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					  Enron Annual Report /

											E0aa002648538

a

GOVERNMENT
 EXHIBIT
  4592
 CriniNo H 04-0025



								 ECaaOO2648539

Enron manages efficient, flexible networks to reliably deliver physical products at
	    predictable prices. In 2000 Enron used its networks to deliver a record
	    amount of physical natural gas, electricity, bandwidth capacity and
	    other products. With our networks, we can significantly expand our
	      existing businesses while extending our services to new markets
		with enormous potential for growth.

       FINANCIAL HIGHLIGHTS
       LETTER TO SHAREHOLDERS
       ENRON WHOLESALE SERVICES
       ENRON ENERGY SERVICES
       ENRON BROADBAND SERVICES
       ENRON TRANSPORTATION SERVICES

  FINANCIAL REVIEW
 2 OIJR VALUES
$4 BOARD OF DIRECTORS
$~i ENRON CORPORATE POLICY COMMITTEE
SL~ SHAREHOLDER INFORMATION



	    FINANCIAL HIGHLIGHTS

(Unaudited: in million,, except per share data)

2000         1999

1998        1997

								     $100,789      $40,112     $31,260      $20273      $13,289

Net income:
  Operating results
  Items impacting comparability
Total

Earnings per diluted conunon share:
  Operating results
  Items impacting comparability
Total

Dividends paid per conimon share

Total assets

$    1.286
     (287)
$    979

    1.47
     (0.35)
~    1.12

S    0.50

$ 65.503

957
(64)
893   -

118
(0.08)
1.10

698          515
  5         (410)
703          105

1.00
0.01
1.01

0 87
(0.71)
0.16

0.50         0.48        0.46         0.43

33,381       29,350       22,552

Cash from operating activities
(excluding working capital)

Capital expenditures and equity investments

$   3,010

$   3.314

2.228

3.085

1,873

3,564

275          742

2,092

1.483

NYSE price range
  High
  1.0w
  Close December 31

	   40 1
      31 3

203

p..
 97    98  99
(Sin billions)

REVENUES

100.3

00

$     90'.4,       447.        297.
      417.         287.        19'An
      83~4         447.        28"As

iii
.11
       U..
 99    00
 Earnings Pm
-5-
 Ii, dollars)

1,415%

If
99     00
  I-
Is in rmIlin~

O9ERA11NG RESULIS

(9%)
SW
500
 One Year

89%       129%

Enroot     S&P
	   500
	   Five Years

CUMLEAliVE TOTAL RETURN
(though December 31,2000)

350%      383%

	  p..
Enrot,    Sap
	  500
	    ten Years

Enroot

								      ECaaOO264854O

Revenues

1996

493
 91
584

0.91
0.17
1.08

16,137

23 'A
17 ~4.
21 'A.

22 Vs
17 'A
20 "A,

L



       TO OUR SHAREHOLDERS
		 o          00             b    y     u   is   o    edo

       outdistdnce the
       competition
       a; YJ solidify (11ff leadership) iii eat/i ot (10! roaftiT biJSIIiOSSQ&. (tI 0(11 largest business,
       wholesale services, we experienced an enormous increase of 59 percent in physical
       energy deliveries. Our retail energy binness achieved irs highest level ever of total
       con tract va/Lie. Our newest bushess, broadband services, significantly accelerated
       trari.sacflori activity and our oldest business, the interstate pipelines, registered
       increaser.] c.Yarnings. 7/in company & net income reached a record $ 1.3 tnlliofl IPi 2000.

    Enron has built unique and strong businesses
that have tremendous opportunities for growth.
These businesses - wholesale services, retail energy
services, broadband services and transportation
services - can be significantly expanded within
their very large existing markets and extended
to new markets with enormous growth potential.
At a minimum, we see our market opportunities
company-wide tripling over the next five years.
    Enron is laser-focused on earnings per share,
and we expect to continue strong earnings per-
formance. We will leverage our extensive business
networks, market knowledge and logistical exper-
tise to produce high-value bundled products for an
increasing number of global customers.
Competitive Advantages
    Our targeted markets are very large and are
undergoing fundamental changes. Energy deregu-
lation and liberalization continue, and customers
are driving demand for reliable delivery of energy
at predictable prices. Many markets are experienc-
ing tighter supply, higher prices and increased
volatility, and there is increasing interdependence
within regions and across commodities. Similarly,
the broadband industry faces issues of overcapacity
and capital constraint even as demand increases for

faster, flexible and more reliable connectivity. Enron
is in a unique position to provide the products and
services needed in these environments. Our size,
experience and skills give us enormous competitive
advantages. We have:
* Robust networks of strategic assets that we own
 or have contractual access to, which give us
 greater flexibility and speed to reliably deliver
 widespread logistical solutions.
* Unparalleled liquidity and market-making abilities
 that result in price and service advantages.
* Risk management skills that enable us to offer
 reliable prices as well as reliable delivery.
* Innovative technology such as EnronOnline to
 deliver products and services easily at the lowest
 possible cost.
    These capabilities enable us to provide high-
value products and services other wholesale service
providers cannot. We can take the physical compo-
nents and repackage them to suit the specific needs
of customers. We treat term, price and delivery as
variables that are blended into a single, compre-
hensive solution. Our technology and fulfillment
systems ensure execution. In current market envi-
ronments, these abilities make Enron the right
company with the right model at the right time.

								      ECaaOO2648541



The Astonishing Success of EnronOnline
    In late 1999 we extended our successful busi-
ness model to a web-based system, EnronOnline.
EnronOnline has broadened our market reach,
accelerated our business activity and enabled us
to scale our business beyond our own expectations.
By the end of 2000, EnronOnline had executed
548,000 transactions with a notional value of $336
billion, and it is now the world's largest web-based
eCommerce System.
    With EnronOnline, we are reaching a greater
number of customers more quickly and at a lower
cost than ever- It's a great new business generator,
attracting users who are drawn by the site's ease of
use, transparent, firm prices and the fact that they
are transacting directly with Enron. In 2000 our
total physical volumes increased significantly as a
direct result of EnronOnline.

    EnronOnline has enabled us to scale quickly,
soundly and economically, Since its introduction,
EnronOnline has expanded to include more than
1.200 of our products, It also has streamlined our
back-office processes, making our entire operation
more efficient, It has reduced our overall transaction
costs by 75 percent and increased the productivity
of our commercial team by five-fold on average,
We are not sitting still with this important new
business tool - in September 2000 we released
EnronOnline 2,0, which added even more customer
functionality and customization features and
attracted more customers,
Enron Wholesale Services
    The wholesale services business delivered
record physical volumes of 51,7 trillion British
thermal units equivalent per day (TBtue/d) in 2000,
compared to 32,4 TBtue/d in 1999, As a result,

wholesale services income before interest, minority
interests and taxes (IBIT) increased 72 percent to $2.3
billion. Over the past five years, as physical volumes
have increased, wholesale IBIT has grown at a com-
pounded average annual rate of 48 percent, and we
have had 20 consecutive quarters of year-over-year
growth. We have established core wholesale busi-
nesses in both natural gas and power in North
America and Europe, where we are market leaders.
    In North America, we deliver almost double
the amount of natural gas and electricity than the
second tier of competitors. Our network of 2.500
delivery points provides price advantages, flexibility
and speed-to-market in both natural gas and power
Natural gas, our most developed business, has seen
substantial volume growth throughout the United
States and Canada, In 2000 our physical natural gas
volumes were up 77 percent to 24,7 billion cubic feet
per day (Bcfld), Physical power volumes were up 52
percent to 579 million megawatt-hours (MWh),
    We are building a similar, large network in
Europe. In 2000 we marketed 3-6 Bcf/d of natural gas
and 53 million MWh in this market, a vast increase
over 1999, As markets open, we tenaciously pursue
the difficult, early deals that break ground for
subsequent business. We are the only pan-European

player, and we are optimizing our advantage to
conduct cross-border transactions,
    We are extending Enron's proven business
approach to other markets, and integrating
EnronOnline into all our businesses as an accelera-
tor, Our growth rates are rising in areas such as
metals, forest products, weather derivatives and coal,
We expect these businesses to contribute to earnings
even more significantly in 2001,
Enron Energy Services
    Our retail unit is a tremendous business that
experienced a break-out year in 2000, We signed
contracts with a total value of $16.1 billion of cus-
tomers' future energy expenditures, almost double
the $8.5 billion signed in 1999, We recorded increas-
ing positive earnings in all four quarters in 2000. and
the business generated $103 million of recurring BIT.
Energy and facilities management outsourcing is

				   ECaaOO2648542



now a proven concept, and we've established a
profitable deal flow, which includes extensions of
contracts by many existing customers. Price volatility
in energy markets has drawn fresh attention to our
capabilities, increasing demand for our services. No
other provider has the skill, experience, depth and
versatility to offer both energy commodity and
price risk management services, as well as energy
asset management and capital solutions. In 2001
we expect to close approximately $30 billion in
new total contract value, including business from
our newest market, Europe.
Enron Broadband Services
    We have created a new market for bandwidth
intermediation with Enron Broadband Services. In
2000 we completed 321 transactions with 45 coun-

			     51.7

		  273

		  II                0 Electricity
				    tr Oilier

		  Q,,,)     K))      Natural Gas
		  98     99   00
	    WHOLESAlE SERVICES - PrnSICAI VOUiWS
	    (trillion British thermal irks equivalent pe day)

terparties. We are expanding our broadband inter-
mediation capabilities to include a broad range of
network services, such as dark fiber, circuits, Internet
Protocol service and data storage. Our opportunities
are increasing commensurately.
    Par of the value we bring to the broadband
field is network connectivity - providing the
switches, the network intelligence and the inter-
mediation skills to enable the efficient exchange
of capacity between independent networks. We
operate 25 pooling points to conned independent
third-parties - 18 in the United States, six in
Europe and one in Japan. At least 10 more are
scheduled to be completed in 2001.
    Enron also has developed a compelling
commerical model to deliver premium content-on-
demand services via the Enron Intelligent Network.
Content providers want to extend their established

businesses and offer viewers at home an additional
convenient way to choose and receive entertain-
ment. Enron provides the wholesale logistical services
that bridge the gap between content providers and
last-mile distributors. Full-length movies-on-demand
service has been successfully tested in four U.S.
metropolitan markets.
Enron Transportation Services
    The new name for our gas pipeline group accu-
rately reflects a cultural shift to add more innovative
customer services to our efficient pipeline operation.
To serve our customers more effectively, we are
increasingly incorporating the web into those rela-
tionships. Customers can go online to schedule nomi-
nations and handle inquiries, and they can transact
for available capacity on EnronOnline. The pipelines

16.1

I

       85

   3

ENRON ENERGY SERVICES -
VALUE OF CONTRACTS ORIGINAITI)
($ in billions)

continued to provide strong earnings and cash flow
in 2000. Demand for natural gas is at a high in the
United States, and we're adding capacity to take
advantage of expansion opportunities in all markets.
New capacity is supported by long-term contracts.
Strong Returns
    Enron is increasing earnings per share and
continuing our strong returns to shareholders.
Recurring earnings per share have increased
steadily since 1997 and were up 25 percent in
2000. The company's total return to shareholders
was 89 percent in 2000. compared with a negative
9 percent returned by the S&P 500. The 10-year
return to Enron shareholders was 1,415 percent
compared with 383 percent for the S&P 500.
    Enron hardly resembles the company we were
in the early days. During our 15-year history, we have
stretched ourselves beyond our own expectations.

								      ECaaOO2648543



		      We have metamorphosed from an asset-based
		      pipeline and power generating company to a
		      marketing and logistics company whose biggest
		      assets are its well-established business approach
		      and its innovative people.
			   Our performance and capabilities cannot be
		      compared to a traditional energy peer group. Our
		      results put us in the top tier of the world's corpora-
		      tions. We have a proven business concept that is
		      eminently scalable in our existing businesses and
		      adaptable enough to extend to new markets.
			   As energy markets continue their transforma-
		      tion, and non-energy markets develop, we are
		      poised to capture a good share of the enormous
		      opportunities they represent. We believe wholesale
		      gas and power in North America, Europe and Japan

						  380
					    351

					     98   99    00
				       ENRON TRANSPORTATION SERVICES
				       REPORTED INCOME BEFORE INTER! ST AND TAXES
				       (S in nijilionsl

								   Enroncnline will accelerate their growth. We plan
								   to leverage all of these competitive advantages to
								   create significant value for our shareholders.

										   7<
								   ,4;~5V

								   Kenneth L. Lay
								   Chairman

					   $~ t

						    A

								   Jeffrey K. Skilling
								   President and
								   Chief Executive Officer

		       will grow from a $660 billion market today to a
		       $1.7 trillion market over the next several years.
		       Retail energy services in the United States and
		       Europe have the potential to grow from $180 billion
		       today to $765 billion in the not-so-distant future.
		       Broadband's prospective global growth is huge -
		       it should increase fromjust $17 billion today to
		       $1.4 trillion within five years.
			   Taken together, these markets present a $3.9
		       trillion opportunity for Enron, and we havejust
		       scratched the surface. Add to that the other big
		       markets we are pursuing - forest products, metals,
		       steel, coal and air-emissions credits - and the
		       opportunity rises by $830 billion to reach nearly
		       $4.7 trillion.
			   Our talented people, global presence, finan-
		       cial strength and massive market knowledge have
		       created our sustainable and unique businesses.

												       ECaaOO2648544

391

236

	     59

	233
  3

  10    20   30    40
ENRON BROADBAND SERVICES -
2000 BANDWIDTh TRANSACTiONS



			      When customers do business with
			    Enron, they get our commitment to reli-
			    ably deliver their product at a predictable
			    price, regardless of the market condition,
			      This commitment is possible because
			    of Enron 's unrivaled access to markets
			    and liquidity We manage flexible net-
			    works with thousands of delivery points,
			    giving us multiple options and a distinct
			    senhice advantage.
			      Our extensive daily market activity
			    keeps us on top of price movements, so
			    we can manage our customers' price risk.
			    We offer a multitude of predictable pric-
			    ing options.
			      Market access and information allow
			    Enron to deliver comprehensive logistical
			    solutions that work in volatile markets
			    or markets undergoing fundamental
			    changes, such as energy and broadband.
			      This core logistical capability led to
			    our best year ever in 2000 because physi-
			    cal volumes drive our wholesale profits.
			    We see ample opportunities for further
			    volume growth in existing and new mar-
			    kets. Enron's ability to deliver is the one
			    Constant in an increasingly complex and
			    competitive world

								     ~nron bIendN thow toPt oinmon%
								     to deliver premium tdgiabc2i so/v

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EVEgYT! I ~ CHANGES BUT US



       0~echnoIogy Advantages
	  * Information systems quickly distribute
	    real-time information.
	    EnronOnline extends Enron's reach to
	    increase volumes and market share.
	  * Enrons sophisticated systems track
-           prices, register exposures and monitor
	    customer Credit.

			      4-:?

* Enron allows customers to choose the
 optimal way to set a piedictable price.

4

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	  / ~.

-       ~xtensive Market Networks
	   * Enron manages large, flexible networks
	    of assets, contracts and services that
	    provide unrivaled liquidity.
	    Liquidity allows Enron to move products
	    in and out of markets so it can maximize
	    opportunity and margins.
	   * Because it has broad physical access,
	    Enron reliably executes contracts.

       E'~caIabIe Fulfillment
	   * ErronOnline integrates seamlessly into
	    delivery fulfillment systems, reducing
	    transaction costs.
	   * Existing systems scale readily as
	    volumes increase.
	   * Standardized legal and tax compliance
- ,         speed business.
	    Systematic risk assessment and control
	    protect Enron.
			       4<

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ENRON WHOLESALE SERVICES
    Wholesale services is Enrons largest and fastest
growing business, with sustainable growth oppor-
tunities in each of its markets. In 2000 income before
interest, minority interests and taxes (IBIT) rose 72
percent to $2.3 billion, with record physical energy
volumes of 51.7 trillion British thermal units equiv-
alent per day (TBtueld) - a 59 percent increase
over 1999.
    For the past five years, wholesale services
earnings have grown at an average compounded
growth rate of 48 percent annually, and our com-
petitive position is growing stronger. Customers
transact with Enron because we offer products and
services few others can match. With our flexible
networks and unique capabilities in risk manage-
ment and finance, we deliver the widest range of
reliable logistical solutions at predictable prices.
    Enron delivers more than two times the natural
gas and power volumes as does its nearest energy
marketing competitor. Our formidable lead comes
from our willingness to enter markets early and
serve as a market-maker to build liquidity and price
transparency. Breakthrough technology applications,
such as EnronOnline, accelerate our market penetra-
tion. These competitive advantages have made us
the most successful energy marketer in the two
largest deregulating energy markets, North America
and Europe. We expect to achieve a similar leader-
ship position as we extend our business approach
to new regions, products and industries.
    Our business has flourished with EnronOnline.
Launched in November 1999, EnronOnline handled
548,000 transactions in 2000 with a gross notional
value of $336 billion. EnronOnline is unquestionably
the largest web-based eCommerce site in the world
and dwarfs all other energy marketing web sites
combined. By the fourth quarter of 2000, it account-
ed for almost half of Enron's transactions over all
business units. EnronOnline has pushed productivity
through the roof: Transactions per commercial person
rose to 3,084 in 2000 from 672 in 1999. EnronOnline
Version 2.0, launched in September 2000, has attract-
ed more users with its additional functionality (see
 EnronOnline next page).
Enron North America
    In North America, Enrons physical natural gas
volumes increased 77 percent to 24.7 billion cubic
feet per day (Bcf/d) in 2000 from 13.9 Bcf/d in 1999.
Power deliveries increased 52 percent to 579 million
megawatt-hours (MWh) from 381 million MWh the
year before.
    EnronOnline has been a runaway success in
North America. It accounted for 74 percent of
North American volume transacted in 2000, and

created liquidity on a scale never seen before. It is a
dynamic business accelerator: It took nearly a
decade for Enrons daily gas transactions to reach
13.9 Bcf in 1999. Just 12 months later, Enronanline
had helped to practically double daily transactions
to 24.7 Bcf.
    EnronOnline magnifies the success of our
existing business, which springs from the scale and
scope of our established networks. We touch more
parts of North America's energy system than any
other merchant, with access to upwards of 2,500
distinct delivery points each day. The widespread
delivery options and possibilities of our network
give us a price and service advantage. Our networks
and presence in nationwide energy markets also
enable us to capture and distribute massive amounts
of information about real-time market supply and
demand, grid constraints and bottlenecks. When
the market moves, we are able to conduct business
while competitors are still fact-finding.
    Our people also make a difference. We are
able to attract the best and the brightest and place
them in an entrepreneurial atmosphere in which
they can thrive. With our intellectual capital, we
develop premium high-margin structured products
that draw on our liquidity and market knowledge.
A good example is the gas-marketing-services hub
in Chicago we launched with People's Energy in
March 2000. Known as Enovate, this venture opti-
mizes People's 30 Bef a year of Chicago-area storage
capacity and related transportation. It played a role
in increasing our gas volumes in the central United
States by 156 percent, the largest increase in our
2000 North American physical volumes.
    We continually assess the necessity of adding
or owning assets in a region. Sometimes it is less
expensive to own an asset than to replicate the
asset in the market through contracting and mar-
ket-making. We are developing generation plants
to sell merchant power to high-demand markets,
including proposed facilities in California. Florida,
Texas, Louisiana and Georgia. But as liquidity
increases, asset ownership may no longer be neces-
sary. We plan to sell Houston Pipe Line Company,
and Louisiana Resources Company is now held by
Bridgeline Holdings, L.R, ajoint venture in which
Enron retains an interest. Additionally, in the second
quarter of 2001 we expect to close the sale of five
of the six electricity peaking generation units in
operation. The result is the same earnings power
with less invested capital.
    Mexico's move toward liberalizing its energy
markets should gain intensity and speed with its
new government. Increased cross-border electricity
transactions between Mexico and the United States
seem inevitable. Our activities in Mexico seek to

E0aa002648548



optimize both the Mexican electricity market and
cross-border activity between the two countries.
     Enron also is active in South America, where
we own and develop assets to help create an
energy network.
Enron Europe
     We are rapidly extending Enron's market-
making approach into the deregulating European
markets, focusing on the U.K., the Continent and
the Nordic region. The Continent is still in the early
stages of liberalization, Although the European
Union has mandated liberalization of the power and
natural gas markets, each country is responding at
its own pace. The velocity of transactions is rising on
the Continent, however, and Enron expects to raise
the level of liquidity to make the markets work.
     Our business throughout Europe is growing
rapidly. Natural gas and power volumes more than
doubled to 10.3 trillion British thermal units equiv-
alent per day (TBtueld) in 2000 from 4.1 TBtueld in
1999. We enjoy several competitive advantages in
Europe: We are the only pan-European player; we
have a proven business strategy: we entered the
market early to build a presence; and we have
attracted a talented and skilled local workforce.
     Our cross-border capabilities are becoming
increasingly important as markets interconnect.
U.K. gas can now be transported to Belgium. and
subsequently to the rest of the Continent, giving us
the opportunity to develop innovative transactions
on both sides of the border The resulting increase
in price volatility has nearly doubled U.K. gas prices,
which, along with more volatile electricity prices
ahead, has significantly improved demand for the
U.K. risk management products we offer, both now
and over the long term.
     lust as in North America, EnronOnline is
increasing Enrons reach and volumes in Europe
and is a prime driver of liquidity. Its simple con-
tracts, multi-currency capabilities, transparent and
competitive prices and easy accessibility have won
EnronOnline rapid acceptance.
     In the U.K., power and gas volumes more than
doubled, with power rising to 113 million MWh in
2000, and gas volumes climbing 119 percent to reach
3.2 Bcf/d. Several market factors are likely to create
more business for us. The U.K's New Electricity
Trading Agreements, which replace the existing
U.K. power pool, are scheduled to be implemented
by the second quarter of 2001. The agreements
will result in increased price volatility, and Enron
is well-positioned to help customers manage this
risk. Additionally, lower power prices are shrinking
profit margins for U.K. merchant power plants,
which increasingly need to turn to market inter-

mediaries such as Enron to hedge their fuel and
power prices.
    On the Continent, our power volumes
increased to 50 million MWh in 2000 from 7 million
MWh in 1999. We are transacting at all major
country interconnections, benefiting from cross-
border opportunities. We closed our first-ever
transaction in France and are an active player in
Germany and Switzerland. We are beginning to
partner with utilities to offer comprehensive port-
folio management services, such as our agreement
to purchase and distribute powerjointly with Swiss
Citypower AG. which controls 19 percent of the
Swiss electricity market,

	   Enrononline
	   Fnron Online successfully leverages Enrons core
	   market -making capabilities, benefiting both exiT
	   customers and Enron. The web-based system
	   makes it easier to do business with Enron. It
	   also accelerates the growth of Enron's existing
	   businesses and facilitates quick and efficient
	   entry into new markets.

    In Spain, electricity demand is growing faster
than anywhere else in Europe. and there are limit-
ed import and export capabilities. Enron is respond-
ing to this opportunity by developing a 1.200-
megawatt plant in Arcos, south of Seville, that
should close financing in 2001.
    Continental gas liquidity isjust starting to
increase. Our volumes grew to 472 million cubic
feet per day (MMcfld) in 2000 from 53 MMcfld in
1999. While the market is in its early stages, Enron
has managed to increase weekly transactions from
about 5 to 100 over the course of a year. In
October we initiated the first gas supply deal in
Germany to the local utilities of Heidelberg,
Tuebingen and Bensheirn. We also are delivering
natural gas to some large users in the Netherlands
and France.

								 ECaaOO2648549

-I



    We continue to set records in the Nordic
region, where we are the largest power marketer.
Electricity volumes increased nearly 150 percent
to reach 77 million MWh in 2000 from 31 million
MWh in 1999. Enron's Oslo office also is now
the base of our European weather risk manage-
ment business.
    As more Nordic companies outsource energy
supply and management, Enrons products arid serv-
ices - including advanced technology applications
- are eagerly sought. In December Enron entered
into a two-year portfolio management agreement
with UPM-Kymmene Corp., one of the world's
largest forest products companies. Enron will assist

opportunities to support our market-making activi-
ties, including inside-the-fence power generation.
Under consideration are a number of sites, which
may be fueled by gas, liquefied natural gas or coal,
Enron Australia
    Enron's market-making ability has been suc-
cessfully extended to Australia, where Enron is a
leading provider of logistical solutions in the coun-
try's power market. During 2000 we introduced
weather risk management products in the region.
offering temperature-based products for Sydney,
Melbourne, Hong Kong. Tokyo and Osaka. The
Sydney office also provides a strategic platform for
the extension of Enron's coal, metals and broad-

MAKING MARKETS
Enron's networks of assets and
contractual relationships allow us
to make markets and offer real-
time pricing for more than 7.200
products on EnronOnline, This
tremendous market liquidity
attracts cust omen and A#ther
increases Enron's volumes and
market share.

CUSTOMER RELATIONSHIPS
EnronOnline provides customers
with a more convenient way to dis-
cover prices and do business with
Enron, which increases transaction
volumes and attracts new cus-
tomers. The system automatically
taps into Enrons sophisticated cm-
tomer-credit profiles to protect
Enron from credit risk

UPM-Kymmene in optimizing its Nordic power port-
folio of approximately 14 terawatt hours.
Enron Japan
    Enron Japan formally opened its rokyo office
in October 2000. Japan represents an enormous
opportunity: Its electricity rates are the highest in
the world, and electricity consumption is second
only to the United States. We have attracted top
talent to develop wholesale andjoint venture possi-
bilities, and have introduced our first product for
large electricity users - three- to five-year contracts
that will reduce electricity bills immediately by up
to 10 percent the first year, with the possibility of
further reductions in subsequent years. Our first
contracts were signed in early 2001.
    Through joint ventures with several Japanese
companies, Enron is exploring merchant plant

band businesses, as well as providing support for
Enrons operations in the Asia-Pacific region.
Extending to New Markets
    Enrons durable business approach, which has
driven our success in the natural gas and electricity
markets, is eminently applicable to other markets
and geographical regions. While we are remaining
focused on increasing earnings and opportunities
in gas and power, we also are extending Enrons
method to large, fragmented industries and prod-
ucts, where intermediation can make markets
more efficient and responsive to customer needs.
We expect these new businesses to contribute to
earnings in 2001.
    Enron Metals was launched in July 2000 when
Enron acquired the world's leading merchant of non-
ferrous metals, MG plc. Together, MG and Eriron are

17 INFORMATION SYSTEMS
 Enrononline is fully integrated
 with Enron's pro prietaq informa-
 tion systems~ which provide critical
 market information process thou.
 sands of deals and help assess and
 manage market and other risks. As
 a resulc Enron manages risks
 ins? antaneously even in the most
 volatile markets.

	A
   w~.

   A

ECA LABILITY
  Enron's well-tuned back-office e'~-
  tem, integrated with Em-onOnline,
  has proven its ability to scale as
  Em-on's total transactions have
  gromi From an average of ESna
  day at EnronOnlines November
  1999 launch to an average of
  7,900 a day by year-end 2000.
  As Ehrononlii,e expands products
  and volumes iron's scalable
  back-office will contirne to be
  a competitive advantage.

    I

ECaaOO264855O



a powerful team. Enron's financial resources and
eCommerce abilities add a new dimension to MG'S
widespread physical merchant skills and excellent
customer relationships. The early results are right on
target, with physical volumes up 31 percent in 2000.
    Enron Metals opens an additional door to
large energy customers. Cominco Ltd.. a zinc pro-
ducer and an Enron Metals customer in Vancouver,
British Columbia, worked with Enron to halt zinc
production for six weeks and sell its power into the
Northwestern power market, where it was needed.
Enron North America protected Cominco by struc-
turing a fixed-price swap to guarantee the sale
price of the power, and Enron Metals arranged to

    Coal intermediation moved to a new level in
2000. The industry has been radically affected by the
worldwide deregulation of the electricity industry.
Like natural-gas-fueled generation, coal-burning
generators require flexible terms and risk-manage-
ment protection. Enron is able to provide unrivaled
logistical support. Our coal business has led us to
participate in sea and land logistics as well.
    Weather has never been better for us. Our
weather risk management business is up about
five-fold to 1,629 transactions in 2000 from 321
transactions the year before, As in all of our mar-
kets, we bring cross-commodity capabilities to our
weather products. For instance, we closed a three-

One Coal Contract
Coven All Logistics
The process of sourcing and delivering
coal to an electricity generator is a cot,,.
plica ted process. Enron provides a single,
comprehensive solution to manage all
logistics and risk, whether the coal is
sourced don,estically or abroad. In some
cases, we have reduced the customers
cost of coal by as much as 10 percent.

4/tCOAL PRICE AND
  SLII'Pt V RISKS
  Enron allows generators
  to purchase coal at flexible
  ten,,s. sach as lo,,g-tenr,
  fixed rates or a maximum
  price. Supply and price are
  assured because Enron has
  access to flu, It ipte sources
  all over the globe. Enron is
  on its way to becoming the
  worlds largest wholesale
  coal merchant.

supply a portion of the zinc required to fulfill
Comincos obligations. Comincos profit from the
deal exceeded the annual profit it makes from
producing zinc.
    Enron Credit is a new business with strong mar-
ket potential. Enron has leveraged its internal risk
management processes and systems to create a real-
time, market-based online credit evaluation system.
The idea is simple: Existing credit ratings and scoring
mechanisms are not market-based and cannot
respond in real time to credit events. This means
creditors must figure out their credit risk exposure
on their own. Enron Credit posts the cost of credit
as a simple interest rate for more than 10,000 com-
panies on its web site, www.enroncredit.com. Enron
Credit also gives corporations the ability to hedge
their credit risk via a bankruptcy product.

year precipitation transaction that provides finan-
cial compensation linked to natural gas prices if
precipitation falls below a pre-determined mini-
mum. The weather unit worked with several other
Enron groups to transfer Enrons risk, ultimately
transacting with 10 external companies in three
markets (natural gas, weather products and insur-
ance). The bundled end-product resulted in an
effective hedge for the customer
    Crude oil. We now average crude deliveries of
7.5 TBtue/d to 240 customers in 46 countries. We
have introduced the first-ever 24x7 commodity
market of a West Texas Intermediate crude product
on EnronOnline, allowing our customers to respond
to market-changing events at any time, day or
night. We also concluded our biggest physical jet
fuel contract, providing 100,000 barrels for one

								 ECaaOO2648551



year at the flexible and market-based prices that
the customer needed,
     LNG. Enron is establishing a liquefied natural
gas (LNG) network to create merchant ENG opportu-
nities and to bring more gas to areas of the world
that need it. Our ING-related assets in operation
and development in the Caribbean and the Middle
East form part of this network. We source surplus
LNG from the Middle East and Asia and currently
market it in the United States.
     Forest Products. Enron has offered pulp, paper
and lumber financial products for several years, and
now we are marketing physical volumes. In 2000 we
acquired Garden State Paper Co., which gives us
access to 210,000 tons of newsprint a year and
tour recycling centers in key markets. In January
2001 we agreed to purchase a newsprint mill and
related assets in Canada. With this acquisition,
Enron will become the seventh-largest producer of
newsprint in North America, giving us the physical
liquidity necessary to quickly grow this business.
Enron's Clickpapercom~ is powered by the
EnronOnline platform but is totally customized for
the forest products industry. It offers more than 100
financial and physical products and features news
and information tailored specifically to forest prod-
ucts industry customers.
     steel. In some markets, such as steel, we believe
we can run our network with minimal assets. The
industry currently suffers from overcapacity, but
lacks a market mechanism to efficiently market the
surplus. We will offer a core commodity baseline
product that can be indexed against almost all
other products in this $330 billion industry. The
outlook is promising - we have transacted our
first steel swap. This year we will build liquidity,
improve pricing efficiency and gain contractual
access to the physical product to provide compre-
hensive logistical support.
Enron Global Assets
     Enron Global Assets manages and optimizes
Enrons assets outside North America and Europe.
Enron has a solid portfolio of asset-based busi-
nesses. However, with the higher returns available
in the company's other businesses, we expect to
divest some interests in a number of these assets.
The remaining asset businesses will continue to
focus on performance and complementing our mar-
ket-making and services businesses.
Enron Wind Corp.
     The economics of wind power are more
promising than ever, creating significant growth
for Enror-i Wind. Technological advancements and
lower costs associated with today's larger, more
efficient wind turbines have made wind power

costs competitive with fossil fuel-generation for
the first time. This cost competitiveness, together
with government policies supporting renewable
energy in most key markets and growing consumer
demand for green energy, have fueled 30 percent
annual growth over the past five years.
    With focused efforts in the world's three key
wind power markets - Germany, Spain and the
United States - Enron Wind completed 2000 with
revenues of approximately $460 million. Strong
growth in both the United States and Europe will
account for a projected sales increase of approxi-
mately 100 percent in 2001.

ECaaOO2648552



ENRON ENERGY SERVICES
    Enron Energy Services is the retail arm of Enron,
serving business users of energy in commercial and
industrial sectors. Our comprehensive energy out-
sourcing product has proven an exceptionally
effective way for companies to reduce their costs,
manage risks of energy price volatility, improve
their energy infrastructure and focus resources
on their core businesses.
    Enron Energy Services recorded its first prof-
itable quarter as expected at the end of 1999, and
continued to grow rapidly through 2000, with
increasing profits in all four quarters of 2000 and
aggregate recurring income before interest and
taxes (IBIT) of $103 million for the year The value of
our contracts in 2000 totaled more than $16 billion,
increasing Enron Energy Services' cumulative con-
tract value to more than $30 billion since late 1997.
    This success reflects growing acceptance of
Enrons energy outsourcing product - acceptance
that has meant an increasing rate of new contract-
ing. Our retail energy success in 2000 also reflects
our strong emphasis on contract execution and
implementation and on excellence in customer
service. Additionally, 2000 was marked by increased
activity in Europe - an untapped market for
energy outsourcing.
    We are positioned to dramatically increase our
profitability in 2001. Retail energy earnings will be
fueled by the rapid growth of our U.S. and European
businesses and the strong execution and extension
of existing contracts.
Market Volatility
    The U.S. energy sector experienced unprece-
dented challenge and opportunity in 2000. In
national terms, steady movement toward a func-
tioning deregulated energy marketplace continues.
More than half the country's population is scheduled
to be able to choose their electricity supplier by
2004. The ongoing energy crisis in California has
focused everyone's attention on the complexities
of incomplete deregulation, the risks of unreliable
supply and the costs of unmanaged energy demand.
Enron provides commercial and industrial energy
customers with the solutions they need, bringing
reliability and price-risk management to a market
otherwise fraught with uncertainty.
    The volatility of energy prices across the coun-
try has heightened the value of energy management
and increased the demand for retail services. With
our series of capabilities - energy commodity and
price risk management capabilities, energy asset
management and capital solutions - we remain
the only firm with the skill, experience, depth and

versatility to provide a comprehensive solution to
address uncertain, rapidly changing markets,
Customer Relationships
    The core of Enron's retail business is developing
long-term, multi-year relationships with our cus-
tomers, The value at contract signing is only a part
of the potential value that can be realized when
satisfied customers seek to add additional Enron
services to their contracts,
    Of the $16.1 billion in total contract value
signed in 2000. approximately $3 billion came from
expansions of existing contract relationships. For
example, in 1998, we signed a five-year, $250 million
contract with World Color Press, which later merged
with Quebecor Printing. In 2000, based on Quebecor

World's satisfaction, the relationship was extended
and expanded to a 10-year, $1 billion agreement
including not only commodity supply, but also over-
all energy management, including the design and
implementation of improvements in energy asset
infrastructure in more than 60 facilities operated
by Quebecor World.
    We value our long-term customer relation-
ships, and the health of these relationships can't
be left to luck, instinct or vague impressions. Our
Customer Satisfaction Program continually cap-
tures our performance against expectations and
benchmarks those results. Further, it is designed
to ensure identification and resolution - including
prompt escalation to the executive level if needed
- of any issue that might arise.

								 ECaaOO2648553



		      Medium-size Business Market
			   In the first three years of U.S. operation. Enron
		      Energy Services has been squarely focused on Fortune
		      1000 customers. But U.K-based Enron Direct has
		      successfully penetrated the immense medium-size
		      business market, proving that we can sell energy to
		      smaller enterprises in a truly open retail market.
			   Since gaining regulatory approval in February
		      1999 through the end of 2000, Enron Direct has
		      acquired more than 130,000 gas and power cus-
		      tomers, and continues to grow at a substantial rate.
		      The profitability of these smaller accounts comes
		      from Enrons long-term price risk management capa-
		      bility and Enron Directs low-cost sales channels. Our
		      high expectations for medium-size businesses are

															   4
															   'N
									     MEASUREMENTS               tNIMIZING DOWNTIME

								   something is wrong until the ener-    personnel can help control the
								   gy bill comes, and then it is much    costs of vendor calls and on-site
								   too late. But with the Enron PMC.     repairs through diagnostic data.
								   real-time monitoring means that       and through best-practice manage-
								   unusual changes in energy demand      ment of a net woi* of thousands of
								   are tracked instantaneously           service providers. We wol* with
								   enabling Enron and the wstomer        service providers to categorize and
								   to identify and address problems      analyze the actual cost of repairs.
								   before energy costs get out of        With Enron's expertise and scale,
								   hand,                                 we can improve response times.
													 redece downtime and cut the cost
													 of repairs and maintenance.

		       reflected by the rapid expansion of the European
		       operation. Enron Dire cto already is active in Madrid,
		       Spain, and similar businesses will be launched in
		       other countries as well.
			    It is our strong belief that Enron is uniquely
		       positioned to benefit both in the United States and
		       Europe from the world's steady shift toward dereg-
		       ulated energy markets. We will continue to provide
		       sensible market solutions for the effective manage-
		       ment of energy costs, and will continue to build a
		       dynamic global retail business to drive company
		       profits and sustain our reputation for innovation.

												       ECaaOO2648554

 a
%4 SENSIBLE INVESThIENTS           REDUCING PEAK DEMAND
				   The cost of energy vanes widely
				   over the cowse of the day. The
				   PARC uses real-time pricing infor-
				   mation, and the stream of data
				   coming from the customer site, to
				   automatically and remotely rMice
				   cast omen' tow-priority energy use
				   ten the price of energy is highest
				   -ensuring that the customer gets
				   maximum benefit for every dollar
				   spent on energy.

PARC data identify opportunities
to improve efficiency through
equipment upgrades or through
changes in processes, without
adversely affecting a clients oper-
ations. The PARC's sophisticated
modeling systems calculate a
cost-benefit analysis for every
potential investment in energy
assets- This analysis includes a
real-tin,. correlation with the
price of commodities - to help
companies not only make deci-
sions but also to show them that
there are decisions to be made,



ENRON BROADBAND SERVICES
    Enron Broadband Services made excellent
progress executing its business plan in 2000. The
build-out of Enron's 18,000-mile global fiber
network is near completion, bandwidth interme-
diation transaction volume is growing exponen-
tially, and we are testing the first commercially
sound premium content-on-demand service.
Clearly, the Enron business model is working in
the broadband market.
    Enron Broadband Services' goals are to:
* Deploy the most open, efficient global broadband
 network, the Enron Intelligent Network.
* Be the worlds largest marketer of bandwidth and
 network services.
* Be the world's largest provider of premium con-
 tent delivery services.
The Enron intelligent Network
    We expect to be the first to provide broad-
band connectivity on a global basis through the
Enron Intelligent Network (FIN). The FIN operates
as a "network of networks," providing switching
capacity between independent networks for low-
cost scalability. We will continue to add pooling
points, which physically interconnect third parties'
networks and serve as reference points for band-
width contracts. We currently operate 25 pooling
points: 18 in the United States, and one each
in Tokyo, London, Brussels, Amsterdam, Paris,
Dusseldorf and Frankfurt, We expect to add at
least 10 more in 2001,
    FIN's embedded intelligence, provided by
Enron's proprietary Broadband Operating System
(BOS), gives Enron unique, powerful multi-layer
network control. The Enron BOS enables the FIN to:
* Dynamically provision bandwidth in real time.
* Control quality and access to the network for
 Internet Service Providers.
* Control and monitor applications as they stream
 over the network to ensure quality and avoid
 congested routes.
    The BOS automates the transaction process
all the way from the initial request for capacity to
provisioning, electronic billing and funds transfer
With the BOS, Enron has created the first scalable,
fully integrated transaction processing platform
for delivering bandwidth capacity.
Bandwidth Intermediation
    We exceeded our expectations by delivering
more than 72,000 terabytes of network services
in 2000, demonstrating rapidly growing industry
acceptance of our flexible services. We are creating
the risk management building blocks to manage
almost every element of the network in addition to

bandwidth: dark fiber, circuits, Internet Protocol (IP)
services (transporting data packets according to P
standards) and storage capacity.
    To date we have transacted with 45 counter-
parties, including U.S. and international telecom-
munications carriers, marketers and resellers and
network service providers. In 2001 we expect to
deliver 570.000 terabytes as we grow both the
breadth and the depth of our network and prod-
ucts. We offer 32 bandwidth-related products on
EnronOnline.
    Enron's ability to provide bandwidth-on-
demand at specified service levels and guaranteed
delivery enables customers to access capacity with-
out necessarily building, buying or expanding their

own networks, Our bundled intermediation package
includes P transport over land, under the sea, and
via satellite, at both fixed and peak-usage terms.
For example, we are working with i2 Technologies,
a global provider of intelligent eBusiness solutions,
to connect with customers in six cities, including
four overseas. 2 has provisioned local-loop and
long-haul capacity through Enron, and has low-
cost access to our network's equipment as if it
were its own, but it now has the flexibility to
quickly add or discard capacity as day-to-day
needs change.
    Data storage is a $30 billion-per-year business,
and we know customers would like to purchase it
on an as-needed basis. In January 2001 we com-
pleted our first data storage transactions with a

								ECaaOO2548555



		       leading provider of managed storage services,
		       StorageNetworks, and a large retailer, Best Buy.
		       Best Buy is buying off-site storage capacity to save
		       money and gain flexibility to accommodate chang-
		       ing storage needs.
		       Content Services
			    In April 2000 Enron signed an agreement with
		       a US. video rental retailer to deliver movies over
		       the Enron Intelligent Network. The trial service is
		       up and running in Seattle; Portland, Ore.; Salt Lake
		       City and New York City. Additionally, we have
		       established relationships with other high-visibility
		       content providers. Over the next two or three years,
		       we plan to deliver on-demand not only movies
		       but sports, educational content, games, music and

							      Sr
		       applications not yet imagined.
		       Market Innovator
			    Enrons innovative approach is as valuable in
		       broadband as it is in energy. Our proven intermedi-
		       ation skills are creating new value for the industry
		       and giving it a flexibility it has never enjoyed. We
		       have combined our business model with readily
		       available technologies to deliver premium content
		       over the Enron Intelligent Network in a very com-
		       pelling commercial model. We are not tied to any
		       particular technology. We use the best solution at
		       the best time for our customers, delivering the
		       most reliable product at the lowest available cost
		       in the marketplace.

													ECaaOO2648556

I

Enronisfadlitating             __    YNAMIC PROVlSlOAflNi2rastruc.
				      Enrons pooling point
acclivity by establishing pooling     tore allows companies to provision
points in major metropolitan areas    bandwidth quickly, eliminating the
to switch bandwidth from one          long lead times associated with
independent network to another,       circuit provisioning in the past.
The pooling points help optimize      Enhanced connectivity and dynam-
network capacity by creating corn-    ic provisioning allow bandwidth
mon physical delivery points and      users to take advantage of band-
access to nuiltiple locations.        width market opportunities on
				      short notice.

f%~nwORA CONtROL
  Within Eaton's Broatand Operating
  System (805) lie several unique
  capabilities that monitor switching
  activity between networks and
  control the provisioning of circuits.
  The Eaton SOS can measure per-
  formance in real time at eves'
  layer of the network and ensure
  quality of service and delivery.

'? CAL4SILITY
The Eaton Intelligent Network
(FIN) has extensive reach through-
out the continental United States
and connects to Europe and Asia.
With its broad connectivity, the
FIN is designed to scale without
the cost of building additional
infrastructure. Leveraging the
EnronOnline platform provides
additional reach and gives cus-
tomers anew, easy option (or
their bandwidth needs.



ENRON TRANSPORTATION
SERVICES
    The Gas Pipeline Group formally changed its
name in September 2000 to Enron Transportation
Services to emphasize its ability to deliver innovative
solutions to its customers. These emerging services
augment our core competency: operating interstate
pipelines safely and efficiently. In 2000 we continued
our record of strong returns with consistent earnings
and cash flow. Income before interest and taxes
reached $391 million, up from $380 million in 1999.
Cash flow from operations rose to $415 million
in 2000 from $370 million in 1999. Throughput
remained relatively unchanged in 2000 at 9.13

    Purchasing Capacity
    Through Enron Online
    Enron transpoitation Senoces has intro.
    diced several innovative custome, services,
    including the use of EnronOt-i line. Northen,
    Natural Gas, Trans weston, Pipeline and
    Florida Gas Transmission are selling avail-
    able rti,, and intenvppble capacity cvi
    EnronOnline in addition to selling capacity
    through traditional methods. Customers
    already using nroo Online to transact gas
    can now range rranspo.-tabon at the
    same time.

billion cubic feet per day (Bcfld), compared to 9.18
Bcf/d the previous year.
     Together, our interstate pipelines span approxi-
mately 25,000 miles with a peak capacity of 9.8
Bcf/d. We transport 15 percent of U.S. natural gas
demand. We connect to the major supply basins in
the United States and Canada, and we continue to
increase capacity from those basins to our major
markets. We have added 840 million cubic feet per
day (MMcfId) over the past two years, and nearly 1
Bcf/d is scheduled to enter service in the next three
years. At the same time, our expense per MMcf/d
has declined by 26 percent from 1992 to today.
     Enron Transportation Services pipelines have
brought to market a variety of new products and
services specifically tailored to address customer

needs. Northern Natural Gas, for example, has used
interruptible storage products that extend its capa-
bility to meet the growing demand for services to
manage physical positions. Transwestern Pipeline
Company is offering shippers increased service
flexibility by accessing third-party storage. Across
all pipelines, web-based applications have been
introduced to allow customers to better manage
transactions and allow the pipelines to maximize
their capacity offerings. Northern Natural Gas.
Transwestern Pipeline and Florida Gas Transmission
began to sell available capacity on Enrononline
in 2000 to give customers the convenience of
eCommerce transacting (see "Purchasing Capacity
Through Enrononline" on this page).

Northern Natural Gas
    Northern Natural Gas, Enron's largest pipeline,
has approximately 16,500 miles of pipeline extend-
ing from the Permian Basin in Texas to the Great
Lakes, providing extensive access to major utilities
and industrials in the upper Midwest. The pipeline
has market area peak capacity of 4.3 Bcfld. It inter-
connects with major pipelines, including Great
lakes, Transwestern, El Paso, Northern Border and
Trailblazer, to offer excellent northern, southern
and western flow capabilities. Ninety-five percent
of market area capacity is contracted through 2003.
    Market area demand is expected to increase
considerably with the development of approximately
2.000 megawatts of gas-fired generation over the
next three years. The pipeline has developed innova-

								      ECaaOO2648557

				  'vf~bji Cd~1

    DISCOVERY
Knowledge helps wstomers make better
decisions. Prices am h44v transparent and
instantly aecessibl& tic!, allows buyers to
know what their transportation costs will be
when they are buying their gas.

K OPTIMIZING THE ASSETS
 When a pipeline is not totally subscribed
 Enrononhine lets the market know it is avail-
 able. Pipelines also can auction off highly
 desirable capacity by accepting sealed bids.
 EnronOnline gives Enron Transportation
 Services the ability to put more product in
 front of more of its customers than ever
 before.



tive and flexible services to meet the transportation.
storage and balancing needs of power producers. It
completed construction in October 2000 of a link to
445 megawatts of peaking power operated by Great
River Energy in Minnesota. The link will transport up
to 120 MMcf/d of gas.
Transwestern Pipeline
     Transwestern operates approximately 2,500
miles of pipe with 1.7 Bcfld ol' peak capacity. With
pipeline originating in the San Juan, Permian and
Anadarko Basins, Trarnwestern can move gas east
to Texas or west to the California border. To respond
to increased gas demand in California, Transwestern
Pipeline added compressor facilities near Gallup,
New Mexico. in May 2000 to increase mainline
capacity by 140 MMcfld to the California border.
The new capacity is completely subscribed under
long-term contracts, In 2000 the pipeline also added
several major interconnects to tap into growing
markets east of California.
     The Transwestern system is fully subscribed for
western deliveries through December 2005 and for
eastern deliveries through December 2002. The sys-
tem has the potential to quickly increase throughput
capacity. An expansion project is expected to be flied
this year and completed in 2002,
Florida Gas Transmission
     Florida Gas Transmission serves the rapidly
growing Florida peninsula and connects with 10
major pipelines. It has maintained a competitive
position by staging expansions to keep pace with
demand as it grows. With current peak capacity
of 1.5 Bcfld, Florida Gas Transmission will add 600
MMcf/d of capacity when its Phase IV and Phase V
expansions are completed. The Fort Myers extension.
part of a 200 MMcffd Phase IV expansion, went into
service on October 1, 2000. and the remainder is
scheduled to go into service in May 2001. The 400-
MMcf/d Phase V expansion has received preliminary
approval from the Federal Energy Regulatory
Commission and is expected to be completed in
April 2002.
     The 4,795-mile pipeline currently is evaluating
supply connections to two proposed liquefied natu-
ral gas facilities.
Northern Border Partners, IP.
     Northern Border Partners, L.P. is a publicly
traded partnership (NYSE: NBP), of which Enron
is the largest general partner. Northern Border
Partners owns a 70 percent general partner interest
in Northern Border Pipeline, which extends 1,214
miles from the Canadian border in Montana to
Illinois, The pipeline, a low-cost link between
Canadian reserves and the Midwest market, has a
peak capacity of 2.4 Bcf/d and is fully contracted

under long-term agreements with an average term
of six years. Its Project 2000 extension - 34 miles of
pipe from Manhattan, Illinois, to a point near North
Hayden, Indiana - will provide 544 MMcfId to
industrial markets in Indiana with a targeted in-
service date of late 2001.
    late in 2000. Northern Border Pipeline settled
its rate case, allowing it to switch from a cost-of-
service tariff to a stated-rate tariff, which will provide
rate certainty to customers, increase competitiveness
and allow flexibility in services provided.
    Northern Border Partners also owns interests
in gathering systems in the Powder River and Wind
River Basins in Wyoming, and recently signed a letter
of intent to purchase Bear Paw INC. which has
extensive gathering and processing operations in
the Powder River Basin and the Williston Basin.
The partnership also owns Black Mesa Pipeline, a
273-mile coal-water slurry pipeline running from
Kayenta, Arizona, to Mohave Power Station in
Laughlin, Nevada.
Portland General Electric
    The sale of Portland General Electric (PGE) to
Sierra Pacific Resources has been delayed by the
effect of recent events in California and Nevada on
the buyer. In 2000 the Portland, Oregon-based elec-
tricity utility performed well in the face of regional
wholesale price volatility BIT rose approximately 12
percent to $341 million. Total electricity sales reached
38.4 million megawatt-hours (MWh) compared to
31.9 million MWh in 1999. We will continue to drive
performance while we pursue the utility's sale.

ECaaOO264855B



MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL RISK MANAGEMENT
INFORMATION REGARDING FORWARD-
LOOKING STATEMENTS
MANAGEMENT'S RESPONSIBILITY FOR
FINANCIAL REPORTING
REPORTS OF INDEPENDENT PUBLIC
ACCO U NTANTS
ENRON CORP. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
ENRON CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME

7 ENRON CORR AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEET
  ENRON CORP. AND SUBSIDIARIES
  CONSOLIDATED STATEMENT OF
  CASH FLOWS
  ENRON CORP. AND SUBSIDIARIES
  CONSOLIDATED STATEMENT OF
  CHANGES IN SHAREHOLDERS' EQUITY
  ENRON CORP. AND SUBSIDIARIES
  NOTES TO THE CONSOLIDATED
  FINANCIAL STATEMENTS
  SELECTED FINANCIAL AND CREDIT
  INFORMATION (UNAUDITED)

								 ECaaOO2648559



Management S Discussion and Analysis
of Financial Condition and Results
of Operations
     The following      review of the results of operations and
financial   condition   of Enron  Corp. and  its subsidiaries and
affiliates  (Enron)   should  be  read in conjunction  with  the
Consolidated Financial Statements.

	  Si CKHIAFt( IKS

%t~r ,yvibih>li   -A Is

     Enron's net income for 2000 was $979 million compared to
$893 million in 1999 and $703 million in 1998. Items impacting
comparability are discussed in the respective segment results. Net
income before items impacting comparability was $1,266 million,
$957 million and $698 million, respectively, in 2000, 1999 and
1998.  Enrons       business is divided into five segments   and
Exploration and Production (Enron Oil & Gas Company) through
August    16,    1999 (see Note 2  to the Consolidated  Financial
Statements). Enrons operating segments include:

     Transportation       and Distribution. Transportation   and
Distribution       consists of Enron Transportation Services and
Portland    General. Transportation    Services includes Enrons
interstate   natural   gas  pipelines, primarily Northern Natural
Gas  Company        (Northern), Transwestern  Pipeline Company
(Transwestern). Enrons 50% interest in Florida Gas Transmission
Company (Florida Gas) and Enrons interests in Northern Border
Partners, L.P. and FOil Energy Partners, LP. (Eon).

Net income includes the following:

(In millions)
After-tax results before items
 impacting comparability

Items impacting comparability:(a)
 Charge to reflect impairment by Azurix
 Gain on TNPC, Inc. (The New
   Power Company), net
 Gains on sales of subsidiary stock
 MTBE-related charges
 Cumulative effect of
   accounting changes
Net income

  2000     1999     1998

$1,266    $957      $698

  (326)        -

    39
	    345       45
	   (278)     (40)

      -    (131)        -
$  979    $893      $703

(a) Tax affected at 35%, except where a specift tax rate applied

    Diluted earnings per share of common stock were as follows:

					  2000      1999     1998
Diluted earnings per sharela):...............-............--
 After-tax results before items
   impacting comparability               S 1.47    $ 118   $ 1.00

 Items impacting comparability:
   Charge to reflect impainnent by Azurix 40.40)
   Gain on The New Power Company, net     0.05
   Gains on sales of subsidiary stock         -     0.45     0.07
   MTRE-related charges                       -     (0.36)   (0.06)
   Cumulative effect of
    accounting changes                        .     (0.17)      -
Diluted earningsper share                $1.12     $1.10   $1.01
W Restated to reflect the tvt~-for-one stock split effective August13, t99R

    Wholesale Services. 'Wholesale Services includes  EnrorYs
wholesale businesses around the world, Wholesale Services oper-
ates in developed markets such as North America and Europe. as
well as developing or newly deregulating   markets including
South America, India and Japan.

    Retail Energy Services. Enron, through its subsidiary Enron
Energy Services, LIC (Energy Services), is extending its energy
expertise and capabilities to end-use retail customers in the indus-
trial and commercial business sectors to manage their energy
requirements and reduce their total energy costs.

    Broadband Services. Enrons broadband services business
(Broadband Services) provides customers with a single source for
broadband services, including bandwidth intermediation and the
delivery of premium content.

    Corporate and Other Corporate and Other includes Enrolls
investment in Azurix Corp. (Azurix), which provides water and
wastewater services, results of Enron Renewable Energy Corp.
(EREC), which develops and constructs wind-generated power
projects, and the operations of Enrons methanol and MTBE
plants as well as overall corporate activities of Enron.

n-mr'  S.'f nn-'r'.t,:r,5 Minority lrslcrr:sts and income fates
    The following table presents income before interest, minor-
ity interests and income taxes (IBIfl for each of Enrons operating
segments (see Note 20 to the Consolidated Financial Statements):

(In millions)

2000     1999     1998

Transportation and Distribution:
  Transportation Services              $ 391   $  380    $ 351
  Portland General                       341      305      286
Wholesale Services                      2.260   1,317      968
Retail Energy Services                   165      (68)     (119)
Broadband Services                       (60)        -        -
Exploration and Production                  -      65      128
Corporate and Other                     (615)      (4)     (32)
  Income before interest,
   minority interests and taxes        $2,482  $1,995    $1,582

rRIr)t.'t,rs'fro (tss'10,,,i..

    Transportation Services. The following table summarizes
total volumes transported by each of Enrons interstate natural
gas pipelines.

					2000     1999      1998
Total volumes transported (BBtuld$a)
  Northern Natural Gas                  3,529   3,820     4.098
  Transwestern Pipeline                 1,657   1,462     1,608
  Florida Gas Transmission              1,501   1,495     1,324
  Northern Border Pipeline              2.443   2,405     1,770
(a) R0l,on British thermal unas per day Amounts reflect 100% of each entitys
  throughput volumes. Florida Gas and Northern Border P,peline are unconsoli-
  dated eguily affliates.

						      ECaaOO264856O



    Significant components of BIT are as follows:

				       2000     1999     1998
(In m illions)................................................
Net revenues                           $650     $626     $640
Operating expenses                      280      264      276
Depreciation and amortization            67       66       70
Equity earnings                          63       38       32
Other net                                25       46       25
 Income before interest and taxes      $391.....$380

    Revenues, net of cost of sales, of Transportation Services
,ncreased $24 million (4%) during 2000 and declined $14 million
(2%) during 1999 as compared to 1998. In 2000, Transportation
Services' interstate pipelines produced strong financial results.
The volumestransported byTranswestern increased 13 percent in
2000 as compared to 1999. Northern's 2000 gross margin was
comparable to 1999 despite an 8 percent decline in volumes
transported. Net revenues in 2000 were favorably impacted by
transportation revenues from Transwestern's Gallup, New Mexico
expansion and by sales from Northern's gas storage inventory.
The decrease in net revenue in 1999 compared to 1998 was
primarily due to the expiration, in October 1998. of certain tran-
sition cost recovery surcharges, partially offset by a Northern sale
of gas storage inventory in 1999.

an increase in wholesale sales, partially offset by higher purchased
power and fuel costs. Operating expenses increased primarily due
to increased plant maintenance costs related to periodic overhauls.
Depreciation and amortization increased in 2000 primarily as a
result of increased regulatory amortization. Other, net in 2000
included the impact of an Oregon  Public Utility Commission
(OPUC) order allowing certain deregulation costs to be deferred
and recovered through rate cases, the settlement of litigation
related to the Trojan nuclear power generating facility and gains
on the sale of certain generation-related assets.
    Revenues, net of purchased power and fuel costs, decreased
$5 million in 1999 as compared to 1998. Revenues increased pri-
marily as a result of an increase in the number of customers
served by Portland General. Higher purchased power and fuel
costs, which increased 42 percent in 1999, offset the increase in
revenues. Other income, net increased $31 million in 1999 as
compared to 1998 primarily as a result of a gain recognized on
the sale of certain assets.
    In 1999, Enron entered into an agreement to sell Portland
General Electric Company to Sierra Pacific Resources. See Note 2
to the Consolidated Financial Statements.

    Statistics for Portland General are as follows:

				   2000     1999   1998

(>.          [ n n--s

     Operating expenses, including depreciation and amortiza-
lion, of Transportation Services increased $17 million (5%) during
2000 primarily as a result of higher overhead costs related to
information     technology and  employee    benefits. Operating
expenses decreased $16 million (5%) during 1999 primarily as a
result of the expiration of certain transition cost recovery sur-
charges which had been recovered through revenues.

     v [  Fl fl(JS

     Equity    in earnings of unconsolidated    equity affiliates
increased $25 million and $6 million in 2000 and 1999. respectively.
The increase in equity earnings in 2000 as compared to 1999
primarily relatesto Enron's investment in Florida Gas, The increase
in earnings in 1999 as compared to 1998 was primarily a result of
higher earnings from Northern Border Pipeline and ECU.

   :1,1

     Other, net decreased $21 million in 2000 as compared to
1999 after increasing $21 million in 1999 as compared to 1998.
Included in 2000 were gains related to an energy commodity
contract and the sale of compressor-related equipment, while
the 1999 amount included interest income earned in connection
with the financing of an acquisition by ECU, The 1998 amount
included gains from the sale of an interest in an equity invest-
ment, substantially offset by charges related to litigation,

     Portland General. Portland General realized BIT as follows:

(In millions)                           2000     1999     1998
Revenues                               $2,256   $1,379  $1,196
Purchased power and fuel                1,461     639      451
Operating expenses                       3=1      304      295
Depreciation and amortization            211      181      183
Other, net                                78       SD       19
   Income before interest and taxes    S 341    $ 305   $286

     Revenues, net of purchased power and fuel costs, increased
$55 million in 2000 as compared to 1999. The increase is primarily
the result of a significant increase in the price of power sold and

Electricity sales (thousand MWh)(a)
  Residential
  Commercial
  Industrial
    Total retail
  Wholesale
    Total electricity sales

Resource mix
  Coal
  Combustion turbine
  Hydro
    Total generation
  Firm purchases
  Secondary purchases
    Total resources

Average variable power cost (MillsIl(Wb)(bI
  Generation
  Firm purchases
  Secondary purchases
    Total average variable power cost

7.433    7,404  7,101
7,527    7,392  6,781
4,912    4,463  3,562

19,872    19,259  17,444
18,548    12,612  10,869
38,420    31,871  28,313

11%      15%    16%
12       8      12
 6       9       9
29       32     37
63       57     56
 8       11      7
100%    100%    100%

14.5
34,9
123.6
37.2

Retail customers (end of period, thousands)  725

11.3     8.6
23.2     17.3
19.7     23.6
20.0     15,6

719      704

~) Thousand rnegavva if-hours.
(h) F$41s (I/TO cent) per kilowatt-hour

      Enron Transportation Services is expected to provide stable
earnings and cash flows during 2001. The four major natural gas
pipelines have strong competitive positions in their respective
markets as a result of efficient operating practices, competitive
rates and favorable market conditions.  Enron Transportation
Services expects to continue to pursue demand-driven expansion
opportunities. Florida Gas expects to complete an expansion that
will  increase throughput by 198 enillion cubic feet per day
(MMcf/d)   by mid-2001. Florida Gas has  received preliminary
approval from the Federal Energy Regulatory Commission for an
expansion of 428 MMcftd. expected to be completed by early
2003, and is also pursuing an expansion of 150 MMcf/d that is
expected to be completed in mid-2003. Tranwestern completed
an expansion of 140 MMcf/d in May 2000 and is pursuing an
expansion of 50 MMcf/d that is expected to be completed in 2001

								 ECaaOO2648561



and an additional expansion of up to 150 MMcI/d that is expected
to be completed in 2002. Northern Border Partners is evaluating
the development of a 325 mile pipeline with a range of capacity
from 375 MMcI/d to 500 MMcftd to connect natural gas produc-
tion in Wyoming to the Northern Border Pipeline in Montana.
     In 2001,   Portland General anticipates purchased power
and fuel costs to remain at historically high levels. Portland
General has submitted a request with the OPtiC to recover the
anticipated cost increase through a rate adjustment.

     Enron builds its wholesale businesses through the creation
of  networks    involving selective asset ownership, contractual
access to third-party assets and market-making activities. Each
market    in  which Wholesale Services operates utilizes these
components in a slightly different manner and is at a different
stage  of   development. This network  strategy has enabled
Wholesale Services to establish a leading position in its markets.
Wholesale Services' activities are categorized into two business
lines: (a)  Commodity Sales and  Services and (b) Assets and
Investments. Activities may be integrated into a bundled product
offering for Enron's customers.
     Wholesale Services manages its portfolio of contracts and
assets in order to maximize value, minimize the associated risks
and provide overall liquidity. In doing so, Wholesale Services uses
portfolio and risk management disciplines, including offsetting
or hedging transactions, to manage exposures to market price
movements (commodities, interest rates, foreign currencies and
equities). Additionally, Wholesale Services manages its liquidity
and exposure to third-party credit risk through monetization of
its contract    portfolio or third-party insurance contracts.
Wholesale Services also sells interests in certain investments and
other assets to improve liquidity and overall return, the timing of
which is dependent on market conditions and management's
expectations of the investments value.

    The following table reflects BIT for each business line:

(In millions)
Commodity sales and services           $1.630   $ 828     $411
Assets and investments                   889      850       709
Unallocated expenses                     (259)    (161)    (152)
  Income before interest.
   minority interests and taxes        $2,260   $1,317    $968

    The following discussion analyzes the contributions to 1811
for each business line.

    Commodity Sales and Services. Wholesale Services provides
reliable commodity     delivery   and predictable pricing to its
customers through forwards and other contracts. This market-
making    activity includes the   purchase, sale, marketing and
delivery of natural gas, electricity, liquids and other commodi-
ties, as well as the management of Wholesale Services' own
portfolio of contracts. Contracts associated with this activity are
accounted for using the mark-to-market method of accounting.
See Note 1 to the Consolidated Financial Statements. Wholesale
Services' market-making activity is facilitated through a network
of capabilities including selective asset ownership. Accordingly,
certain  assets involved in the delivery of these services are
included in this business (such as intrastate natural gas pipelines,
gas storage facilities and certain electric generation assets\

    Wholesale Services markets, transports and provides energy
commodities as reflected in the following table (including inter-
company amounts):

				  2000     1999     1998
Physical volumes (B8tue/d)Ca~ThY
Gas:

 United States
 Canada
 Europe and Other

Transportation volumes
   Total gas volumes
Crude oil and Liquids
Electricity (c}
   Total physical volumes (BBtuetd)

17,674    8.982     7,418
 6,359    4,398     3,486
 3,637    1,572     1,251
27,670   14,952    12,155
  649       575      559
28,319   15.527    12,714
 6.088    6,160     3.570
17.308   10,742    11,024
51.715   32,429    27,308

Electricity volumes (thousand MWD)
   United States                    578,787 380,518   401,843
   Europe and Other                  54,670  11,576      529
    Total                           633.457 392,094   402,372
Financial settlements
 (notional, BBtuefd)                196,148  99,337    75,266

(a) Bill,bn British thermal units equivalent per day
(is) Includes third-part' transacdons by Enron Energy Servkes.
(c) Represents electricity vol ume5 convorted to BBwefd.

				 Earnings from commodity sales and services increased $1.0
			     billion (160%) in 2000 as compared to 1999. Increased profits
			     from North American gas and power marketing operations,
			     European power marketing operations as well as the value of
			     new businesses, such as pulp and paper, contributed to the
			     earnings growth of Erirons commodity sales and services busi-
			     ness. Continued market leadership in terms of volumes trans-
			     acted,  significant increases in natural  gas prices and price
			     volatility in both the gas and power markets were the key
			     contributors to increased profits in the gas and power interme-
			     diation businesses. In late 1999, Wholesale Services launched an
			     Internet-based ecommerce system, Enrononline, which allows
			     wholesale customers to view Enrons real time pricing and to
			     complete commodity transactions with Enron as principal, with
  2000     1999     1998     no  direct interaction.  In its  first full year  of operation,
			     EnronOnline  positively  impacted   wholesale volumes,   which
			     increased 59 percent over 1999 levels.
				 Earnings from commodity sales and services increased S217
			     million (53%) in 1999 as compared to 1998. reflecting strong
_______________  _____       results from the    intermediation  businesses  in both  North
			     America and Europe, which include delivery of energy com-
			     modities and associated risk management products. Wholesale
			     Services also successfully managed its overall portfolio of con-
			     tracts, particularly in minimizing  credit   exposures utilizing
			     third-party contracts. New product offerings in coal and pulp
			     and paper markets also added favorably to the results.

				 Assets and Investments. Enrons Wholesale businesses make
			     investments in various energy and certain related assets as a part
			     of its network strategy. Wholesale Services either purchases the
			     asset from a third party or develops and constructs the asset. In
			     most cases, Wholesale    Services operates and    manages such
			     assets. Earnings from these investments principally result from
			     operations of the assets or sales of ownership interest.
				 Additionally. Wholesale Services invests in debt and equity
			     securities of energy and technology-related businesses, which
			     may also utilize Wholesale Services' products and services, With
			     these merchant investments, Enron's influence is much more
			     limited relative to assets Enron develops or constructs. Earnings
			     from these activities, which are accounted for on a fair value
			     basis and are included in revenues, result from changes in the
			     market value of the securities. Wholesale Services uses risk

							      ECaaOO2648562



management     disciplines, including hedging transactions, to
manage the impact of market price movements on its merchant
investments.   See Note   4 to the   Consolidated   Financial
Statements for a summary of these investments.
     Earnings from assets and investments increased $39 million
(5%) in 2000 as compared to 1999 as a result of an increase in the
value of Wholesale Services' merchant investments, partially off-
set by lower gains from sales of energy assets. Earnings from
asset operations were comparable to 1999 levels. Earnings from
merchant investments were positively impacted by power-related
and energy investments, partially offset by the decline in value
of technology-related  and  certain energy-intensive industry
investments. Gains on sales of energy assets in 2000 included the
monetization of certain European energy operations.
     Earnings from assets and investments increased $141 million
(20%) in 1999 as compared to 1998. During 1999, earnings from
Wholesale Services' energy-related assets increased, reflecting
the operation of the Dabhol Power Plant in India. ownership in
Elektro Eletricidade e Servivos SA. (Flektro). a Brazilian electric
utility, and assets in various other developing markets, Wholesale
Services  merchant investments increased in value during the
year due to the expansion into certain technology-related invest-
ments, partially offset by a decline in the value of certain energy
investments,  In addition, Wholesale  Services' 1999 earnings
increased due to development and construction activities, while
gains on sales of energy assets declined.

     Unallocated Expenses. Net unallocated expenses such as
systems expenses and   performance-related costs increased in
2000 due to growth of Wholesale Services   existing businesses
and continued expansion into new markets.

     In 2000, Wholesale Services reinforced its leading positions
in the natural gas and power markets in both North America and
Europe. In the coming year, Wholesale Services plans to continue
to expand and refine its existing energy networks and to extend
its proven business model to new markets and industries.
     In 2001. Wholesale Services plans to continue to fine-tune
its already successful existing energy networks. In North America,
Enron expects to complete the sale of five of its peaking power
plants located in the Midwest and its intrastate natural gas
pipeline.  In each case, market conditions, such  as increased
liquidity, have diminished the need to own physical assets. For
energy networks in other geographical areaswhere liquidity may
be an issue, Enron will evaluate whether its existing network will
benefit from additional physical assets. The existing networks in
North America and Europe should continue to provide opportu-
nities for sustained volume growth and increased profits.
     The combination of knowledge gained in building networks
in key energy markets and the application of new technology, such
as EnronOnline,   is expected to provide the basis to  extend
Wholesale Services' business model to new markets and industries.
In key international markets, where deregulation is underway,
Enron plans to build energy networks by using the optimum
combination   of acquiring or constructing physical assets and
securing contractual access to third-party assets. Enron also plans
to replicate its business model to new industrial markets such as
metals, pulp, paper and lumbe~ coat and steel. Enron expects to
use its eCommerce platform, EnronOnline, to accelerate the pene-
tration into these industries.
     Earnings from Wholesale Services are dependent on the
origination and completion of transactions, some of which are
individually significant and which are impacted by market condi-
tions, the regulatory environment and customer relationships.
Wholesale Services' transactions have historically been based on

a diverse product portfolio, providing a solid base of earnings.
Enron's strengths, including its ability to identify and respond to
customer needs, access to extensive physical assets and its inte-
grated product offerings, are important drivers of the expected
continued earnings growth. In addition, significant earnings are
expected from Wholesale Services      commodity portfolio and
investments, which are subject to market fluctuations. External
factors, such as the amount of volatility in market prices. impact
the earnings opportunity associated with Wholesale Services'
business, Risk related to these activities is managed using natu-
rally offsetting transactions and hedge transactions, The effec-
tiveness of Enrons risk management activities can have a materi-
al impact on future earnings. See "Financial Risk Management"
for a discussion of market risk related to Wholesale Services.

    Energy Services sells or manages the delivery of natural gas,
electricity,  liquids and other commodities to  industrial and
commercial customers located     in North America and Europe.
Energy Services also provides outsourcing solutions to customers
for full energy management. This integrated product includes
the management of commodity delivery, energy information and
energy assets, and price risk management activities. The com-
modity portion of the contracts associated with this business are
accounted for under the mark-to-market method of accounting.
See Note ito the Consolidated Financial Statements,

(In millions)                            2000      1999       1998
Revenues                                54,815   11.807     $1,072
Cost of sales                           4,028      1,551      955
Operating expenses                        449        308      210
Depreciation and amortization              38         29       31
Equity losses                             (60)         -       (2)
Other, net                                 63         13         7
  BIT before items impacting
    comparability                         103        (68)     (119)
Items impacting comparability:
  Gain on The New Power Company
    stock issuance                        121          -         -
  Retail Energy Services charges          (59)         -         -
Income (loss) before interest, minority
  interests and taxes                   6 165    $   (68)   $ (119)

    Revenues and gross margin increased $2,808 million and
$331 million, respectively, in 2000 compared to 1999. primarily
resulting from execution of commitments on its existing cus-
tomer base, long-term energy contracts originated in 2000 and
the increase in the value of Energy Services' contract portfolio.
Operating expenses increased as a result of costs incurred in
building the capabilities to deliver services on existing customer
contracts and in building Energy Services' outsourcing business in
Europe. Other, net in 2000 consisted primarily of gains associat-
ed with the securitization of non-merchant equity instruments.
Equity losses reflect Energy Services portion of losses of The New
Power Company.
    Items impacting comparability in 2000 included a pre-tax
gain of $121 million related to the issuance of common stock by
The New Power Company and a charge of $59 million related to
the write-off of certain information technology and other costs.
The New Power Company, which is approximately 45 percent
owned by Enron. was formed to provide electricity and natural
gas to residential and small commercial customers in deregulated
energy markets in the United States,

								 ECaaOO2648563



     During 2001, Energy Services anticipates continued growth
in the demand for retail energy outsourcing solutions. Energy
Services will deliver these services to its existing customers, while
continuing to expand its commercial and industrial customer base
for total energy outsourcing. Energy Services also plans to contin-
ue integrating its service delivery capabilities, extend its business
model to related markets and offer new products.

     In implementing  Enron's network strategy. Broadband
Services is constructing the Enron Intelligent Network, a nation-
wide fiber-optic network that consists of both fiber deployed by
Enron and acquired capacity on non-Enron networks and is man-
aged by Enrons Broadband Operating System software. Enron is
extending its market-making and risk management skills from its
energy business to develop the bandwidth intermediation busi-
ness to help customers manage unexpected fluctuation in the
price, supply and demand of bandwidth, Enron's bandwidth-on-
demand platform allows delivery of high-bandwidth media-rich
content such as video streaming, high capacity data transport
and video conferencing. Broadband Services also makes invest-
ments in companies with related technologies and with the
potential for capital appreciation. Earnings from these merchant
investments, which are accounted for on a fair value basis and
are included in revenues, result from changes in the market value
of the securities. Broadband Services uses risk management disci-
plines, including hedging transactions, to manage the impact of
market   price movements    on its merchant   investments,
Broadband Services also sells interests in certain investments and
other assetsto improve liquidity and overall return, thetiming of
which is dependent on market conditions and management's
expectations of the investment's value,
     The components of Broadband Services' businesses include
the  development  and construction of the Enron Intelligent
Network, sales of excess fiber and software, bandwidth interme-
diation and the delivery of content, Significant components of
Broadband Services' results are as follows:

(In millions)
Cross margin
Operating expenses
Depreciation and amortization
Other, net
 loss before interest minority interests and taxes

2000
$318
 305
  77

S (60)

    Broadband Services recognized a loss before interest, minority
interests and taxes of $60 million in 2000, Gross margin included
earnings from sales of excess fiber capacity, a significant increase in
the market value of Broadband Services' merchant investments and
the monetization of a portion of Enron's broadband content deliv-
cry platform. Expenses incurred during the period include expenses
related to building the business and depreciation and amortization,

Gui 00k
    Broadband Services is extending Enrons proven business
model to the communications industry, In 2001, Enron expects to
further develop the Enron Intelligent Network, a global broad-
band network with broad connectivity potential to both buyers
and sellers of bandwidth through Enron's pooling points, In addi-
tion, Enron expects to further deploy its proprietary Broadband
Operating System across the Enron Intelligent Network, enabling
Enron to manage bandwidth capacity independent of owning the
underlying fiber. Broadband Services expects its intermediation
transaction level to increase significantly in 2001 as more market
participants connect tothe pooling points and transact with Enron

to manage their bandwidth needs, The availability of Enron's
bandwidth intermediation products and prices on EnronOnline are
expected to favorably impact the volume of transactions. In 2001,
Broadband Services expects to continue to expand the commercial
roll-out  of its content service offerings including video-on-
demand, Enron expects the volume of content delivered over its
network to increase as more content delivery contracts are signed
and as more distribution partner locations are connected.

    Significant components of Corporate and Others BIT areas
follows:

(In millions)

BIT before items impacting
 comparability

2000       1999      1998

S(289)    $ (17)     $ 7

Items impacting comparability:
 Charge to reflect impairment
   by Azurix                            (326)       -        -
 Gains on exchange and sales of
   Enron Oil & Gas Company (EOG) stock     -     454       22
 Charge to reflect impairment of
   MTBE assets and losses on
   contracted MTBE production              -     (441)    (61)
    Loss before interest, minority
     interests and taxes               5(615)   $  (4)    $(32)

    Results for Corporate and Other in 2000 reflect operating
losses from Enron's investment in Azurix (excluding the impair-
ments discussed below) and increased information technology.
employee compensation and corporate-wide expenses,
    Results for Corporate and Other in 1999 were impacted by
higher corporate expenses, partially offset by increased earnings
from EREC resulting from     increased sales volumes from its
German manufacturing subsidiary and from the completion and
sale of certain domestic wind projects, Enron also recognized
higher earnings related to Azurix, Results in 1998 were favor-
ably impacted by increases in the market value of certain corpo-
rate-managed financial instruments, partially offset by higher
corporate expenses.
    Items impacting comparability in 2000 included a $326 mil-
lion charge reflecting Enrons portion of impairments recorded
by Azurix related to assets in Argentina, Items impacting compa-
rability in 1999 included a pre-tax gain of $454 million on the
exchange and sale of Enron's interest in FOG (see Note 2 to the
Consolidated Financial Statements) and a $441 million pre-tax
charge for the impairment of its MTBE assets (see Note 17 to the
Consolidated Financial Statements).
    During 1998, Enron recognized a pre-tax gain of $22 million
on the delivery of 10,5 million shares of EOG stock held by Enron
as repayment of mandatorily exchangeable debt, Enron also
recorded a $61 million charge to reflect losses on contracted
MTBE production,

    Interest and related charges,     net of interest capitalized
which totaled $38 million, $54 million and $66 million for 2000,
1999 and 1998, respectively, increased to $838 million in 2000
from $656 million in 1999 and $550 million in 1998, The increase
in 2000 as compared to 1999 was primarily a result of increased
long-term debt levels, increased average short-term borrowings,
short-term debt assumed as a result of the acquisition of MG plc
and higher interest rates in the U.S. The increase was partially
offset by the replacement of debt related to a Brazilian sub-
sidiary with lower interest rate debt.

							      ECaaOO2645564



     The increase in 1 999 as compared to 1998 was primarily due
to debt issuances and debt related to a Brazilian subsidiary, par-
tially offset by a decrease in debt related to EOG following the
sale and exchange of Enron's interests in August 1999. See Note
2 to the Consolidated Financial Statements.

	  Ft

     Minority interests include the following:

(In millions)                                 2000    1999     1998
Elektro(a)
Majority-owned limited liability
  company and limited partnerships            105       71        -
Enron Oil & Gas company                          -        2      24
Other                                          16       23       53
  Total                                       $154    $135      $77
(a) Relates to the resperrive parents of Elekrro. wtiith had m4'orily shareholders
  in 2000 and 1999 See NoteS to the Consolidated Financial Statement

     Minority interests include Elektro beginning January 1, 1999,
a majority-owned limited liability company and majority-owned
limited partnerships since their formation during 1998 through
2000 and EOG until the exchange and sale of Enron's interests in
August 1999 (see Note? to the Consolidated Financial Statements).

     Income tax expense increased in 2000 as compared to 1999
primarily as a result of increased earnings, decreased equity earn-
ings and decreased tax benefits related to the foreign tax rate
differential, partially offset by an increase in the differences
between the book and tax basis of certain assets and stock sales.
     Income tax expense decreased in 1999 compared to 1998
primarily as a result of increased equity earnings, tax benefits
related to the foreign tax rate differential and the audit settle-
ment related to      Monthly Income        Preferred Shares, partially
offset by increased earnings.

(:ijrri(illiuvct F Is?sjt Ct        I   (

      In 1999, Enron recorded an after-tax charge of $131 million
to reflect the initial adoption (as of January 1,1999) of two new
accounting pronouncements, the AICPA Statement of Position
98-S (SOP 98-5),     Reporting on the Costs of Start-Up Activities,"
and the Emerging Issues Task Force Issue No. 98-10,       Accounting
for Contracts Involved in Energy Trading arid Risk Management
Activities." The 1999 charge was primarily related to the adop-
tion of SOP 98-5.

N' k-V A:'(hIJRI1IN.(        ~5F)NrtHk(?i 'Mi NV

      In 1998, the Financial Accounting Standards Board (FAiR)
issued Statement of Financial Accounting Standards (SPAS) No,
133,   "Accounting           for Derivative Instruments and Hedging
Activities," which was subsequently amended by SPAS No, 137 and
SFAS No. 138. SEAS No. 133 must be applied to all derivative instru-
ments and certain derivative instruments embedded in hybrid
instruments and requires that such instruments be recorded in the
balance sheet either as an asset or liability measured at its fair
value through earnings, with special accounting allowed for cer-
tain qualifying hedges. Enron will adopt SPAS No.          133 as of
January 1, 2001. Due to the adoption of SFAS No, 133, Enron will
recognize an after-tax non-cash loss of approximately $5 million in
earnings and an after-tax non-cash gain in "Other Comprehensive
Income," a component of shareholders' equity, of approximately
$22 million from the cumulative effect of a change in accounting
principle. Enron will also reclassify $532 million from "Long-Term
Debt" to "Other Liabilities" due to the adoption.

    The total impact of Enron's adoption of SFAS Ne. 133 on
earnings and on "Other Comprehensive Income" is dependent
upon certain pending interpretations, which are currently under
consideration, including those related to "normal purchases and
normal sales" and inflation escalators included in certain con-
tract payment provisions. The interpretations of these issues, and
others, are currently under consideration by the FASA. While the
ultimate conclusions reached on interpretations being consid-
ered by the FASA could impact the effects of Enron's adoption of
SFAS No. 133,  Enron does not believe that such conclusions
would have a material effect on its current estimate of the
impact of adoption,

F tN/V CIA'. (MCNEil Ilk

     F ow:;

(In millions)

				       2000     1999     1998
Cash provided by (used in):
 Operating activities                $4,179   $1,228   $ 1,640
 Investing activities                 $264)    (3,507)  (3,965)
 Financing activities                   571    2,456     2,266

      Net cash provided by operating activities increased $3,551
million in 2000, primarily reflecting decreases in working capital,
positive operating results and a receipt of cash associated with
the assumption of a contractual obligation. Net cash provided
by operating activities decreased $412 million in 1999, primarily
reflecting increases in working capital and net assets from price
risk management activities, partially offset by increased earn-
ings and higher proceeds from sales of merchant assets and
investments, The 1998 amount reflects positive operating cash
flow from Enron's major business segments, proceeds from sales
of interests in energy-related merchant assets and cash from
timing and other changes related to Enron's commodity portfo-
lio,  partially offset by new  investments in  merchant assets
and investments,
      Net cash used in investing activities primarily reflects capital
expenditures and equity investments, which total $3,314 million
in 2000, $3,085 million in 1999 and $3,564 million in 1998, and
cash used for business acquisitions. See "Capital Expenditures and
Equity Investments" below and see Note 2 to the Consolidated
Financial Statements for cash   used for business acquisitions.
Partially offsetting these uses of cash were proceeds from sales of
non-merchant assets,    including certain equity instruments by
Energy Services and an international power project, which totaled
$494 million in 2000- Proceeds from non-merchant asset sales
were $294 million in 1999 and $239 million in 1998.
      Cash provided by financing activities in 2000 included pro-
ceeds from the issuance of subsidiary equity and the issuance of
common stock related to employee benefit plans, partially offset
by payments of dividends. Cash provided by financing activities
in 1999 included proceeds from the net issuance of short- and
long-term debt, the issuance of common stock and the issuance
of subsidiary equity, partially offset by payments of dividends.
Cash provided by financing activities in 1998 included proceeds
from the net issuance of short- and long-term debt the issuance
of common stock and the sale of a minority interest in a sub-
sidiary, partially offset by payments of dividends.

								 E0aa002648565



  I'                       v                                  AKtW..-A  )~
     Capital expenditures by operating segment are as follows:

2001

(In millions)

Estimate    2000

1999    1998

Transportation and Distribution   $ 140   S 270    $ 316   $ 310
Wholesale Services                  570    1.280   1,216     706
Retail Energy Services               50      70       64      75
Broadband Services                  700     436         -       -
Exploration and Production             -       -     226     690
Corporate and Other                  40     325      541     124
 Total                            $1,500  $2381    $2,363  $1,905

    Capital expenditures increased $18 million in 2000 and $458
million in 1999 as compared to the previous year. Capital expen-
ditures in 2000 primarily relate to construction of power plants
to extend Wholesale Services' network and fiber optic network
infrastructure for Broadband Services. During 1999, Wholesale
Services expenditures increased due primarily to construction of
domestic and international power plants. The 1999 increase in
Corporate and Other reflects the purchase of certain previously
leased MTBE-related assets.
    Cash used for investments in equity affiliates by the operat-
ing segments is as follows:

(In millions)                             2000    1999   1998
Transportation and Distrrbutson           $  1    $  -  S  27
Wholesale Services                         911     712    703
Corporate and Other                         21      10    929
 Total                                    $933    $722  $1,659

      Equity investments in 2000 relate primarily to capital invested
for the ongoing construction, by a joint venture, of a power plant
in India as well as other international investments. EqtAty invest-
ments in 1999 relate primarily to an investment in a joint venture
that holds gas distribution and related businesses in South Korea
and the power plant project in India.
      The level of spending for capital expenditures and equity
investments will vary depending upon conditions in the energy
and broadband markets, related economic conditions and den-
titled  opportunities. Management   expects that the capital
spending program will be funded by a combination of internally
generated funds, proceeds from dispositions of selected assets
and short- and long-term borrowings.

       I(J
      At December 31, 2000, Enron had working capital of $2.0
billion. If a working capital deficit should occur, Enron has credit
facilities  in place to fund  working  capital requirements.
At December 31, 2000. those credit lines provided for up to
$4.2 billion of committed and uncommitted credit, of which
$290 million was outstanding. Certain of the credit agreements
contain    prefunding covenants. However, such covenants are
not expected to restrict Enron's access to junds under these
agreements. In addition. Enron sells commercial paper and has
agreements to sell trade accounts receivable, thus providing
financing to meet seasonal working capital needs. Management
believes that the sources of funding described above are suffi-
cient to meet short- and long-term liquidity needs not met by
cash flows from operations.

    Total capitalization at December 31, 2000 was $25.0 billion.
Debt as a percentage of total capitalization increased to 40.9
percent at December 31, 2000 as compared to 38.5 percent at
December 31, 1999. The increase in the ratio primarily reflects
increased debt levels and the impact on total equity of the
decline in the value of the British pound sterling. This was par-
tially offset by the issuances, in 2000, of Enron common stock
and the contribution of common shares (see Note 16 to the
Consolidated Financial Statements). The issuances of Enron com-
mon stock primarily related to the acquisition of a minority
shareholders interest in Enron Energy Services, INC and the
exercise of employee stock options.
    Enron is a party to certain financial contracts which contain
provisions for early settlement in the event of a significant
market price decline in which Enrons common stock falls below
certain levels (prices ranging from $28.20 to $55.00 per share) or
if the credit ratings for Enron's unsecured, senior long-term debt
obligations fall below investment grade. The impact of this early
settlement could include the issuance of additional shares of
Enron common stock.
    Enron's senior unsecured long-term debt is currently rated
BBB+ by Standard & Poor's Corporation and Fitch IBCA and Baal
by Moody's Investor Service. Enrons continued investment grade
status is critical to the success of its wholesale businesses as well
as its ability to maintain adequate liquidity. Enrons management
believes it will be able to maintain its credit rating.

Financial Risk Management
    Wholesale Services offers price risk management services
primarily related to commodities associated with the energy
sector (natural gas, electricity, crude oil and natural gas liquids).
Energy Services and Broadband Services also offer price risk man-
agement services to their customers. These services are provided
through a variety of financial instruments including forward
contracts, which may involve physical delivery, swap agreements,
which may require payments to (or receipt of payments from)
counterparties based on the differential between a fixed and
variable price for the commodity, options and other contractual
arrangements. Interest rate risks and foreign currency risks asso-
ciated with the fair value of Wholesale Services' commodities
portfolio are managed using a variety of financial instruments.
including financial futures, swaps and options.
    On a much more limited basis, Enron's other businesses also
enter into financial instruments such as forwards, swaps and
other contracts primarily for the purpose of hedging the impact
of market fluctuations on assets, liabilities, production or other
contractual commitments. Changes in the market value of these
hedge transactions are deferred until the gain or loss is recog-
nized on the hedged item.
    Enron manages market risk on a portfolio basis, subject to
parameters established by its Board of Directors. Market risks
are monitored by an independent risk control group operating
separately from the units that create or actively manage these
risk exposures to ensure compliance with Enrons stated risk
management policies.

ECaaOO2S48566



   k.4

    The use of financial instruments by Enron's businesses may
expose Enron to market and credit risks resulting from adverse
changes in commodity and equity prices, interest rates and foreign
exchange rates. For Enrons businesses, the major market risks are
discussed below:
    Commodity Price Risk. Commodity price risk is a consequence
of providing price risk management services to customers. As dis-
cussed above, Enron actively manages this risk on a portfolio basis
to ensure compliance with Enron's stated risk management policies.
    Interest Rate Risk. Interest rate risk is also a consequence of
providing price risk management services to customers and having
variable rate debt obligations, as changing interest rates impact
the discounted value of future cash flows. Enron utilizes forwards.
futures, swaps and options to manage its interest rate risk.
    Foreign  Currency Exchange Rate Risk.  Foreign currency
exchange rate risk is the result of Enron's international operations
and price risk management services provided to its worldwide
customer base. The primary purpose of Enron's foreign currency
hedging activities is to protect against the volatility associated
with foreign currency purchase and sale transactions. Enron pri-
marily utilizes forward exchange contracts, futures and purchased
options to manage Enrons risk profile.
    Equity Risk. Equity risk arises from Enron's participation in
investments. Enron generally manages this risk by hedging spe-
cific investments using futures, forwards, swaps and options.
    Enron evaluates, measures and manages the market risk in
its investments on a daily basis utilizing value at risk and other
methodologies. The quantification of market risk using value at
risk provides a consistent measure of risk across diverse markets
and products. The use of these methodologies requires a num-
ber of key assumptions including the selection of a confidence
level for expected losses, the holding period for liquidation and
the treatment of risks outside the value at risk methodologies.
including liquidity risk and event risk. Value at risk represents an
estimate of  reasonably possible net losses in earnings that
would be recognized on its investments assuming hypothetical
movements in future market rates and no change in positions.
Value at risk is not necessarily indicative of actual results which
may occur.

							   Enron performs regular stress and scenario analyses to estimate
							   the economic impact of sudden market moves on the value of its
							   portfolios. The results of the stress testing, along with the pro-
							   fessional judgment of experienced business and risk managers.
							   are used to supplement the value at risk methodology and cap-
							   ture additional market-related risks, including volatility, liquidity
							   and event, concentration and correlation risks.
								The following table illustrates the value at risk for each
							   component of market risk:

										December 31.    Year ended December 31, 2000
													 High     Low
										 2lXtj  1999  Averaget~1 valuation Ca) Valuationid)

								  (In millions)

							   Trading Market Risk:
							     Commodity price (b)
							     Interest rate
							     Foreign currency
							       exchange rate
							     Equity Cc)

										 $66  $21

											    $50

												     $81       $23

										  59   26     45       59       36

							    Non-Trading Market Riskid):
							     Commodity price          2    1     2        5        2
							     Intereitrate             -    2     1        2
							     Foreign currency
							       exchange rate          8    4     8       10        4
							     Equity                   7    3     6        7        5
							    (a) The average value present a twelve month average of the month-end values.
							      The high and tori, valuations for each market risk component represenr the
							      h4hesr and lowest monrh-er,ri vaitte during 2000.
							    W In 2000. increased natural gas prices combined vvirh increased price volatility in
							      power and gas market caused Enron 's value at risk to increase significantly
							    fc) Enron s equity trading market risk prima rily relates to merchant investments
							      (see Note 4 to the Consolidated Financial Starementi In 2000. the vaksearrkk
							      model utilized for equity trading marlcet risk was refried to mo,-e close4' cor-
							      relate with the valuation methodologies used for merchant activities
							    fd) Includes only the risk related to the friancial insrn.sment that serve as hedges
							      and does not include the related underfying hedged tern.

							    Atxt.t.isitiscq PoNcies
								Accounting policies for price risk management and hedging
							    activities are described in Note 1 to the Consolidated Financial
							    Statements.

"J,,iwo at Intl

      Enron has performed an entity-wide value at risk analysis of
virtually all of Enrons financial instruments, including price risk
management activities and merchant investments. Value at risk
incorporates numerous variables that could impact the fair value
at Enroot investments.     including commodity prices, interest
rates,  foreign   exchange rates, equity prices and associated
volatilities,  as well as correlation within and  across these
variables. Enron estimates value at risk for commodity, interest
rate and foreign exchange exposures using a model based on
Monte Carlo simulation of delta/gamma positionswhich captures
a significant portion of the exposure related to option positions.
The value at risk for equity exposure discussed above is based on
JR Morgan's RiskMetricsM approach. Both value at risk methods
utilize a one-day holding period and a 95% confidence level.
Cross-commodity correlations are used as appropriate.
      The use of value at risk models allows management to
aggregate risks across the company, compare risk on a consistent
basis and identify the drivers of risk. Because of the inherent
limitations to value at risk, including the use of delta/gamma
approximations to value options, subjectivity in the choice of
liquidation period and reliance on historical data to calibrate the
models, Enron relies on value at risk as only one component in its
risk control process. In addition to using value at risk measures,

														     ECaaOO2848567



In [craw hon Regarding ForvvarcLLooking
Sta tern en ts
     This Report includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21 F of the Securities Exchange Act of 1934. All statements other
than statements of historical facts contained in this document
are  forward-looking  statements. Forward-looking  statements
include, but are not limited to, statements relating to expansion
opportunities  for the Transportation Services, extension of
Enron's business model to new markets and industries, demand
in the  market for broadband   services and high   bandwidth
applications. transaction volumes in the U.S. power market, com-
mencement of commercial operations of new power plants and
pipeline projects, completion of the sale of certain assets and
growth in the demand for retail energy outsourcing solutions,
When used in this document, the words  anticipate,  believe,
  estimate.---expects,---intend,'  may,----project.   plan,
  should  and similar expressions are intended to be among the
statements that identify forward-looking statements, Although
Enron believes that its expectations reflected in these forward-
looking statements are based on reasonable assumptions, such
statements involve risks and uncertainties and no assurance can
be given that actual results will be consistent with these forward-
looking statements, Important factors that could cause actual
results to differ materially from those in the forward-looking
statements herein include success in marketing natural gas and
power to wholesale customers; the ability of Enron to penetrate
new retail natural gas and electricity markets (including energy
outsourcing markets) in the United States and foreign jurisdic-
tions; development of Enrons broadband network and customer
demand for intermediation and content services; the timing,
extent and market effects of deregulation of energy markets in
the United States, including the current energy market condi-
tions in California, and in foreign jurisdictions; other regulatory
developments in the United States and in foreign countries,
including tax legislation and regulations; political developments
in foreign countries; the extent of efforts by governments to
privatize natural gas and electric utilities and other industries;
the timing and extent of changes in commodity prices for crude
oil, natural gas, electricity, foreign currency and interest rates;
the extent of success in acquiring oil and gas properties and in
discovering, developing, producing and marketing reserves; the
timing and success of Enron's efforts to develop international
power, pipeline and other infrastructure projects; the effective-
ness of Enrons risk management activities; the ability of coun-
terparties to financial risk management instruments and other
contracts with Enron to meet their financial commitments to
Enron; and Enron's ability to access the capital markets and equi-
ty markets during the periods covered by the forward-looking
statements, which will depend on general market conditions and
Enron's ability to maintain the credit ratings for its unsecured
senior long-term debt obligations,

Managernen t 's Responsibility for Financial
Reporting
    The following financial statements of Enron Corp and sub-
sidiaries (collectively, Enron) were   prepared by management,
which is responsible for their integrity and objectivity. The state-
ments have been prepared in conformity with generally accepted
accounting principles and necessarily include some amounts that
are based on the best estimates and judgments of management.
    The system of internal controls of Enron is designed to
provide reasonable assurance as to the reliability of financial
statements and    the    protection of assets from unauthorized
acquisition,  use or disposition. This system is augmented    by
written policies and guidelines and the careful selection and
training of qualified personnel. It should be recognized, however,
that there are inherent limitations in the effectiveness of any
system of internal control, Accordingly, even an effective internal
control system   can     provide  only reasonable assurance with
respect to the preparation of reliable financial statements and
safeguarding of assets, Further, because of changes in conditions,
internal control system effectiveness may vary over time.
    Enron assessed its internal control system as of December 31,
2000, 1999 and 1998, relative to current standards of control
criteria. Based upon this assessment, management believes that
its system of internal controlswas adequate during the periods to
provide reasonable assurance as to the reliability of financial
statements and the protection of assets against unauthorized
acquisition, use or disposition,
    Arthur Andersen tIP was engaged to audit the financial
statements of Enron and issue reports thereon. Their audits
included    developing    an  overall  understanding of  Enrons
accounting systems, procedures and internal controls and con-
ducting tests and other auditing procedures sufficient to support
their opinion on the financial statements. Arthur Andersen LIP
was also engaged to examine and report on management's
assertion about the effectiveness of Enrons system of internal
controls, The Reports of Independent Public Accountants appear
in this Annual Report.
    The adequacy of Enrons financial controls and the account-
ing principles employed in financial reporting are under the
general oversight of the Audit Committee of Enron Corp.'s Board
of Directors,   No member of this committee is an officer or
employee of Enron. The independent public accountants have
direct access to the Audit Committee, and they meet with the
committee from time to time, with and without financial man-
agement present, to discuss accounting, auditing and financial
reporting matters.

ECaaOO2648568



Reports Of lr)depefldefl t Pub/ic AccOUntan S

To the Shareholders and Board of Directors of Enron Corp.:

      We have examined management's assertion that the system
of internal control of Fnron Corp. (an Oregon corporation) and
subsidiaries as  of  December  31,  2000, 1999 and 1998 was
adequate to provide reasonable assurance as to the reliability of
financial statements and the protection of assets from unautho-
rized acquisition, use or disposition, included in the accompany-
ing   report on    Management's   Responsibility for Financial
Reporting. Management is responsible for maintaining effective
internal control over the reliability of financial statements and
the protection of assets against unauthorized acquisition, use or
disposition. Our   responsibility is to express an opinion on
management's assertion based on our examination.
      Our examinations were made in accordance with attesta-
tion standards established by the American Institute of Certified
Public   Accountants and,  accordingly, included obtaining an
understanding of the system of internal control, testing and eval-
uating the design and operating effectiveness of the system of
internal control and such other procedures as we considered
necessary in the circumstances. We believe that our examinations
provide a reasonable basis for our opinion.
      Because of inherent limitations in any system of internal
control, errors or irregularities may occur and not be detected.
Also, projections of any evaluation of the system of internal
control to future periods are sublect to the risk that the system
of internal control may become inadequate because of changes
in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
      In our opinion, management's assertion that the system of
internal  control  of Fnron  Corp.  and its subsidiaries as of
December 31, 2000, 1999 and 1998 was adequate to provide rea-
sonable assurance as to the reliability of financial statements and
the protection of assets from unauthorized acquisition, use or
disposition is fairly stated, in all material respects, based upon
current standards of control criteria.

Arthur Andersen lIP

							    To the Shareholders and Board of Directors of Fnron Corp.:

								We have audited the accompanying consolidated balance
							    sheet of Enron Corp. (an Oregon corporation) and subsidiaries as
							    of December 31, 2000 and 1999, and the related consolidated
							    statements of income, comprehensive income, cash flows and
							    changes in shareholders' equity for each of the three years in the
							    period ended December 31, 2000. These financial statements are
							    the responsibility of Enron Corp.'s management. Our responsibil-
							    ity is to express an opinion on these financial statements based
							    on our audits.
								We conducted our audits in accordance with auditing stan-
							    dards generally accepted in the United States. Those standards
							    require that we plan and perform the audit to obtain reasonable
							    assurance about whether the financial statements are free of
							    material misstatement. An audit includes examining, on a test
							    basis, evidence supporting the amounts and disclosures in the
							    financial  statements. An audit also includes assessing the
							    accounting   principles used and significant estimates made
							    by management,    as well as evaluating the overall financial
							    statement presentation. We believe that our audits provide a
							    reasonable basis for our opinion.
								In our opinion, the financial statements referred to above
							    present fairly, in all material respects, the financial position of
							    Enron Corp. and subsidiaries as of December 31, 2000 and 1999,
							    and the results of their operations, cash flows and changes in
							    shareholders' equity for each of the three years in the period
							    ended December 31, 2000, in conformity with accounting princi-
							    ples generally accepted in the United States.
								As discussed in Note 18 to the consolidated financial state-
							    ments,   Enron Corp. and subsidiaries changed its method of
							    accounting for costs of start-up activities and its method of
							    accounting for certain contracts involved in energy trading and
							    risk management activities in the first quarter of 1999.

							    Arthur Andersen LIP

							    Houston, Texas
							    February 23, 2001

Houston, Texas
February 23, 2001

														ECaaOO2648569



Error? Corp. and Subsidiaries Consolidaied Inc orne Statement

									      Year ended December 31,

(In m,Ilions, except per shave amounts)
Revenues
  Natural gas and other products
  Electricity
  Metals
  Other
   Total revenues

Costs and Expenses
  Cost of gas, electricity, metals and other products
  Operating expenses
  Depreciation, depletion and amortization
  Taxes, other than income taxes
  Impairment of long-lived assets
   Total costs and expenses

Operating Income

Other Income and Deductions
  Equity in earnings of unconsolidated equity affiliates
  Gains on sales of non-merchant assets
  Gains on the issuance of stock by TNPC, Inc.
  Interest income
  Other income, net
Income Before Interest, Minority Interests and Income Taxes

Interest and related charges, net
Dividends on company-obligated preferred securities of subsidiaries
Minority interests
Income tax expense
Net income before cumulative effect of accounting changes
Cumulative effect of accounting changes, net of tax
Net Income

Preferred stock dividends
Earninqs on Common Stock

							       2000

										       1999

							    S 50,500
							      33,823
							       9,234
							       7,232

										     $19,536
										      15.238

										       5,338

													       1998

													    513.276
													     13,939

													      4,045

							     100785                    40.112                 31.260

							      94,517                   34,761                 26,381
							       3184                     3,045                   2,473
								 855                     870                     827
								 280                     193                     201
								    -                    44t
							      98836                    39,310                 29.882

							       1,953                     802                    1378

								  87                     309                      97
								 146                     541                      56
								 121
								 212                     162                      88
								 (37)                    181                     (37)
							       2482                     1,995                   1,582

								 838                     656                     550
								  77                      76                      77
								 154                     135                      77
								 434                     104............- -      175
								 979                    1,024                    703

													     -      --____
								 979                     893                     703

								  83                      66                      17
							    $    896                  $  827                  $  686

Earnings Per Share of Common Stock
  Basic
   Before cumulative effect of accounting changes                  S   1.22                 $   136                  $  1.07
   Cumulative effect of accounting changes                                                    (0,19)
     Basic earnings per share                                      $   1.22                 $   117                  $  1.07
  Diluted
   Before cumulative effect of accounting changes                  S   1.12                 $   117                  $  1.01
   Cumulative effect of accounting changes                                 -                  (0.17)
     Diluted earnings per share                                    S   1.12                 $   1.10                 $  1.01
Average Number of Common Shares Used in Computation
  Basic                                                                736                      705                     642
  Diluted                                                              814                      769                     695

Enron Corp. and Subsidiaries Consolidated Statement of Comprehensive Income
											Year ended December 31,
(In milli ns)                                                           2000                     1999                   1998
Net income                                                           S   979                    $893                   $ 703
Other comprehensive income:
  Foreign currency translation adjustment and other                     (307)                    (579)    __   __         (14)
Total Comprehensive Income                                           S   672                    $314                   $ 689
The acconipanyinq notes are an integral part of these consolidated fnancialsfarements.

														     ECaaOO264857O



Enron Corp and Subsidia des Cunsolida ted Balance Sheet

December 31,

(In millions, except shares)
ASSETS
Current Assets
 Cash and cash equivalents
 Trade receivables (net of allowance for doubtful
   accounts of $133 and $40, respectively)
 Other receivables
 Assets from price risk management activities
 Inventories
 Deposits
 Other
   Total current assets

2000                    1999

$ 1,374

Investments and Other Assets
  Investments in and advances to unconsolidated equity affiliates
  Assets from price risk management activities
  Goodwill
  Other
    Total investments and other assets

Property, Plant and Equipment, at cost
  Natural gas transmission
  electric generation and distribution
  Fiber-optic network and equipment
  Construction in progress
  Other

  less accumulated depreciation, depletion and amortization
    Property, plant and equipment, net

$   288

10,395                   3,030
 1,874                    518
12,018                   2,205
  953                     598
 2,433                     81
 1,333                    535
30,321                   7255

 5,294                   5,036
 8,988                   2.929
 3,638                   2,799
 5,459                   4,681
23,379                  15.445

 6,916                   6,948
 4,766                   3,552
  839                     379
  682                    1,120
 2,256                   1,913
15.459                  13,912
 3,716                   3,231
11,743                  10,681

Total Assets

										     $65,503

													    $33,381

The accompanying notes are an nteg,a(part of these consolidared fr,ancia) statement.

															   ECaaOO2648571



December 31,

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
 Accounts payable
 Liabilities from price risk management activities
 Short-term debt
 Customers' deposits
 Other

2000                    1999

 9,777
10,495
 1,679
 4,277
 2,178

Total current liabilities

$ 2,154
  1,836
  1,001
    44
  1,724

28,406                   6,759    ______

Long-Term Debt

Deferred Credits and Other Liabilities
 Deferred income taxes
 Liabilities from price risk management activities
 Other
   Total deferred credits and other liabilities

 8,550                   7,151

 1,644                   1,894
 9,423                   2,990
 2.692                   1,587
13,759                   6,471

Commitments arid Contingencies (Notes 13. 14 and IS)

Minority Interests

Company-Obligated Preferred Securities of Sttsidiaries

Shareholders Equity
 Second preferred stock, cumulative, no par value, 1,370,000 shares authorized,
   1,240,933 shares and 1,296,184 shares issued, respectively
 Mandatorily Convertible Junior Preferred Stock, Series B,
   no par value, 250,000 shares issued
 Common stock, no par value, 1,200,000,000 shares authorized,
   752,205,112 shares and 716.865.081 shares issued, respectively
 Retained earnings
 Accumulated other comprehensive income
 Common stock held in treasury, 577,066 shares and 1,337,714 shares, respectively
 Restricted stock and other
   Total shareholders' equity

2,414                   2,430

 904                    1,000

 124

1,000

 130

1,000

8,348                     6,637
3,226                     2,698
(1,048)                    (741)
  (32)                      (49)
 (148)                     (105)
11,470                    9,570

Total Liabilities and Shareholders' Equity

$65,503

$33,381

ECaaOO2648572



Enron Corp. and Subsidiaries Conso/idated Statement of Cash Flows
										  Year ended December 31.
(In millions)                                                      2000                    1999                    1998
Cash flows Front Operating Activities
Reconciliation of net income to net cash provided by operating activities
  Net income                                                     S  979
  Cumulative effect of accounting changes

  Depreciation, depletion and amortization
  Impairment of long-lived assets (including equity investments)
  Deferred income taxes
  Gains on sales of non-merchant assets
  Changes in components of working capital
  Net assets from price risk management activities
  Merchant assets and investments:
   Realized gains on sales
   Proceeds from sales
   Additions and unrealized gains
  Other operating activities
Not Cash Provided by Operating Activities

Cash Flows Froo, Investing Activities
  Capital expenditures
  Equity investments
  Proceeds from sales of non-merchant assets
  Acquisition of subsidiary stock
  Business acquisitions, net of cash acquired (see Note 2)
  Other investing activities
Net Cash Used in Investing Activities

Cash Flows Front Financing Activities
  Issuance of long-term debt
  Repayment of long-term debt
  Net increase (decrease) in short-term borrowings
  Net issuance (redemption) of company-obligated
   preferred securities of subsidiaries
  Issuance of common stock
  Issuance of subsidiary equity
  Dividends paid
  Net disposition of treasury stock
  Other financing activities
Net Cash Provided by Financing Activities

								 855
								 326
								 207
								 (146)
							       1,769
								 (783)

										     $  893
											131
											870
											441
											 21

											(541)
										      (1,000)
											(395)

													     $   703

														 827

														  87
														 (82)
														 (233)
														 350

								(104)                     (756)                  (628)
							       1,839                     2,217                  1,434
							      fIns)                       (827)                  (721)
							       1113                       174                     (97)
							       4779                      1,228                  1,640

							       (2,381)                  (2,363)                   (1,905)
								 (933)                     (722)                  (1,659)
								 494                       294                     239
								 (485)                                             (180)
								 (777)                     (311)                   (104)
								 (182)                     (405)                   (356)
							       (4,264)                  (3,507)                   (3,965)

							       3,894                     1,776                     1,903
							       (2,337)                  (1,837)                    (870)
							       (1,595)                   1,565                     (158)

								 (96)                                                 8
								 307                       852                     867
								 500                       568                     828
								 (523)                     (467)                   (414)
								 327                       139                       13
								  (6)                      (140)                     89
								 571                     2,456                     2,266

Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents. Beginning of Year
Cash and Cash Equivalents. End of Year

							       1,066
								 288

											177

											111

														(59)
														170

							     - $ 1,374                  $  2
														 $  111
Changes in Components of Working Capital
  Receivables                                                   6(8,203)                $  (662)                 1(1,055)
  Inventories                                                    1,336                     (133)                   (372)
  Payables                                                       7,187                     (246)                    433
  Other                                                          1469                       41                      761
   Total                                                        $ 1,769                 $(1,000)                 $ (233)
The accompanying flares are an in tegral part of these consolidated franciat statements

								ECaaOO2648573



Enron Corp. and Subsidiaries ConsclidaiQd

SMternent of Changes in Sf~arehoIders'Equity

fIr millions, except per share
amounts, shares in thousa~~s)
Cumulative Second Preferred Convertible Stock
  Balance, beginning of year
  Exchange of convertible preferred stock for common stock
  Balance, end of yea--------------- -
Mandatorily Convertible Junior Preferred Stock, Serses B
  Balance, beginning of year
  Issuances
  Balance, end of year
Common Stock
  Balance, beginning of year
  Exchange of convertible preferred stock for common stock
  Issuances related to benefit
  and dividend reinvestment plans
  Sales of common stock

 Issuances of common stock in business acquisitions
   (see Note 2)
 Other

								2000
							  Shares   Amount

							   1,296   S   130
							     (55)
							   1,241...S   124

							     250   $ 1.000

							     250   S 1,000

							 716. 865
							   1.509

								    6,637
									6

										    1999                 1998
									      Shares   Amount        Shares  Amount

									       1,320     $ 132

									       1,296     $ 130

										    -    $    -

										 250      1,000
										 250     $1,000

									     671094      $5,117
										 465         (1)

							  28,100       966     10,054       258
								-              27,600       839

												     1,338    $  134
												      (13)        2=
												     1,320    $  132

								   $

													      $    -

												   636,594    $4,224
													  -       (7)

												    34,500

														 45
														836

								    5.731      409       7,652      250            -        -
									-      330           -      174            -       19
  Balance, end of year                                            752,205  6 8,348     716,865    $6,637     671,094   $5,117
Retained Earnings
  Balance, beginning of year                                               $ 2,69~                $2,226               $1,852
  Net income                                                                   979                  893                   703
  Cash dividends
   Common stock (10.5000, 10.5000 and $04812
    per share in 2000. 1999 and 1998, respectively)                            (363)                (355)                (312)
   Cumulative Second Preferred Convertible Stock
    ($13,652, 113.652 and 113.1402 per share in 2000,
     1999 and 1998, respectively)                                              (17)                                       (17)
   Series A and B Preferred Stock

								      (66)
								  $ 3,226

											   (17)
											   (49)
											$2,698

													     $2,226

  Balance, en..of..ea
Accumulated Other Comprehensive Income
  Balance, beginning of year                                                  $  (7411                1 (162)                S. (148)
  Translation adjustments and other..............................................(~q7*), -~             (579)                   (14)
  Balance, end of year                                                        S (1,048)               $ (741)                $ (162)
Treasury Stock
  Balance, beginning of year                                          (1,338) S   (49)     (9,334)    $ (195)    (14,102)    $ (269)
  Shares acquired                                                     (3.114)    (234)     (1,845)       (71)     (2,236)       (61)
  Exchange of convertible preferred stock for common stock                 -                  181         4         486           9
  Issuances related to benefit and dividend reinvestment plans         3,875      251       9,660        213       6,426        124
  Issuances of treasury stock in business acquisitions................................           -                   92           2
  Balance, end of year                                                  (577) $   (32)0.338)          $  (49)     (9.334)      (195)
Restricted Stock and Oilier
  Balance, beginning of year                                                  S  (105)                $  (70)                $ (175)
  Issuances related to benefit and dividend reinvestment plans                    (43)                   (35)                   105
  Balance, end of year..........-                                             $   ~                   $ (105)                $  (70)
Total Shareholders Equity                                                     $11,470                 $9,570                 $7,048
The accompanying notes are an integral pa C? of these consolidated (henna? statements.

							      ECaaOO2648574



Fnrcri Corp. and Subsidiaries Notes to the
Consobda ted Financial Statements

			 ICAM /Ci. C>lNl~iNCPOi*j(*>L5.

			   '-'I

    The accounting and financial reporting policies of Enron
Corp. and its subsidiaries conform to generally accepted account-
ing principles and prevailing industry practices. The consolidated
financial statements include the  accounts of all subsidiaries
controlled by Enron Corp. after the elimination of signifkant
intercompany accounts and transactions.
    The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make  estimates   and  assumptions that  affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
    'Enron    is used from time to time herein as a collective
reference to Enron Corp. and its subsidiaries and affiliates. The
businesses of Enron are conducted by its subsidiaries and affili-
ates whose operations are managed by their respective officers.

    Enron records as cash equivalents all highly liquid short-term
investments with original maturities of three months or less.

    Inventories consist primarily of commodities, priced at market
as such inventories are used in trading activities.

			   At ricr1i7=iti()ri

    The    provision for depreciation and  amortization with
respect to operations other than oil and gas producing activities
is computed using the straight-line or regulatorily mandated
method, based on estimated economic lives. Composite depreci-
ation rates are applied to functional groups of property having
similar economic characteristics. The cost of utility property units
retired, other than land, is charged to accumulated depreciation.
    Provisions for depreciation, depletion and amortization of
proved oil and gas properties are calculated using the units-of-
production method.

    Enron accounts for income taxes using an asset and liability
approach under which deferred assets and liabilities are recog-
nized based on anticipated future tax consequences attributable
to differences between financial statement carrying amounts of
assets and liabilities and their respective tax bases (see Note 5).

	     Shirt

    Basic   earnings per share is computed  based  upon the
weighted-average    number  of  common   shares outstanding
during the periods. Diluted earnings per share is computed based
upon the weighted-average number of common shares out-
standing plus the assumed issuance of common shares for all
potentially dilutive securities. All share and per share amounts
have been adjusted to reflect the August 13. 1999 two-for-one
stock split. See Note 11 for a reconciliation of the basic and dilut-
ed earnings per share computations.

     Enron engages in price risk management activities for both
trading and non-trading purposes. Instruments utilized in con-
nection with trading activities are accounted for using the mark-
to-market     method.   Under  the mark-to-market  method   of
accounting, forwards, swaps, options, energy transportation con-
tracts utilized for trading activities and other instruments with
third parties are reflected at fair value and are shown as "Assets
and Liabilities from Price Risk Management Activities'  in the
Consolidated Balance Sheet. These activities also include the
commodity risk management component embedded in energy
outsourcing contracts. Unrealized gains and losses from newly
originated contracts, contract restructurings and the impact of
price movements are recognized as "Other Revenues." Changes
in the assets and liabilities from price risk management activities
result primarily from changes in the valuation of the portfolio of
contracts, newly originated transactions and the timing of settle-
ment relative to the receipt of cash for certain contracts. The
market prices used to value these transactions reflect manage-
ment's best estimate considering various factors including closing
exchange      and over-the-counter quotations, time value and
volatility factors underlying the commitments.
     Financial   instruments  are also utilized for non-trading
purposes to hedge the impact of market fluctuations on assets,
liabilities,  production  and  other contractual commitments.
Hedge accounting is utilized in non-trading activities when there
is a high degree of correlation between price movements in the
derivative and the item designated as being hedged. In instances
where the anticipated correlation of price movements does not
occur, hedge accounting is terminated and future changes in
the value of the financial instruments are recognized as gains or
losses. If the hedged item is sold, the value of the financial
instrument is recognized in income. Gains and losses on financial
instruments used for hedging purposes are recognized in the
Consolidated    Income Statement in the same manner as the
hedged item.
     The cash flow impact of financial instruments is reflected as
cash  flows    from  operating  activities in the Consolidated
Statement of Cash Flows. See Note 3 for further discussion of
Enron's price risk management activities.

Ascoj- rt~nq ~or r~ =vnlooTer- Act iv:.;

     Development costs related to projects, including costs of
feasibility studies, bid preparation, permitting, licensing and con-
tract negotiation, are expensed as incurred until the project is
estimated to be probable. At that time, such costs are capitalized
or expensed as incurred,     based on the  nature of the costs
incurred.     Capitalized development  costs may be  recovered
through reimbursements from joint venture partners or other
third parties, or classified as part of the investment and recov-
ered through the cash flows from that project. Accumulated
capitalized project development costs are otherwise expensed in
the period that management determines it is probable that the
costs will not be recovered.

     Expenditures that relate to an existing condition caused by
past operations,   and do not contribute to current or future
revenue generation, are expensed. Environmental expenditures
relating to current or future revenues are expensed or capitalized
as appropriate based on the nature of the costs incurred. Liabilities
are recorded when environmental assessments and/or clean-ups
are probable and the costs can be reasonably estimated.

								 ECaaOO2648575



     Direct costs of materials and services consumed in developing
 or obtaining software, including payroll and payroll-related costs
 for employees who are directly associated with and who devote
 time to the software project are capitalized. Costs may begin to be
 capitalized once the application development stage has begun. All
 other costs are expensed as incurred. Enron amortizes the costs on
 a straight-line  basis  over the useful life of the software.
 Impairment is evaluated based on changes in the expected useful-
 ness ot the software. At December 31, 2000 and 1999, Enron has
 capitalized, net of amortization, $381 million and $240 million,
 respectively, of software costs covering numerous systems, includ-
 ing trading and settlement, accounting, billing, and upgrades.

		  '''\L>.1]aterl Affii<lNv,

     Investments in unconsolidated affiliates are accounted for
 by the equity method, except for certain investments resulting
 from Enrons merchant investment activities which are included
 at market value in "Other Investments" in the Consolidated
 Balance Sheet. See Notes 4 and 9. Where acquired assets are
 accounted for under the equity method based on temporary con-
 trol, earnings or losses are recognized only for the portion of the
 investment to be retained.

	S ,.~KVrv  Vt,<k

     Enron accounts for the issuance of stock by its subsidiaries in
 accordance with the Securities and Exchange Commission's Staff
 Accounting Bulletin (SAB) Si. SAB 51 allows for Enron to recog-
 nize a gain in the amount that the offering price per share of a
 subsidiary's stock exceeds Enron's carrying amount per share.

     For international subsidiaries, asset and liability accounts
 are translated at year-end rates of exchange and revenue and
 expenses are translated at average exchange rates prevailing
 during the year. For subsidiaries whose functional currency is
 deemed to be other than the U.S. dollar, translation adjustments
 are included as a separate component of other comprehensive
 income and shareholders' equity. Currency transaction gains and
 losses are recorded in income.
     During 1999, the exchange rate for the Brazilian real to the
 U.S. dollar declined, resulting in a non-cash foreign currency
 translation adjustment reducing the value of Enron's assets and
 shareholders' equity by approximately $600 million.

     Certain reclassifications have been made to the consolidated
 financial statements for prior years to conform with the current
 presentation.

 2   2,' '!'J' V A.  ~.     tA A V K 'QSIIICN2

     In  2000,    Enron,  through  a wholly-owned   subsidiary,
 acquired all of the outstanding common shares of MG plc. a
 leading independent      international metals market.making
 business that provides financial and marketing services to the
 global metals industry, for $413 million in cash and assumed
 debt of approximately $1.6 billion.
     In addition,    Enron  made other acquisitions including a
 technology-related company, a facility maintenance company
 and all minority shareholders' interests in Enron Energy Services.
 [[C and Enron Renewable Energy Corp. Enron issued 5.7 million
 shares of Enron common stock, contributed common stock and
 warrants of an unconsolidated equity affiliate and paid cash in
 these transactions.

     On August 16, 1999, Enron exchanged approximately 62.3
million shares (approximately 75%) of the Enron Oil & Gas
Company (FOG) common stock it held for all of the stock of
FOCI-India, Inc.. a subsidiary of FOG. Also in August 1999. Enron
received net proceeds of approximately $190 million for the sale
of 8.5 million shares of FOG common stock in a public offering
and issued approximately $255 million of public debt that is
exchangeable in July 2002 into approximately 11.5 million shares
of FOG common stock. As a result of the share exchange and
share sale. Enron recorded a pre'tax gain of $454 million ($345
million aftertax, or $0.45 per diluted share) in 1999. As of August
16, 1999, FOG is no longer included in        Enron's consolidated
financial statements. EOGI'lndia, Inc. is included in the consoli-
dated  financial   statements      within the Wholesale    Services
segment following the exchange and sale. Enron accounts for its
oil and gas exploration and production activities under the suc-
cessful efforts method of accounting.
     In August 1998, Enron, through a wholly-owned subsidiary,
completed the acquisition of a controlling interest in Elektro
Fletricidade C Sensivos SA. (Flektro) for approximately $1.3 bil-
lion. Flektro was initially accounted for using the equity method
based on temporary control. In 1999. after the acquisition of
additional interests, Eiektro was consolidated by Enron.
     Additionally, during 1999 and 1998, Enron acquired genera-
tion. natural gas distribution, renewable energy, telecommunica-
tions and energy management businesses for cash, Enron and
subsidiary stock and notes.
     Enron has accounted for these acquisitions using the pur-
chase method of accounting as of the effective date of each
transaction. Accordingly, the purchase price of each transaction
has been allocated based upon the estimated fair value of the
assets and liabilities acquired as of the acquisition date, with the
excess reflected as goodwill in the Consolidated Balance Sheet.
This and all other goodwill is being amortized on a straight-line
basis over S to 40 years.
     Assets acquired, liabilities assumed and consideration paid
as a result of businesses acquired were as follows:

(In millions)                              2000    1999
Fair value of assets acquired,
   other than cash                      $ 2,841    $ 376    $ 269
Goodwill                                   963       (71)     94
Fair value of liabilities assumed         (2.418)     6      (259)
Common stock of Enron issued and
   equity of an unconsolidated
   equity affiliate contributed            (409)        '       -
Net cash paid                           $  777     $311     $104
(a) Excludes arflouflrS re/ated to the 1998 acquisition of Ek&tro

     On November 8, 1999, Fnron announced that it had entered
into an agreement to sell Enron's wholly-owned electric utility
subsidiary, Portland General Electric Company (ME), to Sierra
Pacific Resources for $2.1 billion. Sierra Pacific Resources will also
assume approximately $1 billion in ME debt and preferred stock.
The transaction has been delayed by the effect of recent events
in California and Nevada on the buyer. Fnron's carrying amount
of P~ as of December 31, 2000 was approximately $1.6 billion.
Income before interest, minority interest and income taxes for
ME was $338 million, $298 million and $284 million for 2000,
1999 and 1998, respectively.

ECaaOO2648576



	  FKIVK MAt/v   MI V A'ThviY,  ~N'lx'stCAI

	  tEA

    Enron offers price risk management services to wholesale,
commercial and industrial customers through a variety of finan-
cial and other instruments including forward contracts involving
physical delivery, swap agreements, which require payments to
(or receipt of payments from) counterparties based on the dif-
ferential between a fixed and variable price for the commodity,
options and other contractual arrangements. Interest rate risks
and foreign currency risks associated with the fair value of the
commodity portfolio are managed using a variety of financial
instruments, including financial futures.

    Notional Amounts and Terms. The notional amounts and
terms of these instruments at December 31. 2000 are shown
below (dollars in millions):

			 Fixed Price Fixed Price  Maximum

c;ttJd~T~.....................Payor     Receiver  Terms in Years
			      1,331      6.910         23
  Crude oil and liquids       3,513      1,990          6
  Electricity                 2,424      2,388         24
  Metals, coal and
    pulpandpaper               368         413          9
  Bandwidth                    167         325         11
Financial products
  Interest rate (6)          $4,732     53,977         29
  Foreign currency           S  79      $  465         22
  Equity investments(c)      $2,998     83,768         13

(a) Natural gas, crude oil and liquids and electricity volumes are in T8tue; metals,
  coal and pulp and paper volumes are in millions of metric tonnes;andbandnidlf,
  volumes are in thousands of trrabytes
Cd) The interest rate reed price receiver includes the net notional dollar value of
  the interest rate sensitive component of the combined commodity portfolio.
  The remaining interest rate feed price receiver and the entire interest rate fixed
  price payor represenr the notional contract amount of a portfolio of various
  financial instruments used to hedge the net present value of the commodity
  portfolio. For a given unit of price protecrion, different fi,ancial instruments
  require different notional amounts.
Cc) Excludes derivatives on Enron common stock See Notes JO and 1?

    Enron also has sales and purchase commitments associated
with commodity contracts based on market prices totaling 8,169
T5tue, with terms extending up to 16 years, and 7.2 million
metric tonnes, with terms extending up to S years.
    Notional amounts reflect the volume of transactions but do
not represent the amounts exchanged by the parties to the
financial instruments. Accordingly,  notional amounts do not
accurately measure Enrons exposure to market or credit risks.
The maximum terms in years detailed above are not indicative of
likely future cash flows as these positions may be offset in the
markets at any time in response to the company's price risk
management needs to the extent available in the market.
    The volumetric weighted average maturity of Enrons fixed
price portfolio as of December 31. 2000 was approximately 1.5 years.

     Fair Value. The fair value as of December 31, 2000 and the
average fair value of instruments related to price risk manage-
ment activities held during the year are set forth below:

						  Average Fair Value
			       Fair Value         for the Year Cnded
			    as of 12131/00
(It, millions)             Assets  Liabililies    Assets Liabilities
Natural gas               $10,270    S 9,342     $ 5,525   5 5,114
Crude oil and liquids       1,549     3,574        1,402     2,745
Electricity                 7,335     5396         3,453     1,613
Other commodities           1509      1311           988      757
Equity investments            795       295          492      280
 Total                    821.458    619,918     511,880   510,809
Ca) Computed using rhe ending balance at each month-end

     The income before interest, taxes and certain unallocated
expenses arising from price risk management activities for 2000
was $1,899 million.

     Securitizations. From time to time, Enron sells interests in
certain of its financial assets. Some of these sales are completed
in securitizations, in which Enron concurrently enters into swaps
associated with the     underlying assets which    limits the risks
assumed by the purchaser. Such swaps are adjusted to fair value
using quoted market prices, if available, or estimated fair value
based on management's best estimate of         the present value of
future  cash     flow. These swaps   are included    in Price Risk
Management        activities above as equity   investments. During
2000, gains from sales representing securitizations were $381
million and proceeds were $2,379 million ($545 million of the
proceeds      related  to sales to   Whitewing     Associates, LP.
(Whitewingfl. See Notes 4 and 9. Purchases of securitized mer-
chant  financial    assets totaled $1,184    million during  2000.
Amounts primarily related to equity interests.

     Credit Risk. In conjunction with the valuation of its financial
instruments, Enron provides reserves for credit risks associated
with such activity. Credit risk relates to the risk of loss that Enron
would incur as a result of nonperformance by counterparties
pursuant to the terms of their contractual obligations. Enron
maintains credit policies with regard to its counterparties that
management believes significantly minimize overall credit risk.
These policies include an evaluation of potential counterparties
financial condition (including credit rating), collateral require-
ments under certain circumstances and the use of standardized
agreements which allow for the netting of positive and negative
exposures associated with a single counterparty. Enron also min-
imizes this credit exposure using monetization of its contract
portfolio or third-party insurance contracts.

								ECaaOO2648577



    The counterparties associated with assets from price risk
management activities as of December 31, 2000 and 1999 are
summarized as follows:

			     2000               1999

lnv,sstnient

Investment

(In millions)                  Grade(C)  Total     Gradefa) Total
Gas and electric utilities     S 5.050 S 5,327      $1,461 $1,510
Energy marketers                 4,671   6,124        544    758
Financial institutions           4,146   4,917       1,016  1,273
Independent power
 producers                        672      791        471    641
Oil and gas producers            1,308   2,804        379    688
Industrials                       607    1.138        336    524
Other                             256      357         59     67
 Total                         $16715...21,4S8      $4,266  5,471
Credit and other reserves                 (452)              (337)
Assets from price risk
 management activities(b)              s21.oos(i:)         $5.1 34
(a)

   Investment Grade is primarily determined using publicly available credit rat-
   rigs along with consideration of cash, standby (otters of credit parent conipa-
   ny guarantees and property interest, including oil and gas reservey Included
   In Investment Grade' are counrerparties with a minimum Standard & f~ors
   or Moody 1 rating of 888-or Baaa, respectively
(Is) One and two customers - esposures, respectively at December 31. 2000 and
   1909 comprise grearer than 5% of Asset From Price Risk Managensent
   Activities and are included above as Investment Grade.
(0 At December 3?, 2000. Enron held collateral of approximately 55.5 billion,
   which consist substantially of cash deposits shown as CuslomersDeposits'
   on the balance sheet

     This concentration of counterparties may impact Enron's
overall exposure to credit risk, either positively or negatively, in
that the counterparties may be similarly affected by changes
in economic, regulatory or other conditions. Based on Enron's
policies, its exposures and its credit reserves, Enron does not
anticipate a materially adverse effect on financial position or
results of operations as a result of counterparty nonperformance.
     During 2000, the California power market was significantly
impacted by the increase in wholesale power prices. California
customer rates are currently frozen, requiring the utilities to
finance the majority of their power purchases. If wholesale prices
remain at the current levels and no regulatory relief or legislative
assistance is obtained, certain California utilities may need to
seek bankruptcy protection. During 2000, Enron entered into
wholesale power transactions with California utilities, including
their nonregulated power marketing affiliates. Enron has pro-
vided credit reserves related to such activities based on Enrons
net position with each California utility. Due to the uncertainties
surrounding the California power situation, management cannot
predict the ultimate outcome but believes these masters will not
have a material adverse impact on Enrons financial condition,

	  1:5 P.s:1

     Enron also enters into financial instruments such as swaps
and other contracts primarily for the purpose of hedging the
impact of market fluctuations on assets, liabilities, production or
other contractual commitments.

     Energy Commodity Price Swaps. At December 31, 2000,
Enron was a party to energy commodity price swaps covering 13.6
TBtu, 29.9 TBtu and 0.5 TBtu of natural gas for the years 2001,
2002 and 2003, respectively, and 0.3 million barrels of crude oil for
the year 2001.

     Interest Rate Swaps. At December 31, 2000,               Enron had
entered into interest rate swap agreements with an aggregate
notional principal amount of $1.0 billion to manage interest
rate exposure, These swap agreements are scheduled to termi-

nate $0.4 billion in 2001 and $0.6 billion in the period 2002
through 2010.

	Foreign Currency Contracts. At December 31, 2000, foreign
currency contracts with a     notional principal amount of $1.4
billion were outstanding. These contracts will expire $1.0 billion
in 2001 and $0.4 billion in the period 2002 through 2006.

	Equity Contracts. At December 31, 2000, Enron had entered
into Enron common stock swaps, with an aggregate notional
amount      of $121  million, to hedge  certain incentive-based
compensation plans. Such contracts will expire in 2001.

	Credit Risk. While notional amounts are used to express the
volume of various financial instruments, the amounts potentially
subject to credit risk, in the event of nonperformance by the
third parties, are substantially smaller. Forwards, futures and
other contracts are entered into with counterparties who are
equivalent to investment grade. Accordingly, Enron does not
anticipate any material impact to its financial position or results
of operations as a result of nonperformance by the third parties
on financial instruments related to non-trading activities.

 'I 3fl(  31 fl'AtL]FiSflt~.

	The carrying amounts and estimated fair values of Enron's
financial instruments, excluding trading activities, at December 31.
2000 and 1999 were as follows:

				2000              1999
			  Carrying Estimated Carrying Estimated
(In millions)             Amount   Fair Value Amount Fair Value

Short- and long-term
 debt (Note 7)
Corn pany-obligated
 preferred securities of
 subsidiaries (Note 10)
Energy commodity
 price swaps
Interest rate swaps
Foreign currency contracts
Equity contracts

S1O.229   $10,217   $8,152    $8,108

   904       920     1,000       937

  -       68

  -       94
15        15

	 (3)
 -      (55)

 4        4

     Enron uses the following methods and assumptions in esti-
mating fair values: (a) short- and long-term debt - the carrying
amount of variable-rate debt approximates fair value, the fair
value of marketable debt is based on quoted market prices and
the fair value of other debt is based on the discounted present
value of cash  flows using Enrons current borrowing   rates;
(b) company-obligated preferred securities of subsidiaries - the
fair value is based on quoted market prices, where available, or
based  on the discounted present value of cash flows using
Enrons current borrowing  rates if  not publicly traded; and
(c) energy commodity price swaps, interest rate swaps, foreign
currency contracts and equity contracts - estimated fair values
have been determined using available market data and valuation
methodologies. Judgment is necessarily required in interpreting
market  data and  the use of  different  market assumptions
or  estimation methodologies may   affect the  estimated fair
value amounts,
     The fair market value of cash and cash equivalents, trade
and  other  receivables, accounts  payable and  investments
accounted for atfairvalue are not materially different from their
carrying amounts.
     Guarantees of liabilities of unconsolidated entities and
residual value guarantees have no carrying value and fair values
which are not readily determinable (see Note 15).

							      ECaaOO2648578



      ..ARII !\(1.JIIV

   An analysis of the composition of Enrons merchant investments
and energy assets at December 31, 2000 and 1999 is as follows:

					   December 31,
(In millions)                            2000     1999
Merchant investmer,ts(8..............
 Energy                                  $131    $ 516
 Energy-intensive industries              63       218
 Technology-related                       99        11
 Other                                    302      341
					  601     1,086

Meychant assets(b)
 Independent power plants
 Natural gas transportation

53          152
36           35
89          187

    The differences between taxes computed at the US. federal
statutory tax rate and Enrons effective income tax rate are
as follows:

Statutory federal income
 tax provision
Net state income taxes
roreign tax rate differential
Equity earnings
Basis and stock sale differences
Goodwill amortization
Audit settlement related to Monthly
 Income Preferred Shares
Other

2000       1999      1998

35,0%      350%      350%
   2.5       1.8      1.7
 (2,4)      (7.0)     0.8
   5.3     (10,1)     (4.3)
(11,9)     (10.8)    (142)
   1.6       1,6      2,0

   -        (1,8)     -
   0.6       0.5      (1.0)
30,7%        9.2%    20.0%

Total                                                 $690         $1,273
(a) Investments are recorded at fai, value in Other Assets with changes in fair
   value reflected in Other Revenues.
1W Amnonts represent Enron invesenent k, uric onsojidated equibi afMates with oper-
   ating earnings reflected ks Equity in Earnings of Unconsolidated Equity A/Mates -

       Enron provides capital primarily to energy and technology-
related businesses seeking debtor equity financing. The merchant
investments made by Enron and certain of its unconsolidated
affiliates (see Note 9) are carried at fair value and include public
and private equity, government securities with maturities of more
than 90 days, debt and interests in limited partnerships. The valu-
ation methodologies        utilize market values of publicly-traded
securities, independent appraisals and cash flow analyses.
       Also included in Enron's wholesale business are investments
in  merchant assets       such as power          plants   and natural gas
pipelines, primarily held through equity method investments.
Some of these assets were developed, constructed and operated
by Enron. The merchant assets are not expected to be long-term,
integrated components of Enrons energy networks,
       For the years ended December 31, 2000. 1999 and 1998,
respectively, pre-tax gains from sales of merchant assets and
investments totaling $104 million, $756 million and $628 million
are included in "Other Revenues," and proceeds were $1,838
million, $2,217 million and $1,434 million.

       Nil )L4( IAMI K

       The components of income before income taxes are as follows:

(In millions)                            2000     1999      1998
United States                          $ 640    $  357   -  $197
Foreign                                  773       771       681
				       $1413    $1,128      $878

    Total income tax expense is summarized as follows:

(In millions)                            2000     1999      1998

Payable currently
 Federal
 State
 roreign

Payment deferred
 Federal
 State
 Foreign

    The principal components of
tax liability are as follows:

Enron's net deferred income

						December 31,
(In millions)                                  2000    1999
Deferred income tax assets
 Alternative minimum tax credit carryforward
 Net operating loss cariyforward
 Other

Deferred income tax liabilities
 Depreciation, depletion and amortization
 Price risk management activities
 Other

Net deferred income tax liabilities(a)

$ 254    $  220
  369     1,302
  189       188
  812     1,710

 1,813    1,807
 (182)    1,133
  963       782
 2,594    3,722
$1,782   $2,012

a Includes $138 million and $1 IS million in other current liabilities for 2000 and
  7999, respectively

    Enron has an alternative minimum tax (AMT) credit carry-
forward of approximately $254 million which can be used to
offset regular income taxes payable in future years. the AMT
credit has an indefinite carryforward period.
    Enron has a net operating loss carryforward applicable to
U.S. subsidiaries of approximately $65 million, which will begin
to expire in 2011. Enron has a net operating loss carryforward
applicable to non-U.S. subsidiaries of approximately $1.2 billion,
of which $1.0 billion can be carried forward indefinitely. The
remaining $200 million expires between the years 2001  and
2010. Deferred tax assets have been recognized on the $65
million domestic loss and $1.0 billion of the foreign losses,
    U.S. and foreign income taxes have been provided for earn-
ings of foreign subsidiary companies that are expected to be
remitted to the U-S. Foreign subsidiaries' cumulative undistrib-
uted earnings of approximately $1.8 billion are considered to be
permanently reinvested outside the U.S. and, accordingly, no U.S.
income taxes have been provided thereon. In the event of a
distribution of those earnings in the form of dividends, Enron
may be subject to both foreign withholding taxes and   U.S.
income taxes net of allowable foreign tax credits.

$112     $ 29     $ 30
 22         6       8
 93        48       50
227        83       88

 13      (159)     (14)
 14       23        11
lao      157        90
207       21        87

Total income tax expense(a)              $434     $104     $175
(a) See Note II for tax benefits related to stock options exercised by employees
  reflected in shareholders equity

									ECaaOO2648579



      U          \   /     .3     ( '~N                           Detailed information on long-tern, debt is as follows:

     Cash paid for income taxes and interest expense, including
fees incurred on sales of accounts receivable, is as follows:

(In millions                              2000     1999      1998
Income taxes (net of refunds)             S 62     $51 -     $ 73
Interest (net of amounts capitalized)      834      678      585

     (>41   A LIV 0/

     In 2000, Enron acquired all minority shareholders' interests
in Enron Energy Services, LIC and other businesses with Enron
common stock. See Note 2.
     In 2000 and 1999, Enron entered into various transactions
with related panics, which resulted in an exchange of assets and
an increase in common stock of $171 million in 2000. See Note 16.
     In 2000, a partnership in which Enron was a limited partner
made a liquidating distribution to Enron resulting in a non-cash
increase in current assets of $220 million, a decrease of $20
million in non-current assets and an increase in current liabilities
of $160 million.
     During 2000 and 1999, Enron received the rights to specific
third-party fiber-optic cable in exchange for the rights on spe-
cific fiber-optic cable held for sale by Enron. These exchanges
resulted in non-cash increases in assets of $69 million and $111
million, respectively.
     During 1999, Enron issued approximately 7.6 million shares
of common stock in connection with the acquisition, by an
unconsolidated equity affiliate, of interests in three power plants
in New Jersey.
     In December 1998, Enron extinguished its 6.25% Exchange-
able Notes with 10.5 million shares of EOG common stock.

/    ORE. 1)11 FAD,. I irs AND BEEF

     Enron has credit facilities with domestic and foreign banks
which  provide for an    aggregate of $1.4 billion   in  long-term
committed     credit, of which   5150 million  relates to Portland
General, and $2.4 billion in short-term committed credit. Expiration
dates of the committed facilities range from February 2001 to May
2005. Interest rates on borrowings are based upon the London
Interbank Offered Rate, certificate of deposit rates or other short-
term interest rates. Certain credit facilities contain covenant which
must be met to borrow funds. Such debt covenants are not antici-
pated to materially restrict Enron's ability to borrow funds under
such facilities. Compensating balances are not required, but Enron
is required to pay a commitment or facility fee. At December 31,
2000, $290 million was outstanding under these facilities.
     Enron has also entered into agreements which provide for
uncommitted lines of credit totaling $420 million at December 31,
2000. The uncommitted lines have no stated expiration dates.
Neither compensating balances nor commitment fees are required,
as borrowings under the uncommitted credit lines are available
subject to agreement by the participating banks. At December 31,
2000, no amounts were outstanding under the uncommitted lines.
     In addition to borrowing from banks on a short-term basis,
Enron and certain of its subsidiaries sell commercial paper to pro-
vide financing for various corporate purposes. As of December 31,
2000 and 1999, short-term borrowings of $15 million and $330 mil-
lion, respectively, and long.term debt due within one year of
$1,303 million and $670 million, respectively, have been reclassi-
fied as long-term debt based upon the availability of committed
credit facilities with expiration dates exceeding one year and man-
agement's intent to maintain such amounts in excess of one year.
Weighted average interest rates on short-term debt outstanding
at December 31, 2000 and 1999 were 6.9% and 6.4%, respectively.

(In millions)
Enron Corp.
  Senior debentures
   6.75% to 8.25% due 2005 to 2012
  Notes payable(a)
   1.00% exchangeable notes due 2002
   6.40% to 9.88% due 2001 to 2028
   floating rate notes due 2000 to 2005
   Other
Northern Natural Gas Company
  Notes payable
   6.75% to 7.00% due 2005 to 2011
Transwestern Pipeline Company
  Notes payable
   9.20% due 2004
Portland General
  First mortgage bonds
   6.47% to 9.46% due 2000 to 2023
  Pollution control bonds
   Various rates due 2010 to 2033
  Other
Other
Amount reclassified from short-term debt
Unamortized debt discount and premium
Total long-term debt

  December 31,
 2000      1999

$ 262    $  318

  532       239
 4,416    4,114
   92        79
  242        34

  500       500

   11        15

  328       373

						  200      200
						  282      129
						  414      204
						1,118    1,000
						  (47)     (54)
						$8,550  $7,151
(a) Includes debt denon,inaredin tbreign currencies ofapproxinateby $955 m/llion
  and $525 mi/hon. respectVely at December 3?, 2000 and 1999 Fnron has
  entered into derivative trafltacpons to hedge interest rate and brdgn currency
  exchange (kactuations associated v,4th such debt See Note 3

     The indenture securing Portland General's First Mortgage
Bonds constitutes a direct first mortgage lien on substantially all
electric utility property and   franchises, other than expressly
excepted property.
     The aggregate annual maturities of long-term debt out-
standing at December 31, 2000 were $2,112 million, $750 million,
$852 million, $646 million and $1,592 million for 2001 through
2005, respectively.
     In February 2001, Enron issued $1.25 billion zero coupon
convertible senior notes that mature in 2021. The notes carry a 2.125
percent yield to maturity with an aggregate face value of $1.9 billion
and may be converted, upon certain contingencies being met, into
Enron common stock at an initial conversion premium of 45 percent.

2    MINoR: EY N~ EQ~Si S

     Enron's minority interests at December 31, 2000 and 1999
include the following:

(In millions)                                     2000    1999
Majority-owned limited liability company
  and limited partnerships                      $1,759  $1,773
Elektro(a)                                        462      475
Other                                             193      182
						$2,414  $2,430

(a> Relates to the respectrse parent ot Elektro. L4*PC)~ had minori~' shareholders in
  2000 and ~g9g

     Enron has formed separate limited partnerships and a limited
liability company with third-party investors for various purposes.
These entities are included     in Enrons consolidated financial
statements, with the third-party investors interests reflected in
"Minority Interests   in the Consolidated Balance Sheet.
     In October2000, Enron contributed approximately $1.0 bil-
lion of net assets to a wholly-owned limited liability company. A
third party contributed $500 million for a preferred membership

ECaaOO264858O



interest in the limited liability company. The contribution by
the third party was invested in highly liquid investment grade
securities (including  Enron notes) and short-term receivables.
At December 31, 2000, the malority-owned limited liability com-
pany held net assets of $1.0 billion.
    During      1999, third-party investors contributed cash and
merchant investments totaling $1.0 billion to Enron-sponsored
entities to invest in highly liquid investment grade securities
(including Enron notes) and short-term receivables. The mer-
chant investments, totaling   $500 million, were sold prior to
December31, 1999. During 2000, Enron acquired a portion ofthe
minority shareholder's interest for $485 million.
    In 1998, Enron formed a wholly-owned limited partnership
for the purpose of holding $1.6 billion of assets contributed by
Enron. That partnership contributed $850 million of assets and a
third party contributed $750 million to a second newly-formed
limited partnership. The assets held by the wholly-owned limited
partnership represent collateral for a $750 million note receivable
held by the second limited partnership. In 2000 and 1999. the
wholly-owned and second limited partnerships sold assets valued
at approximately $152 million and $460 million. respectively, and
invested the proceeds in Enron notes.
    Absent certain defaults or other specified events, Enron has
the option to acquire the minority holders' interests in these
partnerships. Enron has the option to acquire the minority hold-
er's interest in the limited liability company after November
2002, If Enron does not acquire the minority holders' interests
before December 2004 through May 2009, or earlier upon certain
specified events, the minority interest holders may cause the
entities to liquidate their assets and dissolve.
    In  2000,    as  part of a restructuring,  Jacare Electrical
Distribution Trust (Jacar~) sold a 47 percent interest in Enron
Rrazil Power Holdings V Ltd. a subsidiary that holds its invest-
ment in Elektro, to Whitewing for approximately $460 million.
See Note 9. The proceeds were used to acquire the original
minority shareholder's interest in Jacar~.
    In 2000, Enron acquired all minority shareholders' interests
in Enron Energy Services, LIC and Enron Renewable Energy Corp.
See Note 2.

9            ir'JZC[ 'IA] I-K) FQI)KYAFFIiLATFS

    Enrons investment in and advances to unconsolidated affil-
iates which are accounted for by the equity method is as follows:

				  Voting        December 31,
(In millions)                     Interestla)  2000     1999
Azurix Corp.                        34%       1 325    $ 762
Bridgeline Holdings
Citrus Corp.
Dabhol Power Company
Joint Energy Development
  Investments L.P. (JEDI}(b)
Joint Energy Development
  Investments II L.P. (ff01 1)(b)
51< - Enron Co. Ltd.
Transportadora de Gas del Sur SA.
Whitewing Associates, L.R(b)
Other

    Enron's equity in earnings (losses) of unconsolidated equity
affiliates is as follows:

(In millions)
~Ui &~Th
Citrus Corp.
Dabhol Power Company
Joint Energy Development
 Investments [P.
Joint Energy Development
 Investments II, L.R
TNPC, Inc. (The New Power Company)
Transportadora de Gas del Sur SA.
Whitewing Associates, LP.
Other

 2000      1999      1998
sf428)     $ 23      $  6
   50        25       23
   51        30         -

   197       11       (45)

   58        92       (4)
   (60)        -        -
   38        32       36
   58          9        -
   123       87       81
S  87      $309      $97

(a) Outing the tour/h quarter of 2000, Azurix Corp. (Azurix) impaired the carrying
  valueofitsArgentine assets. resulting in a charge of approximateky $470 million.
  Enron 's portion of the charge was $326 million.

     Summarized     combined    financial information of Enron's
unconsolidated affiliates is presented below:

						   December 31,
(In millions)                                    2000     1399
Balance sheet
  Current assets(a)                           $ 5,884   $ 3,168
  Property, plant and equipment, net           14,786    14,356
  Other noncurrent assets                      13,485     9,459
  Current liabilities(a)                         4,739    4,401
  Long-term debt(8)                              9.717    8,486
  Other noncurrent liabilities                   6,148    2,402
  Owners' equity           ____                13,561    11,694
(a) Includes $470 million and $327 million receivable from Enron and $302 million
  and $84 million payable to Enron at December 37. 2000 and 7999, respectively

					2000     1999     1998
Income statemer~1---------------------------~''-----------
  Operating revenues                  115.903 $11,568    $8,508
  Operating expenses                   14,110    9,449    7,244
  Net income                             586     1,857     142
Distributions paid to Enron ___          137       482      87
(a) Fnron recognized revenues from transactions with unconsolidated egui~' affil-
  rates of $570 million in 2000. $674 million in 7999 and $563 million in 7998..

				 In 2000 and 1999, Enron sold approximately $632 million
			     and $192 million, respectively, of merchant investments and
			     other assets to Whitewing. Enron recognized no gains or losses
Net                          in connection with these transactions. Additionally, in 2000, ECT
			     Merchant Investments Corp., a wholly-owned Enron subsidiary,
			     contributed two pools of merchant investments to a limited
			     partnership that is a subsidiary of Enron. Subsequent to the
40%        229         -     contributions, the partnership issued partnership interests
50%        530      480
50%        693      466      representing 100% of the beneficial, economic interests in the
			     two asset pools, and such interests were sold for a total of $545
50%        399      211      million to a limited liability company that is a subsidiary of
			     Whitewing. See Note 3. These entities are separate legal entities
50%        220      162      from ~nron and have separate assets and liabilities. In 2000 and
50%        258      269      1999, the Related Party, as described in Note 16, contributed $33
35%        479      452      million and $15 million, respectively, of equity to Whitewing. In
50%        558      662      2000, Whitewing   contributed $7.1 million to a partnership
			     formed by Enron, Whitewing and a third party. Subsequently,
			     Enron sold a portion of its interest in the partnership through a
			     securitization. See Note 3.
				 In 2000, The New Power Company sold warrants convertible
			     into common stock of The New Power Company for $50 million
			     to the Related Party (described in Note 16).
				 From time to time, Enron has entered into various adminis-
			     trative service, management, construction, supply and operating

				      --1,603                       1,572
				       65,294 fr)...................
la) Certain investments have income sharing ratios which differ from Enron
  voting interests
(6) lEVI and $01 //account kit thor investment at fair value Vthiterr.srrg accounts tbr
  certain of its inve<tments at fair va/ira rhesearfliates held lair value investment total-
  ing $7823 million antiS?. 728 rn/lion. respectively at Oecerr,ber3l. 2000 and 7999.
it) At Oecember 37. 2000 and 7999. the unamortized excess of Enron investment
  in unconsolidated affliates teas $782 mi/lion and $779 million, respective/y
  which 's being amortized over the expected lives of the investments.

ECaaOO2648581



agreements with its unconsolidated equity affiliates.  Enron's
management believes that its existing agreements and transac-
tions are reasonable compared to those which could have been
obtained from third parties.

		    "''' \.-t:jq'IO% U Snt>d~a' 0$

    Summarized  information for Enron's company-obligated
preferred securities of subsidiaries is as follows:

(In millions, except per

	     k

     Enron has authorized 16,500.000 shares of preferred stock,
no par value. At December 31, 2000, Enron had outstanding
1.240,933 shares of Cumulative Second Preferred Convertible Stock
(the Convertible Preferred Stock), no par value. The Convertible
Preferred Stock pays dividends at an amount equal to the higher
of $10.50 per share or the equivalent dividend that would be paid
if shares of the Convertible Preferred Stock were converted to
common stock. Each share of the Convertible Preferred Stock is
convertible at any time at the option of the holder thereof into
27.304 shares of Enron's common stock, subject to certain adjust-
ments. The Convertible Preferred Stock is currently subject to
redemption at Enron's option at a price of $100 per share plus
accrued dividends. During 2000, 1999 and 1998. 55,251 shares,
23,664 shares and 17,797 shares, respectively, of the Convertible
Preferred Stock were converted into common stock.
     In 1999, all outstanding shares of Series A Preferred Stock
held by Whitewing were exchanged for 250,000 shares of Enron
Mandatorily Convertible Junior Preferred Stock, Series B (Series B
Preferred Stock). Also in  1999, Enron entered into a Share
Settlement Agreement under which Enron could be obligated,
under certain  circumstances, to deliver additional shares of
common stock or Series B Preferred Stock to Whitewing for the
amount that the market price of the converted Enron common
shares is less than $28 per share. In 2000, Enron increased the
strike price in the Share Settlement Agreement to $48.55 per
share in  exchange for an    additional capital contribution in
Whitewing by third-party investors. The number of shares of
Series B Preferred Stock authorized equals the number of shaves
necessary to satisfy Enrons obligation under the Share Settlement
Agreement. Absent certain defaults or other specified events,
Enron has the option to acquire the third-party investors' inter-
ests. If Enron does not acquire the third-party investors' interests
before January 2003, or earlier upon certain specified events,
Whitewing may liquidate its assets and dissolve. At December 31,
2000, Enron had outstanding 250,000 shares of Series B Preferred
Stock with a   liquidation value of $1.0 billion. The Series B
Preferred Stock pays semi-annual cash dividends at an annual rate
of 6.50%. Each share of Series B Preferred Stock is mandatorily
convertible into 200 shares of Enron common stock on January IS,
2003 or earlier upon the occurrence of certain events.
     In connection with the 1998 financial restructuring (yielding
proceeds of approximately $1.2 billion) of EnrorVs investment in
Azurix, Enron committed to cause the sale of Enron convertible
preferred stock, if certain debt obligations of the related entity
which acquired an interest in Azurix, are defaulted upon, or in
certain events, including, among other things, Enron's credit
ratings fall below specified levels. If the sale of the convertible
preferred stock is not sufficient to retire such obligations, Enron
would be liable for the shortfall. Such obligations will mature in
December 2001. The number of common shares issuable upon
conversion is based on future common stock prices.

share amounts and shares)
Enron Capital LLC
  8% Cumulative Guaranteed
   Monthly Income Preferred
   Shaves (8,550,000 shaves)(a)

Enron capital Trust I
  8.3% Trust Originated Preferred
   Securities (8,000,000 preferred
   securitiessa)

Enron Capital Trust II
  8 1/8% Trust Originated Preferred
   Securities (6,000,000 preferred
   securities) (a)

Enron Capital Trust Ill
  Adjustable~Rate capital Trust Securities
   (200.000 preferred securities)

[NC Power II L.L,C.
  6.74% Preference Units
   (105,000 shares) (b)

Enron Equity Corp.
  8.57% Preferred Stock (880 shares) (a)
  7.39% Preferred Stock (150 shares)(axc)

Enron Capital Resources, L.R
  9% Cumulative Preferred Securities.
   Series A (3,000,000 preferred
   securities) (a)

	     Liquidation
December_31,    Value
2000    1999  Per Share

$214   $ 214     $ 25

 200     200       25

 150     ISO       25

	 200     1,000

105

 88
 15

1,000

	88   100,000
	15   100.000

75      75       25

Other                               67      58
				  $904   $1,000    ______
(a) Redeemable under certain circunlswnces after specifr.d dares.
(b) Inirial rate is 6.74% increasing to 7.79%.
(0 Mandatorily redeemable ib 2006.

							      ECaaOO2648582



								   A

								 At December 31, 2000. Enron had derivative instruments
							     (excluding amounts disclosed in Note 10) on 54.8 million shares
							     of Enron common stock, of which approximately  12 million
							     shares are with JEDI and 22.5 million are with related parties
							     (see Note 16), at an average price of $67.92 per share on which
							     Enron was a fixed price payon Shares potentially deliverable to
							     counterparties under the contracts are assumed to be outstand-
							     ing in calculating diluted earnings per share unless they are
							     antidilutive. At December 31, 2000. there were outstanding
							     non-employee options to purchase 6.4 million shares of Enron
				  $979   $1,024     $703     common stock at an exercise price of $19.59 per share.

							     Sioc L,rUon':,'rs

				   (17)      (17)
					     (30)
				   (66)      (19)

								   Enron applies Accounting Principles Board (APB) Opinion 25
							       and related interpretations in accounting for its stock option
							       plans. In accordance with APR Opinion 25, no compensation
							       expense has been recognized for the fixed stock option plans.
							       Compensation expense charged against income for the restricted
				_______________________        stock plan for2000, 1999 and l99Bwas $220 million, $131 million
							       and $58 million, respectively. Had compensation cost for Enron's
							       stock option compensation plans been determined based on the
							       fair value at the grant dates for awards under those plans.
							       Enrons net income and earnings per share would have been
							       $886 million ($1.09 per share basic. $1.01 per share diluted) in
				  $896     $ 958     $ 6S6     2000, $827 million ($1.08 per share basic, $1.01 per share diluted)
							       in 1999 and $674 million ($1.02 per share basic, $0.97 per share

				    17        17        17     diluted) in 1998.
								   The fair value of each option grant is estimated on the date
				   913       975       703     of grant using the Black-Scholes option-pricing model with
							       weighted-average assumptions for grant in 2000,  1999 and
				       -    (131)         -    1998. respectively: Ci) dividend yield of 2.4%, 2.4% and 2.5%; (ii)
							       expected volatility of 22.3%, 20.0% and 18.3%; (iii) risk-free
				  $913     $ 844     $703      interest rates of 5.8%. 5.6% and 5.0%; and (iv) expected lives of
							       3.2 years, 3.7 years and 3.8 years.
								   Enron has four fixed option plans (the Plans) under which
				   736       705       642     options for shares of Enrons common stock have been or may be
							       granted to officers, employees and non-employee members of
				    35        36        36     the Board of Directors. Options granted may be either incentive
					      28        17
							       stock options or nonqualified stock options and are granted at
							       not less than the fair market value of the stock at the time of
							       grant. Under the Plans, Enron may grant options with a maxi-
							       mum term of 10 years. Options vest under varying schedules.

				  Year Ended December31,
				  2000     1999      1998

						     (17)

				   896      958     686

					   (131)

				  $896    $ 827    $686

ii   C>.}l'IIN.4l>N S

     The computation of basic and diluted earnings per share is
as follows:

(In millions, except per share amounts)
Numerator:
  Basic
    Income before cumulative effect
    of accounting changes
    Preferred stock dividends:
     Second Preferred Stock
     Series A Preferred Stock
     Series B Preferred Stock
    Income available to common share-
    holders before cumulative effect
    of accounting changes
    Cumulative effect of accounting
    changes
    Income available to common
    shareholders
  Diluted
    Income available to common share-
    holders before cumulative effect
    of accounting changes
    Effect of assumed conversion of
    dilutive securities(a):
     Second Preferred Stock
    Income before cumulative effect
    of accounting changes
    Cumulative effect of accounting
    changes
    Income available to common share-
    holders after assumed conversions
Denominator:
  Denominator for basic earnings per
  share~ weighted-average shares
  Effect of dilutive securities:
    Preferred stock
    Stock options
  Dilutive potential common shares
  Denominator for diluted earnings per
  share-adjusted weighted-average
  shares and assumed conversions

				    43
				    78       64       53

					814       769        695
Basic earnings per share:
  Before cumulative effect of
  accounting changes
  cumulative effect of accounting
  changes                                   -    (0.19)
,~py~~p~4a e...........................$1.22    $ 1.17 __  $1.07
Diluted earnings per share:
  Before cumulative effect of
  accounting changes
  Cumulative effect of accounting
  changes                                   -    (0.17)        -
  Diluted earnings per share           $1.12    $ 1.10     $1.01
(a) The Series A F~eferred Stock and the Series B Preferred Stock wore not inc/uded
  in the calculation of diluted earnings per share because conversion of these
  shares would be antidilutiee.

				  $1.22    $ 1.36   $1.07

				  $1.12    $ 1.27   $1.01

								ECaaOO2648583



    Summarized information for Enron's Plans is as follows:

						   2000                       1999                       1998
							 Weighted                   Weighted                  Weighted
							  Average                    Average                   Average
							  Exercise                   Exercise                  Exercise
							   Price                      Price                      Price

(Shares in thousands)                               Shares                     Shares                      Shares
Outstanding,
beginning of year                                   93,531       526.74        79,604        119.60        78,858        11789
 Granted                                            39187         7002         35,118         37.49        15,702         24.99
 Exercisedla)                                       (32235)       2443        (19,705)        18.08        (13,072)       15.70
 Forfeited                                          (4,358)       35.68        (1,465)        24.51        (1,498)        19.77
 Expired                                               (42)       23.75          (21)         18.79          (386)        19.76
Outstanding, end of year                            96,063       $4424         93,531        126.24        79,604        $19.60
Exercisable, end of year                            46,755       $29.85        52,803        $22.56        45,942        $18.16
Available for grant, end of year(b)                 22.066                     24,864                      10,498
Weighted average fair value of options granted                   $13.35                      $ 7.24                      $ 4.20

(a) In 2000. Enron recorded tax benefit related to stock options exercised by employees of approximately $390 million refkcted in shareholders equi~
(6) Includes up to 20,707,969 shares. 22.740.962 shares and tO.497,670 shares as ofDece,nber 3?, 2000, 7999 and 1998, respectively which may be issued either as
  restr,cted stock or pursuant to stock options.

    The following table summarizes information about stock options outstanding at December 31. 2000 (shares in thousands):

Options Outstanding

Options Exercisable

					   Number
					  Outstanding
					  at 12/31/00

							   Weighted
							    Average
							   Remaining
							   Contractual
							     Life

									   Weighted
									    Average
									    Exercise
									     Price

											    Number
											  Exercisable
											  at 12/31/00

													   Weighted
													    Average
													    Exercise
													     Price

Range of Exercise Prices
1  6.88 to $20.00                            15,368             4.7            $16.72           14,001           516.54
  20.06 to  34.81                            24,091             6.8             24.79           12.304            24.13
  35.03 to  47.31                            21,520             6.8             40.52            8,731            40.27
  50.48 to  69.00                            13.965             6.5             60.18            4,072            61.81
  71,06 to  86.63                            21,119             5.6             79.69            1,647            72.36
					     96,063             6.2            $44.24           46.755           $29.85

Hon'!' hvt $to~k P an
    Under Enrons Restricted  Stock Plan, participants may be
granted stock without cost to the participant. The shares granted
under this plan vest to the participants at various times ranging
from immediate vesting to vesting at the end of a fr~e-year period.
Upon vesting, the shares are released to the participants. The
following summarizes shares of restricted stock under this plan:

(Shares in thousands)

Outstanding, beginning of year
   Granted
   Released to participants
   Forfeited
outstanding, end of year
Available for grant end of year
Weighted average fair value of
   restricted stock granted

 :~   FFRSQSM ANrIS ()TIILR 2KNEFITS,

				    employees. Benefits under the FF5 Plan are based on years of
				    service, final average pay and covered compensation.
					Enron also maintains a noncontributory employee stock
				    ownership plan  (ESOP) which covers all eligible employees.
				    Allocations to individual employees retirement accounts within
				    the ESOP offset a portion of benefits earned under the Enron
				    Plan, All shares included in the ESOP have been allocated to the
				    employee accounts. At December 31, 2000 and 1999, 12,600,271
       2000      1999    1998       shares and 17,241.731 shares, respectively, of Enron common
				    stock were held by the ESOP, a portion of which may be used to
				    offset benefits under the Enron Plan.
					Assets of the Enron Plan, the Portland General Plan and the
				    EFS Plan are comprised primarily of equity securities, fixed
________________________________    income securities and temporary cash investments, It is Enrons
     20,708    22,141   10,498      policy to fund all pension costs accrued to the extent required by
				    federal tax regulations.
		 _____________          Enron provides certain postretirement medical, life insur-
				    ance and dental benefits to eligible employees and their eligible
				    dependents. Benefits are provided under the provisions of con-
				    tributory defined dollar benefit plans. Enron is currently funding
				    that portion of its obligations under these postretirement bene-
				    fit plans which are expected to be recoverable through rates by
				    its regulated pipelines and electric utility operations.
					Enron accrues these postretirement benefit costs over the
				    service lives of the employees expected to be eligible to receive
				    such benefits. Enron is amortizing the transition obligation which
				    existed at January 1,1993 over a period of approximately 19 years.
					The  following table sets forth information related to
				    changes in the benefit obligations, changes in plan assets, a
				    reconciliation of the funded status of the plans and components
				    of the expense recognized related to Enron's pension and other
				    postretirement plans:

 6,781     6,034     5.074
 2.243     2,672     2,122
(2.201)   (1,702)   (1,064)
(1.444)     (223)     (98)
 5,379     6,781     6,034

557.69    $37.38    $23.70

    Enron maintains a retirement plan (the Enron Plan) which is
a noncontributory defined benefit plan covering substantially all
employees in the United States and certain employees in foreign
countries, The benefit accrual is in the form of a cash balance of
5% of annual base pay.
    Portland General has a noncontributory defined benefit
pension plan (the Portland General Plan) covering substantially
all of its employees. Benefits under the Portland General Plan
are based on years of service, final average pay and covered
compensation.
    Enron Facility Services has a noncontributory defined bene-
fit pension plan (the FFS Plan) covering substantially all of its

ECaaOO2648584



				  Pension Benefits Other Benefits
(In millions)                      2000   1999  2000  3999

Change in benefit obligation

  Benefit obligation, beginning
  of year
  Service cost
  Interest cost
  Plan participants' contributions
  Plan amendments
  Actuarial loss (gain)
  Acquisitions and divestitures
  Effect of curtailment and
  settlements (a)
  Benefits paid
Benefit obligation, end of year

$708
  33
  53

   9

$687
 32
 49

  6
 (51)
 36

$120
  2
  10
  4

  10

(2)     (8)

 (55)   (43)     (22)  (16)
$746   $708    $124   $120 

Change in plan assets
  Fair value of plan assets,
  beginning of year(b)                   853   $774
  Actual return on plan assets             41    80
  Acquisitions and divestitures              -    37
  Employer contribution                    19      5
  Plan participants' contributions           -     -
  Benefits paid                            (55)  (43)
Fair value of p lan assets,
en~ of year (b)                          5858   $853   64    $68

Reconciliation of funded status,
end of year
  Funded status, end of year             $112   $145   5(60) $152)
  Unrecognized transition
  obligation (asset)                       (6)   (13)     44   48
  Unrecognized prior service cost          25     32      12   14
  Unrecognized net actuarial
  loss (gain)                              55     11    (17)   (29)
Pre5~ied) benefit cost                   $186   $115   8(21) 1(19)

Weighted-average assumptions at
December31
  Discount rate                           775% 7.75%   7.75% 7.75%
  Expected return on plan
  assets (pre-tax)                         (cI    (c)     (d)  (d)
  Rate of compensation increase ______     Ic)    (e)     (e)  (C

Components of net periodic benefit cost
  Servicecost                            S 33   $32    S   2  $  2
  Interest cost                            53     49      10     9
  Expected return on plan assets           (75)  (70)     (4)  (4)
  Amortization of transition
  obligation (asset)                       (6)    (6)      4     4
  Amortization of prior service cost         5     5       1     1
  Recognized net actuarial loss (gain)       -     3      (1)    -
  Effect of curtailment and
    settlements(B)                           -    (6)      -     6
Net periodic benefit cost                 $ 10  $  7   S 12   $ 18
(a) Represent one-time nonrecurring events including the exchange and sale of
  FOG (see Note 2) and certain employees ceasing participa finn in the Portland
  General Ffan as a result of union negotiatifln&
fbi Includes plan asset of the FSOPoUl IS million and $121 million at December
  3?, 2000 and 1999, respectively
(C) Long-term 'ate of return on assets is assumed to he 10.5% for the Enron Plan,
  9 0','. for the Portland General Plan and 9.5% for the FF5 Plan.
(d) Long-tern~ rare of return on assets is assumed to be 7.5% for the Enron assets
  and 9.5% for the Portland General assets.
Is) Rare of compensation increase Is assumed to be 4.0% for the Enron Plan,
  4.0% to 0.5% for the Portland General Plan and 5.0% for the EtS Plan.

    Included in the above amounts are the unfunded obligations
for the supplemental       executive     retirement plans.  At both
December 31, 2000 and 1999, the projected benefit obligation for
these unfunded plans was $56 million and the fair value of assets
was $1 million,

$ 68   $ 60
  (4)     7

  7       6
  4       3
 (11)    (8)

	      The measurement date of the Enron Plan and the ESOP is
	  September 30, and the measurement date of the Portland General
	  Plan, the FF5 Plan and the postretirement benefit plans is December
	  31-The funded status as of the valuation date of the Enron Plan, the
	  Portland General Plan, the ESOP and the postretirement benefit
 2        plans reconciles with the amount detailed above which is included
	  in "Other Assets" on the Consolidated Balance Sheet.
 3
	      For measurement purposes. 6% and 10% annual rates of
(12)      increase in the per capita cost of covered health care benefits
	  were assumed for the period 2000 to 2001 for the Enron and
	  Portland General postretirement plans, respectively. The rates
	  were assumed to decrease to 5% by 2002 and 2010 for the Enron
	  and Portland General postretirement plans, respectively. Assumed
	  health care cost trend rates have a significant effect on the
	  amounts reported for the health care plans. A one-percentage
	  point change in assumed health care cost trend rates would have
	  the following effects:

					1-Percentage    1-Percentage
					Point Increase Point Decrease

(In millions)        __________

Effect on total of service and
  interest cost components            10,4         8(0.3)
Effect on postretirement benefit
  obligation                          $4.4         $13.8)

     Additionally, certain  Enron subsidiaries maintain various
incentive based compensation plans for which participants may
receive a combination of cash or stock options, based upon the
achievement of certain performance goals.

Us   kA't& 15N17   kECiAhOkV .&&JjR

     Rates and regulatory issues related to certain of Enron's
natural gas pipelines and its electric utility operations are subject
to  final determination   by  various regulatory agencies. The
domestic interstate pipeline operations are regulated by the
Federal Energy Regulatory Commission (FEAC) and the electric
utility operations are regulated by the FERC and the Oregon
Public Utility Commission (OPUC). As a result, these operations
are  subject    to the  provisions of Statement  of Financial
Accounting Standards (SFAS) No. 71, "Accounting for the Effects
of Certain Types of Regulation," which recognizes the economic
effects of regulation and, accordingly, Enron has recorded regu-
latory assets and liabilities related to such operations.
     The regulated pipelines operations' net regulatory assets
were $290 million and $250 million at December 31. 2000 and
1999, respectively, and are expected to be recovered over varying
time periods.
     The dectric utility operations' net regulatory assets were
$450 million and $494 million at December 31, 2000 and 1999,
respectively. Based on rates in place at December 31, 2000, Enron
estimates that it will collect substantially all of its regulatory
assets within the next 11 years.

P pc''r-c Curs-up-c IS
     On   April    16, 1999, Northern  Natural Gas Company
(Northern) filed an uncontested Stipulation and Agreement of
Settlement (Settlement) with the FERC and an order approving
the Settlement was issued by the FERC on June 18. 1999. The
rates effectuated by Northern on November 1, 1999 remain in
effect, On May 1.2000. Northern filed to implement an option-
al volumetric firm throughput service. An order approving such
service was issued     November 8,   2000 with   effectiveness
November       1. 2000; a rehearing  request is  pending. On
November 1, 2000. Northern tiled to increase its rates for the
recovery of return and taxes on its System Levelized Account.

								 ECaaOO2648585



On November 22, 2000, the FERC issued an order approving the
rates, subject to refund.
     On   November   1, 2000, Transwestern Pipeline Company
implemented a rate escalation of settled transportation rates in
accordance with its May 1995 global settlement, as amended in
May 1996. On August 23, 1999, Transwestern filed for a new
service, Enhanced Firm Backhaul. An order by the FERC was issued
February 23, 2000, approving the service.

    I   I  ii

     On October 2, 2000 PGE filed a restructuring plan with the
OPUC that implements the provisions of the State Senate Bill
5B1149, signed into law in July 1999. The new law provides indus-
trial and commercial customers of investor-owned utilities in the
state direct access to competing energy suppliers by October 1,
2001. As filed, PGE's plan also proposes an increase in base rates,
with new tariffs effective on October 1. 2001, PGE is a 67,5%
owner of the Trojan Nuclear Plant (Trojan). In September 2000,
PGE entered into an agreement with the OPUC related to Trojan,
See Note 14. At December 31, 2000, PGEs regulatory asset relat-
ed to recovery of Trojan decommissioning costs from customers
was $190 million.
     Enron believes, based upon its experience to date and after
considering appropriate reserves that have been established,
that the ultimate resolution of pending regulatory matters will
not have a material impact on    Enron's financial position or
results of operations,

     Enron is a party to various claims and litigation, the signifi-
cant items of which are discussed below. Although no assurances
can be given, Enron believes, based on its experience to date and
after considering appropriate reserves that have been estab-
lished, that the ultimate resolution of such items, individually or
in the aggregate, will not have a material adverse impact on
Enron's financial position or results of operations.

 'I 'Q,iliOV

     In 1995, several parties (the Plaintiffs) filed suit in Harris
County District Court in  Houston. Texas, against Intratex Gas
Company (Intratex), Houston Pipe Line Company and Panhandle
Gas Company (collectively, the Enron Defendants), each of which
is a wholly-owned subsidiary of Enron. The Plaintiffs were either
sellers or royalty owners under numerous gas purchase contracts
with Intratex, many of which have terminated. Early in 1996, the
case was severed by the Court into two matters to be tried (or
otherwise resolved) separately. In the first matter, the Plaintiffs
alleged that the Enron Defendants committed fraud and negli-
gent misrepresentation in connection with the "Panhandle pro-
gram,"    a special marketing program established in the early
1980s, This case was tried in October 1996 and resulted in a ver-
dict for the Enron Defendants. In the second matter, the Plaintiffs
allege that the    Enron Defendants  violated state regulatory
requirements and certain gas purchase contracts by failing to take
the Plaintiffs  gas ratably with other producers' gas at certain
times between 1978 and 1988. The trial court certified a class
action with respect to ratability claims. On March 9, 2000, the
Texas Supreme Court ruled that the trial court's class certification
was improper and remanded the case to the trial court. The Enron
Defendants deny the Plaintiffs' claims and have asserted various
affirmative defenses, including the statute of limitations. The
Enron Defendants believe that they have strong legal and factual
defenses, and intend to vigorously contest the claims. Although
no assurances can be given. Enron believes that the ultimate

resolution of these matters will not have a material adverse effect
on its financial position or results of operations.
      On November 21, 1996, an explosion occurred in or around
the Humberto Vidal Building in San Juan, Puerto Rico, The explo-
sion resulted in fatalities, bodily injuries and damage to the
building and surrounding property. San Juan Gas Company, Inc.
(San  Juan  Gas), an Enron affiliate, operated a  propane/air
distribution system in the vicinity, but did not provide service to
the building. Enron, San Juan Gas, four affiliates and their insur-
ance carriers were named as defendants, along with several third
parties,  including The  Puerto Rico   Aqueduct   and  Sewer
Authority, Puerto Rico Telephone Company, Heath Consultants
Incorporated. Ilumberto Vidal, Inc. and their insurance carriers,
in numerous lawsuits filed in U.S. District Court for the District of
Puerto Rico and the Superior Court of Puerto Rico. These suits
seek damages for wrongful death, personal injury, business inter-
ruption and property damage allegedly caused by the explosion,
After nearly four years without determining the cause of the
explosion, all parties have agreed not to litigate further that
issue, but to move these suits toward settlements or trials to
determine whether each plaintiff was injured as a result of the
explosion and, if so, the lawful damages attributable to such
injury. The defendants have agreed on a fund for settlements or
final awards, Numerous claims have been settled, Although no
assurances can be given, Enron believes that the ultimate resolu-
tion of these matters will not have a material adverse effect on
its financial position or results of operations.

       * ~ ~

      In early 1993, PGE ceased commercial operation of the
Trojan nuclear power generating facility. The OPUC granted PGE,
through a general rate order; recovery of, and a return on, 87
percent of its remaining investment in Trojan.
      The OPUC's general rate order related to Trojan has been sub-
ject to litigation in various state courts, including rulings by the
Oregon Court of Appeals and petitions to the Oregon Supreme
Court filed by parties opposed to the OPUC's order, including the
Utility Reform Project (URP) and the Citizens Utility Board (CUB).
      In August 2000, PGE entered into agreements with CUB and
the staff of the OPUC to settle the litigation related to PGE's
recovery of its investment in the Trojan plant. Under the agree-
ments, CUB agreed to withdraw from the litigation and to sup-
port the settlement as the means to resolve the Trojan litigation.
The OPUC approved the accounting and ratemaking elements of
the settlement on September 29, 2000. As a     result of these
approvals, ME's investment in Trojan is no longer included in
rates charged to customers, either through a return on or a return
of that investment. Collection of ongoing decommissioning costs
at Trojan is not affected by the settlement agreements or the
September 29. 2000 OPUC order. With CUB's withdrawal, URP is
the one remaining significant adverse party in the litigation. Urn'
has indicated that it plans to continue to challenge the OPUC
order allowing PGE recovery of its investment in Trojan.
      Enron  cannot  predict the outcome    of these actions.
Although no assurances can be given, Enron believes that the
ultimate resolution of these matters will not have a material
adverse effect on its financial position or results of operations.

  i~J:rOIrVeThr t,/it

      Enron is subject to extensive federal, state and local envi-
ronmental laws and regulations. These laws and regulations
require expenditures in connection with the construction of new
facilities, the operation of existing facilities and for remediation
at various operating sites. The implementation of the Clean Air
Act Amendments is expected to result in increased operating

						    ECaaOO2648585



expenses. These increased operating expenses are not expected
to have a material impact on Enrons financial position or results
of operations.
    Enrons natural gas pipeline companies conduct soil and
groundwater remediation on a number of their facilities. Enron
does not expect to incur material expenditures in connection
with soil and groundwater remediation.

    Enron has firm transportation agreements with various joint
venture and other pipelines. Under these agreements, Enron
must make specified minimum   payments each month. At
December 31, 2000, the estimated aggregate amounts of such
required future payments were $91 million, $88 million, $89 mil-
lion, $85 million and $77 million for 2001 through 2005, respec-
tively, and $447 million for later years.
    The costs recognized under firm transportation agreements,
including commodity charges on actual quantities shipped,
totaled $68 million, $55 million and $30 million in 2000,1999 and
1998, respectively.

    Enron leases property, operating facilities and equipment
under various operating leases, certain of which contain renewal
and purchase options and residual value guarantees. Future
commitments related to these items at December 31. 2000 were
5123 million, $98 million, $69 million, $66 million and $49 million
for 2001 through 2005, respectively, and $359 million for later
years. Guarantees underthe leasestotal $556 million at December
31, 2000.
    Total rent expense incurred during 2000, 1999 and 1998 was
$143 million, $143 million and $147 million, respectively.
    Enron  has entered into two development agreements
whereby Enron is required to manage construction of a certain
number of power projects on behalf of third-party owners,
Under one development agreement, where construction is
expected to be completed on or before March 31, 2004, Enron
has agreed to enter into power offtake agreements for varying
portions of the offtake from each facility. Under both develop-
ment agreements, Enron maintains purchase options, which
may be assigned to a third party. In addition to the purchase
option under the other development agreement Enron main-
tains lease options on the power projects. If upon completion.
which is expected to occur on or before August 31, 2002, Enron
has failed to exercise one of its options. Enron may participate
in the remarketing of the power projects which Enron has guar-
anteed the recovery of 89.9 percent of certain project costs, of
which approximately $140 million has been incurred through
December 31, 2000.
    Enron guarantees the performance of certain of its uncon-
solidated equity affiliates in connection with letters of credit
issued on behalf of those entities. At December 31, 2000. a total
of $264 million of such guarantees were outstanding, including
$103 million on behalf of EGH Energy Partners, LR (EOTT).
In addition, Enron is a guarantor on certain liabilities of uncon-
solidated equity affiliates and other companies totaling approxi-
mately $1,863 million at December 31, 2000, including $538
million related to FOrT trade obligations. The EDIT letters of
credit and guarantees of trade obligations are secured by the
assets of FOTT. Enron has also guaranteed $386 million in lease
obligations for which it has been indemnified by an "Investment
Grade" company. Management does not consider it likely that
Enron would be required to perform or otherwise incur any loss-

es associated with the above guarantees. In addition, certain
commitments have been made related to capital expenditures
and equity investments planned in 2001.
    On December 15,    2000, Enron announced that it had
entered into an agreement with Azurix under which the holders
of Azurix's approximately 39 million publiclytraded shareswould
receive cash of $8375 in exchange for each share. The agree-
ment, which is subject to the approval of Azurix shareholders, is
expected to close in early 2001.

	   <AR>( ~R,KJSA2 iONs

    In 2000 and 1999, Enron entered into transactionswith lim-
ited partnerships (the Related Party) whose general partner's
managing member is a senior officer of Enron. The limited part-
ners of the Related Party are unrelated to Enron. Management
believes that the terms of the transactions with the Related Party
were reasonable compared to those which could have been
negotiated with unrelated third parties.
    In 2000, Enron entered into transactions with the Related
Party to hedge certain merchant investments and other assets. As
part of the transactions, Enron (i) contributed to newly-formed
entities (the Entities) assets valued at approximately $1.2 billion.
including $150 million in Enron notes payable, 3.7 million
restricted shares of outstanding Enron common stock and the
right to receive up to 18.0 million shares of outstanding Enron
common stock in March 2003 (subject to certain conditions) and
(ii) transferred to the Entities assets valued at approximately
$309 million, including a $50 million note payable and an invest-
ment in an entity that indirectly holds warrants convertible into
common stock of an Enron equity method investee. In return,
Enron received economic interests in the Entities, $309 million in
notes receivable, of which $259 million is recorded at Enren's
carryover basis of zero, and a special distribution from the
Entities in the form of $1.2 billion in notes receivable, subject to
changes in the principal for amounts payable by Enron in con-
nection with the execution of additional derivative instruments.
Cash in these Entities of $172.6 million is invested in Enron
demand notes. In addition, Enron paid $123 million to purchase
share-settled options from the Entities on 21.7 million shares of
Enron common stock. The Entities paid Enron $10.7 million to
terminate the share-settled options on 14.6 million shares of
Enron common stock outstanding. In late 2000, Enron entered
into share-settled collar arrangements with the Entities on 15.4
million shares of Enron common stock. Such arrangements will
be accounted for as equity transactions when settled.
    In 2000, Enron entered into derivative transactions with the
Entities with a combined notional amount of approximately $2.1
billion to hedge certain merchant investments and other assets.
Enrons notes receivable balance was reduced by $36 million as a
result of premiums owed on derivative transactions. Enron
recognized revenues of approximately $500 million related to
the subsequent change in the market value of these derivatives,
which offset market value changes of certain merchant invest-
ments and price risk management activities. In addition, Enron
recognized $44.5 million and $14.1 million of interest income
and interest expense, respectively, on the notes receivable from
and payable to the Entities.
    In 1999, Enron entered into a series of transactions involving
a third party and the Related Party. The effect of the transactions
was (i) Enron and the third party amended certain forward
contracts to purchase shares of Enron common stock, resulting in
Enron having forward contracts to purchase Enron common
shares at the market price on that day, (ii) the Related Party
received 6.8 million shares of Enron common stock subject to cer-
tain restrictions and (iii) Enron received a note receivable, which

								 E0aa002648587



was repaid in December 1999, and certain financial instruments
hedging an investment held by Enron. Enron recorded the assets
received and equity issued at estimated fair value. In connection
with the transactions, the Related Par-ty agreed that the senior
officer of Enron would have no pecuniary interest in such Enron
common shares and would be restricted from voting on matters
related to such shares. In 2000, Enron and the Related Party
entered into an agreement to terminate certain financial instru-
ments that had been entered into during 1999. In connection
with this agreement Enron received approximately 3.1 million
shares of Enron common stock held by the Related Party. A put
option, which was originally entered into in the first quarter of
2000 and gave the Related Party the right to sell shares of Enron
common stock to Enron at a strike price of $71.31 per share, was
terminated under this agreement. In return, Enron paid approxi-
mately $26.8 million to the Related Party.
     In 2000. Enron sold a portion of its dark fiber inventory
to the Related Party in exchange for $30 million cash and a $70
million note receivable that was subsequently repaid. Enron
recognized gross margin of $67 million on the sale.
     In 2000, the Related Party acquired, through securitizations,
approximately $35 million of merchant investments from Enron,
In addition, Enron and the Related Party formed partnerships in
which Enron contributed cash and assets and the Related Party
contributed $17.5 million in cash. Subsequently, Enron sold a por-
tion of its interest in the partnership through securitizations. See
Note 3. Also. Enron contributed a put option to a trust in which
the Related Party and Whitewing hold equity and debt interests.
At December 31, 2000, the fair value of the put option wasa $36
million loss to Enron.
     In 1999, the Related Party acquired approximately $371 mil-
lion of merchant assets and investments and other assets from
Enron. Enron recognized pre-tax gains of approximately $16 mil-
lion related to these transactions. The Related Party also entered
into an agreement to acquire Enron's interests in an unconsoli-
dated equity affiliate for approximately $34 million.

1 7  ASSfr I 't'/i 'AIKM [NI

     In 1999, continued significant changes in state and federal
rules regarding the use of MTBE as a gasoline additive have
significantly impacted Enron's view of the future prospects for
this business. As a result, Enron completed a reevaluation of its
position and strategy with respect to its operated MTBE assets
which resulted in (i} the purchase of certain previously-leased
MTBE related assets, under provisions within the lease, in order
to facilitate future actions, including the potential disposal of
such assets and (ii) a review of all MTSE-related assets for impair-
ment considering the recent adverse changes and their impact on
recoverability. Based on this review and disposal discussions with
market participants, in 1999, Enron recorded a $441 million
pre-tax charge for the impairment of its MTBE-related assets.

    AX
...........XALIX>:(. ~>~a:.2(,.! i('i~~4.: fQT K

    In 1999, Enron recorded an after-tax charge of $131 million
to reflect the initial adoption (as of January 1, 1999) of two new
accounting pronouncements, the AICPA Statement of Position
98-5 (SOP 98-5). 'Reporting on the Costs of Start-Up Activities"
and the Emerging Issues Task Force Issue No. 98-10, 'Accounting
for Contracts Involved in Energy Trading and Risk Management
Activities.  The 1999 charge was primarily related to the adop-
hon of SOP 98-5

     I     ,~tit   r    -

    In 1998, the Financial Accounting Standards Board (FASB)
issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which was subsequently amended by
SFAS No. 137 and SFAS No. 138. SEAS No. 133 must be applied
to all derivative instruments and certain derivative instruments
embedded in hybrid instruments and requires that such instru-
ments be recorded in the balance sheet either as an asset or
liability measured at its fair value through earnings, with special
accounting allowed for certain qualifying hedges. Enron will
adopt SFAS No. 133 as of January 1,2001. Due to the adoption
of SFAS No. 133, Enron will recognize an after-tax non-cash loss
of approximately $5 million in earnings and an after-tax non-
cash gain in    Other Comprehensive Income." a component of
shareholders    equity, of approximately $22 million from the
cumulative effect of a change in accounting principle. Enron
will also reclassify $532 million from 'Long-Term Debt  to
 Other Liabilities" due to the adoption.
    The total impact of Enron's adoption of SEAS No. 133 on
earnings and on "Other Comprehensive Income" is dependent
upon certain pending interpretations, which   are currently
under consideration. including those related to "normal pur-
chases and normal sales" and inflation escalators included in
certain contract payment provisions. The interpretations of
these issues, and others, are currently under consideration by
the FASB. While the ultimate conclusions reached on interpre-
tations being considered by the FASB could impact the effects
of Enron's adoption of SEAS No. 133, Enron does not believe
that such conclusions would have a material effect on its cur-
rent estimate of the impact of adoption.

2Caa002648588



19   OlAIJIF 0KV I ftJA   I

     Summarized quarterly financial data is as follows:

(In millions, except                         First             Second            Third            Fourth            Total
PC sh re am CU.................................................Quarter          Quarter           Quarter           y~~~(a)
					   Quarter
2000
Revenues                                   513.145             $18,826          $30,001           $40,751         $100,789
Income before interest, minority
  interests and income taxes                   624                809              666               583             2,482
Net income                                     332                289              292                60              979
Earnings per share:
  Basic                                    S  0.44             $  037           S  037            5  0.05         $   1.22
  Diluted                                     040                 034              0.34              0.05             1.12

1999
Revenues                                   $ 7,632             $ 9,672          $11,835           $10,973         $ 40,112
Income before interest, minority
  interests and income taxes                   533                469              520               473             1.995
Net income                                     122                222              290               259              893
Earnings per share:
  Basic                                    $  017              $  0.29          $  038            $  0.33         1   1.17
  Diluted                                     0.16                0.27             0.35              0.31             1.10
(a) The sum of earnIngs per share for the four quarters may nor equal earnings per share for the total year due to changes in the average number of common
  shares outstanding.

20   (;FcThr::API IC/-NJ, Pt 19N1 V StCVVr N 7 NOIUVIAI ON

     Enrons business Is divided into operating segments, defined
as components of an enterprise about wVsich financial informa-
tion is available and evaluated regularly by the chief operating
decision maker, or decision-making group, in deciding how to
allocate resources to an individual segment and in assessing
performance of the segment. Enron's chief operating decision-
making group is the Office of the Chairman.
     Enrons chief operating decision-making group evaluates
performance and allocates resources based on income before
interest, minority interests and income taxes (IBIT) as well as on
net income. Certain costs related to company-wide functions are
allocated to each segment. However, interest on corporate debt
is primarily maintained at Corporate and is not allocated to the
segments. Therefore, management believes that BIT is the dom-
inant measurement of segment profits consistent with Enrons
consolidated financial statements. The accounting policies of the
segments are substantially the same as those described in the
summary of significant accounting policies in Note 1.
     Beginning  in  2000, Enrons communications       business is
being  managed   as  a separate operating        segment  named
Broadband Services and therefore, based on criteria set by SFAS
No.  131, "Disclosures about Segments of an Enterprise and
Related Information,  is reported separately.
     Enron  has  divided its operations        into the following
reportable segments, based on similarities in economic charac-
teristics. products and services, types of customers, methods of
distributions and regulatory environment,
     Transportation and Distribution - Regulated industries.
Interstate transmission of natural gas. Management and opera-
tion of pipelines- Electric utility operations.
     Wholesale Services - Energy commodity sales and services,
risk management products and financial services to wholesale
customers, Development acquisition and operation of power
plants, natural gas pipelines and other energy-related assets.
     Retai/ Energy Services - Sales of natural gas and electricity
directly to end-use customers, particularly in the commercial
and industrial sectors, including the outsourcing of energy-
related activities.

    Broadband Services - Construction and management of a
nationwide fiber optic network, the marketing and management
of bandwidth and the delivery of high-bandwidth content.
    Exploration and Production - Natural gas and crude oil
exploration  and  production primarily in the United States,
Canada, Trinidad and India until August 16, 1999. See Note 2.
    Corporate and Other - Includes operation of water and
renewable energy businesses as well as clean fuels plants.
    Financial information by geographic and business segment
follows for each   of the three years in the period ended
December 31, 2000.

     a, WI::: Seqr-si'

(In millions)

Operating revenues from
unaffiliated customers
 United States
 Foreign

Year Ended December 31.
2000     1999     1998

				S 17,831   530,176  $25,247
				  22,898     9,936    6,013
				$100,789   $40,112  $31,260
Income before interest, minority
interests and income taxes
 United States                  S  2,131   $ 1,273  $ 1.008
 Foreign                             351       722     574

Long-lived assets
 United States
 Foreign

$  2,482   $ 1,995  $ 1,582

S 10,899
    844
S 11,743

$ 8,286  $ 9,382
  2,395    1,275
$10,681  $10,657

								ECaaOO2648589



						 Transportation                    Retail                     Corporate
						     and          Wholesale        Energy      Aroadhand        and
(In n,illio r,s)                                  Distribution     Services        Services     Services        Other(d)    Total
2000
Unaffiliated revenuesla)

							  $2,742      593,278        53,824       S  408        S 531        5100,789
Intersegment reverlues(b)                                    213        1,628           791             -       (2,632)            -
 Total revenues                                            2,955       94,906         4.615          408        (2095)        100,789
Depreciation, depletion and amortization                     278          343            38          77           119            855
Opetating income (loss)                                      565        1,668            58  - -     (64).........274)..........1,953
Equity in earnings of unconsolidated equity affiliates        65          486           (60)            1         (405)           87
Gains on sales of assets and investments                      25            9            74             -          38            146
Gain on the issuance of stock by TNPC, Inc.                                             121             -                        121
Interest income                                                6          111             5             3          21            212
Other income, net                                             71          (74)          (33)            -          (1)           (31)
Income (loss) before interest, minority
 interests and income taxes                                  732        2,260           165          (60)         (615)         2,482
Capital expenditures                                         270        1,280            70          436          325           2,381
Identifiable assets                                        7,509       43,920         4,266        1,113         3,201         60,209
Investments in and advances to
 unconsolidated equity affiliates                            774        4,014           104          24           378           5,294
   Total assets                                           58.283      547,934        $4,370       $1,337        S 3,579      S 65,503

(In millions)
1999
Unaffiliated revenuesla)
Intersegment revenues(b)
  Total revenues
Depreciation, depletion and amortization
Operating income (loss)
Equity in earnings of unconsolidated equity affiliates
Gains on sales of assets and investments
Intetest income
Other income, net
Income (loss) before interest, minority
  interests and income taxes
Capital expenditures
Identifiable assets
Investments in and advances to
  unconsolidated equity affiliates
    Total assets
1998
Unaffiliated revenues(a)
Intersegment revenues(b)
  Total revenues
Depseciation. depletion and amortization
Operating income (loss)
Equity in earnings of unconsolidated eluity affiliates
Gains on sales of assets and investments
Interest income
Other income, net
Income (loss) before interest, minority
  interests and income taxes
Capital expenditures
Identifiable assets
Investments in and advances to
  unconsolidated equity affiliates
    Total assets

Transportation                    Retail     Exploration    Corporate
    and          Wholesale        Energy        and           and
 Distribution     Services        Services   Production(c)    Other(d)     Total

   $2,013         $35,501         $1,518       $ 429         $  651      $ 40,112
       19             786           289            97         (1,191)           -
    2,032          36,287          1,807         526            (540)      40.112
      247             294            29          213             87           870
      551             889            (81)          66           (623)         802
       50             237              .                         22           309
       19              11              -            .           511           541
       20             126              5            -            11           162
       45              54              8           (1)           75           181

-~  685     -    1,317         (68)           65           (4)        1,995
    316          1,216          84           226         541          2,363
   7,148        18,501         956             -        1,740        28,345

  All
$7,959

 2.684
$21,185

$  956

 1,541
$3,281

  5,036
$ 33,381

$

$1,833       $27,220        $1,072       $  750       $  385       $ 31,260
   16             505            .          134
 1,849        27,725         1,072          884         (270)        31,260
  253             195           31          315           33            827
  562             880         (124)         133          (73)         1.378
   33             42            (2)            .          24            97
   31              4             .             .          21            56
      9           67             -             1          11            88
      2           (25)           7           (6)         (15)           (37)

   637-----------968          (119)  ____     128          (32)        1,582
----i6           706            75   _ _      690          124         1,905
  6.955        12,205          747          3,001        2.009        24,917

 1,140          4,433
$ 3.149      $ 29,350

  661          2,632
$7,616       $14,837       $  747       $3,001

(a) Unafffiated revenues include sates to unconsolidated equity afffiates
(I,) Incersegment sales are made at prices comparable to those rereived from unaffziated customers and in some instances are affected by regulatory considerations.
Cc) Reflects results through August 16 1999. See Note 2
Cd) Includes consolidating eliminations.

							      5Caa002648590



Se/cc ted Financial and Credit Information (Unaudited~
    The following review of the credit characteristics of Enron Corp. and its subsidiaries and affiliates should be read in con)unction with the
Consolidated Financial Statements.  The credit information that follows represents management's calculation of certain key credit ratios of
Enron.

							  2000

On millions)
Total Obligations
Balance sheet debt (short- and long-term)

							     $10229

									1999

								       8,152

										     Source

										     Balance Sheet

Items added to liability profile:
  Guarantees (a)
  Residual value guarantees of synthetic leases
  Net liability Irom price risk management activities16)
  Debt exchangeable for EOG Resources, Inc. shares(c)
  Debt of unconsolidated equity affiliatesld)
  Firm transportation obligations(C)
Total Obligations

Shareholders' Equity and Certain Other tans
Shareholders' Equity

Items added to shareholders' equity:
  Minority interests
  Company-obligated preferred securities of subsidiaries
Total Shareholders' Equity and Certain Other Items

213
556

(532)

180           Note 15
715           Note 15
    -         Balance Sheet
(239)         Note 7
    -         Noteg

		     -        Note 15
$10466        $ 8,808

$11,470

$ 9,570

Balance Sheet

 2414            2,430         Balance Sheet, Note 8
   904           1,000         Balance Sheet, Note 10
$14,788        $13,000

Funds Flow from Operations
Net cash provided by operating activities                       $ 4,719       $ 1,228          Cash Flow Statement
  Changes in working capital                                      1,769         (1,000)        Cash Flow Statement
Funds Flow fro    pperations..............................-     S 3,010       $ 2,228
							      ---------------------------------------
Interest and Estimated Lease Interest Expense
Interest incurred                                               S  876        $   710
Capitalized interest                                               (38)           (54)         Management's Discussion and Analysis
Interest and Related Charges, net                               $  838        $   656          Income Statement

Estimated Lease Interest Expense~0                              $  106        $   124

Adjusted Earnings for Credit Analysis
Income before interest, minority interests and income taxes

Adjustments to BIT:
 Gain on sales of non'merchant assets
 Impairment of long'lived assets (including equity investments)
 Distributions in excess of (less than) earnings
   of unconsolidated equity affiliates
 Estimated lease interest expenseW
Total Adjusted Earnings for Credit Analysis

Key Credit Ratios
Funds flow interest coverag~(g)
Pretax interest coverage (h)
Funds flow from operationsfl'otal obligations
Total obligations/Total obligations plus Total
 shareholders' equity and certain other items
DebtlTotal Capital (I)

S 2.482

  (146)
   326

(276)
106

$ 1,995

  (541)
   441

   1 73
   124

Income Statement

Cash Flow Statement
Cash Flow Statement

Note 9

$ 2.492       $ 2,192

4.07
2,54
28,8%

414%
409%

3,67
263
25.3%

40.4%
38.5%

(a) Management estimates triton  risk adjusted exposure on uncollateral,zed guarantees is approximately 10% of the total nominal value of the guarantees issued.
(I,) Excess of price risk management liabilities over price risk management assets.
Ic) triton expects to extinguish this obligation by delivering shares of FOG Resources, Inc stock.
Id) Debt of unconsolidated equity aff#iares is non-recourse and therefore is excluded from triton's obligations.
Ce) Firm transportation obligations are excluded, as contracted capacity has market value.
(0 Management estimates triton s lease interest expense for the year based on the average minimum lease payment or commitment (excluding prircrjnl repayments and other itemst
(g) Calculated as funds fl,w from operations plus ,nteresr incurred and estimated lease interest expense, divided by interest incurred arid estimated lease interest expense
(h) Calculated as total adjusted earnings divided by interest incurred and estimated lease interest expense.
6)  Total capital includes debt, minority interests, company-obligated preferred securiries of subsidiaries and shareholders 'eguity

																 ECaaOO2648591



      OUR VALUES
      Cotrinu inicat ion
 *    We have an obligation to communicate. Here, we take the time to
 *    talk with one another.., and to listen. We believe that information
      :s meant to move and that infoimation moves people.

      Respect
      We treat others as we would like to be treated ourselves. We do
      not tolerate abusive or disrespectful treatment.

      lnt~'ity
 I    We work with customers and prospects openly, honestly and sin-
      cerely. flea we say we will do something, we will do it when we
      say we cannot or will not do something, then we won't do it.

  0~

  C,

a
  Es
  E1

  :1   Excellence    with nothing less than the very best in everything
       We are satisfied
       we do. We will continue to raise the bar for everyone. The great
       fun here will be for all of us to disco ver just how good we can
       really be.

ann
 a
 r

r

.9

Es

a a a a

U. --

ii-

				     ECaaOO2648592



					     t                   t

			  r

						      1<

ROBERT A. BELFER
New York. New York
Chairman, Relco Oil & Gas Corp.

NORMAN P BLAKE, JR
Colorado Springs, Colorado
Chairman, President and CEO,
Comdisco, Inc., and Former CEO
and Secretary General, United States
Olympic Committee

RONNIE C. CHANt
Hong Kong
Chairman, Hang Lung Group

JO/IN It DUNCAN
Houston, Texas
Former Chairman of the Executive
Committee of Gulf & Western Industries, Inc.

WENDY L CRAMM
Washington, B.C.
Director of the Regulatory Studies
Program of the Mercatus Center at
George Mason University
Former Chairman, U.S. Commodity Futures
Trading Commission

KEN C HARRfSON
Portland, Oregon
Former Chairman and CEO, Portland
General Electric Company

ROBERT K. JAFOICKE
Stanford, California
Professor of Accounting (Emeritus) and
Former Dean. Graduate School of Business,
Stanford University

KENNETHL. LAY
Houston, Texas
Chairman. Enron Corp.

CHARLES A. LEMAISTRE
San Antonio, Texas
President Emeritus. University of Texas
M.D. Anderson Cancer Center

JOHN MENDELSORN
Houston, Texas
President, University of Texas
M.D. Anderson Cancer Center

JEROME I MEYER
Wilsonville, Oregon
Chairman. Tektronix, Inc.

PAULO V FERRAZ REPS/PA
Rio do Janeiro, Brazil
Executive Vice President of Group Bozano
Former President and COO. Meridional
Financial Group, and Former President and
CEO, State Bank of Rio do janeiro, Brazil

FRANK SAVAGE'
Stamford, Connecticut
Chairman. Alliance Capital Management
International (a division of Alliance Capital
Management 1.9)

JEFFREY K. SR/LUNch>
Houston, Texas
President and CEO, Enron Corp.

								      ECaaOO2648593

j
A

A

'S.

1*



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Enron Corporate Policy Committee

Chairman, Enron

president and Chief Executive Officer.
Enron

  i-F P
Vice Chairman &
Chief Strategic Officer. Enron

P(V   -~
Executive Vice President &
Chief Accounting Officer. Enron

C' 4\ HOP LU"
Chairman & CEO.
Enron Transportation Services

     flAt
Executive Vice President &
Chief of Staff, Enron

'9Y~~ Ffz A'~EY
Chairman A CEO.
Enron Energy Services

.." .113,1 K
Executive Vice President &
General Counsel. Enron

'ANDY EASTOW
Executive Vice President A
Chief Financial Officei Enron

MARIK FREVERT
Chairman & CEO.
Enron Wholesale Services

LOU [41
Chairman & CEO,
Enron Xcelerator

NV RIG F
Chairman & CEO.
Enron Broadband Services

~CHN   V
President & CEO,
Enron Europe

GREG WI-ALLE<
President & COO,
Enron Wholesale Services

				   KEVIN HANNON
				   Chief Operating Officer,
				   Enron Broadband Services

Shareholder In formation

  [Ft.ANSFF P :\CIFN I, R: Cs: RAN,
  DiVIDEND PAYING AND
  RFHVFSTMENi PLAN .4011k)
  1)1 RE C i-SF EVIL 11 PROC RAM)
  First Chicago Trust Company
  do EquiServe
  P.O. Box 2500
  Jersey City, NJ 07303-2500
  (800) 519-3111
  (201) 324-1225
  TOD: (201) 222-4955
  For direct deposit of dividends only, call:
  (800) 870.2340
  Internet address:
  http:/~v.equ serve, corn

  2Q(IC ...NC.,I..Ai ,i
  This Annual Report and the statements
  contained herein are submitted for the
  general information of the shareholders
  of Enron Corp. and are not intended for
  use in con nection with or to induce the
  sale or purchase of securities.

  ft     N  .1'.         5

  Enron Corp.'s Annual Report to share-
  holders and Form 10-K report to the
  Securities and Exchange Commission
  are available upon request on Enrons
  Internet address http:/~Av,enron.com
  For information regarding specific
  shareholder questions, write or call the
  Transfer Agent.

Financial analysts and investors who need
additional information should contact:
Enron Corp.
Investor Relations Dept.
PLO. Box 1188, Suite Aa)SB
Houston, TX 77251-1188
(713) 853-3956
Enrons Internet address:
http:/A~.enron,com

ANN U AL ME ETENG OF
 HAP F HO 1
The Annual Meeting of Shareholders will
be held in Houston, Texas. in the LaSalle
Ballroom of the Doubletree Hotel at
Allen Center, 400 Dallas Street, on
Tuesday, May 1, 2001. at 10 a,m,
Information with respect to this meeting
is contained in the Proxy Statement
sent with this Annual Report to holders
of record of Enron Corps Common
Stock and the Cumulative Second
Preferred Convertible Stock on March
2,2001. The 2000 Annual Report is not
to be considered a part of the proxy
soliciting material,

l1)iv'IDI9KL RFi>.IVESTFvIENI
The Transfer Agent offers holders of
Enron Corp. Common Stock the oppor-
tunity to reinvest part or all of their
dividends in the purchase of additional
shares of Common Stock by participating

in the DirectSERVlCE Program for
Shareholders of Enron Corp. This pro-
gram gives almost everyone the oppor-
tunity to purchase additional shares of
Common Stock without paying a bro-
kerage commission. Anyone wishing to
participate in the program may, upon
timely application, reinvest some, all.
or none of the cash dividends paid on
their Common Stock, or make optional
cash payments of as little as $25. after
an initial investment of $250 for new
shareholders, with a limit of $120,000
per calendar year. Direct requests for
further information to:
DirectSERVICE Program for
Shareholders of Enron Corp.
do First Chicago Trust Company
do EquiServe
P.O. Box 2598
Jersey City. NJ 07303-2598
Shareholders may call: (800) 519-3111
Non-shareholders requests for program
materials:
(800) 662-7662
Internet address:
http:/A~vw.equ iservecom
TDD: (201) 222-4955

								 ECaaOO2648595



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