IN: Two questions: 1. How do we fight the notion that a FERC retroactive determination of "just and reasonable rates" should be re-injected into the calculation of negative CTCs? It seems to me that there are at least equitable arguments against that. Will this be a CPUC or FERC issue? 2. Can we use the utilities' underscheduling to push them back on this, legally or in negotiations? Since they contributed to the market disfunction, shouldn't they have to live with the consequences?

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OUT: Negative CTC Issues

IN: Dear All, The business units are operating on a lean G&A budget and cut costs whenever we can and making sure that we are efficient. Are there any initiative to do likewise for all corp functions? As an accountant in the business unit, we received corp allocations. The total for corp was more than $700MM. This, of course, excludes Enron Net Work, Enron Property, and Global Finance, which if we include those, the G&A to Enron could well be over $1Billion (not counting the business units G&A). The number just blew me away. I think we need to make sure all functions are needed and are run efficiently. We cannot say it's OK just because we can allocate to the business units because the business units may not receive benefits for these costs. We sure don't want Enron, as a whole, to be growing so fat and so fast that it will hurt our bottom line. I'm sorry if I'm out of line, but I really do care about Enron and am very proud to be its employee. Thank you for your time.

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OUT: cost cutting measures - from an Employee/shareholder point of view

IN: Kay: I just wanted to check in regarding the status on exercise of the put right for CA Energy Development I and II LLC. Let me know if you have any comments on the documents or if we can further assist you. Thanks.

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OUT: Exercise of Put Right on CA Energy Development

IN: A friend of mine, Jim McCloskey, a Director at Ernst & Young, mentioned to me that one of his partners and former Vice Chairman of E&Y, Bob Herdman, was recently named Chief Accountant to the SEC and asked whether E&Y could be of any assistance with respect to the present SEC inquiry. I told Jim that I would convey his request to the appropriate personnel. If you or any one wanted to discuss this matter further with Jim he can be reached at 713-750-8206. I do know that Jim had met with Jeff Skilling earlier this year to talk about opportunities in E&Y working with Enron and I think he has another meeting scheduled in November with Rick Causey and others for a follow up presentation, all unrelated to the SEC inquiry. Regards,

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OUT:
Ernst & Young