Exhibit 10.26

           FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

     This Agreement, made and entered into on this 7th day
of February, 2000, and made effective as of February 7,
2000, by and between Enron Corp., (Company") and Kenneth L.
Lay ("Employee"), is an amendment to that certain Employment
Agreement between the parties entered into and made
effective on December 9. 1996 (the "Employment Agreement").

     WHEREAS, the parties desire to amend the Employment
Agreement as provided herein;

     NOW, THEREFORE, for and in consideration of the
covenants contained herein, and for other good and valuable
considerations, the parties agree as follows:

     1.  Article 2, paragraph 2.1 shall be deleted in its
entirety and the following inserted in its place:

          "2.1 TERM.  Unless sooner terminated pursuant to
other provisions hereof, Company agrees to employ Employee
for the period (the "Term") beginning on the Effective Date
and ending on December 31, 2003, and thereafter for such
period, if any, as may be agreed upon in writing by Employee
and Company."

     2.   Article 2 is hereby amended by adding the following
       paragraph 2.5:

               "2.5 Should Employee remain employed by
               Company beyond the expiration of the Term,
               such employment shall convert to a month-to-
               month relationship terminable at any time by
               either Company or Employee for any reason
               whatsoever, with or without cause.  Upon such
               termination of the employment relationship by
               either Company or Employee for any reason
               whatsoever, Employee shall be entitled to pro
               rata salary through the date of such
               termination, but Employee shall not be
               entitled to any individual bonuses or
               individual incentive compensation not yet
               paid at the date of such termination and all
               other future compensation to which Employee
               is entitled and all future benefits for which
               Employee is eligible shall cease and
               terminate."

     3.   Article 3, Section 3.1 is hereby amended in its
       entirety and the following is inserted in its place:

               "3.1 Base Salary.   During the period
               beginning on the Effective Date and ending on
               December 31, 1996, Employee shall receive an
               annual base salary equal to $990,000 which
               increased to 1.2 million dollars on May 1,
               1997 and then increased to 1.3 million
               dollars on May 1, 1998.  Thereafter, during
               the period of this Agreement, Employee shall
               receive a minimum annual base salary equal to
               $1,300,000.  Employee's base salary shall be
               reviewed annually and may be increased
               annually and from time to time by the Board
               of Directors (or the Compensation and
               Management Development Committee of such
               Board) in its sole discretion and, after any
               such change, Employee's new level of base
               salary shall be Employee's base salary for
               purposes of this Agreement until the
               effective date of any subsequent change.
               Employee's annual base salary shall be paid
               in equal installments in accordance with
               Company's standard policy regarding payment
               of compensation to executives; provided,
               however, that Employee hereby irrevocable
               elects and agrees that any base salary
               payable to Employee pursuant to this
               paragraph 3.1 in excess of $1,000,000 during
               any taxable year of Company shall be deferred
               under Company's 1994 Deferral Plan.  Any
               amounts deferred under Company's 1994
               Deferral Plan pursuant to this paragraph 3.1
               shall be subject to all of the terms and
               conditions of such plan, including, without
               limitation, the time of payment provisions
               thereof."

     4.   Article 5, paragraph 5.1 is hereby deleted and the
          following inserted in its place:

               "5.1 As part of the consideration for the
               compensation and benefits to be paid to
               Employee hereunder, in keeping with
               Employee's duties as a fiduciary and in order
               to protect Company's interests in the
               confidential information of Company and the
               business relationships developed by Employee
               with the clients and potential clients of
               Company, and as an additional incentive for
               Company to enter into this Agreement, Company
               and Employee agree to the non-competition
               provisions of this Article 5.  Employee
               agrees that during the period of Employee's
               non-competition obligations hereunder,
               Employee will not, directly or indirectly for
               Employee or for others, in any geographic
               area or market where Company or any of its
               affiliated companies are conducting any
               business as of the date of termination of the
               employment relationship or have during the
               previous twelve months conducted any
               business:

               (i)  engage in any business competitive with
               the business conducted by Company;

               (ii) render advice or services to, or
               otherwise assist, any other person,
               association, or entity who is engaged,
               directly or indirectly, in any business
               competitive with the business conducted by
               Company; or

               (iii)     induce any employee of Company or
               any of its affiliates to terminate his or her
               employment with Company or its affiliates, or
               hire or assist in the hiring of any such
               employee by person, association, or entity
               not affiliated with Enron.

These non-competition obligations shall extend until the
latter of (a) expiration of the Term or (b) one year after
termination of the employment relationship."

     5.   Article 7, paragraph 7.1(i) is hereby deleted in its
          entirety and the following inserted in its place:

               "(i) Employee shall receive a lump sum
               payment for each full calendar year of the
               remaining Term of this Agreement equal to the
               total of Employee's 2000 annual base salary
               of $1,300,000, Employee's 1999 bonus payable
               in 2000 of $3,900,000 and the 2000 long-term
               grant value of $15,000,000."

     6.   Article 7, paragraph 7.2 is hereby deleted in its
          entirety and the following inserted in its place:

               "7.2 Certain Additional Payments by Company.
               Notwithstanding anything to the contrary in
               this Agreement, in the event that any
               payment, distribution, or other benefit
               provided by Company to or for the benefit of
               Employee, whether paid or payable or
               distributed or distributable pursuant to the
               terms of this Agreement or otherwise (a
               "Payment"), would be subject to the excise
               tax imposed by Section 4999 of the Internal
               Revenue Code of 1986, as amended, or any
               interest or penalties with respect to such
               excise tax (such excise tax, together with
               any such interest or penalties, are
               hereinafter collectively referred to as the
               "Excise Tax"), Company shall pay to Employee
               an additional payment (a "Gross-up Payment")
               in an amount such that after payment by
               Employee of all taxes (including any interest
               or penalties imposed with respect to such
               taxes), including any Excise Tax imposed on
               any Gross-up Payment, Employee retains an
               amount of the Gross-up Payment equal to the
               Excise Tax imposed upon the Payments.
               Company and Employee shall make an initial
               determination as to whether a Gross-up
               Payment is required and the amount of any
               such Gross-up Payment.  Employee shall notify
               Company immediately in writing of any claim
               by the Internal Revenue Service which, if
               successful, would require Company to make a
               Gross-up Payment (or a Gross-up Payment in
               excess of that, if any, initially determined
               by Company and Employee) within five days of
               the receipt of such claim.  Company shall
               notify Employee in writing at least five days
               prior to the due date of any response
               required with respect to such claim if it
               plans to contest the claim.  If Company
               decides to contest such claim, Employee shall
               cooperate fully with Company in such action;
               provided, however, Company shall bear and pay
               directly or indirectly all costs and expenses
               (including additional interest and penalties)
               incurred in connection with such action and
               shall indemnify and hold Employee harmless,
               on an after-tax basis, for any Excise Tax or
               income tax, including interest and penalties
               with respect thereto, imposed as a result of
               Company's action.  If, as a result of
               Company's action with respect to a claim,
               Employee receives a refund of any amount paid
               by Company with respect to such claim,
               Employee shall promptly pay such refund to
               Company.  If Company fails to timely notify
               Employee whether it will contest such claim
               or Company determines not to contest such
               claim, then Company shall immediately pay to
               Employee the portion of such claim, if any,
               which it has not previously paid to
               Employee."

     7.   Article 7, paragraph 7.6(iii) is hereby deleted in its
          entirety and the following inserted in its place:

               "(iii)    "Involuntarily Terminated" shall
               mean termination of Employee's employment
               with Company (A) by Company for any reason
               whatsoever except for Cause or (B) by
               Employee for Good Reason."

     8.   Article 8 is hereby amended by adding the following
          paragraph:

               "8.15  If a dispute arises out of or
               related to this Agreement and the dispute
               cannot be settled through direct discussions,
               Company and Employee agree that, except for
               disputes arising out of a breach or alleged
               breach of Articles 4 and 5, they shall to
               first endeavor to settle the dispute in an
               amicable fashion, including the use of a
               mediator.  If such efforts fail to resolve
               the dispute, the dispute, and any dispute
               arising under Articles 4 and 5, shall be
               resolved as follows:

     (a)  Except as provided in Subsection (b), any and all
          claims, demands, cause of action, disputes, controversies,
          and other matters in questions arising out of or relating to
          this Agreement, any provision hereof, the alleged breach
          thereof, or in any way relating to the subject matter of
          this Agreement, involving Company, Enron, Employee, and/or
          their respective representatives, even through some or all
          of such claims allegedly are extra-contractual in nature,
          whether such claims sound in contract, tort, or otherwise,
          at law or in equity, under state or federal law, whether
          provided by statute or the common law, for damages or any
          other relief, including all aspects of any disputes arising
          out of Articles 4 or 5 [excepting only temporary or
          preliminary injunctive relief as specified in subsection (b)
          hereof] shall be resolved by binding arbitration pursuant to
          the Federal Arbitration Act in accordance with the
          Commercial Arbitration Rules then in effect with the
          American Arbitration Association.  The arbitration
          proceeding shall be conducted in Houston, Texas.  The
          arbitration may be initiated by either party by the
          providing to the other a written notice of arbitration
          specifying the claims.  Within thirty (30) days of the
          notice of initiation of the arbitration procedure, each
          party shall denominate one arbitrator.  The two arbitrators
          shall select a third arbitrator failing agreement on which
          within thirty (30) days of the original notice, the parties
          (or either of them) shall apply to the Senior Active United
          States District Judge for the Southern District of Texas,
          who shall appoint a third arbitrator.  The three
          arbitrators, utilizing the Commercial Arbitration Rules of
          the American Arbitration Association, shall by majority vote
          within 120 days of the selection of the third arbitrator,
          resolve all disputes between the parties.  There shall be no
          transcript of the hearing before the arbitrators.  The
          arbitrators' decision shall be in writing, but shall be as
          brief as possible.  The arbitrators shall not assign the
          reasons for their decision.  The arbitrators' decision shall
          be final and non-appealable to the maximum extent permitted
          by law.  Judgment upon any award rendered in any such
          arbitration proceeding may be entered by any federal or
          state court having jurisdiction.  This agreement to
          arbitrate shall be enforceable in either federal or state
          court.  The enforcement of this agreement to arbitrate and
          all procedural aspects of this agreement to arbitrate,
          including but not limited to, the construction and
          interpretation of this agreement to arbitrate, the issues
          subject to arbitration (i.e., arbitrability), the scope of
          the arbitrable issues, allegations of waiver, delay or
          defenses to arbitrability, and the rules governing the
          conduct of the arbitration, shall be governed by and
          construed pursuant to the Federal Arbitration Act and shall
          be decided by the arbitrators.  In deciding the substance of
          any such claims, the arbitrators shall apply the substantive
          laws of the State of Texas (excluding Texas choice-of-law
          principles that might call for the application of some other
          State's law); provided, however, it is expressly agreed that
          the arbitrators shall have no authority to award treble,
          exemplary, or punitive damages under any circumstances
          regardless of whether such damages may be available under
          Texas law, the parties hereby waiving their right, if any,
          to recover treble, exemplary, or punitive damages in
          connection with any such claims.  Even though cessation of
          employment under this Agreement may affect Employee's rights
          under the Stock Option Grant Agreements or the Split Dollar
          Agreement referenced in paragraphs 3.5 and 3.6 and/or the
          Company's 1991 Stock Plan (the "1991 Stock Plan"), this
          agreement to arbitrate is not applicable to disputes between
          or among Company and Employee based upon or arising out of
          the Stock Option Grant Agreements or the Split Dollar
          Agreement referenced in paragraphs 3.5 and 3.6 the 1991
          Stock Plan, or any other agreement, benefit plan, or program
          heretofore or hereafter entered into between Employee and
          Company, or its affiliates.

     (b)  Notwithstanding the agreement to arbitrate contained in
          Subsection 8.15(a), in the event that either party wishes to
          seek a temporary restraining order or a preliminary or
          temporary injunction to maintain the status quo pending the
          Arbitrator's award, each party shall have the right to
          pursue such temporary injunctive relief in court.  The
          parties agree that such action for a temporary restraining
          order or a preliminary or temporary injunction may be
          brought in the State or federal courts residing in Houston,
          Harris County, Texas, or in any other forum in which
          jurisdiction is appropriate, and each of Company and
          Employee hereby irrevocably appoints the Secretary of State
          for the State of Texas as an agent for receipt of service of
          process in connection with such litigation."

     This Agreement is the First Amendment to the Employment
Agreement, and the parties agree that all other terms,
conditions and stipulations contained in the Employment
Agreement shall remain in full force and effect and without
any change or modification, except as provided herein.

     IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.


KENNETH L. LAY                ENRON CORP.


/s/ KENNETH L. LAY            /s/ CHARLES A. LeMAISTRE
Date:     2/7/00              Name:  Charles A.LeMaistre
                              Title: Chair, Compensation &
                              Management Development
                              Committee
                              Date: February 7, 2000