Subject: coal follow-up


Vijay,  I apologize for the delay in getting back to you.
I've been traveling again= .
=20 I also just found this in my in-box as returned as un-delivered (I put only= =20 two v(s) instead of three.
I hope your other discussions went well that= =20 day.
=20  Below are a few comments that i believe you addressed and wanted some=20 additional feedback from our coal activities and changes in the coal=20 industry.
I wanted to get this out to you quickly so please forgive this= =20 lack of formality or writing creativity.
Enron activity (EOL) Enron's online activity has been very successful especially as compared wit= h=20 our early estimations of acceptance by the industry.
I believe that there = is=20 only one other active coal trading system (Dynegy direct) that simply isn't= =20 posting prices as a bulletin board and waiting for a response with telephon= e=20 follow-up.
I also believe that we have done a very significant amount of o= r=20 maybe all the coal transactions on Dynegy direct to date.
We do a lot of o= ur=20 business online and the numbers YTD are that approx.
45% of our trades are= =20 executed online.
That number has been higher, as much as 90% for certain= =20 months or when we are trying something new or moving a particular product.
= =20 Also, as Bid/Ask spreads tighten, which we would expect, that bodes well fo= r=20 EOL and our (and the markets) ability to transact even more quickly.
=20 Transactions that took days to put together now can be done in 1 second.
= =20 Between the speed and the cost savings of having a fully integrated system,= =20 we believe that our transaction numbers and percentages of online business= =20 will significantly increase.
Changes in the industry We discussed changes that we believe are coming in the industry.
We see=20 several things on the horizon.
We expect the acceptance of the online=20 transactions to further increase; especially with the volatile price=20 movements what we have seen in the last 6 months.
We are currently=20 developing several new products for EOL that I believe will become very=20 popular and will create new markets in coal and related sectors.
I don't= =20 want to discuss them right now but we are close to releasing them and I thi= nk=20 they will raise some eyebrows.
The development of the Global Coal exchan= ge=20 will also help.
I frankly don=01,t believe it will be very successful beca= use=20 of several things but primarily because of the difficulty in closing the=20 transaction.
One thing has been very firmly demonstrated.
Every time a new= =20 big system has been introduced EOL volumes go up.
It simply accelerates th= e=20 acceptance of online business and it gets down to the best prices and=20 liquidity to see who will ultimately win the day.
Another big change in th= e=20 industry is the growing acceptance of the OTC market.
The significant pric= e=20 changes that have occurred have "forced" many traditional players to the OT= C=20 market.
This also includes forcing them to agree to standard OTC terms and= =20 conditions and getting them comfortable with the market.
This is very good= =20 for Enron especially when you consider that we are the major player on the= =20 OTC market.
We don't release specific percentages of what we are doing on= =20 the OTC.
Also having more natural and traditional players signing these=20 types of standard agreements helps us on the EOL side because standard=20 contracts are important for developing a more liquid commodity market.
Enron coal volumes A couple of numbers that we are willing to release.
Year to date, we have= =20 made markets and transacted approx.
30 million tons in the forward market.
= =20 On the physical side of our transactions, about 25% go physical vs.=20 financial.
Last year Enron was the largest US market maker (not producer)= =20 with 142 million tons transacted.
Internationally we moved approx.
47=20 million tons and overall the total was slightly less than 190 million tons.=  =20 We have high expectations for 2001.
I believe that we should be up approx= =20 65% and we are on track with that.
I think the industry would be surprise= d=20 that we did almost 2,800 transactions in 2000.
This doesn=01,t include an= y of=20 our shipping business.
I hope this helps and please let me know if you have any other questions.
Mike