IN: Most folks probably listened in to the press conference, but for those that didn't here's a summary of the ISO's proposal to FERC. The description of the proposal was vague and general, and Winters tends to speak in run-on sentences, so if I've gotten anything wrong, please chime in. $100 cap for "old" generation; "new" generation would be exempt. FERC would require generators and SCs to contract forward for at least 70% of their power. For those that meet the 70% requirement, they will be exempt from the $100 cap, and the $250 cap will apply. Winters believes that the 70% requirement, coupled with utility-controled gen, will result in the IOUs scheduling about 85% of load into the forward market. Load and supply that deviate from schedules and go to the real time market will be penalized (details to be "ironed" out). The ISO is supposed to make the filing at FERC today.

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OUT: ISO Proposal to FERC

IN: Ugh. We'll keep working this angle if their new attorney shows up on deck, but I think Susan and I have done as much as can be done with Howard H. Do any of you know what the Red Cedar facilities look like? I.e. how many miles of line, any big diameter line, any compression, etc? Howard must have read some old cases and gotten himself spooked that their facilites aren't gathering under the modified primary function test. I'm not sure why he thinks signing a transport contract with us will make their situation any worse, but that seems to be his conclusion. If Steve and Bill can't nudge Red Cedar's management into doing the deal, I'd suggest that you both or one of you ask Tsuri (sp?) to have his new lawyer call me and Susan after Howard leaves, maybe with one of the Kinder Morgan lawyers on the phone also, and we'll try to straighten this out.

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OUT: Red Cedar

IN: Neither EWS/RAC/EGF employees nor family members or others living in their household or financially dependent on the EWS/RAC/EGF employee may purchase or sell securities of any entity (or derivatives thereof) listed on the Restricted List for your or their personal or related accounts or recommend the purchase or sale of such securities to any person, except with the prior approval of the Compliance Department in consultation with the ENA Legal Department. In addition to the trading restrictions above, should you at any time possess non-public material information about any public company, you, your family members and anybody that is financially dependent on you, are restricted from trading in that issue, and you may not disclose the non-public material information to anyone that does not have a business need to know. With respect to investments in privately held companies, you are responsible for complying in all respects with the policy entitled "Conflicts of Interest, Investments, and Outside Business Interests of Officers and Employees" in the July, 2000 Enron Corp. Code of Ethics. Please consult the Compliance Department with any questions you may have regarding a potential investment in a privately-held company. Company Name Stock Symbol 3 TEC Energy Corp. TTEN Active Power ACPW Adrian Resources ADRRF Applied Terravision Systems, Inc. TER CanFibre Group Ltd. CFGL Carrizo Oil & Gas Inc. CRZO Catalytica Energy Systems, Inc. CESI Crown Energy CROE CyNet, Inc. CYNE Enserco Energy Service Company, Inc. ERC eSpeed, Inc. ESPD FuelCell Energy, Inc. FCEL Hanover Compressor Co. HC ICE Drilling Enterprises Inc. IDF Impact Energy IEY Industrial Holdings, Inc. IHII Kafus Environmental Industries, Inc. KS KCS Energy KCS Nakornthai Strip Mill Public Co Ltd NSM SET Paladin Resources PLC PLR LD Southwest Royalties SWROY Syntroleum Corp. SYNM Tejon Ranch Corp. TRC TransCoastal Marine Services, Inc. TCMS Verado VRDO The Restricted List is solely for the internal use of EWS/RAC/EGF. No one may engage in discussions regarding whether a security is or is not on the Restricted List with persons outside EWS/RAC/EGF without specific clearance from the Compliance Department in consultation with the ENA Legal Department. No employee of any Enron Business Unit may engage in the trading of any Position for the benefit of any party other than an Enron Business Unit (whether for their own account or for the account of any third party) where such Position relates to (i) any financial instrument, security, financial asset or liability which falls within such employee's responsibility at an Enron Business Unit, or (ii) any other commodity not covered by (i) included in any Commodity Group. Position shall mean, collectively, the risk components (including, but not limited to, price risk, basis risk, index risk, credit risk and liquidity risk) of all products (commodities, financial instruments, securities, equities, financial assets or liabilities) which have been authorized for trading in the Enron Corp. Risk Management Policy, any of the Enron Corp. Policies or approved for trading through any amendments to this Policy. The prohibitions listed above do not replace or modify the policies set forth in EWS's Policies and Procedures Regarding Confidential Information and Securities Trading, Enron Corp.'s Risk Management Policy, or Enron Corp.'s Code of Ethics . Should you have any questions regarding the above, please contact me at ext. 31939

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OUT: Restricted List

IN: All, The unofficial word on the street is that deal closing is slated for Feb 7 and UBSWenergy launch is Feb 11. Our intention is to launch financial products only for our regions beginning with Summer '02 through Cal '03. As we are successful in signing up counterparties to reach a critical mass, we'll be adding products that are closer to the front of the curve (less correlated to NG.) We need to do this to protect ourselves from "ambushes" by single parties when we don't have a critical mass of players that we can lay risk off with. Please note that, as a result, we may "only" have a couple of more weeks to play with in terms of studying up and refreshing ourselves on the fundamentals in our respective regions. Therefore, I'd like each of you to fill-in the information listed on the attached document for the region listed by your name. Feel free to use any resources you need (fundies, etc.) and have them finished by next Thurs. (2/7). Someone please nominate yourself to format each paper in the same manner and have them all put together in one binder nice and pretty. Have a goodie. Flet ECAR (Cinergy) - Krugh MAIN (ComEd) - Ave' SERC (TVA) - Jackie SERC (SOCO) - Twisty SPP (ENT) - New Boy

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OUT:
Regional Research Projects