transactions covered by this policy must be conducted in compliance with all Enron Corp. policies, as each
may be amended, supplemented or restated from time to time (collectively the "Enron Corp. Policies").

II. Portfolios

Designated Enron Business Units are authorized to enter into Transactions which create Positions for Enron
Corp. and its affiliates, other Enron Business Units or their respective customers within the authorized
Commodity Groups and limits, specified in the Appendices. These Positions are managed in the following
Portfolios:

A. Trading Portfolio - designed to capture and manage risks related to physical delivery of energy and
other commodities, to provide related risk management services, to take advantage of market arbitrage
opportunities and to manage positions within the approved limits. This portfolio includes commodity
transactions, financial instruments and securities transactions.

B. Merchant Portfolio - designed to capture and manage merchant investments in public and private
companies, including the active management of embedded exposures and to provide greater liquidity for
Enron's merchant investment activities, consistent with Enron Corp.'s core competencies within the
approved limits. This portfolio includes equity, "equity-like," debt and "debt-like" investments in the
public and private sector.

C. Capital Portfolio - designed to accommodate positions and transactions in Enron's own stock or
derivatives thereof which may occur from time to time in the execution of approved structural
transactions (for example, stock buy-backs, hedging of stock option programs, etc.).

III. Limit Structure

  Generally, Enron Business Units' business activities are subject to a combination of limits. These limits include,
but are not limited to: Net Open Position, Maturity/Gap Risk, Potential Exposure (VaR), Regulated Exchange
Limits, and Loss Notifications, as appropriate for the type of business activity under consideration.

  Limits will be applied at the Commodity Group and Portfolio level, as appropriate and monitored daily. Unless
specifically allocated to a business unit for a basket of products, these limits are to be applied against Enron's
consolidated position on an individual commodity group basis.

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A. Net Open Position Limits. Enron Business Units' activities are subject to the Net Open Position limits at
the Commodity Group level, as specified in the Appendices. For purposes of monitoring the Net Open
Position Limits, all Positions within a Commodity Group shall be aggregated into a reference Benchmark
Position assigned to each group.

B. Maturity/Gap Risk Limits. Enron Business Units' activities are subject to the Maturity/Gap Risk limits
at the Commodity Group level, as specified in the Appendices. For purposes of monitoring the
Maturity/Gap Risk Limits, all Positions within a Commodity Group shall be aggregated into a reference
Benchmark Position assigned to each group.

C. Potential Exposure Limits. Enron Business Units' activities are subject to potential exposure analysis
using stress-testing and scenario analysis, as directed by the Enron Corp. Chief Risk Officer, and limits
based on Value-at-Risk (VaR), as specified in the Appendices, calculated daily or as appropriate to the
business activity under consideration at the Portfolio level and at the Commodity Group level.

l ~1 D. Regulated Exchange Limits. Enron Business Units may be subject to limits imposed by regulated
exchanges on which they transact. Enron Business Units shall comply with any such limits imposed on
them, as such limits may be modified from time to time.

  N
E. Loss Notifications. Daily Losses and Cumulative 5-day Losses resulting from Enron Business Units' Q
activities are subject to the reporting requirements specified in Section IV.C. "'

All Enron Business Units are expected to formulate limits subordinate to limits specified in the Appendices, and
such sub-limits should be monitored internally and act as triggers for reference to and action by senior Enron
Business Unit management.

IV. Limit Violation/Loss Notification Requirements

Notwithstanding the other provisions of this Policy, any violation of limits must be reported to the Enron Corp.
Chief Risk Officer. This limit violation report should be made to the Chief Risk Officer by the Enron Business
unit prior to entering into a Transaction if there is a sufficient reason to believe that a limit violation will occur.
Requirements for reporting limit violations and loss notifications, each accompanied by an explanation, as
follows:

A. Net Open Position Limits; Maturity/Gap Risk Limits. If the limit violation exceeds the applicable
limit by greater than or equal to five percent (5%), the Enron Corp. Chief Risk Officer shall ensure the
prompt communication of the occurrence to the Enron Business Unit Office of the Chairman and to the
President of Enron Corp. If the limit violation exceeds the applicable limit by greater than or equal to ten
percent (10%), the Enron Corp. Chief Risk Officer shall ensure the prompt communication of the
occurrence to the Chief Executive Officer of Enron Corp.

1 B. Value-at-Risk Limits. If the VaR for any Commodity Group or Portfolio exceeds the applicable limit by
greater than or equal to five percent (5%), the Enron Corp. Chief Risk Officer shall ensure the prompt
communication of the occurrence to the Enron Business Unit Office of the Chairman and to the President
of Enron Corp. If the VaR for any Commodity Group or Portfolio exceeds the applicable limit by greater

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  i ENRON CORP.
  RISK MANAGEMENT POLICY
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B. Position Reporting. Designated Enron Business Units shall prepare, distribute and make available data
constituting a daily report ("Daily Position Report") including Commodity Group Net Open Position,
Maturity/Gap Position, profit or loss, potential exposure (VaR) and any other parameters as may be
required by the President or the Chief Risk Officer of Enron Corp. The Daily Position Reports at the
Commodity Group level will also report various limits compared to their respective actual amounts and
will be signed off by the Commodity Group Manager of the position(s) and the head of the commercial
support group responsible for their preparation, before any subsequent trading occurs.

For purposes of limit monitoring and aggregation of Enron's consolidated trading results, Enron's
consolidated Daily Position Report should include the Net Open Position, Maturity/Gap Position, profit or
loss, and potential exposure (VaR) for approved Commodity Groups consolidated across the company
without regard to which business unit undertook the trading activity. In those instances where limits are
granted to a business unit for a basket of commodities, reporting for individual commodity risk books
shall be maintained to facilitate aggregation of Enron's actual consolidated commodity specific exposure.
Management reporting may separately provide business unit sub-limit monitoring and trading results
aggregated according to management lines.

The President of Enron Corp. and Enron Corp. Chief Risk Officer shall designate individuals who are
authorized to approve the Daily Position Report on behalf of Enron Corp. After approval, a consolidated
Daily Position Report shall be distributed to the Chairman, the President, the Chief Accounting Officer,
the Chief Risk Officer of Enron Corp. and others as designated by the President or the Chief Risk Officer
of Enron Corp.

  a
C. Stress and Scenario Testing. On a monthly basis, or as markets dictate, designated Enron Business Q
  Units shall formulate and examine the effects of extreme changes in the market parameters relevant to "'
exposures and positions. Results of these tests should be made available to the Enron Corp. Chief Risk
Officer, or his designee(s).

  D. Valuation. On a monthly basis, or as markets dictate, designated Enron Business Units shall provide
evidence of verification of all market parameters used in the calculation of risk metrics and profits and
losses. This should be made available to the Enron Corp. Chief Risk Officer, or his designee(s).

E. Transaction Approval and Execution. Only those employees designated by the Enron Corp. Chief Risk
Officer or his designee(s) will be authorized to enter into Transactions on behalf of Enron. The Chief
Risk Officer must also maintain a record of those employees responsible for the individual Commodity
Groups (Commodity Group Manager) as specified in the Appendices. Individuals will be assigned as
commodity leaders to manage Enron's aggregate position across the company as determined necessary by
the Chief Risk Officer. All Transactions must be entered into in compliance with current policies of the
Credit Group, Market Risk Management Group, and other relevant groups, as determined by the Enron
Corp. Chief Risk Officer. All trades executed on the telephone must be executed on telephones that are
recorded electronically.

F. Brokerage Accounts. Designated Enron Business Units periodically open trading accounts with clearing
brokers to facilitate the conduct of their business. All openings or revisions of trading accounts with a
broker or brokers will be reviewed and approved by the Enron Corp. Chief Risk Officer or his designee(s).
The Enron Corp. Chief Risk Officer or his designee(s) will also notify the brokers of the names of
personnel authorized to trade futures, options or other contracts on regulated exchanges.

Lill,

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VI. Policy Amendment Authority

A. Portfolios, Commodity Groups and Positions. Subject to the authorization of the Board of Directors,
the Enron Corp. Chairman, the President of Enron Corp. and the Enron Corp. Chief Risk Officer,
additional Portfolios may be created and additional Commodity Groups may be added within existing
Portfolios, and the related limits will be created or revised accordingly. The President of Enron Corp. and
the Enron Corp. Chief Risk Officer can authorize additional Positions within the existing Commodity
Groups, provided that such Positions can be aggregated within the limits of a currently authorized
Commodity Group.

B. Cross-Commodity Position Authorization. If in the ordinary course of its business an Enron Business
Unit or trading desk incurs an exposure to an underlying commodity or financial instrument for which it
does not have explicit authority to carry, this exposure should be hedged internally with the appropriate
Enron desk(s), with appropriate notification to the Chief Risk Officer or his designee(s). Hedge positions
should be in instruments that have an observable correlation with the underlying exposure, and should be
rebalanced regularly to substantially neutralize the underlying exposure.

,.. Upon notification to the Chief Risk Officer or his designee(s), the Enron Business Unit Office of the
Chairman who has authority for that commodity group may authorize a specific trader in a different
commodity group to take speculative positions with other Enron trading desks in commodities and/or
,. financial instruments other than those which that trader has explicit authority to trade (i.e. the Business
Unit Office of the Chairman for North American Natural Gas may authorize a trader in the Coal group to
  trade gas with the North American Natural Gas desk). For limit monitoring purposes, these cross- Q
commodity positions shall be captured by individual commodity to facilitate aggregation and reporting of "'
Enron's consolidated exposure by commodity in the Daily Position Report (Coal desk's gas position will
  be aggregated with the North American Natural Gas commodity group.).

C. Position Measurement Parameters. Any changes to parameters used in the aggregation and
measurement of Positions must be approved by the Enron Corp. Chief Risk Officer or his designee(s).
This includes, but is not limited to, the Benchmark Positions, VaR parameters, Maturity/Gap Risk periods,
conversion ratios, volatility factors and correlation factors. Any substantive change as determined by the
Chief Risk Officer will be communicated to Enron's Board at the next regularly scheduled Board of
Directors' meeting.

D. Interim Policy for New Commodity Groups. The President of Enron Corp. and the Chief Risk Officer
of Enron Corp. may approve positions in new Commodity Group(s) prior to approval in the next meeting
of the Enron Corp. Board of Directors, subject to the following criteria: (i) maximum VaR of $1 million,
along with corresponding position limits, and (ii) maximum initial term of six (6) months, subject to one
extension for an additional term prior to review by the Board of Directors for permanent limits. These
interim limits adjust the limit violation and loss notification requirements at the commodity group level
until the granted limits expire, but they do not change the Aggregate VaR Limit. Interim limits shall be
reported to the Enron Corp. Board of Directors at each regularly scheduled Board of Directors' meeting.

  E. Discretionary VaR. The President of Enron Corp. and Chief Risk Officer of Enron Corp. may allocate
"Discretionary VaR" to the existing Commodity Groups listed in Appendix I, along with the

011 corresponding adjustments to Net Open Position limits and Maturity/Gap Position limits, under the
following guidelines: (i) allocation is limited to 100% of the existing commodity group VaR limit in

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Appendix I, (ii) VaR allocation and corresponding adjustments to position limits adjust the limit violation
and loss notification requirements at the commodity group level, (iii) nominal allocations of Discretionary
VaR may exceed the amount listed in Appendix I due to portfolio diversification effect, as determined by
the Chief Risk Officer or his designee(s),and (iv) term of allocation is determined by the Enron Corp.
President and Chief Risk Officer. Discretionary VaR allocations are to be reported to the Enron Corp.
Board of Directors at each regularly scheduled Board of Directors' meeting.

F. Temporary Limits. The Board of Directors of Enron Corp. may from time to time approve temporary
limits to encompass certain specific approved positions. These temporary limits adjust the limit violation
and loss notification requirements at the commodity group level until the granted limits expire, but they do
not change the Aggregate VaR Limit unless the Aggregate VaR Limit is specifically adjusted.

G. Limit Changes and Other Policy Amendments. Any modification of limits or other amendments,
supplements or updates to this Policy, unless otherwise covered by this Section VI, must be either
approved by (i) the Enron Corp. Board of Directors, or (ii) the Enron Corp. President and Chief Risk
Officer and ratified by the Enron Corp. Board of Directors at the next regularly scheduled Board of
Directors' meeting.

VII. Miscellaneous

Employee Trading. No employee of any Enron Business Unit may engage in the trading of any Position
for the benefit of any party other than an Enron Business Unit (whether for their own account or for the
account of any third party) where such Position relates to (i) any financial instrument, security, financial
asset or liability which falls within such employee's responsibility at an Enron Business Unit, or (ii) any
other commodity not covered by (i) included in any Commodity Group.

Employee Review of Policies. As determined by the Chief Risk Officer or his designee(s), an employee
of any Enron Business Unit participating in any activity or transaction within the coverage of this Policy
shall sign on an annual basis or upon any material revision to this Policy, a statement approved by the
Enron Corp. Chief Risk Officer that such employee (i) has read this Policy, (ii) understands this Policy,
and (iii) has complied and will comply with this Policy.

  Compliance with Policy. All Business Units and their employees should comply with this Policy.
Dispensation for non-compliance should be sought from the President of Enron Corp., the Enron Corp.
a ' Chief Risk Officer or their designee(s). Willful or deliberate non-compliance or falsification of risk
metrics or profits and losses referred to by this Policy will be regarded as gross misconduct.

Supersedes Prior Policies. This Policy supersedes and replaces all previous Policies of Enron Corp.
approved by the Enron Corp. Board of Directors concerning risk management or trading. This Risk
Management Policy was approved by the Enron Corp. Board of Directors on October 1, 1996, and as
permitted hereunder it has been amended as of the date reflected on the first page hereof

VIII. Definitions

  "Aggregate VaR Limit" shall mean the total Enron Trading Portfolio VaR Limit as specified in Appendix
I. Discretionary VaR allocation, and approval of Temporary VaR limits and Interim VaR limits do not

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than or equal to ten percent (10%), the Enron Corp. Chief Risk Officer shall ensure the prompt
communication of the occurrence to the Chief Executive Officer of Enron Corp.

If the Aggregate VaR Limit is exceeded, the Enron Corp. Chief Risk Officer shall ensure the prompt
communication of the occurrence to the President of Enron Corp.. If the Aggregate VaR Limit is exceeded
by greater than or equal to ten percent (10%), the Enron Corp. Chief Risk Officer shall ensure the prompt
communication of the occurrence to the Chief Executive Officer of Enron Corp.. If the Aggregate VaR
Limit is exceeded by greater than or equal to fifteen percent (15%), the Enron Corp. Chief Risk Officer
shall ensure the prompt communication of the occurrence to Chairman of the Board and to the Chairman
of the Finance Committee of Enron Corp.

C. Loss Notifications. The Enron Corp. Chief Risk Officer shall ensure the prompt communication to the
Enron Business Unit Office of the Chairman, the President of Enron Corp., or the Chief Executive Officer
of Enron Corp., if a Daily Loss in any Commodity Group or Portfolio is equal to or in excess of 100%,
125%, or 150% of the corresponding VaR limit, respectively. The Enron Corp. Chief Risk Officer shall
ensure the prompt communication to the President of Enron Corp., the Chief Executive Officer of Enron
Corp., or the Chairman of the Board or the Chairman of the Finance Committee of Enron Corp., if the
aggregate Daily Loss is equal to or in excess of 50%, 75%, or 100% of the Aggregate VaR Limit,
respectively.

The Enron Corp. Chief Risk Officer shall ensure the prompt communication to the Enron Business Unit
Office of the Chairman, the President of Enron Corp., or the Chief Executive Officer of Enron Corp. if a
Cumulative 5-day Loss in any Commodity Group or Portfolio is equal to or in excess of 125%, 150%, or
175% of the corresponding VaR Limit, respectively. The Enron Corp. Chief Risk Officer shall ensure the
prompt communication to the President of Enron Corp. or the Chief Executive Officer of Enron Corp., if
the aggregate Cumulative 5-day Loss is equal to or in excess of 75% or 100% of the corresponding VaR
limit, respectively.

D. Reporting to the President of Enron Corp., and to the Chairman, Audit and Finance Committees of
the Board of Directors. Aggregate loss notifications and limit violations shall be communicated to the
President of Enron Corp., the Chief Executive Officer of Enron Corp., the Chairman of the Board, and the
Chairman of the Finance Committee of the Board of Directors of Enron Corp. by the Chief Risk Officer of
Enron Corp., as specified in Section IV. of this policy, and as otherwise determined by the Chief Risk
Officer. Aggregate loss notifications and a summary of limit violations, along with an analysis of Enron's
market risks will be reported to the Audit Committee of the Board of Directors by the Chief Risk Officer
of Enron Corp. at all regularly scheduled Audit Committee meetings.

V. Operations and Controls

A. Segregation of Duties. Enron Business Units shall keep segregated
individuals entering into Transactions each of the following activities:

Transactions; preparation,
reporting of Positions and
models, periodic validation
and/or financial settlement

statements.

3

issuance and verification of Enron Corp.
Commodity Group information; review of the
of prices from independent market sources;
of Transactions; reconciliation of accounts;

from the business groups or
recording and aggregation of
or third-party documentation;
reasonableness of prices and
monitoring of limits; physical
and preparation of financial

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change the Aggregate VaR Limit unless the Aggregate VaR Limit is specifically adjusted by action of the
Board of Directors.

  "Benchmark Position" shall mean the Position within a Commodity Group into which all other Positions
within the same Commodity Group can be converted using price volatility and correlation based
conversion factors. Such conversion factors shall be established and authorized by the Enron Corp. Chief
Risk Officer.

"Commodity Group" shall mean a collection of Positions having sufficient relationship and correlation (as
approved by the Enron Corp. President and Enron Corp. Chief Risk Officer) that allow for aggregation
into a Benchmark Position.

"Cross-Commodity Position" shall mean a Position within a certain Commodity Group that is not
explicitly authorized as part of that Commodity Group. (i.e. Coal trading desk might hold a North
American Natural Gas position as a hedge, or as a speculative position). The suitability and approval of
Cross-Commodity Positions shall be reviewed and approved by the Business Unit Office of the Chairman
of the Commodity Group specifically authorized to hold those Positions. Aggregation of risk components
and profit or loss for all commodity groups will be reported on a consolidated basis in the Enron Daily
Position Report.

"Cumulative 5-day Loss" shall mean a sum of daily profit and loss for the last consecutive five business
days, either for any Commodity Group or for an aggregate loss in value of the trading portfolio. Upon
occurrence of a Cumulative 5-day Loss limit notification or a Daily Loss limit notification reported in
accordance with Section IV.C. of this policy, the Cumulative 5-day Loss calculation is reset. Daily profit
and loss will be calculated using the mark-to-market method on a net present value basis, exclusive of
non-trading type of originations and exclusive of prudence.
  Q
"Daily Loss" shall mean the loss in value of any Commodity Group or a loss in value of the trading "'
portfolio in aggregate on a daily basis. The Daily Loss will be calculated using the mark-to-market
method on a net present value basis, exclusive of non-trading type of originations and exclusive of
prudence.

"Daily Position Report" shall mean a hard or soft copy report including, but not limited to the following,
for each major commodity and price curve traded: Commodity Group Net Open Position, Maturity/Gap
Position, profit or loss, potential exposure (VaR), and for all positions regardless of financial accounting
treatment:

  1. The amounts by which the mark-to-market value of the portfolio can change for small (or unit)
~-. changes in all "market parameters", as a term structure (i.e. by time "bucket") and on a net aggregate
y basis.
  2. For portfolios with option or non-linear risks, the concentration of sensitivities (delta, gamma, vega)
according to expiry date and strike price ("strike concentration").
  3. The VaR for the portfolios, according to Enron's approved methodology.

  The Daily Position Report shall also report the aggregated risk components (positions, VaR, and profit or
loss) for approved Commodity Groups on a consolidated basis, without regard to which Enron Business
Unit transacted, as discussed in Section VI.B. of this policy.

cs~
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  "Discretionary VaR" shall mean the VaR capital specified in Appendix I approved by the Enron Board of
Directors that may be periodically allocated by the Enron Corp. President and Enron Corp. Chief Risk
Officer to permanent Commodity Groups listed in Appendix I as provided in Section VI. E. of this policy.

  "Enron Business Unit(s)" shall mean Enron Corp. and any entity controlled, directly or indirectly, by
Enron Corp., (including internal groups created for the purposes of trading, or aligned according to the
commodities set out in the Appendices), or any entity directly or indirectly under common control of
Enron Corp. For this purpose, the criteria for establishing "control" of any entity include but are not
limited to, ownership of more than fifty percent (50%) of the voting power of such entity.

"Market Parameters" shall mean market spot and forward prices/curves, market spot and forward
volatility, correlation (where appropriate), market interest rates, spot foreign exchange rates (where
appropriate).

"Maturity/Gap Risk" shall mean the risks related to non-parallel changes of forward prices or interest
rates. For purposes of this Policy, the Maturity/Gap Risk related to commodity Positions with forward
prices shall be measured using a rolling total of the net open position per period, which may be modified
based on the market structure of the underlying Position and pending authorization of the Chief Risk
Officer of Enron Corp.

  "Net Open Position" shall mean the aggregate of the open Positions in a Commodity Group on a
Benchmark Position equivalent basis.

`' "Position" shall mean, collectively, the risk components (including, but not limited to, price risk, basis
"` risk, index risk, credit risk and liquidity risk) of all products (commodities, financial instruments,
securities, equities, financial assets or liabilities) which have been authorized for trading in the Enron
Corp. Risk Management Policy, any of the Enron Corp. Policies or approved for trading through any
amendments to this Policy. Q

  "Transactions" shall mean, collectively, forwards, futures, swaps, options, or any combination of these
instruments and any other derivative or cash market instruments creating a Position.

"Value-at-Risk" (VaR) shall mean the Potential Exposure related to a Commodity Group or Position
representing the potential change in value resulting from changes including: market prices, interest rates,
currency rates, counterparty credit condition, liquidity, funding and settlement risk, among others. VaR
shall be calculated using the Enron Corp. adopted VaR methodology at the 95% confidence interval using
a 1-day time horizon. Any recalibration or modification of the VaR methodology or parameters that take
into account observed or anticipated changes in market factors or developments in VaR technologies must
be approved by the Enron Corp. Chief Risk Officer or his designee(s).

4

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APPENDIX I

Permanent Trading Limits (page 1 of 2):

Commodity Group	Benchmark Position	Net Open Position Limit	- Maturity/ Gap Risk Limit	VaR Limit
TRADING PORTFOLIO						$125	MM
Discretionary VaR						$ 25	MM
							
North American Electricity	North American Electricity Equivalents	90	Twh	25	Twh (Rolling 12-Month)	$ 54	MM
North American Natural Gas	NYMEX Henry Hub Equivalents	500	Bcf	200	Bcf (Rolling 3-Month)	$ 61	MM
Southern Cone Natural Gas	Southern Cone Natural Gas Equivalents	35	Bcf	20	Bcf (Rolling 12-Month)	$ 2	MM
Southern Cone Electricity	Southern Cone Electricity Equivalents	3.5 Twh	3.5 Twh (Rolling 12-Month)	$ 5	MM
							
Metals & Minerals	LME Copper Futures Equivalents
Metric Tonnes (MT)	375,000	MT	600,000	MT (Rolling 12-Month)	$ 8	MM
European Natural Gas	UK Northern Balancing Point Gas Equivalents	200	Bcf	90	Bcf (Rolling 12-Month)	$ 10	MM
UK Electricity	UK Electricity Equivalents	60	Twh	15	Twh (Rolling 12-Month)	$ 30	MM
Continental Electricity	Continental Electricity Equivalents	20	Twh	20	Twh (Rolling 12-Month)	$ 4	MM
Nordic Electricity	Nordic Electricity Equivalents	20	Twh	20	Twh (Rolling 12-Month)	$ 5	MM
Australian Electricity	Australian Electricity Equivalents	3	Twh	6	Twh (Rolling 12-Month)	$ 3	MM
Japanese Electricity	Japanese Electricity Equivalents	4	Twh	4	Twh (Rolling 12-Month)	$ 4	MM
Credit Trading	Market Value in USD	$750,000
$50,000	/ by total,
/ b individual		N/A	$ 5	MM
							
Global Products	NYMEX WTI Equivalents	18
(EOL Crude	MM Bbl
- 2 Mil Bbl)	19 Mil Bbl (Rolling 12-Month)
(EOL Crude - 3 Mil Bbl)	$ 15 MM
EOL Crude - $ 3 MM
LNG	LNG Equivalents	9	Bcf	12	Bcf (Rolling 12-Month)	$ 5	MM
Weather Derivatives	EOL Equivalent Contracts	40,000	EOL Contracts		N/A	$ 4.5 MM
Coal	. U.S. Eastern Coal Equivalents
Metric Tonnes (MT)	30	MM MT	30 MM MT
(Rolling 12-Month)	$ 7
Vessel Tradin	MM
g - $ 2 MM
Freight Markets Trading	Full Truckload (FTL) Equivalent Units	83,000	FTL Units	105,000	FTL Units
(Rolling 12-Month)	$ 2	MM
Emissions	S02 Credits	1,000,000	Credits	1,000,000	Credits (Rolling 12-Month)	$ 3	MM
Global Risk Markets Trading (1)	North American Electricity Equivalents	300,000	Mwh		N/A	$ 3	MM (1)

(1) Lifetime Capital at Risk (P95) Limit $ 30 MM
Notional Maximum Loss (P95) Limit $120 MM

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APPENDIX I

Permanent Trading Limits (page 2 of 2):

Commodity Group	Benchmark Position "	Net Open Position Limit	Maturity / Gap Risk Limit	VaR Limit
Financial Instruments				$ 5 MM
Interest Rate	USD Notional Equivalent @ AA Libor	$250,000 / by	N/A	-
Foreign Currency	USD Spot Rate Notional Equivalents	$150 MM	N/A	-
Equity Trading	Market Value in USD	$200 MM	N/A	$ 10 MM
Convertible Arbitrage	Market Value in USD	$150 MM	N/A	$ 2 MM
Meats Trading	Futures Contract Equivalents	750 Contracts	N/A	$ 0.5 MM
Grain Trading	Futures Contract Equivalents	750 Contracts	N/A	$ 0.5 MM
Soft Commodities	Futures Contract Equivalents	4,000 Contracts	N/A	$ 2 MM
				
Pulp & Paper	Pulpex NBSK (Pulp) Futures Equivalents
Metric Tonnes (MT)	0.5 MM MT	500,000 MT
(Rolling 12-Month)	$ 5 MM
Lumber	Board Feet (BF)	44 MM BF	44 MM BF	$ 0.5 MM
Steel	Hot Rolled Coil Steel Equivalents
Metric Tonnes (MT)	1.5 MM MT	2.5 MM MT	$ 5 MM
				
Broadband	N/A	N/A	N/A	$ 2 MM
Advertising Swaps	New York Al 849 PR Cost Per Point (CPP)	28,000 Cost Per Point	56,000 Cost Per Point	$ 2 MM
				
				
				
MERCHANT PORTFOLIO	Market Value in USD	N/A	N/A	N/A
				
CAPITAL PORTFOLIO				$ 10: MM
Enron Companies	Market Value in USD	$300 MM	N/A	-
Other	S&P Equivalents	$200 MM	N/A	-

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APPENDIX II

INTERIM POLICY TRADING LIMITS:

Commodity Group " `	Benehii ark Position _	Net Open Position L-iniit'	Maturity /,Gap Risk Limit	VAR Limit	Expiration Limit
DRAM Chips	128M SDRAM PC 100 Equiv. Chips	2 MM Benchmark Equiv. Chips	1.5 MM Benchmark Equiv. Chips	$1 MM	11/15/01

DISCRETIONARY POLICY TRADING LIMITS:

Discretionary VaR is allocated among Commodity Groups frequently in accordance with the Policy and limits in Appendix I.

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  Approved:
Amended:
  ..':r Amended:
Amended:
Amended:
Amended:

  ENRON CORP. Proprietary and Confidential
RISK MANAGEMENT POLICY
Approved by Enron Corp. Board of Directors

October 1, 1996
December 8, 1998
  May 3, 1999
August 10, 1999
October 20, 1999
December 14, 1999

Amended: February 7, 2000

Amended:	May 2, 2000
Amended:	August 8, 2000
Amended:	October 7, 2000
Amended:	December 12, 2000

Amended: February 13, 2001
Amended: May 1.2001

I. General Authorization

Enron Corp. is authorized to execute Transactions and manage these Transactions within certain authorized
Portfolios in support of its businesses.

All Transactions covered by this policy must be conducted in compliance with all Enron Corp. policies, as each
may be amended, supplemented or restated from time to time (collectively the "Enron Corp. Policies").

II. Portfolios

Designated Enron Business Units are authorized to enter into Transactions which create Positions for Enron Corp.
and its affiliates, other Enron Business Units or their respective customers within the authorized Commodity
Groups and limits, specified in the Appendices. These Positions are managed in the following Portfolios:

A. Trading Portfolio - designed to capture and manage risks related to physical delivery of energy and other
commodities, to provide related risk management services, to take advantage of market arbitrage
opportunities and to manage positions within the approved limits. This portfolio includes commodity
transactions, financial instruments and securities transactions.

B. Merchant Portfolio - designed to capture and manage merchant investments in public and private
companies, including the active management of embedded exposures and to provide greater liquidity for
Enron's merchant investment activities, consistent with Enron Corp.'s core competencies within the
approved limits. This portfolio includes equity, "equity-like," debt and "debt-like" investments in the
public and private sector.

~.'s C. Capital Portfolio - designed to accommodate positions and transactions in Enron's own stock or
derivatives thereof which may occur from time to time in the execution of approved structural transactions
(for example, stock buy-backs, hedging of stock option programs, etc.).

  III. Limit Structure

`: Generally, Enron Business Units' business activities are subject to a combination of limits. These limits include,
but are not limited to: Net Open Position, Maturity/Gap Risk, Potential Exposure (VaR), Regulated Exchange
Limits, and Loss Notifications, as appropriate for the type of business activity under consideration.

  Limits will be applied at the Commodity Group and Portfolio level, as appropriate and monitored daily. Unless
specifically allocated to a business unit for a basket of products, these limits are to be applied against Enron's
t, ;2
  t consolidated position on an individual commodity group basis.
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A. Net Open Position Limits. Enron Business Units' activities are subject to the Net Open Position limits at
the Commodity Group level, as specified in the Appendices. For purposes of monitoring the Net Open
Position Limits, all Positions within a Commodity Group shall be aggregated into a reference Benchmark
Position assigned to each group.

  B. Maturity/Gap Risk Limits. Enron Business Units' activities are subject to the Maturity/Gap Risk limits
at the Commodity Group level, as specified in the Appendices. For purposes of monitoring the
Maturity/Gap Risk Limits, all Positions within a Commodity Group shall be aggregated into a reference
Benchmark Position assigned to each group.

C. Potential Exposure Limits. Enron Business Units' activities are subject to potential exposure analysis
using stress-testing and scenario analysis, as directed by the Enron Corp. Chief Risk Officer, and limits
based on Value-at-Risk (VaR), as specified in the Appendices, calculated daily or as appropriate to the
business activity under consideration at the Portfolio level and at the Commodity Group level.

  D. Regulated Exchange Limits. Enron Business Units may be subject to limits imposed by regulated
exchanges on which they transact. Enron Business Units shall comply with any such limits imposed on
them, as such limits may be modified from time to time.

  M
E. Loss Notifications. Daily Losses and Cumulative 5-day Losses resulting from Enron Business Units' Q
  activities are subject to the reporting requirements specified in Section IV. C. '~

All Enron Business Units are expected to formulate limits subordinate to limits specified in the Appendices, and
such sub-limits should be monitored internally and act as triggers for reference to and action by senior Enron
Business Unit management.

IV. Limit Violation/Loss Notification Requirements

Notwithstanding the other provisions of this Policy, any violation of limits must be reported to the Enron Corp.
Chief Risk Officer. This limit violation report should be made to the Chief Risk Officer by the Enron Business
unit prior to entering into a Transaction if there is a sufficient reason to believe that a limit violation will occur.
Requirements for reporting limit violations and loss notifications, each accompanied by an explanation, as
follows:

A. Net Open Position Limits; Maturity/Gap Risk Limits. If the limit violation exceeds the applicable
limit by greater than or equal to five percent (5%), the Enron Corp. Chief Risk Officer shall ensure the
prompt communication of the occurrence to the Enron Business Unit Office of the Chairman and to the
President of Enron Corp. If the limit violation exceeds the applicable limit by greater than or equal to ten
percent (10%), the Enron Corp. Chief Risk Officer shall ensure the prompt communication of the
occurrence to the Chairman Executive Officer of Enron Corp.

11
  B. Value-at-Risk Limits. If the VaR for any Commodity Group or Portfolio exceeds the applicable limit by
greater than or equal to five percent (5%), the Enron Corp. Chief Risk Officer shall ensure the prompt
communication of the occurrence to the Enron Business Unit Office of the Chairman and to the President
of Enron Corp. If the VaR for any Commodity Group or Portfolio exceeds the applicable limit by greater
U

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than or equal to ten percent (10%), the Enron Corp. Chief Risk Officer shall ensure the prompt
communication of the occurrence to the Chair Chief Executive Officer of Enron Corp.

If the Aggregate VaR Limit is exceeded, the Enron Corp. Chief Risk Officer shall ensure the prompt
communication of the occurrence to the President of Enron Corp.. If the Aggregate VaR Limit is exceeded
by greater than or equal to ten percent (10%), the Enron Corp. Chief Risk Officer shall ensure the prompt
communication of the occurrence to the QiaiRffan-Chief Executive Officer of Enron Corp.. If the
Aggregate VaR Limit is exceeded by greater than or equal to fifteen percent (15%), the Enron Corp. Chief
Risk Officer shall ensure the prompt communication of the occurrence to Chairman of the Board and to
the Chairman of the Finance Committee of Enron Corp.

C. Loss Notifications. The Enron Corp. Chief Risk Officer shall ensure the prompt communication to the
Enron Business Unit Office of the Chairman, the President of Enron Corp., or theme hief
Executive Officer of Enron Corp., if a Daily Loss in any Commodity Group or Portfolio is equal to or in
excess of 100%, 125%, or 150% of the corresponding VaR limit, respectively. The Enron Corp. Chief
Risk Officer shall ensure the prompt communication to the President of Enron Corp., the Chairman Chief
Executive Officer of Enron Corp., or the Chairman of the Board or the Chairman of the Finance
Committee of Enron Corp., if the aggregate Daily Loss is equal to or in excess of 50%, 75%, or 100% of
the Aggregate VaR Limit, respectively.

The Enron Corp. Chief Risk Officer shall ensure the prompt communication to the Enron Business Unit
Office of the Chairman, the President of Enron Corp., or the Q~-Chief Executive Officer of Enron `;
Corp. if a Cumulative 5-day Loss in any Commodity Group or Portfolio is equal to or in excess of 125%,
150%, or 175% of the corresponding VaR Limit, respectively. The Enron Corp. Chief Risk Officer shall
ensure the prompt communication to the President of Enron Corp. or the C haiFakanChief Executive
Officer of Enron Corp., if the aggregate Cumulative 5-day Loss is equal to or in excess of 75% or 100% of
the corresponding VaR limit, respectively.

D. Reporting to the President of Enron Corp., and to the Chairman, Audit and Finance Committees of
the Board of Directors. Aggregate loss notifications and limit violations shall be communicated to the
President of Enron Corp., the Chief Executive Officer of Enron Corp., the Chairman of Enfen -Corps the
Board, and the Chairman of the Finance Committee of the Board of Directors of Enron Corp. by the Chief
Risk Officer of Enron Corp., as specified in Section IV. of this policy, and as otherwise determined by the
Chief Risk Officer. Aggregate loss notifications and a summary of limit violations, along with an analysis
of Enron's market risks will be reported to the Audit Committee of the Board of Directors by the Chief
Risk Officer of Enron Corp. at all regularly scheduled Audit Committee meetings.

V. Operations and Controls

A. Segregation of Duties. Enron Business Units shall keep segregated from the business groups or
individuals entering into Transactions each of the following activities: recording and aggregation of
Transactions; preparation, issuance and verification of Enron Corp. or third-party documentation;
reporting of Positions and Commodity Group information; review of the reasonableness of prices and
models, periodic validation of prices from independent market sources; monitoring of limits; physical
and/or financial settlement of Transactions; reconciliation of accounts; and preparation of financial
statements.

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B. Position Reporting. Designated Enron Business Units shall prepare, distribute and make available data
constituting a daily report ("Daily Position Report") including Commodity Group Net Open Position,
Maturity/Gap Position, profit or loss, potential exposure (VaR) and any other parameters as may be
required by the President or the Chief Risk Officer of Enron Corp. The Daily Position Reports at the
Commodity Group level will also report various limits compared to their respective actual amounts and
will be signed off by the Commodity Group Manager of the position(s) and the head of the commercial
support group responsible for their preparation, before any subsequent trading occurs.

For purposes of limit 'monitoring and aggregation of Enron's consolidated trading results, Enron's
consolidated Daily Position Report should include the Net Open Position, Maturity/Gap Position, profit or
loss, and potential exposure (VaR) for approved Commodity Groups consolidated across the company
without regard to which business unit undertook the trading activity. In those instances where limits are
granted to a business unit for a basket of commodities, reporting for individual commodity risk books
shall be maintained to facilitate aggregation of Enron's actual consolidated commodity specific exposure.
Management reporting may separately provide business unit sub-limit monitoring and trading results
aggregated according to management lines.

The President of Enron Corp. and Enron Corp. Chief Risk Officer shall designate individuals who are
authorized to approve the Daily Position Report on behalf of Enron Corp. After approval, a consolidated
Daily Position Report shall be distributed to the Chairman, the President, the Chief Accounting Officer,
the Chief Risk Officer of Enron Corp. and others as designated by the President or the Chief Risk Officer
of Enron Corp.

  uo
C. Stress and Scenario Testing. On a monthly basis, or as markets dictate, designated Enron Business `~
  Units shall fonnulate and examine the effects of extreme changes in the market parameters relevant to 10,
exposures and positions. Results of these tests should be made available to the Enron Corp. Chief Risk
Officer, or his designee(s).

  D. Valuation. On a monthly basis, or as markets dictate, designated Enron Business Units shall provide
evidence of verification of all market parameters used in the calculation of risk metrics and profits and
losses. This should be made available to the Enron Corp. Chief Risk Officer, or his designee(s).

E. Transaction Approval and Execution. Only those employees designated by the Enron Corp. Chief Risk
Officer or his designee(s) will be authorized to enter into Transactions on behalf of Enron. The Chief
Risk Officer must also maintain a record of those employees responsible for the individual Commodity
Groups (Commodity Group Manager) as specified in the Appendices. Individuals will be assigned as
commodity leaders to manage Enron's aggregate position across the company as determined necessary by
the Chief Risk Officer. All Transactions must be entered into in compliance with current policies of the
Credit Group, Market Risk Management Group, and other relevant groups, as determined by the Enron
Corp. Chief Risk Officer. All trades executed on the telephone must be executed on telephones that are
recorded electronically.

F. Brokerage Accounts. Designated Enron Business Units periodically open trading accounts with clearing
brokers to facilitate the conduct of their business. All openings or revisions of trading accounts with a
broker or brokers will be reviewed and approved by the Enron Corp. Chief Risk Officer or his designee(s).
The Enron Corp. Chief Risk Officer or his designee(s) will also notify the brokers of the names of
personnel authorized to trade futures, options or other contracts on regulated exchanges.

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VI. Policy Amendment Authority

A. Portfolios, Commodity Groups and Positions. Subject to the authorization of the Board of Directors,
the Enron Corp. Chairman, the President of Enron Corp. and the Enron Corp. Chief Risk Officer,
additional Portfolios may be created and additional Commodity Groups may be added within existing
Portfolios, and the related limits will be created or revised accordingly. The President of Enron Corp. and
the Enron Corp. Chief Risk Officer can authorize additional Positions within the existing Commodity
Groups, provided that such Positions can be aggregated within the limits of a currently authorized
Commodity Group.

B. Cross-Commodity Position Authorization. If in the ordinary course of its business an Enron Business
Unit or trading desk incurs an exposure to an underlying commodity or financial instrument for which it
does not have explicit authority to carry, this exposure should be hedged internally with the appropriate
Enron desk(s), with appropriate notification to the Chief Risk Officer or his designee(s). Hedge positions
should be in instruments that have an observable correlation with the underlying exposure, and should be
rebalanced regularly to substantially neutralize the underlying exposure.

Upon notification to the Chief Risk Officer or his designee(s), the Enron Business Unit Office of the
Chairman who has authority for that commodity group may authorize a specific trader in a different
commodity group to take speculative positions with other Enron trading desks in commodities and/or
financial instruments other than those which that trader has explicit authority to trade (i.e. the Business
Unit Office of the Chairman for North American Natural Gas may authorize a trader in the Coal group to m
trade gas with the North American Natural Gas desk). For limit monitoring purposes, these cross- Q
commodity positions shall be captured by individual commodity to facilitate aggregation and reporting of
Enron's consolidated exposure by commodity in the Daily Position Report (Coal desk's gas position will
be aggregated with the North American Natural Gas commodity group.).

C. Position Measurement Parameters. Any changes to parameters used in the aggregation and
measurement of Positions must be approved by the Enron Corp. Chief Risk Officer or his designee(s).
This includes, but is not limited to, the Benchmark Positions, VaR parameters, Maturity/Gap Risk periods,
conversion ratios, volatility factors and correlation factors. Any substantive change as determined by the
Chief Risk Officer will be communicated to Enron's Board at the next regularly scheduled Board of
Directors' meeting.

D. Interim Policy for New Commodity Groups. The President of Enron Corp. and the Chief Risk Officer
of Enron Corp. may approve positions in new Commodity Group(s) prior to approval in the next meeting
of the Enron Corp. Board of Directors, subject to the following criteria: (i) maximum VaR of $1 million,
along with corresponding position limits, and (ii) maximum initial term of six (6) months, subject to one
extension for an additional term prior to review by the Board of Directors for permanent limits. These
interim limits adjust the limit violation and loss notification requirements at the commodity group level
until the granted limits expire, but they do not change the Aggregate VaR Limit. Interim limits shall be
reported to the Enron Corp. Board of Directors at each regularly scheduled Board of Directors' meeting.

  x E. Discretionary VaR. The President of Enron Corp. and Chief Risk Officer of Enron Corp. may allocate
"Discretionary VaR" to the existing Commodity Groups listed in Appendix I, along with the
corresponding adjustments to Net Open Position limits and Maturity/Gap Position limits, under the
following guidelines: (i) allocation is limited to 100% of the existing commodity group VaR limit in

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Appendix I, (ii) VaR allocation and corresponding adjustments to position limits adjust the limit violation
and loss notification requirements at the commodity group level, (iii) nominal allocations of Discretionary
VaR may exceed the amount listed in Appendix I due to portfolio diversification effect, as determined by
the Chief Risk Officer or his designee(s),and (iv) term of allocation is determined by the Enron Corp.
President and Chief Risk Officer. Discretionary VaR allocations are to be reported to the Enron Corp.
Board of Directors at each regularly scheduled Board of Directors' meeting.

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F. Temporary Limits. The Board of Directors of Enron Corp. may from time to time approve temporary
limits to encompass certain specific approved positions. These-temporary limits adjust the limit violation
and loss notification requirements at the commodity group level until the granted limits expire, but they do
not change the Aggregate VaR Limit unless the Aggregate VaR Limit is specifically adjusted.

  G. Limit Changes and Othee
supplements or updates to
approved by (i) the Enron
Officer and ratified by the
Directors' meeting.

VII. Miscellaneous

Policy Amendments. Any modification of limits or other amendments,
this Policy, unless otherwise covered by this Section VI, must be either
:orp. Board of Directors, or (ii) the Enron Corp. President and Chief Risk
Enron Corp. Board of Directors at the next regularly scheduled Board of

Employee Trading. No employee of any Enron Business Unit may engage in the trading of any Position
for the benefit of any party other than an Enron Business Unit (whether for their own account or for the
account of any third party) where such Position relates to (i) any financial instrument, security, financial
asset or liability which falls within such employee's responsibility at an Enron Business Unit, or (ii) any
other commodity not covered by (i) included in any Commodity Group.

Employee Review of Policies. As determined by the Chief Risk Officer or his designee(s), an employee
of any Enron Business Unit participating in any activity or transaction within the coverage of this Policy
shall sign on an annual basis or upon any material revision to this Policy, a statement approved by the LO
Enron Corp. Chief Risk Officer that such employee (i) has read this Policy, (ii) understands this Policy,
and (iii) has complied and will comply with this Policy.

Compliance with Policy. All Business Units and their employees should comply with this Policy.
Dispensation for non-compliance should be sought from the President of Enron Corp., the Enron Corp.
Chief Risk Officer or their designee(s). Willful or deliberate non-compliance or falsification of risk
metrics or profits and losses referred to by this Policy will be regarded as gross misconduct.

Supersedes Prior Policies. This Policy supersedes and replaces all previous Policies of Enron Corp.
approved by the Enron Corp. Board of Directors concerning risk management or trading. This Risk
Management Policy was approved by the Enron Corp. Board of Directors on October 1, 1996, and as
permitted hereunder it has been amended as of the date reflected on the first page hereof.

VIII. Definitions

  1

"Aggregate VaR Limit" shall mean the total Enron Trading Portfolio VaR Limit as specified in Appendix
I. Discretionary VaR allocation, and approval of Temporary VaR limits and Interim VaR limits do not
change the Aggregate VaR Limit unless the Aggregate VaR Limit is specifically adjusted by action of the
Board of Directors.

"Benchmark Position" shall mean the Position within a Commodity Group into which all other Positions
within the same Commodity Group can be converted using price volatility and correlation based
conversion factors. Such conversion factors shall be established and authorized by the Enron Corp. Chief
Risk Officer.

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! 971,

^i "Commodity Group" shall mean a collection of Positions having sufficient relationship and correlation (as
approved by the Enron Corp. President and Enron Corp. Chief Risk Officer) that allow for aggregation
into a Benchmark Position.

"Cross-Commodity Position" shall mean a Position within a certain Commodity Group that is not
explicitly authorized as part of that Commodity Group. (i.e. Coal trading desk might hold a North
American Natural Gas position as a hedge, or as a speculative position). The suitability and approval of
Cross-Commodity Positions shall be reviewed and approved by the Business Unit Office of the Chairman
of the Commodity Group specifically authorized to hold those Positions. Aggregation of risk components
and profit or loss for all commodity groups will be reported on a consolidated basis in the Enron Daily
Position Report.

"Cumulative 5-day Loss" shall mean a sum of daily profit and loss for the last consecutive five business
days, either for any Commodity Group or for an aggregate loss in value of the trading portfolio. Upon
occurrence of a Cumulative 5-day Loss limit notification or a Daily Loss limit notification reported in
accordance with Section IV.C. of this policy, the Cumulative 5-day Loss calculation is reset. Daily profit
and loss will be calculated using the mark-to-market method on a net present value basis, exclusive of
non-trading type of originations and exclusive of prudence.

  :`Daily Loss" shall mean the loss in value of any Commodity Group or a loss in value of the trading
" portfolio in aggregate on a daily basis. The Daily Loss will be calculated using the mark-to-market
  method on a net present value basis, exclusive of non-trading type of originations and exclusive of
l prudence.

  "Daily Position Report" shall mean a hard or soft copy report including, but not limited to the following,
for each major commodity and price curve traded: Commodity Group Net Open Position, Maturity/Gap
Position, profit or loss, potential exposure (VaR), and for all positions regardless of financial accounting
treatment:

The amounts by which the mark-to-market value of the portfolio can change for small (or unit)
changes in all "market parameters", as a term structure (i.e. by time "bucket") and on a net aggregate
basis.
For portfolios with option or non-linear risks, the concentration of sensitivities (delta, gamma, vega)
according to expiry date and strike price ("strike concentration").
The VaR for the portfolios, according to Enron's approved methodology.

The Daily Position Report shall also report the aggregated risk components (positions, VaR, and profit or
loss) for approved Commodity Groups on a consolidated basis, without regard to which Enron Business
Unit transacted, as discussed in Section VI.B. of this policy.

  "Discretionary VaR" shall mean the VaR capital specified in Appendix I approved by the Enron Board of
Directors that may be periodically allocated by the Enron Corp. President and Enron Corp. Chief Risk
Officer to permanent Commodity Groups listed in Appendix I as provided in Section VI. E. of this policy.
"Enron Business Unit(s)" shall mean Enron Corp. and any entity controlled, directly or indirectly, by
Enron Corp., (including internal groups created for the purposes of trading, or aligned according to the
commodities set out in the Appendices), or any entity directly or indirectly under common control of
Enron Corp. For this purpose, the criteria for establishing "control" of any entity include but are not
limited to, ownership of more than fifty percent (50%) of the voting power of such entity.

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"Market Parameters" shall mean market spot and forward prices/curves, market spot and forward
volatility, correlation (where appropriate), market interest rates, spot foreign exchange rates (where
appropriate).

"Maturity/Gap Risk" shall mean the risks related to non-parallel changes of forward prices or interest
rates. For purposes of this Policy, the Maturity/Gap Risk related to commodity Positions with forward
prices shall be measured using a rolling total of the net open position per period, which may be modified
based on the market structure of the underlying Position and pending authorization of the Chief Risk
Officer of Enron Corp.

"Net Open Position" shall mean the aggregate of the open Positions in a Commodity Group on a
Benchmark Position equivalent basis.

"Position" shall mean, collectively, the risk components (including, but not limited to, price risk, basis
risk, index risk, credit risk and liquidity risk) of all products (commodities, financial instruments,
securities, equities, financial assets or liabilities) which have been authorized for trading in the Enron
Corp. Risk Management Policy, any of the Enron Corp. Policies or approved for trading through any
amendments to this Policy.

"Transactions" shall mean, collectively, forwards, futures, swaps, options, or any combination of these
instruments and any other derivative or cash market instruments creating a Position.

  0
"Value-at-Risk" (VaR) shall mean the Potential Exposure related to a Commodity Group or Position
representing the potential change in value resulting from changes including: market prices, interest rates,
currency rates, counterparty credit condition, liquidity, funding and settlement risk, among others. VaR
shall be calculated using the Enron Corp. adopted VaR methodology at the 95% confidence interval using
a 1-day time horizon. Any recalibration or modification of the VaR methodology or parameters that take
into account observed or anticipated changes in market factors or developments in VaR technologies must
be approved by the Enron Corp. Chief Risk Officer or his designee(s).

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APPENDIX I

Permanent Trading Limits (page 1 of 2):

Commodity Group	Benchmark Position	Net Open Position Limit	Maturity / Gap Risk Limit	VaR Limit
TRADING PORTFOLIO	$125 MM
Discretionary VaR				$25 MM
				
North American Electricity	North American Electricity Equivalents	90 Twh	25 Twh (Rolling 12-Month)	$54 MM
North American Natural Gas	NYMEX Henry Hub Equivalents	500 Bcf	200 Bcf (Rolling 3-Month)	$61 MM
Southern Cone Natural Gas	Southern Cone Natural Gas Equivalents	35 Bcf	20 Bcf (Rolling 12-Month)	$2 MM
Southern Cone Electricity	Southern Cone Electricity Equivalents	3.5 Twh	3.5 Twh (Rolling 12-Month)	$5 MM
				
Metals & Minerals	LME Copper Futures Equivalents.
Metric Tonnes (MT)	375,000 MT	600,000 MT (Rolling 12-Month)	$8 MM
European Natural Gas	UK Northern Balancing Point Gas Equivalents	200 Bcf	90 Bcf (Rolling 12-Month)	$10_MM
UK Electricity (4)	UK Electricity Equivalents	X60 Twh (-1-)	15 Twh (Rolling 12-Month)	$1-O-30 MM (-I-)
Continental Electricity	Continental Electricity Equivalents	20 Twh	20 Twh (Rolling 12-Month)	$4 MM
Nordic Electricity	Nordic Electricity Equivalents	20 Twh	20 Twh (Rolling 12-Month)	$5 MM
Australian Electricity	Australian Electricity Equivalents	3 Twh	6 Twh (Rolling 12-Month)	$3 MM
Japanese Electricity	Japanese Electricity Equivalents	4 Twh	4 Twh (Rolling 12-Month)	$4 MM
Credit Trading	Market Value in USD	$750,00018-/-bp total,
$50,000 DVO-1--/-b individual	N/A	$5 MM
				
Global Products	NYMEX WTI Equivalents	18M44-MM Bbl
(EOL Crude - 2 Mil Bbl)	19 Mil Bbl (Rolling 12-Month)
(EOL Crude - 3 Mil Bbl)	$15 MM
(EOL Crude - $3 MM)
LNG	LNG Equivalents	9 Bcf	12 Bcf (Rolling 12-Month)	$5 MM
Weather Derivatives	EOL Equivalent
Contracts	40,000 EOL equiv-C_eontracts	N/A	$4.5 MM
Coal & Freigh	U.S. Eastern Coal Equivalents
Metric Tonnes (MT)	30 MM MT	30 MM MT (Rolling 12-Month)	$7 MM
(Freight-Vessel Trading-
$2 MM)
	uivalent Units
Full Truckload (FTL) E	000 FTL Units
83	105,000 FTL Units (Rolling 12-Month)	2 MM
Freight t Markets Trading	q	,		
Emissions	S02 Credits	1,000,000 Credits	1,000,000 Credits (Rolling 12-Month)	$3 MM
Global Risk Markets Trading (1)	North American Electricity Equivalents	300.0 00 Mwh	N/A	3 MM I

  (1) See Temporary Limits- Appendix (I) Lifetime Capital at Risk (P95) Limit $ 30 MM E0004403842
  Notional Maximum Loss (P95) Limit $120 MM 5A-21
EXH006-01298


=============
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=============

  ENRON CORP.
  RISK MANAGEMENT POLICY
Proprietary and Confidential

APPENDIX I

Permanent Trading Limits (page 2 of 2):

Commodity Group	Benchmark Position	Net Open Position Limit	Maturity / Gap Risk Limit	VaR Limit
Financial Instruments				$5 MM
Interest Rate	USD Notional Equivalent @
AA Libor	$250,000 / by	N/A	-
Foreign Current	USD Spot Rate Notional Equivalents	$150 MM	N/A	-
Equity Trading	Market Value in USD	$200 MM	N/A	$10 MM
Convertible Arbitrage	Market Value in USD	$150 MM	N/A	$2 MM
Meats Trading	Futures Contract Equivalents	750 Contracts	N/A	$0.5 MM
Grain Trading	Futures Contract Equivalents	750 Contracts	N/A	$0.5 MM
Soft Commodities	Futures Contract Equivalents	4,000 Contracts	N/A	$2 MM
				
Pulp & Paper	Pulpex NBSK (Pulp) Futures Equiv ?tents
MetdTanneLrMl.	-500j00)-0,5-MM MT	500,000 MT (Rolling 12-Month)	$5 MM
Lumber	Board Feet (BF)	44 MM BF	44 MM BF	$dt5.1YIl\g5003000
Steel	Hot Rolled Coil Steel Equivalents
Metric Tonnes (MT)	1.5 MM MT	2.5 MM MT	$5 MM
				
Broadband	N/A	N/A	N/A	$2 MM
Advertising Swaps	New York A1849 PR Cost Per Point (CPP)	2~0-0-254-Cost Per Point	56 0O.0_4- & Cost Per Point	$2 MM
				
(-Nor-th-A-merienn-igleetr-leity and				(sub-limit)
				
MERCHANT PORTFOLIO	Market Value in USD	N/A	N/A	N/A
				
CAPITAL PORTFOLIO				$ 10 MM
Enron Companies	Market Value in USD	$300 MM	N/A	-
Other	S&P Equivalents	$200 MM	N/A	-

E0004403843

  5A-22
EXH006-01299


=============
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=============

  ENRON CORP.
  RISK MANAGEMENT POLICY
Proprietary and Confidential

APPENDIX II

INTERIM POLICY TRADING LIMITS:

Commodity Croup	Benehmar~C Position;	lef Open ~aihon Limit	Mature / Gap_ rsic Limit	VaR I niit	Fxpiiraizori . 'uii ,
					
					
DRAM Chips	128M SDRAM PC100 Equiv. Chips	2 MM Benchmark Equiv. Chips	1.5 MM Benchmark Equiv. Chips	$1 MM	X11/15/01

DISCRETIONARY POLICY TRADING LIMITS:

Discretionary VaR is allocated among Commodity Groups frequently in accordance with the Policy and limits in Appendix I.

E0004403844

5A-23

EXH006-01300


=============
Page 106 of 208
=============

Agenda Item 5b

EXH006-01301


=============
Page 107 of 208
=============

  77

Transaction Approval Process

E0004403846

5B- 1

EXH006-01302


=============
Page 108 of 208
=============

  Summary of Significant Changes

 In an effort to reduce Board approval of revisions to the Transaction
Approval Process due solely to personnel or organizational changes, a
modification to grant approval authority to holders of certain executive positions
is recommended. The Chief Risk Officer will maintain an incumbency
certificate with the holders of such executive positions.

 Added approval authority for certain business unit Chief Operating Officers

 All remaining changes are non-substantive, but provide further clarification
to the Transaction Approval Process.

E0004403847

5B-2

EXH006-01303


=============
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=============

w,_7

Transaction Approval Process
  REVISED 511/01

Request For:
RISK
ADJUSTED
CAPITAL
  or
PREPAID OR
EMBEDDED
DEBT
  FINANCING (5)
or
  DIVESTITURE
(>$2,500,000) (1)

TRANSACTION
size
  $MM (4) Approving Unit
ASSESSMENT < 5 BUSINESS GROUP
CONTROL AHEAD

 Transaction CONFORMING < 20 (2) WHOLESALE OOC
Review and
  %" < 75 t21 ENE-OOC
Valuation
 Credit and
  75+ ENE-BOD
  Market Risk ~.
Assessment
 Pricing
 RAC
RECOMMEND-
ATION < 25 (2) ENE-OOC
  NON T

transaction
a. roru
1

  CONFORMING 25+(3) ENE-BOD
ongoing portfolio review and revaluation ?;

(1) Except NON-CONFORMING transactions and venture capital transactions not authorized by the Company's charter, for both of which the limit is $500,000.
(2) Deal Approval Sheets approved by the WHOLESALE OOC and ENE-OOC will be distributed to the ENE-BOD (Finance Committee) after approval.
(3) Transactions deemed NON-CONFORMING only due to RAC RECOMMENDATION being "Returns Below Capital Price" will NOT require ENE-BOD approval if < $75MM.
(4) Merchant asset DIVESTITURES exceeding $500MM and strategic asset DIVESTITURES exceeding $200MM require ENE-BOD approval.
(5) Transactions meeting certain criteria may be approved under the E-DASH process of the Transaction Approval Process, see page 5B-5.

DEFINED TERMS IN ITALICS 5B-3

E0004403848

EXH006-01304


=============
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=============

Approval Process for Originated
Contractual Transactions

  I Commodity VaR
Position Risk
ORIGINATED :i
  TRANSACTION <5
  Non-standard Capital $
documentation Expenditure
  RISK RAC TRANSACTION
(if any) ADJUSTED s APPROVAL
  .
OR
  CAPITAL PROCESS
Reserve `.
  Deal results in 4 ~4 Credit Risk
violation of
  existing limits
  a
  ~! PV8 Savings
  " ~ Guarantee 71
(or equivalent)

E0004403849

5B-4

EXH006-01305


=============
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=============

  E-DASH Process "'
PREPAID OR EMBEDDED DEBT FINANCING

<= $5MM <= $10MM <= $15MM <= $20MM <= $25MM ! >$25MM
i

j AAA-/Aaa3
i		<= 7 years	<= 7 years	<= 5 years <= 5 years <= 5 years
AA-/Aa3		<= 6 years	<= 5 years	<= 4 years <= 3 years
A-/A3		<= 5 years	<= 3 years	<= 2 years
I
BBB+/Baal		
<= 4 years	
<= 2 years	
BBB/Baa2		<= 3 years		

I

  BBB-/Baa3 <= 1 year
BB-/Ba3 <= 6 months
B+/B1 or lower or
  unrated <= 3 months

REVISED 5/1101

  I TRANSACTION
'' APPROVAL
  PROCESS

Example Transactions Include:

 Prepays
 Tilted swaps or other
transactions where debt
financing of a counterparty is
embedded in a trading I risk
management transaction

MApproval to be documented in an Expedited DASH ("E-DASH") and approved by EGF, RAC, and BUSINESS GROUP HEADS only.
(2) In the case of split-rated entities, the lowest applicable rating level shall apply (e.g., an A+/A2 counterparty is classified as A-/A3 or higher and a
BBB-/Ba2 counterparty is classified as BB/Ba2 or higher)

5B-5

E0004403850

EXH006-01306


=============
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=============

Approval Authority

				REVISED 511/01
	CONFORMING	NON-CONFORMING		
	LIMIT	LIMIT		
/ENE-BOD	75+	25+	Enron Corp. Board of Directors (Executive Committee
				
			between Board Meetings)	
ENE-OOC	< 75	< 25	Enron Corp. Office of the Chairman	
WHOLESALE	< 20	N/A	Chairman & CEO	
OOC			President & COO	
BUSINESS,	< 5	N/A	Enron Americas	President & CEO
GROUP				COO

HEADS			................................................................................................................
Enron Europe	...............................................................................................................
President & CEO
(WHOLESALE)		
........................................... .	COO .............................................................................
			Enron Global Markets	President & CEO
			
...........................................................................................................................	COO
...............................................................................................................
			Enron Industrial Markets	President & CEO
			
.......................................................................	COO
...............................................................................................................
			Enron Global Assets	President & CEO
				COO
BUSINESS	< 5	N/A	Enron Energy Services	Chairman & CEO
GROUP			
.....................................................................................................................................	COO
..............................................................................................................
HEADS			Enron Broadband Services	CEO
(OTHER)				President & COO
.
			Enron Global Finance	CFO
			Enron Transportation & Services
...........
. ........ . ....... . ....... . ... . . . ................. . . . . . .	Chairman & CEO

. . . . .......... . . . . . . . . . . . . . . . . . . "
. . . . . . ............. . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... . .... . ...
			Enron Xcelerator	Chaiman & CEO
r
	_
The ENE-OOC has authority	to suspend or revoke approval privileges.
			5B-6	
			E0004403851	

EXH006-01307


=============
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=============

Incumbency Certificate

			REVISED 511101
	CONFORMING NON-CONFORMING		
	LIMIT LIMIT		
I			
ENE-BOD	75+ 25+	Enron Corp. Board of Directors (Executive Committee between Board
		Meetings)	
ENE-OOC	< 75 < 25	Ken Lay, Jeff Skilling - Enron Corp. Office of the Chairman
WHOLESALE	< 20 NIA	Mark Frevert, Chairman & CEO	
OOC		Greg Whalley, President & COO	
BUSINESS	< 5 NIA	Enron Americas	John Lavorato, President & CEO
GROUP		
.. . .. .
.
.
..
...	Louise Kitchen, COO
........... . . . . . . ............ . . . . . . . . .................
. . . . . . . . . . . . . . . . .. . . . . . . .
.
.. .
. . .. . .
........ - ...
..............
.
..
................
HEADS		....... . .. .
................ . . . . . . . .. . . . . . . . . . . . . . . . . .. . . ........
..
.
............
. ..
Enron Europe	. .
.
. . ...
.
.
.
.
.
John Sherriff, President & CEO
(WHOLESALE)		
.................................................................................................	Michael Brown, COO
.....................................................................................................................................................
		Enron Global Markets	Mike McConnell, President & CEO
			Jeff Shankman, COO
		.......... . ..................... . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .. . . .. . . . ..........

Enron Industrial Markets	
. . . . .
.. . . . . . . ............................. . . . . . . . . . . . . . . . . . . . . . . .......... - .......................... -11 .. ................... . ............ . ..........
Jeff McMahon, President & CEO
		........... ...................... ._._...........	
............
......._Ray...Bowen,..COO............................................... ...................
		Enron Global Assets	Rebecca McDonald, President & CEO
			Jim Hughes, COO
BUSINESS	< 5 N/A	_
Enron Energy Services	Dave Delainey, Chairman & CEO
GROUP		
.............................. . . . . . . . . . .. . .. . .. .. . . . . . .. . . . .......... . .............. . . . . . . . . ....................... . ....	Janet Dietrich, COO

. . . . . .. . . . .. . . . . .. . . .
........... - .................. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................ . . . . . . . . . . . . . . . . . ................
HEADS		Enron Broadband Services	Ken Rice, CEO
(OTHER)			Kevin Hannon, President & COO
.............................................---....-- ..................................------............-
		Enron Global Finance ....................................... ......	.........Andy..Fastow,...CFO..................
............................................
		Enron Transportation & Services
.
....
.....	Stan Horton, Chairman & CEO
.
......
..
..
.
....
.
.
....
		....................................................................
...............
.............
......
Enron Xcelerator	....... ..
....
.........
....
.......
..
...
.....
.
...
Lou Pai Chairman & CEO

The Chief Risk Officer maintains incumbency certificate with approval authority.
5B-7

E0004403852

=XH006-01308


=============
Page 114 of 208
=============

Definitions

REVISED 5/1/01

CONFORMING  Routine, non-budgeted and within the general business lines of Enron
 Made in an industry where Enron has established expertise

	 Made in a country where Enron has established a local presence and is currently conducting business
	 RAC will determine if CONFORMING
DIVESTITURES	Disposal of assets (including securities)
NON-CONFORMING	Outside the general business lines of Enron or in an industry where Enron has little or no expertise
	 Made in a country where Enron has no local expertise or where the overall exposure to the country is
	excessive
	 Made to an entity or within an industry that would result in excessive exposure to that entity or industry
	 Deemed NON-CONFORMING if the Deal Approval Sheet indicates RAC RECOMMENDATION of
	"Returns Below Capital Price" or "Do Not Proceed"
_ -	 RAC will determine if NON-CONFORMING
PREPAID OR	 Maximum exposure.to Enron or any affiliate as a result of a prepaid physical or derivative trading / risk
EMBEDDED	management transaction, a tilted swap or other transaction where debt financing of a counterparty is
DEBT FINANCING	' embedded in a trading / risk management transaction
RAC	Risk Assessment and Control group at Enron
	 Chief Risk Officer, responsible for RAC activities
RAC	RAC's overall recommendation on a TRANSACTION, summarized in one of the following:
RECOMMEND-
ATION	- Proceed with Transaction
	- Returns Below Capital Price

- Do Not Proceed

5B-8 E0004403853

EXH006-01309


=============
Page 115 of 208
=============

  _' LA

Definitions

REVISED 511101

   The aggregation of exposure in a transaction that results from:
RISK
ADJUSTED - Capital Expenditure
CAPITAL * cash outflow or commitment to make a cash outflow (examples include any form of debt or equity
financing and prepaid physical or derivative trading I risk management transactions)
  * providing, directly or indirectly, a guarantee of obligations of unaffiliated third parties or of NON-
CONFORMING obligations
  the maximum exposure to Enron or any affiliates as a result of a tilted swap or other transaction
where debt financing of a counterparty is embedded in a trading I risk management transaction
* a commodity or financial position that results in an exposure outside of Board approved limits
  - Commodity positions
Credit
  - Guaranties
  Such exposure translated to an equivalent amount of capital
   RAC will determine the components and total amount of RISK ADJUSTED CAPITAL

TRANSACTION  RISK ADJUSTED CAPITAL / DIVESTITURE / PREPAID OR EMBEDDED DEBT FINANCING
Exposure reflected net to Enron, including funding vehicle exposure

5B-9 EOO04403854

EXH006-01310


=============
Page 116 of 208
=============

9

Ti

Agenda Item 5(b)
TRANSACTION APPROVAL PROCESS
  (Suggested Form of Resolutions)

  WHEREAS, the Board of Directors of the Company approved resolutions on
October 12, 1998 adopting the Enron Corp. Transaction Approval Process (the
"Transaction Approval Process") which provides for (i) a process for review and
approval of Capital Expenditures (as defined in the revised policy attached to these
minutes) and (ii) a process for prior transactions involving Capital Expenditures to be
reviewed for performance and results; and

  WHEREAS, the Board of Directors of the Company approved amendments to
the Transaction Approval Process at meetings held on February 8, 1999, August 10,
1999, February 7t and 8th, 2000, May 2, 2000, October 7, 2000, December 12, 2000
and February 13, 2001; and

  WHEREAS, it would be in the best interest of the Company to further amend the
Transaction Approval Process in order to: (1) better account for and reflect changes in
approval authority with respect to Business Group Heads and changes in the
  organizational structure of Enron Corp.; and (2) make such amendments necessary to
further clarify the Transaction Approval Process;

=i NOW THEREFORE BE IT RESOLVED, that the Company revise the o
Transaction Approval Process to that attached to these minutes and as set forth in m
these resolutions; ~'

  RESOLVED FURTHER, that the revised Transaction Approval Process is
adopted and approved, that a copy of the revised policy be attached to the minutes as
Exhibit A, and that the persons, officers and Approving Units identified therein shall
perform the responsibilities as specified; for the purposes of this policy a certification by
the President and Chief Executive Officer, the Chief Risk Officer (or his or her
designee), the Chief Financial Officer, the Treasurer, any Managing Director or any
Vice President to the effect that this policy has been complied with in connection with
any transaction involving Capital Expenditures shall be conclusive evidence of
compliance and may be relied upon by all persons interested in or participating in such
transaction, including (without limitation) the officers signing transactional documents on
behalf of the Company and attorneys issuing legal opinions with respect to the
transaction;

  RESOLVED FURTHER, that the revised Transaction Approval Process shall not
apply to the approval process for guarantees except as to those guaranteeing the
obligations of unaffiliated third parties. The approval process for all other guarantees

  shall continue as described in the Company's existing "Policy for Approval of
Guarantees, Letters of Credit, Letters of Indemnity, and Other Support Arrangements ,
and shall be reviewed by the Finance Group and the Risk Assessment and Control

  Group;

E0004403855

EXH006-01311


=============
Page 117 of 208
=============

j

S

EXH006-01312

  RESOLVED FURTHER, that the Chairman of the Board , the President and
Chief Executive Officer, the Chief Risk Officer, the Chief Financial Officer, the
Treasurer, any Managing Director, any Vice President of the Company or any other
person authorized by the Board to act on behalf of the Company be, and each of them
hereby is, authorized and empowered to negotiate, enter into, execute, and deliver on
behalf of the Company any agreements and documentation in connection with any
transaction involving Capital Expenditures which has been approved in accordance with
the revised Transaction Approval Process and as the officers executing such
agreements shall approve, such approval to be conclusively evidenced by such
execution; and

  RESOLVED FURTHER, that all actions heretofore taken by the Chairman of the
Board, the President and Chief Executive Officer, the Vice Chairman, the Chief Risk
Officer, the Chief Financial Officer, the Treasurer, any Managing Director or any Vice
President, in the name and on behalf of the Company, related to or in connection with
transactions of the type contemplated by the new review process attached to these
minutes but which originated prior to these resolutions, including, without limitation, the
execution and delivery of any instruments or other documents as any such officer shall
have deemed necessary, proper, or advisable, are hereby adopted, ratified, confirmed,
and approved in all respects.
  Q
LO

E0004403856


=============
Page 118 of 208
=============

m
0
Agenda Item 5c
0
w
0
cn
v


=============
Page 119 of 208
=============

AGENDA ITEM 5(c)
(SUGGESTED FORM OF RESOLUTIONS)

  RESOLVED, that in connection with the business of the
Company and the formation, capitalization, and business of
Enron Finance Partners, LLC, a Delaware limited liability

  company ("EFP") and a minority interest financing vehicle, the
Company be, and hereby is, authorized to cause the creation
of a new series of preferred stock of the Company (the
"Preferred Stock") in an aggregate authorized amount of $1
billion and in accordance with the terms set forth on Exhibit A
hereto and such other terms as any Authorized Officer (as
hereafter defined) of the Company shall approve;

  RESOLVED FURTHER, that the Statement of
Resolutions Establishing a Series of Preferred Stock of the
Company, in the form of Exhibit B hereto ("Statement of
Resolutions"), be, and it hereby is, authorized and approved,
and any Authorized Officer (as hereafter defined) of the
Company is hereby authorized, empowered, and directed to
cause the Statement of Resolutions to be filed with the State '.
of Oregon, setting forth the rights and preferences of the
Preferred Stock;

  RESOLVED FURTHER, that in consideration of and
against payment to the Company of the "Issue Price" as
referenced on Exhibit A hereto in the form of cash, promissory
notes, and/or other securities of the Company, the Company
issue and sell to Enron Asset Holdings, LLC, a Delaware
limited liability company ("EAH") and an indirect subsidiary of
EFP, the number of shares of the Preferred Stock consistent
with the terms set forth on Exhibit A and Exhibit B hereto; and
the proper officers of the Company be, and each of them
hereby is, authorized, empowered, and directed to issue in the
name of EAH, and in accordance with the terms set forth on
Exhibit A and Exhibit B hereto, one or more certificates
representing such stock, and to deliver such certificate or
certificates to EAH upon delivery to the Company of the
consideration for which such stock is to be issued; and that
such shares, when so issued and delivered, shall be fully paid
and nonassessable shares;

n

E0004403858

EXH006-01314


=============
Page 120 of 208
=============

N:

3 RESOLVED FURTHER, that the Preferred Stock be

  represented by certificates in the form of a certificate approved
by the Board of Directors of the Company and hereafter
attached to these resolutions;

x [RESOLVED FURTHER, that shares of
common stock, without par value per share, of the Company

P, ("Common Stock") are hereby appropriated, reserved, and
irrevocably set aside for the purpose of enabling the holders of
the Preferred Stock to convert same in accordance with the
terms and provisions of the Company's Articles of
  l Incorporation and the Statement of Resolutions, and upon
conversion and delivery of the appropriate instrument to the
Company in the form for conversion, the Company shall
forthwith cause to be issued and delivered shares of Common

  Stock in conversion of same, and such shares when issued
and delivered shall be fully paid and non-assessable shares;]
[For the convertibility feature; To confirm we have the capacity
in Enron's current authorized common stock and want to
reserve shares for this purpose.]

  RESOLVED FURTHER, that the formation and N
capitalization of a new minority interest financing vehicle
  ("Financing Vehicle") by the Company and one or more
controlled affiliates of the Company (to be identified by any
Authorized Officer (as hereafter defined) of the Company), be,
and hereby is, authorized, approved, ratified, and confirmed;

  RESOLVED FURTHER, that in connection with the
formation and capitalization of the Financing Vehicle, the
Company be, and hereby is, authorized to cause the formation
and capitalization of two direct or indirect subsidiaries of the
Financing Vehicle, and such formation and capitalization be,
and hereby is, authorized, approved, ratified, and confirmed;

  RESOLVED FURTHER, that in addition to an initial
$1,000 cash capital contribution by the Company to Financing
Vehicle in consideration of its admission as a member of
Financing Vehicle, which is hereby authorized, approved,
ratified, and confirmed, the Company be, and it hereby is,
authorized to cause a further capital contribution to Financing
Vehicle by executing an Option Agreement ("Option
Agreement"), between the Company and Financing Vehicle,

  E0004403859
EXH006-01315


=============
Page 121 of 208
=============

  granting Financing Vehicle an exclusive and irrevocable option
through May 31, 2011 to purchase all issued and outstanding
shares of common stock, $3.75 par value per share (the
"Shares"), of Portland General Electric Company, an Oregon

  corporation ("PGE") and an affiliate of the Company, the
exercise of which is conditioned upon (i) termination of that
certain Stock Purchase Agreement, dated November 5, 1999,
between the Company and Sierra Pacific Resources, a
Nevada corporation, providing for the sale of common stock of
PGE, and (ii) the receipt or satisfaction of any and all
governmental and regulatory approvals (or waiting periods)
required for the exercise of the option and the transfer or
assignment of the Shares, as the case may be; and the
execution, delivery, and performance of such Option
Agreement and contribution be, and hereby are, authorized,
approved, ratified, and confirmed;

  RESOLVED FURTHER, that in connection with the
execution and delivery of the Option Agreement, Financing
Vehicle will assume approximately $1.9 billion of debt of the
Company (the "Enron Debt Obligations"), which debt will be
assumed pursuant to an assumption agreement (the "'
"Assumption Agreement") between the Company and
Financing Vehicle, and such assumption by Financing Vehicle
of the Enron Debt Obligations and the execution and delivery
of the Assumption Agreement be, and hereby are, authorized,
approved, ratified, and confirmed;

  RESOLVED FURTHER, that upon assumption of the
Enron Debt Obligations by Financing Vehicle, . a subsidiary of
Financing Vehicle will assume the Enron Debt Obligations
pursuant to a supplemental assumption agreement (the
"Supplemental Assumption Agreement"), and such
assumption by such Financing Vehicle subsidiary and the

  execution and delivery of the Supplemental Assumption
Agreement be, and hereby are, authorized, approved, ratified,
and confirmed;

  RESOLVED FURTHER, that as a result of the
Assumption Agreement and the Supplemental Assumption
Agreement, the Company and the Financing Vehicle
subsidiary will not be released from the Enron Debt

E0004403860

EXH006-01316


=============
Page 122 of 208
=============

  Obligations, but Financing Vehicle will be released from the
117
  Enron Debt Obligations;

  RESOLVED FURTHER, that in order to provide
financing and liquidity for the Company and its businesses, the
Company is hereby authorized, in its own capacity and in its
capacity as any direct or indirect managing or other member
of Financing Vehicle, to arrange, participate in, and
consummate a financing for Financing Vehicle with up to
$500 million in proceeds from one or more third parties and, in
connection therewith, to:

(a) cause Financing Vehicle to loan funds to
one or more third parties or to the
Company or to affiliates of the Company,
or receive as a loan, contribution, or
investment funds by one or more third
parties, the Company, or affiliates of the
Company, in connection with the business
of Financing Vehicle and the Company;

(b) seek the participation or investment by any `~
affiliated or unaffiliated investors, and
  cause the issuance and/or sale of equity or
debt securities or membership interests in
Financing Vehicle in such amounts and at
such times as determined by the Company,
which issuances may be to an affiliate of
the Company or to an investor or investor
group not affiliated with the Company;

(c) engage any financial, legal, or other
advisors to implement financings, loans,
and issuances of equity or debt securities
or membership interests for Financing
Vehicle, the Company, or their respective
affiliates; and

(d) form and capitalize all entities necessary or
appropriate to effectuate the foregoing
transactions;

E0004403861

EXH006-01317


=============
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=============

	
	RESOLVED FURTHER, that the Company hereby
	authorizes the implementation of all actions necessary or
	appropriate to accomplish the purposes of the foregoing
	without limitation, (i) the creation of
including
resolutions
	,
,
entities (including, but not limited to, corporate entities, limited
	liability companies, branches, and/or partnerships under the
	laws of the United States, the states thereof, and foreign
	jurisdictions), (ii) the issuance of or purchase of shares or
:.1	other interests by the Company, EFP, EAH, Financing
	Vehicle, and their respective subsidiaries and affiliates,
	(iii) contributions of capital to EFP, EAH, Financing Vehicle,
	and to subsidiaries and affiliates of EFP, EAH, Financing
	Vehicle, and the Company, (iv) transfers by the Company,
	EFP, EAH, Financing Vehicle, or their respective subsidiaries
	or affiliates of receivables or other assets (including, without
	limitation, third party, Company, EFP, EAH, Financing Vehicle,
''	or their respective subsidiaries' or affiliates' notes or other
	financial obligations), (v) making guarantees and
		indemnifications by the Company, EFP, EAH, Financing
	Vehicle, or their respective subsidiaries or affiliates,
	(vi) borrowing or providing lending by the Company, EFP,
y	EAH, Financing Vehicle, or their respective subsidiaries or
	affiliates, (vii) acquisitions of securities of the Company, EFP,
	EAH, Financing Vehicle, or their respective subsidiaries or
	affiliates, and (viii) the sale of securities by the Company,
	EFP, EAH, Financing Vehicle, or their respective subsidiaries
	or affiliates to third parties, all of the foregoing subject to the
	applicable charter and governing documents of the Company,
	EFP, EAH, Financing Vehicle, and their respective
	subsidiaries and affiliates, and the execution and delivery of
	contractual agreements as deemed necessary or appropriate
	and approved and executed by any Authorized Officer (as
	hereafter defined) or representative of the Company, EFP,
	EAH, or Financing Vehicle acting on the advice of counsel,
	which is hereby authorized and which shall be conclusively
	evidenced by their signatures on documents intended to be
	final documents;

  RESOLVED FURTHER, that a Committee of the Board
of Directors consisting of Kenneth Lay and Jeffrey Skilling
(with Kenneth Lay to serve as chairman) be, and hereby is,
constituted under Section 3, Article IV of the Company's
Bylaws with full power and authority on behalf of the Board

E0004403862

EXH006-01318


=============
Page 124 of 208
=============

10~11

  (except as otherwise contemplated by Section 6, Article IV of
the Company's Bylaws) to:

(a) settle and approve the terms and authorize
execution on behalf of the Company of
such additional documents relating to the
transactions undertaken or proposed to be
undertaken by the foregoing resolutions as
may be required or necessary in order to
enable the Company and its affiliates to
fulfill their respective obligations in
connection with the foregoing resolutions;

(b) pay or authorize the payment of all fees,
expenses, or charges incurred by or on
behalf of the Company or its affiliates in
connection with the transactions
contemplated by the foregoing resolutions,
including (but without limitation) the fees
and expenses of the Company's and its
affiliates' financial, legal, and professional
advisers; and
  U
(c) take any and all such further action as they LO
shall deem necessary or, desirable in
  connection with the transactions
contemplated by the foregoing resolutions;

	RESOLVED FURTHER, that the Chairman of the
.	Board, any Vice Chairman of the Board, the President or any
	Vice President (including any Executive Vice President, Senior
	Vice President, or Vice President), the Treasurer or any
	Deputy Treasurer, and the Secretary or any Assistant
	Secretary of the Company (each an "Authorized Officer") and
	its counsel be, and each hereby is, authorized, empowered,
	and directed (and any one of them acting alone) to take any
	and all such further action, to amend, execute, and deliver all
' .~	such further instruments and documents, for and in the name
	and on behalf of the Company, EFP, EAH, Financing Vehicle,
	and/or their respective affiliates, under their respective
	corporate seals or otherwise, and to pay all such expenses as
	in their discretion appear to be necessary or desirable to carry
	
	E0004403863

EXH006-01319


=============
Page 125 of 208
=============

	
	
	into effect the purposes and intentions of this and each of the
	foregoing resolutions; and
	RESOLVED FURTHER, that all actions heretofore
	taken by any officer or representative of the Company related
	to or in connection with the transactions contemplated by
	these resolutions be, and hereby are, adopted, ratified,
	confirmed, and approved in all respects.
	
ci	
	
	
	N
	
ci	
ci	
	
	
	
	
	
	
LJ	
	E0004403864
=XH006-01320	


=============
Page 126 of 208
=============

n
AGENDA ITEM 5 (c)
(SUGGESTED FORM OF RESOLUTIONS)

  WHEREAS, in connection with the formation,
capitalization, and financing of Enron Finance Partners, LLC, a
Delaware limited liability company ("EFP") and an affiliate of the
Company, and the consummation of certain transactions in
connection therewith previously approved by the Board of
Directors at a meeting held on August 7-8, 2000, the Company
has executed and delivered a Demand Promissory Note, dated
LL' as of November 21, 2000, in the original principal amount of
$125 Million Dollars, with a maturity date of November 21,
2010, and bearing an interest rate of eight percent per annum
("Promissory Note"), made payable to Enron Capital
Investments Corp., a Delaware Corp. ("ECIC") and an affiliate
of the Company, as a contribution to the capital of ECIC;

  WHEREAS, upon receipt of the Promissory Note, ECIC
contributed the Promissory Note to EFP as a capital
contribution by ECIC;

  WHEREAS, in connection with the formation,
capitalization, and financing of EFP, and the consummation of `~
certain transactions in connection therewith previously
approved by the Board of Directors at a meeting held on August
7-8, 2000, the Company has contributed $20 Million cash to
Enron Finance Management, LLC, a Delaware limited liability
company ("EFM") whose sole member is the Company;

  WHEREAS, upon receipt of such contribution, EFM
further contributed the $20 Million cash to Enron Asset
Holdings, LLC, a Delaware limited liability company ("EAH")
and an affiliate of the Company, as a capital contribution;

  WHEREAS, upon receipt of such contribution, EAH
loaned the $20 Million to the Company;

  WHEREAS, in connection with the approval of the
contribution by the Company to EFP of 11,500,000 shares of
common stock (the "EOG Stock") of EOG Resources, Inc.
("EOG") previously approved by the Board of Directors at a
meeting held on August 7-8, 2000, the Company entered into
t;E

E0004403865

=XH006-01321


=============
Page 127 of 208
=============

	
	that certain Consent Agreement, dated as of November 28,
	2000 ("Consent Agreement"), among the Company, EOG, EFP,
	Enron Intermediate Holdings, LLC, a Delaware limited liability
	company ("EIH"), EAH, and Aeneas L.L.C., a Delaware limited
	liability company ("Aeneas"), providing for: (i) the consent by
	EOG of the transfers of the EOG Stock from the Company to
	EFP, from EFP to EIH, from EIH to EAH, and from EAH to
	Aeneas; (ii) the commitment of the Company, during the period
	from the date thereof through the maturity date of Enron's 7%
	Exchangeable Notes, at any meeting of EOG stockholders with
	respect to which Enron, EFP, EIH, EAH or Aeneas owns any,
=~	EOG Stock entitled to vote, to attend and vote (or cause to be
	voted) all of such EOG Stock in the manner, if any,
	recommended by the board of directors of EOG; (iii) the
	obligation of the Company to indemnify EOG and its
	subsidiaries from and against any taxes imposed on EOG or
	EOG International with respect to the share exchange
	consummated in August 1999 to the extent resulting from the
}	transfers of the EOG Stock pursuant to the transactions
	consented to by EOG in the Consent Agreement; (iv) the
	agreement by the Company that EOG shall not be liable for and
	shall not be obligated to indemnify the Company from any taxes
	if EOG shall prove by clear and convincing evidence that any of
	the transactions consented to by EOG in the Consent
Agreement that were or are effected by Enron were a
	contributing cause of the failure to maintain continuity of interest
	within the meaning of Treas. Reg. 1.355-2(c); (v) the
	forgiveness by the Company of certain indebtedness owing
	from EOG and/or its affiliates to the Company for
	telecommunication services, treasury services and banking
	services provided by the Company and its affiliates pursuant to
	a services agreement in an aggregate of approximately
$1,000,000; and (vi) the obligation of the Company to
	reimburse EOG for all reasonable out-of-pocket legal expenses
	incurred by EOG with Wachtell, Lipton, Rosen & Katz, special
~~	counsel to EOG, and Steptoe & Johnson LLP, special tax
	counsel to EOG, in connection with the negotiation and
	execution of the Consent Agreement;

  WHEREAS, Joint Energy Development Investments II
Limited Partnership, a Delaware limited partnership ("JEDI II"),
owned, among other investments, a Class B Membership
Interest in East Coast Power L.L.C., a Delaware limited liability
company ("ECP LLC");

E0004403866

=XH006-01322


=============
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=============

f
  WHEREAS, Enron Capital Management III Limited
Partnership, a Delaware limited partnership ("ECM III"), is a
limited partner in JEDI II;

  WHEREAS, ECT Merchant Investments Corp. ("ECT
Merchant") and Enron Capital North America Corp. ("Enron
Capital"), each Delaware corporations and wholly-owned
affiliates of the Company, are limited partners in ECM III;

  WHEREAS, under the Amended and Restated
Partnership Agreement of ECM III, dated as of December 4,
2000, the rights and obligations of the ECM III limited partners
are, in part, defined by reference to the underlying investments
of JEDI II;

  WHEREAS, ECT Merchant contributed to Boreas
Holdings Corp., a Delaware corporation ("Boreas") and wholly-
owned affiliate of the Company, the portion of ECT Merchant's
limited partnership interest in ECM III that relates to JEDI II's
Class B Membership Interest in ECP LLC or any interest in
ECP LLC received in exchange therefor (the "ECT Merchant
Asset"), in exchange for shares of common stock, $0.01 par
value per share, of Boreas ("Common Stock"), pursuant to a
Contribution Agreement among ECT Merchant, Enron Capital
and Boreas (the "Boreas Contribution Agreement");

  WHEREAS, Enron Capital contributed to Boreas the
portion of Enron Capital's limited partnership interest in ECM III
that relates to JEDI [I's investment in ECP LLC and in East
Coast Power Holding Company L.L.C., a Delaware limited
liability company, other than the ECT Merchant Asset (such
interest being the "Enron Capital Asset," and the ECT Merchant
Asset and the Enron Capital Asset are sometimes collectively
referred to as the "ECM Interests"), in exchange for shares of
Common Stock, pursuant to the Boreas Contribution
Agreement;

`
L WHEREAS, it was and is the intention of the affected

  parties that the contributions of the ECT Merchant Asset and
the Enron Capital Asset to Boreas, and the issuances of shares
of Common Stock of Boreas to ECT Merchant and to Enron

F? Capital, be consummated pursuant to Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code");

E0004403867

:XH006-01323


=============
Page 129 of 208
=============

7.,

  WHEREAS, following consummation of the foregoing
transactions, Boreas transferred and contributed to EFP, as an
initial capital contribution, the ECM Interests in exchange for a
Class B Membership Interest in EFP and the admission of
Boreas to EFP as a Class B Member (the "EFP Contribution"),
pursuant to a Contribution Agreement among Boreas, EFP,
EIH, and EAH (the "EFP Contribution Agreement");

  WHEREAS, pursuant to the EFP Contribution
Agreement, Boreas was admitted to EFP as a Class B Member
-'d and holds a Class B Membership Interest in EFP, all pursuant
to a First Amendment to Third Amended and Restated Limited
Liability Company Agreement of EFP (the "First Amendment");

  WHEREAS, pursuant to the EFP Contribution
Agreement, EFM and the other members of EFP (including the
Company) entered into the First Amendment, reflecting the
capital contribution by Boreas to EFP;

  WHEREAS, following the EFP Contribution, EFP further
contributed the ECM Interests to EIH, as a capital contribution
(the "EIH Contribution"), pursuant to the EFP Contribution
Agreement;
  to

  WHEREAS, following the EIH Contribution, EIH further
contributed the ECM Interests to EAH, as a capital contribution
(the "EAH Contribution"), pursuant to the EFP Contribution
Agreement;

  WHEREAS, pursuant to the EFP Contribution
Agreement, EFM and EIH entered into a First Amendment to
Second Amended and Restated Limited Liability Company
Agreement of EAH, reflecting the additional capital contribution
by EIH to EAH;

  WHEREAS, in connection with the EFP Contribution, the
EIH Contribution and the EAH Contribution, Enron North
America Corp., a Delaware corporation ("ENAC") and an
affiliate of the Company, assumed in the aggregate
$93,634,266.60 of debt of the Company under that certain
indenture dated as of November 1, 1985, between the
Company (formerly InterNorth, Inc.) and Harris Trust and
Savings Bank, as Trustee (whose successor in interest is The

E0004403868

=XH006-01324


=============
Page 130 of 208
=============

irk

  Bank of New York ), as supplemented and amended to date
(the "Debt Obligations"), which debt was assumed pursuant to
two Assumption Agreements (the "ENAC Assumption
Agreements");

  WHEREAS, upon assumption of the Debt Obligations by
ENAC, ECT Merchant further assumed $936,342.67 of such
Debt Obligations pursuant to a Supplemental Assumption
Agreement (the "ECT Merchant First Supplemental Assumption
Agreement");

  WHEREAS, upon assumption of the Debt Obligations by
ENAC, Enron Capital further assumed $92,697,923.93 of such
Debt Obligations pursuant to a Supplemental Assumption
Agreement (the "Enron Capital First Supplemental Assumption
Agreement");

  WHEREAS, upon assumption of the Debt Obligations by
ECT Merchant and Enron Capital, Boreas further assumed the
Debt Obligations evidenced by the ECT Merchant First
Supplemental Assumption Agreement and the Enron Capital
First Supplemental Assumption Agreement pursuant to two
Supplemental Assumption Agreements (the "Second
Supplemental Assumption Agreements");

  WHEREAS, upon assumption of the Debt Obligations by
Boreas pursuant to the Second Supplemental Assumption
Agreements, EFP further assumed such Debt Obligations
pursuant to two Supplemental Assumption Agreements (the
"Third Supplemental Assumption Agreements");

WHEREAS, upon assumption of the Debt Obligations by

` EFP pursuant to the Third Supplemental Assumption
Agreements, EIH further assumed such Debt Obligations

  pursuant to two Supplemental Assumption Agreements (the
"Fourth Supplemental Assumption Agreements"); and

  WHEREAS, as a result of the ENAC Assumption
Agreements, the ECT Merchant First Supplemental Assumption
~~ Agreement, the Enron Capital First Supplemental Assumption

  Agreement, the Second Supplemental Assumption Agreements,
the Third Supplemental Assumption Agreements, and the
Fourth Supplemental Assumption Agreements, EFP was
w released from the Debt Obligations, but the Company, Boreas,

E0004403869

=XH006-01325


=============
Page 131 of 208
=============

  ECT Merchant, Enron Capital and Boreas were not released
from the Debt Obligations;

  WHEREAS, in connection with the third party financing of
EFP in the amount of $500 million and the syndication thereof,
the Company and the other members of EFP entered into a
Second Amendment to Third Amended and Restated Limited
Liability Company Agreement of Enron Finance Partners, LLC
("Second Amendment") providing that no Class B Membership
Interest (including those held by the Company and its
subsidiaries) may be transferred to a person other than to the
Company or an affiliate of the Company without the consent of
a majority of the interests held by the Class C Member (an
affiliate of Chase Bank of Texas);

  NOW, THEREFORE, IT IS RESOLVED, that the
0 execution and delivery by the Company of the Promissory Note
  be, and hereby is, authorized, approved, ratified and confirmed;

  RESOLVED FURTHER, that the contribution by ECIC of
the Promissory Note to EFP as a capital contribution by ECIC
be, and hereby is, authorized, approved, ratified and confirmed,
and the Company hereby recognizes EFP as the holder of the
Promissory Note;

  RESOLVED FURTHER, that the contribution by the
Company to EFM of $20 Million cash as a capital contribution
be, and hereby is, authorized, approved, ratified and confirmed;

`''' RESOLVED FURTHER, that the Directors hereby
authorize, approve, ratify and confirm the execution, delivery
and performance by the Company of the terms and conditions
of the Consent Agreement;

  RESOLVED FURTHER, that the Directors hereby
authorize, approve, ratify and confirm the assumption by ENAC
of the Debt Obligations pursuant to the ENAC Assumption
Agreements and the -execution, delivery and performance by
the Company of the terms and conditions of the ENAC
Assumption Agreements;

  RESOLVED FURTHER, that the Directors hereby
authorize, approve, ratify and confirm the execution, delivery
and performance by the Company of the ECT Merchant First

E0004403870

=XH006-01326


=============
Page 132 of 208
=============

r
  Supplemental Assumption Agreement and the Enron Capital
First Supplemental Assumption Agreement;

  RESOLVED FURTHER, that the Directors hereby
authorize, approve, ratify and confirm the execution, delivery
and performance by the Company of the First Amendment and
the Second Amendment;

  RESOLVED FURTHER, that the Chairman of the Board,
any Vice Chairman of the Board, the President or any Vice
President (including any Executive Vice President, Senior Vice
President, or Vice President), the Treasurer or any Deputy
Treasurer of the Company and its counsel be, and each hereby
is, authorized, empowered, and directed (and any one of them
acting alone) to take any and all such further action, to amend,
execute, and deliver all such further instruments and
documents, for and in the name and on behalf of the Company
and/or EFP, under their respective corporate seals or otherwise,
and to pay all such expenses as in their discretion appear to be
necessary or desirable to carry into effect the purposes and
intentions of this and each of the foregoing resolutions;

  RESOLVED FURTHER, that all actions heretofore taken
by any officer or representative of the Company related to or in
connection with the transactions contemplated by these
resolutions be, and hereby are, adopted, ratified, confirmed,
and approved in all respects; and

  RESOLVED FURTHER, that the proper officers of the
Company and its counsel be, and each of them hereby is,
authorized, empowered, and directed (any one of them acting
alone) to take any and all such further action, to amend,
execute, and deliver all such further instruments and
documents, for and in the name and on behalf of the Company,
under its corporate seal or otherwise, and to pay all such
expenses as in their discretion appear to be necessary, proper,
or advisable to carry into effect the purposes and intentions of
this and each of the foregoing resolutions.

E00044403871

EXH006-01327


=============
Page 133 of 208
=============

I

  04/25/01
Personal & Confidential

EXHIBIT A

NEW SERIES OF ENRON CORP. PREFERRED STOCK

Summary of Rights and Preferences

Issuer: Enron Corp.

Holder: Enron Asset Holdings, LLC

Securities: Cumulative Junior Preferred Stock, Series A (the "New Preferred
Stock")

Amount: US$1 billion aggregate principal amount

Issue Price: $50 million per share

Maturity: 20 years from the date of issuance

Liquidation Preference: $50 million per share; Ranks junior to any existing series of the
Issuer's preferred stock outstanding as to dividends and
distributions on liquidation.

Dividend Rate: Cumulative dividends at the rate of 5% per annum, payable
quarterly in arrears, will accrue on each share of the New
Preferred Stock from the date of original issue. Dividends will be
paid to the holders either in cash or in additional shares of the
New Preferred Stock at the option of the Issuer, with the
valuation of any dividend shares based on the Issue Price. The
Issuer shall not have the right to elect to make in-kind dividends
with respect to more than 12 quarterly dividend payments
without the affirmative vote of the holders of at least two-thirds of
the outstanding New Preferred Stock, voting as a class.
Payment of cash dividends on the New Preferred Stock may be
subject to certain restricted payment provisions under the
Issuer's loan agreements.

Sinking Fund: None

Optional Redemption: No

Mandatory Redemption: The Issuer shall redeem all shares of the New Preferred Stock
which remain outstanding on the date which is 20 years following
the date of issuance, at a redemption price equal to $50 million
per share, plus an amount equal to the dividends accrued and
unpaid to the redemption date.

Page 1 of 2 E0004403872

;HO06-01328


=============
Page 134 of 208
=============

Liquidation Rights: In the event of a voluntary or involuntary liquidation, dissolution
or winding-up of the Issuer, holders of the New Preferred Stock
II will be entitled to receive $50 million per share, plus accrued and
unpaid dividends to the date of payment, before any distribution
or payment may be made to holders of any junior preferred stock
or common stock of the Issuer. A consolidation, merger or
reorganization of the Issuer with any other corporation or
corporations, or a sale or transfer of all or substantially all of the
assets of the Issuer, or any purchase or redemption by the
Issuer of any of its outstanding shares, shall not be regarded as
a liquidation, dissolution or winding-up of the affairs of the Issuer.

Subsequent Series of
  Preferred Stock: No subsequent series of preferred stock may rank senior to the
New Preferred Stock, except as permitted below with the
approval of the holders.

Voting Rights: So long as the New Preferred Stock is outstanding, the Issuer
will not, without the affirmative vote of the holders of at least two-
thirds of the outstanding New Preferred Stock, voting as a class,
(a) change by amendment to the Issuer's Articles of
Incorporation, by merger or otherwise, the terms and provisions
of the New Preferred Stock so as to affect adversely the rights
and preferences of the holders thereof or (b) authorize the
issuance of capital stock ranking senior to the New Preferred
Stock. Otherwise, holders of New Preferred Stock will not be
entitled to vote unless otherwise required by law.

Exchange:

Conversion Rights:

Transfer Restrictions:

Publicly Registered:

Preemptive Rights.

Registration Rights.

Tag-Along Rights:

Issuer Board Approval:

Public Disclosure

pref stock issue\ps-terms-v3.doc

None
None
None
No
None
None
None

Yes; May 1, 2001 Enron Corp. Board Meeting

Yes; Oregon charter filings and SEC filings

Page 2 of 2

H006-01329

E0004403873


=============
Page 135 of 208
=============

EXHIBIT B

STATEMENT OF RESOLUTIONS ESTABLISHING
A SERIES OF PREFERRED STOCK OF
  ENRON CORP.

CUMULATIVE JUNIOR PREFERRED STOCK, SERIES A

  Pursuant to Oregon Revised Statutes Section 60.134 and Article IV of the Articles
of Incorporation, as amended, of Enron Corp. (the "Corporation"), the Board of Directors of the
Corporation has duly adopted the following resolutions on May 1,.2001, establishing a series of
Preferred Stock of the Corporation:

  RESOLVED, that there is hereby established a series of Preferred Stock of the
Corporation designated the Cumulative Junior Preferred Stock, Series A (herein referred to as the
"Cumulative Junior Preferred Stock"). The designation and number of shares of such series and
the powers, preferences and relative, participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof (in addition to those set forth in the Articles of
Incorporation, as amended, that may be applicable to such series) are as follows:

  A. Definitions. Capitalized terms used but not defined herein shall have the
meaning ascribed thereto in the Corporation's Articles of Incorporation, as amended. In addition,
the following terms shall have the following meanings when used herein:

  (1) The term "accrued dividends" for a share shall mean an
amount computed at the quarterly dividend rate on such share from the date on
which dividends on such share become cumulative to and including the date to
which such dividends are to be accrued, less the aggregate amount of all
dividends theretofore paid thereon.

  (2) The term "Business Day" shall mean any day of the year
except Saturday or Sunday that is a day on which banks are not required or
authorized by law to close in New York City, New York, Houston, Texas, or
Wilmington, Delaware.

  (3) The term "junior stock" shall mean (and references to
shares ranking "junior to" the Cumulative Junior Preferred Stock shall refer to),
with respect to paragraph C, the Common Stock of the Corporation and any other
class or series of stock of the Corporation not entitled to receive any dividends
unless all dividends required to have been paid or declared and set apart for
payment on the Cumulative Junior Preferred Stock shall have been so paid or
declared and, with respect to paragraph D, any class or series of stock of the
Corporation not entitled to receive any assets upon the liquidation, dissolution or
winding up of the affairs of the Corporation until the Cumulative Junior Preferred
Stock shall have received the entire amount to which such stock is entitled upon
liquidation, dissolution or winding up.

E0004403874

=XH006-01330


=============
Page 136 of 208
=============

(4) The term "parity stock" shall mean (and references to
shares ranking "on a parity with" the Cumulative Junior Preferred Stock shall
refer to), with respect to paragraph C, any class or series of stock of the
Corporation entitled to receive payment of dividends on a parity with the
Cumulative Junior Preferred Stock and, with respect to paragraph D, any class or
series of stock of the Corporation entitled to receive assets upon the liquidation,
dissolution or winding up of the affairs of the Corporation on a parity with the
Cumulative Junior Preferred Stock.

  (5) The term "senior stock" shall mean (and references to
shares ranking "senior to" or "prior to" the Cumulative Junior Preferred Stock
shall refer to), with respect to paragraph C, any class or series of stock of the
Corporation ranking senior to the Cumulative Junior Preferred Stock in respect of
the right to receive dividends and, with respect to paragraph D, any class or series
of stock of the Corporation ranking senior to the Cumulative Junior Preferred
Stock with respect to the right to receive assets upon the liquidation, dissolution
or winding up of the affairs of the Corporation. All classes or series of stock of
the Corporation other than junior stock or parity stock shall be senior stock with
respect to the Cumulative Junior Preferred Stock, except to the extent expressly
provided otherwise in the Corporation's Articles of Incorporation, as amended,
including any Statement of Resolutions Establishing a Series of Preferred Stock
filed by the Corporation prior to the filing date hereof. The Corporation's
(i) 9.142% Perpetual Second Preferred Stock, (ii) Cumulative Second Preferred
Convertible Stock, (iii) Mandatorily Convertible Single Reset Preferred Stock,
Series A, (iv) Mandatorily Convertible Single Reset Preferred Stock, Series B,
(v) Mandatorily Convertible Junior Preferred Stock, Series B and (vi) Series A
Junior Voting Convertible Preferred Stock shall be senior stock with respect to the
Cumulative Junior Preferred Stock.

  B. Designation. The distinctive designation of the series shall be the "Cumulative
Junior Preferred Stock, Series A." The number of shares that shall constitute such series shall be
twenty (20) shares plus up to the number of shares necessary to fulfill the Corporation's
obligations pursuant to paragraph C in the event the Corporation elects to pay dividends in the
form of Cumulative Junior Preferred Stock, but in no event more than the number of authorized
but unissued shares of Preferred Stock.

C. Dividends.

  (1) The holders of Cumulative Junior Preferred Stock, in
preference to the rights of holders of any junior stock but subject to the rights of
any senior stock, shall be entitled to receive, as and when declared by the Board
of Directors out of any funds legally available therefor dividends at an annual rate
equal to $2,500,000 per share (as adjusted for any stock dividends,
recombinations or splits with respect to such shares after the filing date hereof),
payable quarterly on the first days of January, April, July and October,
respectively, in each year, with respect to the quarterly period ending on the day
preceding each such respective payment date. Such dividends shall be cumulative

  E0004403875
2

EXH006-01331


=============
Page 137 of 208
=============

from and shall accrue on each share of Cumulative Junior Preferred Stock
beginning on the date on which such share is issued by the Corporation (the
"Original Issuance Date"). All dividends paid pursuant to this paragraph C(1)
shall be paid in cash or, at the option of the Corporation, in share(s) of the
Corporation's Cumulative Junior Preferred Stock (an "In-Kind Dividend"). In the
event the Corporation elects to pay an In-Kind Dividend pursuant to'` this
paragraph C(l ), the Corporation shall be authorized to issue, at its discretion,
fractional shares of Cumulative Junior Preferred Stock or scrip representing
fractional shares of Cumulative Junior Preferred Stock. Any fractional shares or
scrip representing fractional shares shall be issued based upon a value per share of
Cumulative Junior Preferred Stock of $50,000,000. Notwithstanding the
foregoing, the consent of the holders of at least two-thirds of the outstanding
Cumulative Junior Preferred Stock, voting as a class, given in person or by proxy,
either in writing without a meeting (if permitted by law) or by vote at any meeting
called for the purpose, shall be necessary for the Corporation to have the right to
elect to make In-Kind Dividends with respect to more than twelve quarterly
dividend payments.

  (2) No dividend shall be paid upon, or declared or set apart for,
any share of Cumulative Junior Preferred Stock or shares ranking on parity with
Cumulative Junior Preferred Stock for any dividend period unless at the same
time a like proportionate dividend for the same dividend period, ratable in
proportion to the respective annual dividend rates fixed therefor, shall be paid
upon, or declared and set apart for, all shares of Cumulative Junior Preferred
Stock and any Preferred Stock ranking on parity with the Cumulative Junior
Preferred Stock that are entitled to such dividends.

  (3) As long as shares of Cumulative Junior Preferred Stock
remain outstanding, in no event at any time shall any dividend, whether in cash or
property, be paid or declared, nor shall any distribution be made, on any junior
stock, nor shall any shares of any junior stock be purchased, redeemed or
otherwise acquired for value by the Corporation, nor shall the Corporation permit
any shares of any junior stock to be purchased, redeemed or otherwise acquired
by any subsidiary of the Corporation, unless full cumulative dividends on the
Cumulative Junior Preferred Stock scheduled to be paid at or prior to such time
pursuant to paragraph C(l) have been declared and paid. The foregoing provisions
of this subparagraph (3) shall not, however, apply to (i) a dividend payable solely
in any junior stock, (ii) the acquisition of shares of any junior stock in exchange
for, or through application of the proceeds of the sale of, shares of any other
junior stock, (iii) the acquisition of shares of any junior stock pursuant to
contractual obligations binding against the Corporation or any of its subsidiaries
that were entered into at a time when such acquisitions of shares could be made
pursuant to this subparagraph (3) or (iv) the dividend, distribution or issuance of
Rights. "Rights" means rights or warrants distributed by the Corporation under a
shareholder rights plan or agreement to all holders of Common Stock entitling the
holders thereof to subscribe for or purchase shares of the Corporation's capital

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stock (either initially or under certain circumstances), which rights or warrants,
until the occurrence of a specified event or events:

  (a) are deemed to be transferred with such shares of
Common Stock,

(b) are not exercisable, and

  (c) are also issued in respect of future issuances of
Common Stock.

  D. Liquidation Preference. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, then, before any
distribution or payments shall be made to the holders of any junior stock, but subject to the rights
of any senior stock or parity stock, the holders of the Cumulative Junior Preferred Stock shall be
entitled to be paid in full in cash the amount of $50,000,000 per share (as adjusted for any stock
dividends, combinations or splits with respect to such shares after the filing date hereof), together
with accrued dividends to the date of such distribution or payment, whether or not earned or
declared. If such payment shall have been made in full to the holders of the Cumulative Junior
Preferred Stock and all preferential payments or distributions to be made with respect to senior
stock and parity stock have been made in full, the remaining assets and funds of the Corporation
shall be distributed among the holders of the junior stock, according to their respective rights and
preferences and in each case according to their respective shares. If, upon any liquidation,
dissolution or winding up of the affairs of the Corporation, the amounts so payable are not paid
in full to the holders of all shares of the Cumulative Junior Preferred Stock and parity stock, the
holders of the Cumulative Junior Preferred Stock, together with holders of parity stock, shall
share ratably in any distribution of assets in proportion to the full amounts to which they would
otherwise be respectively entitled. Neither the consolidation, merger or reorganization of the
Corporation, the sale, lease or conveyance of all or a part of its assets, nor the purchase or
redemption of any of its outstanding shares, shall be deemed a liquidation, dissolution or winding
up of the affairs of the Corporation within the meaning of the foregoing provisions of this
paragraph D.

E. Redemption.

  (1) To the extent it may lawfully do so and subject to the rights
of holders of any senior stock, on the twentieth anniversary of the Original
Issuance Date (or, in the event it may not lawfully do so, the first day following
the twentieth anniversary of the Original Issuance Date upon which it may
lawfully do so), the Corporation shall redeem all of the Cumulative Junior
Preferred Stock at the redemption price of $50,000,000 per share, together with
accrued dividends to the date of distribution or payment, whether or not earned or
declared.

  (2) Notice of the redemption of Cumulative Junior Preferred
Stock shall be mailed or personally delivered, addressed to the holders of record
of the shares of outstanding Cumulative Junior Preferred Stock at their respective

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addresses as they shall appear on the stock books of the Corporation (but no
failure to mail or otherwise deliver such notice or any defect therein or in the
mailing thereof shall affect the validity of the proceedings for such redemption).

  (3) If, on or before the redemption date specified in the notice,
the redemption price, together with accrued dividends to the date fixed for
redemption, whether or not earned or declared, shall have been set aside by the
Corporation, separate and apart from its other funds, in trust for the pro rata
benefit of the holders of the shares so called for redemption, so as to be and
continue to be available therefor, then, from and after the date of redemption so
designated, notwithstanding that any certificate for shares of Cumulative Junior
Preferred Stock so called for redemption shall not have been surrendered for
cancellation, the shares represented thereby shall no longer be deemed
outstanding, the dividends thereon shall cease to accumulate, and all rights with
respect to the shares of Cumulative Junior Preferred Stock so called for
redemption shall forthwith on the redemption date cease and terminate, except
only the right of the holders thereof to receive the redemption price of the shares
so redeemed, including accrued dividends to the redemption date, but without
interest.

  (4) The Corporation may also, at any time prior to the
redemption date, deposit in trust, for the account of the holders of the Cumulative
Junior Preferred Stock to be redeemed, with a bank or trust company in good
standing, organized under the laws of the United States of America, designated in
the notice of redemption, the redemption price, together with accrued dividends to
the date fixed for redemption, whether or not earned or declared, and, unless the
notice of redemption herein provided for has previously been duly mailed or
personally delivered, deliver irrevocable written instructions directing such bank
or trust company, on behalf and at the expense of the Corporation, to cause notice
of redemption specifying the date of redemption to be duly mailed or personally
delivered as herein provided promptly upon receipt of such irrevocable
instructions. Upon such deposit in trust, after due mailing or personally delivering
the notice of redemption or accompanied by irrevocable instructions as provided
above, notwithstanding that any certificate for shares of Cumulative Junior
Preferred Stock so called for redemption shall not have been surrendered for
cancellation, all shares of Cumulative Junior Preferred Stock with respect to
which the deposit shall have been made shall no longer be deemed to be
outstanding, and all rights with respect to such shares of Cumulative Junior
Preferred Stock shall forthwith cease and terminate except only the right of the
holders thereof to receive from such bank or trust company, at any time after the
time of the deposit, the redemption price, including accrued dividends to the
redemption date, whether or not earned or declared, but without interest, of the
shares so to be redeemed.

  (5) Any moneys deposited by the Corporation pursuant to this
paragraph E which shall not be required for the redemption shall be repaid to the
Corporation forthwith. Any other moneys deposited by the Corporation pursuant

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e

to this paragraph E and unclaimed at the end of six years from the date fixed for
redemption shall be repaid to the Corporation upon its request expressed in a
resolution of its Board of Directors, after which repayment the holders of the
shares so called for redemption shall look only to the Corporation for the payment
thereof.

  F. Voting Rights. The holders of Cumulative Junior Preferred Stock shall have
no right to vote except as otherwise specifically provided herein, in the Articles of Incorporation,
as amended, of the Corporation, or as required by statute.

  (1) So long as any shares of Cumulative Junior Preferred Stock
are outstanding, in addition to any other vote or consent of shareholders required
in the Articles of Incorporation or by law, the consent of the holders of at least
two-thirds of the outstanding Cumulative Junior Preferred Stock, voting as a
class, given in person or by proxy, either in writing without a meeting (if
permitted by law) or by vote at any meeting called for the purpose, shall be
necessary for effecting or validating:

  (a) any amendment, alteration or repeal of any of the
provisions of the Articles of Incorporation of the Corporation, whether by
merger or otherwise, which affects adversely the voting powers, rights or
preferences of the holders of the Cumulative Junior Preferred Stock; or

  (b) the authorization, creation or issuance of, or the
increase in the authorized amount of, any stock of any class or series, or
any security convertible into stock of any class or series, ranking senior to
the Cumulative Junior Preferred Stock with respect to the right to receive
dividends or the right to receive any assets of the Corporation in the event
of the liquidation, dissolution or winding up of the Corporation.

  (2) Holders of Cumulative Junior Preferred Stock shall not be
entitled to receive notice of any meeting of shareholders at which they are not
entitled to vote or consent.

  G. Other Rights. Shares of Cumulative Junior Preferred Stock shall not have any
relative, participating, optional or other special rights or powers other than as set forth herein or
in the Articles of Incorporation, as amended.

Austin 194940.5

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rn
0 Agenda Item 5d
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Presentation to the Enron Corp. Finance Committee
Las Vegas Cogeneration, L.L.C.
  222MW Power Plant Expansion

April 30, 2001

5D-1

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Confidential & Proprietary

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Las Vegas Cogeneration Overview

  Existing Power Plant
 Las Vegas Cogeneration (LVCI) is located in
North Las Vegas in rapid-growth load center that
is short energy

 LVC 1 began commercial operation in May 1994
as a qualifying facility (QF)

 45 MW of on-peak capacity and energy provided
to Nevada Power Company under a PPA through
May 2024

 ENA acquired LVCI in August 1999

 Funded by non-recourse project debt ($54.9MM)
and Enron/JEDI equity ($24MM).

 ENA repowered LVCI in December 1999,
reducing heat rate and increasing capacity to
51MW

 Excess energy is available for merchant sales

  Proposed Expansion

 Continued strong industry demand for merchant
generation projects in Western Region

 Proposal - LVCII:

   222MW gas-fired generating facility

   Two, two-on-one combined cycle units
 4 LM6000's from Enron's existing
turbine portfolio

   LVCII is adjacent to LVCI using similar
technology

 15 year, fixed price tolling agreement with
Allegheny Energy Supply (rated BBB+)

 ENA intends to finalize development, commence
construction and divest prior to commercial
operations.

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Development Status and Sources & Uses

Completed:
 Site: Industrial zoning approved
 Air: Permits issued
 Water/Wastewater: Permits issued/authority granted
 Engineering, procurement and construction contract executed with Modern Continental with fixed-price,
date certain completion guaranteed by A-rated bonding and insurance
 Firm Power Transmission arranged to liquid delivery point

Remaining:
 Electrical Interconnect at Nevada Power's 138kv substation
 Gas Interconnect - Southwest Gas to design, build & operate lateral from the Kern River Pipeline to LVCII
 Water/Wastewater Definitive Agreement
 Notice to Proceed with Construction
 Commercial Operations expected September, 2002
  Transaction Sources and Uses (in MM)

  Sources
JEDIII $ 99.55
ENA 99.55
TOTAL: $199.10*

Uses

Existing Turbines $ 62.0
Construction Costs $107.5
Interest Costs $ 19.4
Contingency 10.2
TOTAL: $199.1

* Excludes $0.6 MM Letter of Credit temporarily required for interconnect agreement

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Strategy

 Finalize development, commence construction and then divest prior to commercial
operations.

 The expansion project, combined with the existing QF asset, will be attractive to
numerous generation companies:
   Proven reliable technology
 100% controlling interest
   Location in fast-growing load pocket in short region
15 year fixed-price tolling agreement

 Pro-Forma economics are superior to those of Fountain Valley Power, which was
recently sold to Black Hills Energy Capital.
   Equity IRR 18.9% - 21.6%

 Expressions of interest from Black Hills, Northland Power, Delta Power, Energy
Investors Fund, Calpine.

  Expected gain on sale in 2001: $25MM - $30MM

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Recommendation

Approve $199.1 MM to finance construction of Las Vegas Cogeneration expansion
(LVCII) subject to completion of the following:

 Execution of definitive tolling agreement with Allegheny Energy Supply

 Receipt of Electrical Transmission Agreement Confirmation

 Execution of Southwest Gas Interconnection Agreement

 Execution of Water/Wastewater Agreement

 Execution of Nevada Power Interconnection Agreement

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  11~~11'.,.

ENRON RISK ASSESSMENT AND CONTROL
DEAL APPROVAL SHEET

Deal Type: SUBSEQUENT INVESTMENT

ri

DEAL NAME: Priscilla
Counterparty: Southwest Power LLC
Business Unit: Enron Americas
Business Unit Originator: Jake Thomas
Industry Category: Wholesale Energy - Non-Regulated Power
Public/Private: Private

Merchant/Strategic: Merchant

Conforming/Nonconforming: Conforming
RAC Recommendation: Proceed with Transaction
APPROVAL AMOUNT REQUESTED ($MMs)
New Capital Investment
  Capital Equipment from E-Next Generation
Security L/C for Electrical Interconnection

Date DASH Completed: April 19, 2001
RAC Underwriter: Chip Schneider
RAC Analyst: Felipe Ibarra
Transaction Type: Equity - Private
Capital Funding Source: JEDI II/On Balance Sheet
Country: United States
Expected Closing Date: May 1, 2001
Expected Funding Date: May 1, 2001
Board Approval: Pending

$137.1
$62.0
$0.6 (Unfunded commitment)

TOTAL $ 199.7

EXPOSURE SUMMARY ($MMs)
  This Transaction (1) $194.9
Existing Exposure (DASH dated 06/15/00) 4.8

TOTAL $199.7
Note (1): Includes $14.6 million of interest during construction (IDC) and interest on development loan of $4.8 million. At 80% leverage the c9
expected equity contribution is approximately $39.8 million. D

  DEAL DESCRIPTION
  ENA requests the approval to invest $199.1 million for construction of Southwest Power's expansion to be called
Las Vegas Cogeneration II, LLC (LVC 11). The project will be located adjacent to the site of Southwest Power's
existing 51 MW plant ("LVC I") in North Las Vegas, Nevada. LVC II is a 222 MW gas-fired CCGT comprised of four
3 LM6000s and two steam turbines, yielding a projected heat rate of 7,800 Btu/kWh. Enron will own 50% of LVC II
and JEDI II will own the remaining 50%, giving Enron an effective 75% equity interest.

Initial funding for the development was provided through a $4.8 million bridge loan facility from ENA to LVC II
through April 30, 2001. Southwest Power (SWP) is developing LVC II with the assistance of ENA through the
existing Corporate Services Agreement. The EPC contractor will be Modern Continental under a fixed-price turnkey
contract. Total construction and development costs (before IDC and financing fees) are estimated at $181.4 million
($817/kW), while current projection estimates total project cost, including the cost of project financing, is $199.1
million ($897/kW). After project financing, the remaining equity investment for each Enron and JEDI II is expected
to be approximately $20 million. The financing plan includes a bridge loan from ENA to LVC II starting on May 1,
2001, with project financing takeout by September 30, 2001. LVC 11 will have the option to either extend the current
Preliminary Notice-to-Proceed or give Modern Continental Full Notice-to-Proceed on May 1, 2001. Estimated
funding for the period May 1, 2001, to September 30, 2001 (expected funding-date for the project financing) is $30
million. The four LM6000 PC turbines and two 138 kV transformers required for the expansion will be procured
from E-Next Generation.

  Prior to Notice-to-Proceed under the EPC Contract, Southwest Power will enter into a 15-year tolling agreement
with Allegheny Energy Supply Company ("Allegheny") for the full output of the plant. Further details of this
agreement are presented in Appendix I.

tJ

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  RAC Deal Approval Sheet

  TRANSACTION SOURCES AND USES OF FUNDS
Sources
  Jedi II $99.5
ENA $99.5
Total $199.1

RETURN SUMMARY (Unlevered)

PV @ Cumulative

Return Components:	Capital Price	IRR
Cash Outflows	(166,263)	N/A
Cost of Delays in COD	(2,547)	N/A
Intermed. Cash Flows	167,934	10.94%
Terminal Value	9,178	11.89%

  a

Total Project NPV 7,761 11.89%

EPC
Owners' Cost
Contingency
Other Costs

Deal Name: Priscilla

Uses
$154.3
  $8.9
$10.2
$25.7

$199.1

Capital Price Components	
Risk free rate (%):	5.12%
Equity Premium (%):	3.37%
Credit Premium (%):	0.00%
Country Premium (%):	0.00%
Transaction-Specific (%):	2.51%
RAC CAPITAL PRICE:	11.00%

E-Rating: N/A Relative upside ratio N/A

The return summary represents an unlevered case and ownership/operation through the 15-year Tolling
Agreement. A probabilistic analysis was also performed for a levered case. Assumptions and results for the
levered case are detailed below:

Case	70% Debt Case	80% Debt Case
Tenor	14 years	14 years
Coupon	LIBOR + Applicable Margin below	LIBOR + Applicable Margin below
Average Life	8.14 years	8.14 years
Debt-to-Capitalization	70%	80%
Coverage	1.40x min; 1.79x av	1.31x min; 1.57x av
Equity IRR	18.9%	21.6%

ADDlicable Margin

Spread (years 1-3)	2002	1.375%
Spread (years 4-6)	2006	1.625%
Spread (years 7-9)	2009	1.875%
Spread (years 10-13)	2012	2.250%
Spread (year 14)	2016	2.500%

CASH FLOW SUMMARY

  IRR Distribution
t20"/ Expected
10.0%
8.0%
6. M.
4.0% P5 95
2Mo
0.0'/0
  e o a e e e e ;` e o
  N  O t` W v1 O10 1
N O O Q
  h D Oo P O N O b h a\

E0004403887

  Cash FlowSummary
$400,000
  $300,000 ~ ~
$200,000 .~ Terminal Value 1
$100,000 W J
  Ongoing
$(100,000)" D Fees II
$(200,000)  Outflows I I
5(300,000)
  ~-Cumulative P95 j
Cumulative P 5
  Years Expected cumulative cash (lows

TRANSACTION UPSIDES/OPTIONALITY
Potential upside in the Tolling Agreement includes a revenue provision under which the capacity payments are
adjusted for actual output and heat rate. Enron Americas Technical Services believes that LVC II can improve upon
Page 2

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  'J RAC Deal Approval Sheet Deal Name: Priscilla
  the baseline design heat rate and output capacity stipulated in the tolling agreement of 7,800 Btu/kWh (HHV) and 222
MW, respectively. The baselines for the toll are the GE guaranteed output and heat rate. Additionally, the Variable
O&M offered rate ($3.71/MWh) includes a 5% contingency so it is possible that a small margin could be earned on
variable costs when dispatching.

RISK MATRIX

RISK DESCRIPTION	MITIGATION/COMMENTS
Construction Risk	Modern Continental, the EPC Contractor, is bonded for the full amount of its
	$154 million turnkey EPC Contract by United States Fidelity and Guaranty
	Co ("US Fidelity") and Lumbermen's Mutual Casualty Company
	("Lumbermen's"). Each of these entities is responsible for half of the total
	bond. Both have strong credit ratings--US Fidelity is rated AA and Al for
	financial strength by S&P and Moody's, respectively. Lumbermen's is rated A
	and A2 by S&P and Moody's, respectively.
	Project construction costs could be higher than currently forecasted; however,
	the degree of variability and potential for unforeseen costs are low at this point
	given the known cost of major equipment, interconnections and wastewater
	facilities. In addition, the pro forma includes maximum costs on these items
	and an additional $10.1 million contingency.
	The tolling agreement incorporates damages for which LVC II could be liable.
	These include $40,000 per day, liquidated damages for delay in start-up
	capped at 75 days. The potential liquidated damages are mitigated by
	damages that would be due to LVC II by Modern Continental under the terms
	of the EPC contract. The EPC delay liquidated damages begin at $5,000 per
	day and ramp-up, over 30 days, to $40,000 per day. There is a potential
	$775,000 cash outflow in the first 75 days of a delay in COD due to this mis-
	match in liquidated damage payments. Key to Modern Continental's execution
	and avoidance of LDs will be its ability to hire and maintain appropriate levels
	of skilled labor in a tight power plant construction market, to timely complete
	this project. After 75 days, it is expected that the project will be obligated to
	pass-on to Allegheny only the LDs received from the EPC Contractor. The
	project incurs a monthly opportunity cost of $2.7 million in capacity payments
	in the event of a COD delay as the Tolling Agreement does not extend beyond
	its stated termination due to such delay.
	To the extent any delay in COD is not caused by the EPC contractor (e.g.
	delay in gas line/interconnection or electrical interconnection facilities) the
	project will be responsible for liquidated damages under the Tolling Agreement
	for up to 75 days. It is expected that after 75 days, the project will be relieved
	of its LD obligations related to non-EPC delays.
Environmental / Permitting Risk	Development is nearly complete. Status of critical path items is outlined in
	A endix III.
Operating / Fuel Risk	The tolling agreement incorporates an annual test protocol for the steady state
	heat rate and capacity of the plant. It is possible that tolling revenue could
	vary. The tolling agreement includes as its base case both the GE guaranteed
	heat rate and capacity. Deviations from the design heat rate and design
	output will be accounted for via adjustments to the capacity payment. Failure
	to achieve design heat rate or design capacity shall not be an event of default
	under agreement--adjustment to the capacity payment is the sole remedy.
	PUC Approval is required for gas interconnection agreement.

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  RAC Deal Approval Sheet

Deal Name: Priscilla

Credit / Market Risk	Allegheny is rated BBB+ and Baal by S&P and Moody's, respectively. The
	Interconnection Agreement will allow transmission to Mead. Additionally, from
	Mead, output can be wheeled to SP-15 in California and Palo Verde.
	Although deregulation has improved the market potential for power produced
	by LVC II, implementation of legislation in Nevada is not expected for at least
	two years.
Equity Syndication Risk	Factors that make the expansion project attractive to an equity investor are its
	stable cash flow from the tolling agreement, strategic location in the West near
	California and flexible combined-cycle design.

KEY SUCCESS FACTORS

	NA	Poor Excellent
Core Business		X
Strategic Fit		X
Upside Potential		X
Management	X	
Risk Mitigation		X

  EXIT STRATEGY
~' ENA intends to finalize development of this asset, commence construction and divest it prior to the expected
commercial operation date (COD). West Origination's estimated value of the Project, upon COD, is presented in
Appendix II under various levered discount rate scenarios. For reference, ENA estimates that the discount rate
applied to Fountain Valley Power's levered equity cash flows by Black Hills was in the range of 16-18% for terminal
values of $350/kW to $500/kW. Given the longer term of LVC ll's Tolling Agreement (15 years versus 11 years),
LVC II's combined-cycle design and, thus, lower heat rate, it is expected that LVC II will sell at the lower end of
  7j these discount rates. As shown in Appendix III, the deal team estimates a pre-tax gain of between $13.5 million
` -J and $24.5 million.

OTHER RAC COMMENTS
Tolling Agreement with Allegheny can be viewed as sale of a covered physical spread option with the premium paid
in level installments over a 15-year period. Primary risk is timely construction and start-up of facility by Modern
Continental, a lesser-known EPC Contractor in the power industry. Allegheny Energy Supply Company has a
stand-alone rating of BBB+/Baal that is not supported by a guaranty of its parent Allegheny Energy, Inc.

  PUC approval is required for the gas interconnection agreement with Southwest Gas (See Appendix III).
Gas transmission capacity will be assigned to Allegheny

  The draft tolling agreement is not clear on LDs, default or termination beyond the first 75 days of delay in COD.
~., This will be reviewed prior to final approval and execution.

  This approval provides that up to $2 million of the $194.9 be expended before all conditions precedent below are
met.

CONDITIONS PRECEDENT
Approval of the investment beyond an incremental $2 million in development costs is subject to:
 Execution of definitive Tolling Agreement with Allegheny Energy Supply Company
Execution of Southwest Gas Interconnection Agreement
  Execution of Water/Wastewater Agreement
  Execution of Nevada Power Interconnection Agreement

   RAC and Legal review of all Agreements
U  RAC technical review with Americas Technical Services
  E0004403889

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  RAC Deal Approval Sheet

Deal Name: Priscilla

_ESTONES	
Execution of Water/Wastewater Agreement	04/24/01
Execution of Gas Interconnection Agreement with Southwest Gas	04/27/01
Execution of Interconnection Agreement with Nevada Power	04/27/01
Execution Tolling Agreement	04/27/01
Execution of ENA / JEDI II Bridge Loan	04/27/01
Enron BoD Finance Committee Approval	04/30/01
Notice-to-Proceed under EPC Contract	05/01/01
Building Permit	06/01/01
PUC Approval for Gas Transmission	08/30/01
Funding of Project Financing	09/30/01
Sale of Asset	09/30/01
Mechanical Completion	08/01/02
Commercial Operation	09/01/02

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APR-19-2001 10:40
RAC Deal Approval Sheet

ENRON NORTH AMERICA PDX

APPROVALS	Name
West Origination	Jake Thomas
Regional Management	Christopher Calger
Technical Services	Brian Redmond
JEDI II	Shirley Hudler
Americas Accounting	Wes Colwell/Cris Sherman
Americas Legal	JQ,~ark Haedicke
Americas Management	John Lavorato/Louise Kitchen
EWS Management	Mark Frevert
RAC Management	Rick Buy/Dave Gorte
Enron Global Finance	Andy Fastow/Ben Glisan
ENE Management	Jeff Skilling

  503 464 3740 P.02i02
Deal Name: Priscilla

Si ure Date
;~ N Iq of

  ~y rilT-mil
t,S 6

D

E0004403891

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TOTAL . .02


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  APR-19-2001 10:40 ENRON NORTH AMERICA FDX
RAC Deal Approval Sheet

  503 464 3740 P.02/02
Deal Name: Priscilla

rI
:
;	APPROVALS	Name
~
~	
West Origination	
Jake Thomas
	Regional Management	Christopher Cal er
	Technical Services	Brian Redmond IA-J_
	JEDI II	Shirley Hudler
		
t=om	Americas Accounting	Wes Colwell/Cris Sherman
	Americas Legal	~,QiMark Haedicke
		J
~'
	Americas Management	John Lavorato/Louise Kitchen
		
	EWS Management	Mark Frevert
	RAC Management	Rick Buy/Dave Gorte
		
	Enron Global Finance	Andy Fastow/Ben Glisan
	ENE Management	Jeff Skilling

  U

EO004403892

Page 5

EXH006-01348

Sin ure

  Date
Iq 0
v

TOT;:',L P.02

N


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	APR-19-2001 10:40	LNKUN NUR i H H` LK 1 C.H t-'uX
			
		RAC Deal Approval Sheet	
		
	APPROVALS	Name
,j	West Origination	Jake Thomas
;;	Regional Management	Christopher Calger
L;	Technical Services	Brian Redmond
	JEDI II	Shirley Hudler
	i	l
ll/C
i
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	Americas Account
ng	r
erman
es
we
o
s
	Q,-Mark Haedicke
Americas Legal
	5' J
Americas Management	John Lavorato/Louise Kitchen
	EW S Management	Mark Frevert fr hlhall
-o-
,;	RAC Management	Rick Buy/Dave Gorte
	Enron Global Finance	Andy Fastow/Ben Glisan
	ENE Management	Jeff Skilling
		
		
		
		
		
r-.
`?1		
Ui		
ta~		
		
E		
EXH006-01349	

  5bi 4b4 '(4b F'. uez;62
Deal Name: Priscilla

Sigpure

E0004403893

Page 5

  Date
`~-/q-a/
c1 Iq of

  TOTAL 0,2

O


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	APR-19-2001 10:40	ENRON NORTH AMERICA PDX
s:.	
RAC Deal Approval Sheet	
		
	APPROVALS	Name
	West Origination	Jake Thomas
r	Regional Management	Christopher Calger
	Technical Services	Brian Redmond
	JEDI II	Shlrley Hudler
		
	Americas Accounting	Wes Colwell/Cris Sherman
	Americas Legal
ark Haedicke
	J
ricas Mana
ement
Am	John Lavor
t
i
/L
Kit
h
	g
e	o
ou
se
a
en
c
	EWS Management	Mark Frevert
	RAC Management	Rick Buy/Dave Gorte
		
	Enron Global Finance	Andy Fastow/Ben Glisan
	ENE Management	Jeff Skilling
		
		
		
		
i		
		
		
		
		
		
		
		
		
El		
:XH006-01350	

  Sb.S 4b4 S'(4u H. U2/b2
Deal Name: Priscilla

Si ure Date
L{ Iq o~

/mot,
  10

EOO04403894

Page 5

TOTAL P.02

O


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  RAC Deal Approval Sheet Deal Name: Priscilla

Appendix I - Tolling Agreement

  The following table summarizes the general commercial terms of the tolling agreement with Allegheny. The
,`` Variable O&M charge contemplated in the toll equals West Power Origination's estimation of variable O&M
  expenses including major maintenance plus a 5% contingency. Busbar delivery limits LVC II's exposure to
,~ changes in electrical transmission tariffs. The economics incorporated in this DASH assume that the plant operates
at the base heat rate and capacity of the Tolling Agreement. This capacity and heat rate are the GE guarantee
u heat rates and capacities for LVC II. Although possible, it is unlikely that the capacity payment will decrease due to
the results of annual periodic test and the Tolling Agreement's adjustment formula. It is expected that the actual
results will be better. Given the operating performance of LVC I, whose staff will operate LVC II, LVC II is expected
to make or exceed its availability and output targets. Following is a summary of the basic Term and Conditions of
the Tolling Agreement.

JA

Capacity Payment ($/kW month	$12.15
Variable O&M	$3.71 escalating at CPI
Term	15 Years
Deliver Point	Busbar
LD's COD	$40,000/da
Guaranteed Availability	Year-round 90% / Peak 95%, subject to permits
Failure to meet availability and heat rate targets	Adjustment to capacity payment
Base Capacity	222 MW
Stead State Heat Rate	7800 (Btus/kwh, HHV
Allegheny Credit Rating	BBB+

O

EXH006-01351

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  RAC Deal Approval Sheet

Appendix II -Valuation Supplement
(provided by West Origination)

Deal Name: Priscilla

		Enterprise Value
($millions)	
Pretax Equity Discount Rate \ Terminal	$450/kW	$350/kW	$250/kW
Value:			
16%	$223.6	$221.3	$219.0
17%	$219.6	$217.6	$215.7
18%	$216.1	$214.3	$212.6

  <I
  West Power Origination estimates the sale of the equity on LVC 11, (as per assumption above or following closure of
a Toll with Allegheny) will result in an estimated gain between $13 and $25 million, as per table below-

	Pre-Tax Gain on Sale ($millions)
Pretax Equity Discount Rate \ Terminal	$450/kW	$350/kW	$250/kW
Value:			
16%	$24.5	$22.2	$19.9
17%	$20.5	$18.5	$16.6
18%	$17.0	$15.2	$13.5

E0004403896

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  RAC Deal Approval Sheet Deal Name: Priscilla

Appendix III - Status of Critical Path Items

Site Use Permit	Completed August 2000
Air Permit	Completed November 2000
Waste Water Discharge	Completed March 29, 2001.
Permit	
Storm Water Permit	Deemed unnecessary
Acid Rain Permit	Application for waiver filed with Clark County. Working to confirm status.
Water Supply	The City of North Las Vegas will supply water. On January 31, 2001 an invoice for $3
	million in water interconnect fees has been issued by the city of North Las Vegas. Prior
	to issuance of the building permit and upon payment of the interconnection fee a Will
	Serve Letter will be issued.
Wastewater	The City of Las Vegas has approved the City of North Las Vegas' request to approve the
	increase of LCVI's discharge total dissolved solids level to 3,000 ppm . This is sufficient
	discharge capacity to incorporate the added discharge needs of LVC II. Wastewater
	interconnection fees of approximately $5 million will be required prior to issuance of
	building permit. ENA has negotiated deferred payment of approximately $4 million, and
	to make payments refundable, if city does not issue permit. A letter of credit will be
	required for security for the $4 million. Final agreement was executed on April 18th.
	City Council approval scheduled for April 24th.
Gas Interconnect	ENA, acting as SWP's agent, is in the final stages of contract negotiation with Southwest
	Gas. Execution of the final agreement will occur on or before April 27th. Southwest
	Gas will need to get PUC approval of the contract price, since LVC I1's bypass
	avoidance rates will be below standard tariff rates. PUC approval is expected,
	since the reduction in rates is due to LVC I1's option to build a bypass pipeline at
	approximately the same cost to the project. PUC approval process likely to
	require 180 days.
Electrical Interconnect	Nevada Power has completed engineering and cost estimation work for the
	interconnection of the project. Negotiations with Nevada Power have advanced
	positively. Execution of the interconnection agreement is expected on or before April
	27th.
Firm Transmission	The transmission study to deliver facility power to Mead is completed. System upgrades
	identified in the study are approximately $600,000, which will allow the project to transmit
	electricity to Mead at Nevada Power's posted tariff rates. Nevada Power issued
	confirmation letter on April 13th including the form of Transmission Service Agreement.
	LVC II has 30 days to execute the Transmission Service Agreement.
EPC Contract	The EPC contractor is Modern Continental under a fixed-price turnkey contract executed
	on March 29, 2001. Modern is wrapping the performance of the four LM6000 PC gas
	turbines into its overall facility guarantee.
Ground Lease/ O&M	LVC II is currently financed by LVC I. Bank (lender for LVC I) approval of ground lease
Permit	and O&M agreement will be required prior to breaking ground of project. Draft
	documents are being prepared and will be submitted for bank approval b April 20.
Tolling Agreement	Allegheny Energy Supply Company will be the Tolling Agreement counter-party. Final
	execution of a binding agreement is anticipated on or before April 27, 2001.

E0004403897

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a

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n

Interoffice

Memorandum

  PRIVILEGED AND CONFIDENTIAL

  TO: Mark Haedicke DATE: April 16, 2001
Sheila Tweed
  cc:

  Chris Calger, Dave Parquet,
c Jim Gilbert
  FROM: Dale Rasmussen DEPARTMENT: Legal Department
SUBJECT: Legal Risk Memo - Project Priscilla

  Title of Transaction/Agreement: Project Priscilla

Enron Entity: Las Vegas Cogeneration II, L.L.C. ("LVC II") (indirectly owned by ENA)

Nature of Transaction: Development of approx. 222 MW generation facility incorporating 4 GE LM6000
combustion gas turbines adjacent to and on property leased from existing Las Vegas
Cogeneration Limited Partnership ("LVCLP") facility. Certain portions of the two facilities
(control room, etc.) will support both LVC 11 and LVCLP and will be owned by LVCLP.
Development bridge financing (approx. $50MM) from ENA/JEDI through approx. July,
2001; permanent financing to be obtained thereafter, including refinancing of existing
LVCLP credit facility. Not eligible for TurboPark. Output of new facility to be sold to 3`d
party through 15-year tolling arrangement. Entire facility to be sold prior to on-line date of
Sept. 1, 2002.

LVCLP will operate combined facilities pursuant to O&M Agreement.

Legal Risks: Legal Risk Rating = 2 (1 being low risk, and 5 being high risk)

1. Toll Exposure Document under negotiation. Potential exposure from long-term toll position mitigated by
not providing market cover damages. Damages limited to adjustment of capacity payments
for succeeding year, based on annual performance tests. Counterparty would have right to
terminate if availability < fixed% for calendar year. Delay in bringing on-line results in
$40,000/day liquidated damages; capped at 75 days ($3MM) total. In addition, Capacity
Payments not paid until achieve commercial operation. lay t D'z similar h~~r not
identical to corr~nondinn T T)'c under EP contract (damages begin at $15 000/day and
escalate to-S0_010/day). Unable to negotiate perfectly-matched damages with toll
counterparty, but $40,000/day is significantly less than forecast market damages would be.
If delay is "Owner-caused delay" under EPC contract (including delays due to failure of gas
transportation pipeline or interconnection facilities to be built by Southwest Gas or Nevada
Power Company, respectively), LVC 11 would be exposed for full value of $40,000 LD's.
Gas and electricity transmission companies refuse to provide delay LD's. Attempting to
mitigate exposure by having step-in rights for completion of transport/transmission
facilities, but utilities have resisted. Negotiations are ongoing.

  cAdocume- I \mhacdic\cs\Iemp\-6389868.doc
Page 1 of 2

E0004403898

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  2. EPC Contract Risks EPC contract has been signed; proceeding under Preliminary Notice to Proceed. LVC 2
can cancel EPC contract for convenience, subject to reimbursing contractor for costs
incurred, plus subcontractor termination costs (total prior to 4/30/01 is $1,000,000).
Cancellation cost increases to approx. $15,000,000 by end of May.

  3. Lender Approval Risks Approval by existing LVCLP lenders will be required for ground lease and 0&M
Agreement between LVC 2 and LVCLP. Necessary consents will be obtained. Possibility
of moving LVCLP into Condor structure, and thus taking out LVCLP lenders. If Lender
approval is not obtained or refinancing is not put in place by end of April, cancellation
exposure increases substantially.

4. Equity Structure Risks LVC II is owned by Southwest Power, which in turn is owned by ENA (through TLS
Investors, LLC), by JEDI II and by RADR EMP, LLC (a "friend of Enron" structured
entity). Development costs will be funded through a bridge loan; however, net revenues
from sale will be distributed to respective owners of Southwest Power unless an alternative
distribution arrangement is made. RADR equity can be called at any time. Can remove
RADR without violating QF ownership restrictions under current ENE SEC exemption
filing. Robert Eickenroht has further information on this filing and its effect on QF
ownership.

5. Financing Risks Permanent financing not obtained. Major agreements contain "assignment for financing"
clauses, but lenders may require changes to documents.

6. Development Risks See DASH. Currently resolving outstanding question as to Acid Rain Permit (required for
operation, but not for construction; County authority is new to role of issuing permit under
EPA regulations).

Seeking resolution with City of North Las Vegas as to easement for flood channel access
road required by City under Site Use Permit. Requested alignment would impinge on
existing switchyard. LVC 2 is proposing alternate route with "cap" over flood channel. 0)
Will need to resolve prior to issuance of building permit. City has agreed in concept; taking
to design board for approval 5/8.

City of North Las Vegas is effectively the sole source for water to the facility. The City's
service commitment is via a "will serve" letter, rather than by a firm service contract. The
City will not enter into a more formal service contract at this time. We have asked our local
counsel, McDonald Carrano, to provide an opinion regarding the enforceability of the "will
serve" letter. This opinion will be qualified, but initial research confirms that this is the
standard practice for municipal water agencies in Nevada. We are further confirming the
refundability of connection fees (approx. $2 million) payable prior to commencement of
construction.

Nevada Power recently informed LVC 2 of potential delay in reconductoring transmission
line south of plant. This could limit ability to achieve 9/1/01 on-line date. Evaluating other
remedial action schemes that would allow for target on-line date, with line improvements
scheduled later.

If terminate construction prior to commercial operation, will be obligated to reimburse
Southwest Gas for expenses incurred in installing bypass pipeline. Similar obligation to
Nevada Power for interconnection facility upgrades.

Nevada Power/Southwest Gas contracts specify arbitration with neutral arbitrator(s) and
Nevada law inNevada. Both parties initially required exclusive jurisdiction in Nevada
courts. Made-every effort to use New York or other neutral law and non-Nevada sites for
arbitration, but counterparties refuse to compromise on these points. In light of other key
concessions and getting agreement an AAA arbitration, this should not create undue
exposure.

  E0004403899

  n:/common/legat/mcowan/memo/

EXH006-01355


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=============

AGENDA ITEM 5(d)
(SUGGESTED FORM OF RESOLUTIONS)

  WHEREAS, the Company owns, directly or indirectly, 100%
of the memhershin interests in and to TLS Investors_ L_L_C_ ("TLS")-

11A and

  WHEREAS, TLS owns a significant portion of the
membership interests in, and is the managing member of,
Southwest Power, L.L.C. ("Southwest"); and

  WHEREAS, Southwest owns, directly or indirectly, 100% of
the ownership interests in and to both Las Vegas Cogeneration
Limited Partnership ("LVC I") and Las Vegas Cogeneration II,
L.L.C. ("LVC II"); and

  WHEREAS, LVC I owns and operates an existing generation
facility of approximately 52 MW nominal output as a Qualified
Facility (the "LVC I Facility") subject to a power purchase
agreement with Nevada Power Company; and

  WHEREAS, LVC II is developing a new power generation o
facility of approximately 222 MW nominal output (the "LVC II o
Facility") on land to be leased from LVC I immediately adjacent to LO
the existing LVC I facility; and

  WHEREAS, in connection with the development of the LVC
II Facility LVC II desires to enter into (a) an Engineering,
Procurement and Construction Contract with Modern Continental
South Inc. (the "EPC Contract"), (b) a Tolling Agreement
Confirmation to an EEI Master Power Purchase and Sale
Agreement with Allegheny Energy Supply Company LLC (the
"Tolling Agreement"), (c) an Interconnection and Operation
Agreement with Nevada Power Company (the "Interconnection
Agreement"), (d) a Service Agreement for the Transportation of
Customer-Secured Natural Gas and associated Operations

  Procedures Agreement with Southwest Gas Corporation, (e) a
I Bridge Loan Agreement with the Company and with Joint Energy
  Development Investments II Limited Partnership (the "Bridge Loan
Agreement"), and (f) such-other agreements as may be reasonably
necessary for the successful development and operation of the
LVC II Facility (including without limitation agreements with the City
of North Las Vegas for the supply of process water and the
discharge of wastewater, joint venture, shareholder and

171 participation agreements with future project participants, operations

E0004403900

=XH006-01356


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=============

J and maintenance agreements, fuel supply, financing and loan
agreements with various project lenders,) (collectively, the
"Additional Agreements") (the EPC Contract, Tolling Agreement,
Interconnection Agreement, Service Agreement, Bridge Loan
Agreement and Additional Agreements are collectively referred to
as the "Project Agreements"); and

  WHEREAS, the Board of Directors of the Company deems it
advisable and in the best interests of the Company that LVC II
enter into the Project Agreements to move forward with the
development of the LVC II Facility, the total cost of which is
currently estimated to be ONE HUNDRED NINETY NINE MILLION ONE
HUNDRED TEN THOUSAND dollars (US$199,110,000); and

  WHEREAS, the Board of Directors of the Company deems it
advisable and in the best interests of the Company that approvals
be granted, as set forth below, in connection with LVC Il's
development of the Project;

~~ NOW, THEREFORE, IT IS RESOLVED, that the appropriate
officers of the Company, Enron North America Corp. ("ENA"),
and/or LVC II be, and hereby are, authorized to execute, deliver,
  and perform or cause to be executed, delivered and performed, the N
.~ obligations of the Project Agreements; Q

  RESOLVED FURTHER, that all actions heretofore taken by
any officer or representative of the Company or its affiliates related
to or in connection with the transactions contemplated by these

  resolutions be, and hereby are, adopted, ratified, confirmed, and
approved in all respects; and

  RESOLVED FURTHER, that the officers, directors, and
authorized legal representatives of the Company, ENA and LVC II
be, and hereby are, authorized to execute and deliver such other
certificates, powers of attorney, affidavits, agreements,
assignments, documents, guarantees, and instruments as are
required in connection with the Project;

  RESOLVED FURTHER, that the Chairman of the Board, any
Vice Chairman of the Board, the President, any Managing Director,
or any Vice President (including any Executive Vice President,
Senior Vice President, or Vice President), the Treasurer or any
Deputy Treasurer of the Company and its counsel be, and each
hereby is authorized, empowered, and directed (and any one of
1, them acting alone) to take or authorize to be taken any and all such
F. further action, to amend, execute, and deliver all such further

E0004403901

=XH006-01357


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=============

--r

  71
  instruments and documents, for and in the name and on behalf of
_ the Company or its affiliates, under their respective corporate seals
or otherwise, and to pay or cause to be paid all such expenses as
in their discretion appear to be necessary or desirable to carry into
effect the purposes and intentions of this and each of the foregoing
resolutions; and

  RESOLVED FURTHER, that on or before June 15, 2001, an
appropriate officer of the Company or ENA shall certify to the Office
of the Chairman of the Company the occurrence or non-occurrence
of the Conditions, and if such certification specifies the non-
occurrence of either or both of the Conditions, then, without further
action of the Board or the Office of the Chairman such officer may
rescind these resolutions, in which case they shall be deemed null
and void and the approvals contained in these resolutions will no
longer be effective.

  RESOLVED FURTHER, that Jeffrey K. Skilling be, and
hereby is, constituted under Section 3, Article IV of the Company's
Bylaws with full power and authority on behalf of the Board (except
as otherwise contemplated by Section 6, Article IV of the
Company's Bylaws) to:

  N
(a) Settle and approve the terms and authorize o
execution on behalf of the Company or its 0
affiliates of such additional documents relating
  to the transaction undertaken or proposed to
be undertaken by the foregoing resolutions as
may be required or necessary in order to
enable the Company and its affiliates to fulfill
their respective obligations in connection with
the foregoing resolutions;

(b) Pay or authorize the payment of all fees,
expenses, or charges incurred by or on behalf
of the Company or its affiliates in connection
with the transactions contemplated by the
foregoing resolutions, including (but without
limitation) the fees and expenses of the
Company's and its affiliates' financial, legal,
and professional advisers; and

  (c) Take any and all such further action as he shall
;' deem necessary or desirable in connection with
LJ the transactions contemplated by the foregoing
resolutions.

E0004403902

EXH006-01358


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=============

Agenda Item 5e

m


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  L _3

Cuiaba Integrated Energy Project

Enron Board Presentation

April 30, 2001

E0004403904

5E-1

Proprietary and Confidential

EXH006-01360


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L -., E2:3 ELI
  E::13, CIZZ-3

  Cuiaba Integrated Energy Project

History of Enron's Approval

 Nov. 1997 Original Board approval of the Project provided
authorization to construct the project but did
not explicitly provide approval to execute the
financing documents.

 Sept. 1999 Obtained approval to sign loan documents.
 July 2000 Obtained approval to provide contingent
  support required for financing and to purchase
Transredes' interest in the Integrated Project.

 Aug. 2000 Obtained approval of guarantees required by
lenders in connection with cing.

 Dec. 2000 Obtained approval of ddi ioquity funds in
the amount of $222219-. 1 million for a total of $441
million prior to financial close and a total of
$227.5 million after financial close.

  5E-2 Proprietary and Confidential
E0004403905

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E -Z LL] L__J
  J 7A

  Integrated Energy Project

 Integrated Project is 99% complete
 Remaining:

>> Ridges directional drilling
>> Pipeline tie-ins and commissioning
>> Power Plant commissioning on gas

 Plant is currently operating on Diesel

 The Project costs have increased due to:

>> Complications with construction in the ridges and
associated delay costs
>> Inclusion of all contested EECC change orders

 Requested Enron funding includes $82.8 million for
Shell's potential non-participation above the $620
million budget.
  E0004403906

5E-3 Proprietary and Confidential

EXH006-01362


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=============

  Cuiaba Integrated Energy Project
Total Project Cost and Requested Increase
  Nov. '97 Sept. 99 Dec. 00 May 01

Original Project Costs	$ 475.0	$	473.0	$	473.0	$	473.0
Financing Costs		$	42.0	$	47.0	$	62.0
Subtotal	$ 475.0	$	515.0	$	520.0	$	535.0
Incremental Costs							
Turnkey and Other Construction		$	25.0	$	64.0	$	144.0
Ridges		$	13.0	$	22.0	$	41.0
Environmental		$	20.0	$	27.0	$	33.0
Third party Dev/Other Financing		$	41.0	$	39.0	$	47.0
Other Costs and Contingencies		$	6.0	$	15.0	$	7.0
Total Project Cost	$ 475.0	$	620.0	$	687.0	$	807.0
Total Project Cost Increase		$	145.0	$	212.0	$	332.0
Incremental Increase				$	67.0	$	120.0
Working Capital/ Environmental						$	7.8
		E0004403907				
Total Increase						$	127.8
'
h						$	45
6
Enron
are
s S									.
		Enron IRR							
	Total Investment	5.40					
							
	5E-4				Proprietary and Confidential

EXH006-01363


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=============

Cuiaba Integrated Energy Project
Sources and Uses of Funds

  Budget @ Budget @ Budget @ Dec. 2000 Budget @ May 2001
Nov. 1997 Sept. 1999 with Debt All E ui with Debt Al Equity

Sources

Senior Funding	$	346.5	$	365.0	$	365.0	$	-	$	365.0	$	-
SUDAM Financing			$	30.0	$	27.7	$	-	$	-	$	-
Partners' Capital	$	46.6	$	98.9	$	107.8	$	240.7	$	112.3	$	224.3
Enron Capital Exposure	$	81.9	$	125.2	$	187.5	$	401.2	$	188.2 c	$	441.2
IDC: Enron portion									$	20.9	$	20.9
December Board Contingency					$	40.0 A	$	40.0				
This Request												
Enron Share									$	45.6	$	45.6
Shell Non-participation (Potential)									$	82.8	$	82.8
Total	475.0	619.1	728.0	681.9	814.8	814.8 B
						
Uses												
Construction Costs	$	475.0	$	619.1	$	688.0	$	641.9	$	807.0	$	807.0
Working Capital/Environmental Program	$	-	$	-			$	-	$	7.8	$	7.8
December Board Contingency	$	-	$	-	$	40.0 A	$	40.0	$	-	$	-

  Total 475.0 619.1 728.0 681.9 814.8 814.8 B
A BOD granted an additional $40 million for Shell non-participation and contingency.
B Hermes fee refund not included since timing of such (if it occurs) is Q1 2002.
C Enron to receive between $231-$253 million from senior funding (depending upon level of Shell non-participation).
5E-5 E0004403908 Proprietary and Confidential

EXH006-01364


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  Cuiaba Integrated Energy Project

Recommendation

 Approve additional Enron equity funds required for

the completion of the Cuiaba Project in the amount of
US$ 45.6 million as Enron's contribution and in the
amount of US$ 82.8 million in the event Shell does
not participate in the increase, for an aggregate total
equity ,investment in the Cuiaba Project by ESA and/
or its affiliates in the amount of US$ 569.6 million.

  wNt,

  E0004403909
5E-6 Proprietary and Confidential

EXH006-01365


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ENRON RISK ASSESSMENT AND CONTROL

		DEAL APPROVAL SHEET
			
"'	DEAL NAME: Cuiaba Additional Equity II	Date DASH Completed: 4/20/01
	Counterparty:	Cuiaba Integrated Power Project	RAC Underwriter/Analyst: Michael Tribolet/Andre Cangucu
	("Cuiaba")		Investment Type: Equity
	Business Unit:	Enron Global Assets	Capital Funding Source(s): Balance Sheet
	Business Unit Originator: Peter Weidler	Expected Closing Date: N/A
		[]Public	(]Private	Expected Funding Date: Ongoing
		[]Merchant	[]Strategic	Board Approval: (]Pending []Received []Denied ON/A
'		IZlConformine	ONonconforming	

RAC Recommendation: (]Proceed with Transaction lIReturns below Capital Price DDo not Proceed

APPROVAL AMOUNT REQUESTED (in USD millions)

  Capital request $128.4*
*Assumes Shell will not fund over $621 million project budget.
EXPOSURE SUMMARY (in USD millions)

This request $128.4
Previously approved capital commitment $441.2
Total Capital Exposure L 50A

This does not include $806.85 million of contingent sponsor support (indemnities to lenders to obtain project financing).

TRANSACTION SUMMARY

  The Cuiaba I integrated project consists of a 480 MW power plant, located in the city of Cuiaba in the Brasilian state of Mato
Grosso (EPE), a 363 km pipeline in Bolivia (GasBol) and a 278 km pipeline in the Brasilian state of Mato Grosso (GasMat).
  The current ownership structure (after projected buyout of LJM's 13% interest in EPE) of the project is shown below (see -
' Exhibit I).

GasBol GasMat EPE

Enron 50.00% 56.25% 71.875%
Shell 50.00% 43.75% 28.125%
Total 100.00% 100.00% 100.000%

Currently the power plant is in commercial operations in combined cycle mode using diesel fuel. The Brazilian government is
reimbursing the cost of the diesel fuel.

As of April 17, 2001, the project is physically complete with the exception of approximately 2,006 meters of GasMat pipeline
construction through two environmentally sensitive ridges. This construction is being conducted with directional drilling.
Pilot holes have been completed on both ridges. The remaining work involves the enlargement of the pilot holes to 30 inches so
the 18-inch pipe can be pulled through. Once the pipeline is complete, the power plant will be commissioned on gas. The
schedule calls for the pipeline to be mechanically complete by September 21, 2001, and the power plant to be fully
commissioned on gas by January 10, 2002.

The Cuiaba project has experienced a series of cost increases from the original $475 million projected cost in November 1997.
(see Exhibit II) The capital budget required to complete the project has increased from the $688 million most recently
authorized in December 2001 to a total of $814.8-million. This increase includes all costs expected to be incurred by EE&CC
(as the turnkey contractor for the project) regardless of whether or not they are be passed on to the project and a contingency
equal to 5% of the remaining funds to be spent. The increase is summarized below (refer to Exhibit III for additional details):

Li

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Cuiaba Integrated Project
Summary Budget Comparison

		Enron		Increase
	Shell $621	approved		from
	million	DASH from	This	December
	Budget	Dec. 2000	Request	2000 DASH
Turnkey and Change Orders	420.9	449.5	502.2	52.7
Ridges	12.9	22.2	41.0	18.8
Other Constructions	39.3	58.8	84.8	26.0
Financing Costs! Legal/ Insurance	106.8	110.3	114.6	4.3
Development Costs! Mobilization	36.4	35.7	42.6	6.9
Spare Parts	4.6	4.8	4.7	-0.1
Diesel Burned	0.0	6.6	10.1	3.5
Contingency	0.0	0.0	7.0	7.0
Total Construction	620.9	688.0	807.0	119.1
Working Capital	0.0	0.0	3.8	3.8
Environmental funding	0.0	0.0	4.0	4.0
Total Costs	620.9	688.0	814.8	126.9 '
* See reconciliation on page 3				

The primary source of the cost increase is the delay in completing the Brazilian pipeline, compounded by complications
drilling the ridges (see exhibit IV for additional details by project entity). The delay in completion caused commensurate W
increases in the owner's and the contractor's costs.

  Enron's proportionate share of the budget increase requires additional funding of $81.7 million (including $4.0 million for
contingency). This increase includes Enron's proportionate share of the $18.6 Million of fees paid to KFW which will be
refunded if the project does not achieve financial close. Shell is expected to protest between $30 million and $50 million of
change orders from EECC and other costs. They will argue that these costs should have been included in the original turnkey
price. To the extent Shell prevails in this dispute, Enron will soley bear these costs on its own and they will not be charged to
t the project. Shell may also elect to not participate in the budget increase above the $621 million level approved by Shell in
July 2000. In this event, Shell's ownership in the Brazilian project companies will be diluted by the amount of their non-
participation as noted below. In GasBol, the amounts over the Shell Approved Budget would be provided by an "Excess
Shareholder Loan" that bears interest at 16% an has preferential rights over any dividend payments to any shareholder.

  Shell Dilution
Failure to Fund over $621 million Budget

  Dilutes @
Full Participation $621 Million

EPE 28.13% 26.68%

GasMat 43.75% 23.32%

GasBol 50.00% 50.00%

Enron's total exposure to Shell's non-participation in the budget increase and disallowance of costs is $82.8 million. Lastly,

~'; due to the delay in the completion of the pipeline, the companies will experience some negative operating cash flow which will
be required to be provided by the owners. The increase in required funds is partially offset by the incremental $40 million

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e
  provided by the Board in the December 2000 meeting. In total, Enron Global Assets is requesting $ 128.4 million of funds to

4;a complete the project. The breakdown of the request is detailed below;

	(USD millions)		EPE	GaMa	GasBol	Total
	Cost to Complete	$	345.1	$ 122.8	$ 153.1	$ 621.0

(	Operational cash flow	$	(11.01	$ -	$ -	$ 11.0
	Net Cash Per $621 million Budget	$	334.1	$ 122.8	$ 153.1	$ 610.0
	Equity Participation		28.125%	43.75%	50.00%	
	Shell funding		94.0	53.7	76.5	224.3
	Capital Exposure this Dash	$	391.6	$ 233.0	$ 190.3	$ 814.8
	Less: Enron IDC	$	(14.2)	$ (3.5)	$ (3.2)	$ (20.9)
	Total Enron Capital Exposure	$	283.4	$ 175
7	$ 110.5	$ 569
6
				.		.
	Previously approved					$ 441.2
						
	This Request					S 128.4
1						
						
	(USD millions)		EM	t	GasBot	7otaI
	Construction Costs	$	391.6	$ 231.9	$ 183.5	$ 807.0
	Operational Loans	$	-	$ 1.0	$ 2.8	$ 3.8
	FCBC Funding	$		$ -	$ 4.0	$ 4.0 0~
						
						
	Total Cost	$	391.6	$ 233.0	$ 190.3	$ 814.8

Shell is scheduled to seek their Board of Director's authorization prior to May 15, 2001 and after receiving this authorization
Enron and Shell will negotiate how the cost overruns are apportioned between the project and the contractor (EE&CC).
Additionally, the economics assume actual capital spending does not exceed $814.8 Million.

There are three significant issues between EPE and Furnas, the offtaker of power.

1. Furnas has refused to sign the consent to assignment required by the PPA. This consent is condition for
financing.

r~Y

  2. Regulations promulgated in mid-1998 (a year after Enron won the bid) require power generators to enter into
grid interconnection agreements which, if applicable would expose the project to penalties and dispatch
conditions not envisioned and priced in the PPA. These include: 1) a requirement to purchase backup energy at
the prevailing spot prices when the plant is not available; 2) the absorption of future changes in transmission
costs; 3) liability for civil-damages due to electricity outages caused by other generators. This exposure is volatile
and unpredictable. The existing PPA with Furnas provides the power plant with minimum penalties for not
meeting its availability requirements and also protects the plant from anything not within its direct control.
Furnas wishes to shift this exposure to EPE. The regulator recently fined EPE for non-compliance with this
regulation. The fine, now being contested, if not reversed, creates an event of default under which EPE can
terminate the contract and force Fumas/Eletrobras to buy the plant.

  3. EPE has significant claims of Force Majeure due to governmental intervention and /or inaction. Under the PPA,
the additional cost directly associated with these claims may be recoverable through a tariff increase.

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Ultimately, these issues will result in one of three outcomes, 1) The regulator will agree the PPA takes precedent over the new
rules and Furnas complies with the PPA resulting in the appropriate conditions to achieve financial close and partial recovery
of the cost overruns, or 2) the PPA is mutually renegotiated, or 3) the PPA is terminated and Enron retains the plant and resells
the capacity to other off-takers or alternatively Enron sells the plant to Furnas.

Gas Supply Issues: The Gas Supply Agreement with YPF (GSA) can be terminated by buyer or seller if all conditions
precedent are not met by May 4, 2001. The non-fulfilled conditions precedent are: (i) occurrence of Financial Closing with
respect to the integrated project; and (ii) completion of all Commissioning Activities on gas. Enron has verbally notified YPF
that it intends to terminate the GSA and is now in the process of renegotiating the GSA with YPF to obtain: (i) gas contract
pricing consistent to current Bolivian gas market conditions and, (ii) the flexibility required to address the current situation of
the PPA (see above). The PV differential between the pricing in the YPF GSA and current Bolivian gas market conditions is
between $30 and $50 Million. YPF has not shown a sense of urgency to come to terms and the deal team is actively soliciting
alternate suppliers.

TRANSACTION SOURCES AND USES OF FUNDS (in millions)

Assuming all equity financed

	Sources	Uses
This request	$128.4	Construction costs $807.0
Enron capital previously		Working Capital 3.8
approved	441.2	Environmental program 4.0
Interest to Enron on IDC	20.9	
Shell capital	224.3	
Total	$814.8	Total $814.8

RETURN SUMMARY

RAC's probabilistic models used a capital price of 22.0%. Assuming no Shell participation, but a dillution of their equity, the o
project has a negative NPV of ($244,052,000).

Probabilistic DCF
b Component	Cumulative
IRR	PV @ Capital
Price
Cash Outflows + Outstanding	NA	$ (569,184)
Fees	-19.00%	$ (23,678)
Ongoing Cash Flows	5.38%	$ 348,810
Terminal Value	5.38%	$ -
Total	5.38%	$ (244,052)

Semivariance - +/- 1.352

0%
60		IRR Distribution		
.			P5		
50.0%					
40.0%			Ex	cted	
30.0%					
20.0%				5	
10.0%					
0
0%					
.				
	s se	s@ e s se W	ae	se se
	O 00 O
O M l~	M O1 r- Vl
h 00 N O	00
0	O N
D N
	O r-
O 00 t~	N '7
D ~T M N	O	M D
N

Despite the large cost overruns, RAC also ran a present value secenario to measure the go-forward economics, from the $621
million budget level, treating past capital contributions as sunk costs. A present value of positive $131,113,000 results.

Probabilistic DCF
b Component	Cumulative
IRR	PV @ Capital
Price
Cash Outflows + Outstanding	NA	$ (194,019)
Fees	-14.20%	$ (23,678)
Ongoing Cash Flows	66.57%	$ 348,810
Terminal Value	66.57%	$ -
Total	66.57%	$ 131,113

E0004403913

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0%
6	IRR Distribution			
0.
-
50.0%	F5				
40.0%					
30.0%					
20.0%					
10.0%	Expected P95				
0%
0					
.				
	
t
t s	
C,	
00	
\C s
	-
C` to V N N
O N
O l~ 00 00 V t~	C

01	00

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  RAC Deal Approval Sheet Deal Name: Cuiaba Additional Equity II

ell

To illustrate the sensativities to the different senarios, RAC also ran a deterministic model. Assuming Shell did not contribute
additional equity and Enron was unable to dillute Shell, the NPV fell another $18,886,000. However, if Shell participated
fully in the equity contribution, the NPV would increase $48,169,000

CASH FLOW SUMMARY

The net present value scenario is presented below:

  Cash Flow Summary t Terminal Value
$400,000 l Ongoing
$200,000 Fees
  Outflows 1 Outflows
  $0 41-
$(200,000) A Cumulative P95
$(400,000)
  -f -Cumulative P5
  $(600,000) "---"-- Expected cumulative cash flows
$(800,000)
  00 00 .11 ,^ c~1 ~~ q1 \
  1 1 ti ti
Years

W
Ln

  TRANSACTION UPSIDES/OPTIONALITY

  The deal team is actively negotiating both the PPA and the Gas Supply Agreement. As much of the cost overruns as possible
will be recovered through reductions in the gas supply costs and increases in the power tariff. However, even if the deal team
is successful in reducing the cost gas to market and increasing the tariff as permitted by the PPA, the project returns will be
below Enron's capital price.
1ti
  The initial project concept contemplated a low cost expansion of the pipeline. Additional generation of sufficient capacity to
'; recover the economics of the pipelines (Cuiaba II) will require a new 800 KM, 500 kV transmission line. The cost of this line
is between $250 Million and $400 Million. The line is under study by the Government. as an strategic investment, but at this
date a timetable has not been established for its construction.

EXIT STRATEGY

While this project has a positive expected internal rate of return is unlikely that Enron will be able to sell either the power plant
or the Brazilian pipeline at a price that exceeds its book value of these assets.

  Should the OPIC and KFW $365 Million financing ultimately close, Enron may sell its interest in the Cuiaba Project to third
parties, subject to certain conditions and hold restrictions contained in the OPIC and KFW financing. Specifically, Enron must
maintain at least 25% ownership (direct or indirect) in each of the project companies and Enron and/or Shell must maintain
control (greater than 50%) of each of the project entities. Given the foregoing, Enron may sell down to a 25% interest in each
i .;. of the operating companies to a US domestic or foreign entity so long as Enron and/or Shell maintain control. Lender consent
would be required for Enron to completely exit the project and the buyer would need to be a US entity pursuant to OPIC's US
sponsorship requirements. In addition, Shell has a right of first refusal with respect to any sale by Enron of its interest in the
project entities.
s
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RAC Deal Approval Sheet

RISK MATRIX

Deal Name: Cuiaba Additional Equity II

DESCRIPTION	MITIGATION/COMMENTS
PPA is terminated	If the PPA is terminated due to a Furnas default, Enron has the
	option of retaining ownership or sell the plant to Furnas for
	approximately $360 Million. This creates approximately $211.5
	million of value for Enron's investment in this project relative to
	Furnas performing pursuant to the PPA. This is due to the lower
	discount rate of 11.5% used to calculate the damage and that only
	revenue is used for this calculation. Once the prepayment is made,
	Fumas/Eletrobras would be obligated to assume the project contract
	including the gas supply agreement. This process is likely to be
	contested by Furnas and involve a lengthy process with the decision
	ultimately being made by an arbitrator, in Paris, France, with the
	award being enforced by the Brazilian court.
Senior debt financing does not occur	Cost to obtain financing has been capitalized and is included in the
	$814.8 million budget. If P party financing is not achieved, such
	costs (total of $30.3 million) would have to be written-off .
Construction risk & continued cost overruns	All currently anticipated cost overruns of completing the project are
	captured in the capital request presented in this DASH. While
	additional overruns are not impossible, EPE and GasBol are
	complete. GasMat is 91% complete in terms of dollars expensed vs.
	dollars anticipated to complete.
	There were previously mechanical issues with the Siemens
	turbines. If gas is not supplied by year-end 2001, the Siemens
	performance guaranty will lapse.
Gas Supply	The Gas Supply Agreement is under renegotiation, if YPF does not
	react in a timely manner and/or is not willing to achieve a
	reasonable compromise, then Enron intends to terminate the
	contract and seek alternative suppliers. There are over 50 Tcf of
	certified reserves in Bolivia and only 7 tcf of market, however, in
	Bolivia, certified reserves includes probable reserves. Proved,
	uncommitted reserves total approximately 2.5 tcf and there are a
	limited number of producers with which to negotiate replacement
	supply. This project requires 428.7 Tcf over the 19 year PPA. The
	current contract price of $1.36 per MMBTU compares to current
	market price of $1.00 per MMBTU.
	Results of a solicitation for 6-month gas supply produced very
	favorable results and Enron has purchased a 12-year gas supply of
	lesser quantity at a very favorable price ($1.00 per MMBTU).
	There is a risk that YPF will initiate an arbitration process in the
	event Enron terminates the agreement.

E0004403915

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Deal Name: Cuiaba Additional Equity II

Partner funding	There will be a significant debate with Shell on who is responsible
	for the cost overruns. This DASH assumes that Shell will not fund
	any project expenditures above $621 million project budget that it
	approved in July 2000. Shell's position is that some of the
	proposed change orders are included in the EE&CC turnkey
	contract that was budgeted in total in the $621 million budget.
	Per the Shareholder Agreements, in the event that Enron/Shell can
	not agree on the Budget, the following occurs:
	 Brazilian project companies (EPE and GasMat): Shell
	percentage shall be reduced (I) the total amount contributed by
	Shell to such project entity divided by (II) the total amount
	contributed to such project entity by all its shareholders.
	 Bolivian project company (GasBol): Enron would fund
	the Shell portion of the increase via "Excess Shareholder
	Loans" that accrue interest at 16% per annum. The principal
	and interest shall be repaid by GasBol prior to any distributions
	to any shareholders (either dividends, repayment of capital,
	etc.)
Legal risk
it	
The legal risks with respect to the PPA with Furnas and the Shell
	funding are very significant, and the outcome is difficult to predict

KEY SUCCESS FACTORS

	NA	Poor Excellent
Core Business		X
Strategic Fit		X
U side/O tionalit		X
Management	NA	
Risk Mitigation		X

  OTHER RAC COMMENTS:

  This DASH request assumes Shell is unwilling to approve change orders over the $621 million project cost level. To the extent
that Shell balks at additional funding over this level, this DASH request is for the funding of EE&CC's construction loss or
;. EGA's increased project costs and owenership.

  Assuming no incremental capital contribution by Shell, the net present value of the project is a negative ($244,052,000) at a
capital cost of 22.0%. While the net present value is hugely negative, the present value of this incremental investment
decision is a positive $131,113,000. As well, depending on how the scope of change orders are interpreted by Shell and
~" Enron, EE&CC may be contractually obligated to finish the work.

  MILESTONES:
Complete pipeline on Ridge 10 July 11, 2001
>: Gas contract renegotiated September 21, 2001
 Pipeline mechanically complete September 21,2001
+ IBAMA operating license for GasMat October 6, 2001
   Gas available at plant November 11, 2001 E0004403916
 PPA status December 31, 2001
   Plant Commissioned on Gas January 10, 2002

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RAC Deal Approval Sheet

2

				
	APPROVALS	Name	Slgnatur	Date
1	Region Originator	Peter Weidler		Za o
	CEO - EGA	Rebecca McDonald	i Z-4 -A	
	EWS Legal	Mark Haedicke		
	RAC Management	Dave Gortc		

c.
~'	Enron Global Finance	Andy Fastow or Ben Glisan		
	Office of the Chairman	Jeffrey Skilling		

  ui

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C:\WMDOWS\TEMP\Cuioba DASH 010420.doc

Hpr 25 2UU1 1 :52 F.02

Deal Name: Culabd Additional Equity II

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  De*l Name. Cuisb6 Additional Equity IT

  tINKUI`I JUU I h HI"ItKII-H
N -kC De it Approval Sheet

	
	
	
	Y
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	O
. B
A
S
	Rel ion On ;inator
		CE,-?-EG b
	Lcga
,:	RA, 'Management
	
	Enr a Glok al Finance
	Offi'cof0:Chatrmut

  Name Signa u Dat
  Peter Weidler LQ a T
Rebecca M, Donald LU
Mark Hacdecke ?r
Dave Gone 40. a,:o-1
Andy Fastow or Ben Gltsan
Jeffrey Ski] lin ~lp

I V e- hc,{ e P.).

E0004403918

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  E d ELEOZEZ99ti 'ON/LI: 6 1 '1S/6I~61 10 OZ 191)
cv1..InnF_n1' 7 t

  Page 8

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~<s RAC Deal Approval Sheet
n

la

Deal 'Name: Cuiaba Additional Equity II

	APPROVALS
	Region Originator
	CEO - EGA
1ss
t!	
EWS Legal
	
	RAC Management
	Enron Global Finance
1	
Office of the Chairman

  Name
Peter Weidler
Rebecca McDonald

  Signatur Dal
z Z00

W

Mark Haedicke

Dave Gorte

Andy Fastow or Ben Glisan
Jeffrey Skilling

  See % O o,. P.1 .

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.NKIJN :,UU I H HMbKI LH I- ax : (1.5-b4b- (UI313

RAC Deal Approval Sheet

Global Finance Summary (addendum to DASH)

1. Transaction Summary

Total Deal/Project Capital Commitment through Completion
Less: Financings (OPIC/KfW project financing)
Less: Syndications
Net Enron Investment (funding to date plus future funding to Completion)

Hpr 2.5 2UU1 1,, :52 h . 01

Deal Name: Culabg Additional Equity II

  Amount (S millions)
$569.8

-0-

  $569.8

2. Investment terms and pricing: 0 Market 0 Above Market X0 Below Market
Describe (if necessary):
  (Investment returns below RAC capital pricing for Bolivia/Brazil investments.)

  3. Financing terms and pricing;  Market 0 Above Market 0 Below Market
  Describe (if necessary): OPIC (10.71%, 15 years). KfW three tranches (7.04%, 15 years, 7.48%, 15 years and 9.27%,
~" 11 years). Negotiations with the Lenders to extend their commitments until year end 2001 should be concluded favorably
by the end of April, 2001.

4. Legal or practical liquidity restrictions: 0 Unrestricted 0 Legally Restricted 0 Practically Restricted
Describe (if necessary): Enron to maintain 25% minimum hold in project (OPIC requirement) and Shell and Enron must
maintain control of project (OPIC/KfW requirement).

5. Any recourse to Enron (other than investment): 0 Recourse 0 No Recourse
Describe (if any): Debt becomes recourse to Enron (pursuant to put agreement) if replacement fuel arrangement
satisfactory to OPIC/KfW lenders is not dclivered before March 2003.

6a. Business unit Intent to syndicate; 0 None 0 Partial 0 All
Describe (if necessary): See "hold" comment below.

6b. Intended Enron hold period:
  Long-term hold in strategic project. Business unit may sell all or a portion of its investment in the Cuiab:t Integrated
Project. however, timing an amount of sell down unknown presently. To sell down below 25%, consent needed from
lenders (OPIC/KfW) and must be sold to party satisfying OPIC U.S. sponsorship requirements per charter.

6c. Likely Syndication Market: 0 Industry/Strategic Partner 0 Direct Private Equity
0 Capital Markets 0 JEDI 1
0 JEDI 2 0 Enserco
0 LJM 1 or 2 0 Condor
0 Other: OPIC/KFW 0 Margaux
S365 million

6d. Is this a JEDI 2 "Qualified Investment" 0 Yes X0 No
Global Finance Representative: ~' ''= IZ
  Signature Name (Printed) Date

Name: Peter Anderson

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  RAC Deal Approval Sheet Deal Name: Cuiaba Additional Equity II

  EXHIBIT I - PROJECT DESCRIPTION

Project Description:

The Cuiaba Project is an integrated energy project comprised of a 480MW gas-fired combined cycle power plant in the state of
Mato Grosso in Western Brazil and two connected pipeline segments totaling 641 km from Bolivia to Brazil which will supply
gas to the power plant. The integrated power plant and pipeline project consists of three individual project companies: (1) Gas
Oriente Boliviano (GasBol) - the Bolivian pipeline segment, (2) GasOcidente do Mato Grosso (GasMat) - the Brazilian
pipeline segment and (3) Empresa Produtora Energia (EPE) - the thermal power plant. Transredes, S.A. (TRSA) was originally
a participant in the project along with Enron and Shell, however given Transredes limited liquidity, they sold their interests to
Enron and Shell. Gas will be supplied to the plant by Transborder Gas Services (TBS) which has contracted for gas with YPF
and Transredes, GTB, GasBol, and GasMat for gas transportation.. Gas will be transported by the YABOG (Transredes) and
Bolivia-Brazil (GTB) pipelines and then by GasBol and GasMat to the plant.

The current ownership structure of the Cuiaba Project is shown below.

GasBol	GasMat	EPE	TBS
Enron 50.000%	56.250%	58.875%	72.500%
LJM 0.000%	0.000%	13.000%*	0.000%
Shell 50.000%	43.750%	28.125%	27.500%
Total 100.000%	100.000%	100.000%	100.000%

* Enron has entered into a definitive Agreement with UM to purchase its share for $13.2 MILLION plus cancellation of $19.3 MILLION in debt. Deal
expected to close bt May 30, 2001, but could close earlier pending receipt of right of first offer waiver from Shell.

  Pursuant to a 20 year PPA executed in May 1997 with Eletronorte and Eletrobras, 100% of EPE's output will be sold to
Furnas, a regional generating company owned by Eletrobras, which will in turn sell the power to Cemat, the local distribution IZO
'' company. In May 1999, the PPA was transferred directly to Furnas as part of the privatization process with no material W
I changes to the PPA. Fumas' obligations for tariff adjustments and revenue protection provided for in the PPA (including in
inflation and exchange rate adjustments) are guaranteed by Eletrobras.

The project is being constructed by Superior Construction Company, an Enron affiliate, under a single turnkey EPC contract
which guarantees the completion of the power plant and pipelines. The major subcontractor under the EPC contract is Siemens
A.G., which provided the two combustion turbines and one steam generator required. If the guaranteed capacity is not
available on due dates or capacity tests fail to reflect guaranteed levels as set forth in the PPA, EPE will become liable for
penalties for delay damages. Penalties are essentially offset by the guaranties for completion and performance contained in the
turnkey EPC contract.

As of 30 January 2001, combined cycle commissioning on diesel fuel to 480 MW was completed. It is foreseen that once
natural gas is available at the site Siemens will return to complete combined cycle commissioning on natural gas. That effort
scheduled to commence in November 2001 and will last an estimated sixty (60) days. Commencement of combined cycle
power operations on natural gas is schedule for January 2002. The Bolivian pipeline is 100% complete and line packed while
the Brazilian pipeline with the exception of the two remaining ridges is 100% complete. Gas is scheduled to arrive at the plant
in November 2001. The $365 Million of financing committed by OPIC and KFW remains available subject to the satisfaction
of several condition precedent's. The most problematic appears to be the Furnas' consent, referred to above, which at this
point has no resolution in sight. OPIC has confirmed that it is willing to begin closing due diligence at any point that we feel
that the issue with Furnas is moving to resolution.

  H:\Winword\2001\Cuiaba DASH 010420.doc

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  RAC Deal Approval Sheet

EXHIBIT II
Project Cost History

Deal Name: Cuiaba Additional Equity II

Original - November 1997

  EPE GasMat GasBol Total
Capital cost (USD 000) $ 280,000 $ 195,000 <included $ 475,000

July 1999

  EPE GasMat GasBol Total
Capital cost (USD 000) $ 345,000 $ 95,000 $ 133,000 $ 573,000

July 2000

  EPE GasMat GasBol Total
Capital cost (USD 000) $ 342,371 $ 124,218 $ 152,538 $ 619,127

December 2000

  EPE GasMat GasBol Total
Capital cost (USD 000) $ 323,487 $ 151,599 $ 166,787 $ 641,873

April 2001

  EPE GasMat GasBol Total
Capital cost (USD 000) $ 391,600 $ 232,900 $ 190,300 $ 814,800

EOO04403922

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EXH006-01378

li!
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E	
	RAC Deal Approval
	
	
	
	
	
	
	
:;	Turnkey and Change Orders
	Ridges
	Other Construction
	Financing Costs/Legal/Insurance
	Development Costs/Mobilization
	Spare Parts
_	Diesel Burned
1r	Contingency
	Total
	
	
	
	
	
	
	
	
	
	H:\W inword\2001 \Cu i ab
EXH006-01379

Sheet

EXHIBIT III
Construction Budget

Deal Name: Cuiaba Additional Equity II

Cuiaba Integrated Power Project
Summary Construction Budget
(US$ millions)

Approved Budget @ 12-12-2000

EPE	GasMat	GasBol	
M	M		Total
$245.9	$87.8	$115.9	$449.5
$0.0	$22.2	$0.0	$22.2
$10.4	$20.7	$27.7	$58.8
$72.3	$19.0	$19.0	$110.3
$20.1	$6.9	$8.7	$35.7
$4.6	$0.1	$0.1	$4.8
$6.6			$6.6
$00
S359.9	$00
5156,	$00
5171.4	$0-0
$688 0

	This Request	
EPE	GasMat	GasBol	
		M	Total
$258.8	$121.6	$121.8	$502.2
$0.0	$41.0	$0.0	$41.0
$16.0	$33.9	$34.9	$84.8
$73.5	$22.7	$18.5	$114.6
$27.3	$8.7	$6.6	$42.6
$4.5	$0.1	$0.1	$4.7
$10.1	$0.0	$0.0	$10.1
$1.3
5391.6	$4.0
S231.9	$1.6
5183.5	$7.0
5807.0

	Increase		
EPE	GasMat	GasBol		
$$$	M	M	Total	
$13.0	$33.8	$5.9	$52.7	
$0.0	$18.8	$0.0	$18.8	
$5.6	$13.1	$7.2	$25.9	
$1.3	$3.6	($0.5)	$4.4	
$7.1	$1.8	($2.0)	$6.9	
($0.1)	$0.0	$0.0	($0.1)	
$3.5	$0.0	$0.0	$3.5	
				O
				
				
$31.7	$75.2	5121	$119.0	

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  RAC Deal Approval Sheet

Deal Name: Cuiaba Additional Equity II

EXHIBIT IV - Budget Changes/Reconciliation
Cuiaba Integrated Project
Construction Budget reconciliation
$688 Budget to $807 Budget
(US$- Millions)

Construction Budget of 12/12/01
Change Orders

  Tax Adjustments
FX Savings
Ridges

  Diesel Burned
Owners Engineer
Right of Way/ Legal
Financing Delays
  Owner Pesonnel Standby Costs
Additional Construction Costs
Environmental Costs

  Consultant Fees
Mobilization/ Startup Costs
Contigency

  Total Increase
Budget to Complete

$33.40
14.7

  4.6
18.8

25.7
5

4.2
5.8
7

$687.80

  $119.20
$807.00

E0004403924

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EXH006-01380

Page 13

V-
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AGENDA ITEM 5(e)
(SUGGESTED FORM OF RESOLUTIONS)

  WHEREAS, the Committee approved on November 14,
1997 that certain wholly-owned subsidiaries of the Enron
South America LLC ("ESA"), including Enron do Brazil
Holdings Ltd. and Enron Brazil Power Holdings I Ltd. (the
"Project Participants") participated with Shell Cuiaba Holdings
Ltd. and Shell Gas (Latin America) B.V. in the development
and ownership of a 480-megawatt independent power plant in
Cuiaba, Brazil and a 641 km pipeline from Bolivia to Brazil, the
Cuiaba Integrated Energy Project (the "Cuiaba Project or the
"Project"); and

  WHEREAS, the Committee authorized on September
24, 1999 the Company or its designated affiliate to sign
financing documents related to the Cuiaba Project;

  WHEREAS, the Committee approved on August 8,
2000 the guarantees required by the lenders in connection
with the financing of the Cuiaba Project;

  WHEREAS, the Committee approved on December 12,
2000 spending of additional equity funds for an aggregate total
equity investment in the Cuiaba Project by ESA and/or its
affiliates in the amount of US$441,174,000.00 prior to financial
close and a permanent equity investment in the Cuiaba
Project by ESA and/or its affiliates in the amount of
US$227,460,000.00 from and after financial close;

  WHEREAS, the construction of the Cuiaba Project is
almost complete;

  WHEREAS, due to certain construction delays and cost
related overruns related to environmental matters, the Cuiaba
Project will require additional equity funding to complete
construction prior to financial closing;

k__ , NOW, THEREFORE, IT IS RESOLVED, that ESA and
its affiliates are authorized to spend additional equity funds
required for the completion of the Cuiaba Project in the
s amount of US$45,600,000.00 as Enron's contribution and in
11

E0004403925

=XH006-01381


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  ' the amount of US$82,800,000.00 in the event Shell does not
participate in the increase, for an aggregate total equity
investment in the Cuiaba Project by ESA and/or its affiliates in
the amount of US$569,600,000.00 prior to financial close;

  RESOLVED FURTHER, that the directors, officers, and
attorneys-in-fact of the Company and the Project Participants
are hereby authorized, empowered, and directed (any one of
them acting alone) to take any and all such actions necessary
to execute and deliver all instruments and documents in
support the Cuiaba Project, under corporate seal or otherwise,
and to pay all such expenses as in their discretion appear to
be necessary, proper, or advisable to carry into effect the
purposes and intentions of this and each of the foregoing
resolutions and that all actions heretofore taken by the
directors, officers, and attorneys-in-fact of the Company and
the Project Participants with respect to the transactions
contemplated above be, in all respects, approved, confirmed,
and ratified.

  RESOLVED FURTHER, that the proper officers of the
Company and its counsel be, and each of them hereby is,
authorized, empowered, and directed (any one of them acting
alone) to take any and all such further action, to amend,
execute, and deliver all such further instruments and
documents, for and in the name and on behalf of the

  Company, under its corporate seal or otherwise, and to pay all
9 such expenses as in their discretion appear to be necessary,
  proper, or advisable to carry into effect the purposes and
intentions of this and each of the foregoing resolutions.

E0004403926

=XH006-01382


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=============

  Agenda Item 5f
m
  C)

EXH006-01383


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=============

77
j

Divestiture of CEG/CEG-Rio Gas LDCs

Presentation to the Enron Corp. Finance Committee
April 30, 2001

E0004403928

5F-1

EXH006-01384


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=============

CEG/CEG-Rio

 Enron acquired its interest i

n CEG/C G-Rio

gas LDCs in July 1997

through participation in a consortium including Gas Natural,
Iberdrola,and Pluspetrol

 Consortium was the winning bidder in the privatization of the gas
distribution companies that held the concessions for the state of
Rio de Janeiro, Brazil
 Enron, total cash investment = US$266.5 MM

 Enron held an open auction process for the Brazilian gas LDCs in
November, 2000 (CEG/CEG-Rio + Gaspart). Eight multinational
energy companies participated in the auction
 Petrobras only company to offer an expression of interest for
CEG/CEG-Rio

 Negotiated PSA with Petrobras to sell Enron's interest for US$241MM
plus relinquishment of Petrobras' rights of first refusal over Enron's
shares in the Gaspart LDCs (relinquishment valued by CSFB at $40 -

$60MM)

E0004403929

5F-2

EXH006-01385


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=============

Financial Impact

 Balance Sheet As of December 31, 2000:

Initial Investment	$266.5 MM
Equity Earnings	6.4 MM
Goodwill Amortization	~.12MM
Book Value	$269.8 MM
Cumulative Translation Adj.	118.1 MM
Equity Net of CTA	$151.7 MM

 Income Statement Impact of Sale
  Basis $269.8 MM
Sale Price 241.0 MM
Loss on Sale $ 28.8 MM

E0004403930

5F-3

EXH006-01386


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rI
AGENDA ITEM 5(f)
(SUGGESTED FORM OF RESOLUTIONS)

  WHEREAS, Enron Corp. (the "Company ") has substantially
finalized negotiations for a definitive Purchase and Sale Agreement
(the "Share Purchase Agreement"), between the Company, as
Parent, and Petroleo Brasileiro S.A. - Petrobras ("Petrobras"), as
Acquiror, to be additionally joined by Enron International Brazil Gas
Holdings LLC, a Delaware limited liability company and indirect
subsidiary of Enron, as Seller, and Brasperno Oil Service Co. -
Brasoil, a Cayman Islands company and a subsidiary of Petrobras,
as Buyer;

  WHEREAS, the Share Purchase Agreement provides for the
`! purchase and sale of 100 % of the outstanding securities (the
  "Securities") of Enron International Brazil Gas Holdings Ltd., a
Cayman Islands company, and Enron International Brazil 1997 Ltd.,
Cayman Islands subsidiaries of the Company, which together, own
through other subsidiaries all of the Company's direct and indirect
equity interests in Companhia Distribuidora de Gas do Rio de
`~ Janeiro - CEG ("CEG") and CEG Rio S.A ("CEG-Rio"); `
T~ WHEREAS, CEG and CEG-Rio are the Brazilian companies
  that hold the natural gas distribution franchises for the city and state,
respectively, of Rio de Janeiro, Brazil; and

  WHEREAS, Enron desires to sell the Securities for a cash
purchase price of US $241 Million and other consideration set forth
or to be set forth in the Share Purchase Agreement under the terms
set forth or to be set forth therein, as such terms are finally
negotiated and agreed pursuant to this Resolution, and to take all
other actions required or appropriate in connection with the
effectuation of such sale of the Securities;

  NOW, THEREFORE, IT IS RESOLVED, that the Board of
Directors hereby approves the form, terms and provisions of the
Share Purchase Agreement and hereby authorizes the Authorized
Officers (as hereinafter defined) to execute and deliver, for, in the
name and on behalf of the Company, the Share Purchase
`' Agreement with such changes therein to reflect final negotiation of
the terms thereof as the officers executing the same shall approve,
their execution of the Share Purchase Agreement (the "Definitive

E0004403933

=XH006-01387


=============
Page 193 of 208
=============

  Share Purchase Agreement") to be conclusive evidence of such
approval; and

  RESOLVED, FURTHER, that the Office of the Chairman be,
and hereby is, authorized, empowered and directed in the name and
on behalf of the Company, (i) to complete the negotiations of the
terms of the Share Purchase Agreement, (ii) to determine the final
terms and conditions of the Definitive Share Purchase Agreement,
(iii) to approve the sale of the Securities upon the final terms and
conditions of the Definitive Share Purchase Agreement, and (iv) to
authorize and approve any and all further actions that may be
required or appropriate to be taken by the Company and/or its
relevant subsidiaries and controlled affiliates, as contemplated the
Definitive Share Purchase Agreement; and

  RESOLVED FURTHER, that the Office of the Chairman be,
and hereby is, authorized, empowered, and directed in the name
and on behalf of the Company, under its corporate seal or
otherwise, to take such further actions as it shall deem necessary or
appropriate, including, without limitation, the authority and power to
  f approve the execution of such other agreements, documents or
instruments as are contemplated to be executed and delivered by
the Definitive Share Purchase Agreement or are deemed necessary
or appropriate to sell the Securities under the terms and conditions
of the Definitive Share Purchase Agreement; and

  RESOLVED FURTHER, that the Chairman of the Board, the
Vice Chairman of the Board, the President, any Vice President, any
Managing Director, the Treasurer, or any Assistant Treasurer of the
Company (the "Authorized Officers") be, and each such Authorized
Officer hereby is (any one of them acting alone), authorized in the
name and on behalf of the Company to take or cause to be taken
such action as such Authorized Officer may deem necessary or
desirable in connection with the performance by the Company of its
obligations under the Definitive Share Purchase Agreement or any
other agreement, document, or instrument related to the transaction
contemplated by these Resolutions; and

  RESOLVED FURTHER, that all actions heretofore taken by
-1 any officer of the Company, related to or in connection with the
  transactions contemplated by these Resolutions, including without
limitation the execution, delivery, and performance of any of the
agreements referred to above or any guaranties, instruments, or

E0004403934

EXH006-01388


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=============

  other documents as any such Authorized Officer shall have deemed
necessary, proper, desirable or advisable in connection with the
Share Purchase Agreement or the Definitive Share Purchase
Agreement, are hereby adopted, ratified, confirmed, and approved
in all respects; and

  RESOLVED FURTHER, that the Authorized Officers of the
Company be, and each of them hereby is, authorized, empowered,
  l and directed (any one of them acting alone) to take any and all such
further actions, to amend, execute, and deliver all such further
instruments and documents, for and in the name and on behalf of
the Company, under its corporate seal or otherwise, and to pay all
such expenses as in their discretion appear to be necessary, proper,
or advisable to carry into effect the purposes and intentions of this

and each of the foregoing premises and Resolutions.

r

E0004403935

EXH006-01389


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=============

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Agenda Item 5g


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=============

  Project Red Rock

Enron Transportation Services
Presentation to the Enron Corp. Finance Committee
April 30, 2001

5G-1 E0004403937

EXH006-01391


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Page 197 of 208
=============

.
..,..J .. . _ _ .r
  L- L

Transwestern Pipeline Company
Red Rock Expansion

 California market currently short on pipeline capacity.

 Transwestern is proposing a 150,000 MMBtu/d expansion from
various input points to markets in California or near the
California border.

 Expansion will be accomplished by adding 4 compressors to
existing, pipeline.

 Increases Transwestern's west capacity to #-~69;6A9-~a--
0 MMBtu/d.

5G-2

E0004403938

EXH006-01392


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=============

L. U.

Timeline

 Open Season Conducted in November 2000

 FERC Filing in March, 2001

 Current Status:
-Negotiating Contracts
  -Accepting Definitive Bids for Capacity

 Expect Contract Completion in 60 Days

 Expected In Service Summer 2002

5G-3 E0004403939

EXH006-01393


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=============

Potential Load	
Open Season	& Contract	Negotiations
Company	Amount	Pr_ ice_	Term
	(MMBtu/d)		
Pennsylvania Power & Light	8,000	.35	30 yrs.
	12,000	.40	30 yrs.
Western Gas Resources	5,000	.38	15 yrs
	5,000	.39	15 yrs
Dynegy	30,000	.55	5 yrs
Calpine	90,000		
SoCal	50,000		

E0004403940

5G-4

EXH006-01394


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=============

Recommendation

Delegate authority to Jeff Skilling to Approve
Transwestern's $95 million Red Rock expansion
subject to successful completion of contract
negotiations.

E0004403941

5G-5

EXH006-01395


=============
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=============

r-=

AGENDA ITEM 5(g)
(SUGGESTED FORM OF RESOLUTIONS)

  WHEREAS, Transwestern Pipeline Company, a company
incorporated under the laws of the State of Delaware ("TW") and an
indirect, wholly-owned subsidiary of the Company, has made an
application to the Federal Energy Regulatory Commission,
requesting permission and approval to: (1) abandon certain
compressor station facilities and (2) construct and operate certain
compressor station facilities all located within the state of Arizona,
thereby creating incremental mainline capacity to the California
border;

  WHEREAS, TW proposes to abandon in-place the existing
units at Station 1 through Station 4 and to install one nominally ISO
rated 41,500 horsepower unit at each compressor station, which are
all located within the state of Arizona, and as a result of the
proposal, TW will be able to flow 150,000 Mcf per day (Mcf/d) of
incremental firm capacity on its mainline from Thoreau to California,
increasing its total capacity to the California border to 1,240,000
Mcf/d, with compressor units in-service by June 1, 2002, and with
anticipated costs totaling $95, 000,000 (the "Redrock Expansion" or LO
the "Project");

  WHEREAS, as a condition to the commencement of
construction on the Project TW anticipates having in place
transportation service agreements with projected revenues covering
100% of the Project costs (the "Service Agreements");

  WHEREAS, various affiliates of the Company may in the
future enter into agreements with TW pursuant to which such
affiliates have provided and/or will provide goods and/or services for
purposes of the Redrock Expansion or may purchase services from
TW as set forth in such agreements (each such agreement, an
"Affiliate Agreement"). Such Affiliate Agreements include but are not
limited to the following:

  a. Operation and Maintenance Agreements related to the
Project;
  b. Fuel Management Agreements; and
c. Construction Service Contracts;

E0004403942

EXH006-01396


=============
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=============

r

  WHEREAS, the Company, through its affiliates, currently
-<; owns a controlling interest in TW, and such ownership will benefit,
directly or indirectly, the Company;

  NOW, THEREFORE, IT IS RESOLVED, that the Company
be, and it hereby is, authorized to take such action as the
appropriate officers of the Company deem necessary or desirable in
connection with the completion and commissioning of the Project,
subject to the following conditions: (1) that the terms and conditions
of the Service Agreements shall have been approved by Jeffrey K.
Skilling, or any officer or agent of the Company authorized by him to
grant such approval, and (2) TW having executed the Service
Agreements;

  RESOLVED FURTHER, that the Chairman of the Board, the
Vice Chairman of the Board, the President, any Managing Director,
any Vice President, the Chief Financial Officer, the Treasurer or any
Deputy Treasurer of the Company be, and each of them hereby is,
authorized in the name and on behalf of the Company, under its
corporate seal or otherwise, to take such action and to do all things
that may appear to be reasonably necessary, in the sole discretion
of any of such officers, to undertake, effectuate and carry out the
completion and commissioning of the Project, insofar as such action
or things relate to the Company, including without limitation, the
authority and power to negotiate, execute, deliver, amend, perform,
and consummate the agreements described above and such other
agreements, instruments, or documents as such officer may deem
necessary or desirable to carry out the purpose and intent of the
foregoing premises and resolutions, in such forms as shall be
approved by the officer executing the same, such approval to be
conclusively evidenced by the execution thereof by such officer;

  RESOLVED FURTHER, that all actions heretofore taken by
any officer of the Company, related to or in connection with the
transactions contemplated by these resolutions, including without
limitation the execution and delivery of any of-such instruments or
other documents as any such officer shall have deemed necessary,
proper, or advisable, are hereby adopted, ratified, confirmed and
approved in all respects; and

  RESOLVED FURTHER, that the proper officers of the
Company and its counsel be, and each of them hereby is,
authorized, empowered, and directed (any one of them acting alone)

E0004403943

EXH006-01397


=============
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=============

  to take any and all such further action, to amend, execute, and
deliver all such further instruments and documents, for and in the
name and on behalf of the Company, under its corporate seal or
otherwise, and to pay all such expenses as in their discretion appear
to be necessary, proper, or advisable to carry into effect the
77
  purposes and intentions of this and each of the foregoing premises
and resolutions.

E0004403944

EXH006-01398


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=============

Agenda Item 6

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  Other Business

E0004403946

6-1

EXH006-01400


=============
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=============

  Agenda Item 7
m
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EXH006-01401


=============
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=============

~-

  Adjourn

E0004403948

7-1

EXH006-01402


=============
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=============

EXH006-01403

		Page
1. Approval of February 12, 2001 Finance Minutes subject to final legal review	Mr. Winokur	1-1
2. Financial Reports		2-1
A) Chief Financial Officer Report	Mr. Fastow	2A-1
B) Deputy Treasurer Nomination Discussion		2B-1
3. Treasurer Report	Mr. Glisan	3-1
4. Chief Risk Officer Report	Mr. Buy	4-1
Quarterly Risk Update		
- Enron's Assets		4-2
- Trade Credit Update		4-3
- Investment Portfolio		4-11
- Enron Energy Services		4-16
- Market Risk Update		4-23
5. Projects and Amendments		5-1
A) Revision to the Risk Management Policy	Mr. Buy	5A-1
- Approve for Recommendation to the Board		
B) Revision to the Transaction Approval Process	Mr. Buy	5B-1
- Approve for Recommendation to the Board		
C) Minority Financing Vehicle	Mr. Causey	5C-1
- Approve for Recommendation to the Board		
D) Las Vegas Cogen II	Mr. Calger	5D-1
- Approve for Recommendation to the Board		
E) Cuiaba Integrated Energy Project	Ms. McDonald	5E-1
- Approve for Recommendation to the Board		
F) CEG Rio Divestiture	Mr. Stabler	5F-1
- Approve for Recommendation to the Board		
G) Project Red Rock	Mr. Horton	5G-1
- Approve for Recommendation to the Board		
6. Other Business		6-1
7. Adjourn EOO04403950		71

See Addendum for Deal Approval Sheets approved between Bo	
ard meetincis	a