Q: Dear Dr. Lay: As a stockholder, I am as upset as you, most Enron employees and other co-shareholders are given Enron's recent performance due to questionable management by scrupulous officers at Enron. As an ex-employee, I have seen many signs of a major collapse, given the fact that Enron's values (such as Respect, Integrity, Communicatons and Excellence) were simply not followed by Enron's officers and senior members of management. There are examples, such as in Panama, Palestine, and the Dominican Republic. One bad deal after the other with questionable economics and accounting to make each deal look good for the personal benefit of one individual in charge. It is about time that you get rid of these individuals and bring Enron back to what you have built over the years to be a successful company. Regards,
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A: stockholder comments
IN: Could you please set up a conference call and send the information to the list below? Please set it up for tomorrow, Wednesday, at 9 AM PDT, for one hour. Thank you very much. Jeff Dasovich/SFO/EES@EES, Steven J Kean/NA/Enron@Enron, James D Steffes/HOU/EES@EES, Rob Bradley/Corp/Enron@ENRON, mpalmer@enron.com, Karen Denne/Corp/Enron@ENRON, Mona L Petrochko/SFO/EES@EES, Susan J Mara/SFO/EES@EES, Paul Kaufman/PDX/ECT@ECT Dave Parquet, Samuel Wehn/HOU/ECT@ECT, Tim Belden/HOU/ECT@ECT, Sandra McCubbin/SFO/EES@EES

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OUT: Conference Call
IN: This is an email
It would appear that the plague of OOM requests that have distorted prices in New York may soon be reduced to the point that a true market may evolve and introduce some interest in serving load without the unhedgable risk of "uplift charges". The difficulty in looking ahead is to determine what the real prices will be without the numerous OOM requests that have been made in the past. The information that has been published in the past with regard to generation OOM did not quantify how much generation was removed from the bid stack at any one time. Certainly a significant number of peak hours were affected but it is unknown to what degree. At a guess a number of hours probably had over 1000 MW of generation OOM, effectively removing this generation from the bid stack but showing up as "uplift charges" on that portion of the electricity bill. Two pieces of information would be extremely helpful in taking a stab at what the energy prices should have been/are without the large OOM shadow bilateral market that presently exists. 1. How much generation in aggregate was loaded OOM for each hour in each zone? 2. Approximately how much was the uplift assigned to each zone on a daily basis? On a side note it is interesting to note that there is a recent presentation to the AMP/ICM Task Force by one of the participants that has determined that if all the large suppliers collude in tandem to withhold 50 MW each that there could conceivably be an increase in price. While this conspiracy theory is of concern to said presenter it would seem highly unlikely, especially considering that bid load or exports provide a much higher impact on price in reality than the unlikely scenario of some large suppliers all colluding in tandem. What should be of concern does not seem to be on their radar screen. Why are there so many OOM requests in NYC alone? Despite the more complex system in NYC the number of requests is significant. The resultant distortion in price has the result of making a market that is very difficult to predict and very difficult to hedge. The uplift charges assigned to those trying to serve load can be devastating, well that is those without the ability to pass it through. An interesting market development has resulted from the numerous OOM requests. The numerous OOM requests have translated into unhedgeable uplift that deters retail competition. The result of a lack of retail competition would be that customers would continue to reside with the incumbent provider instead of with another retail provider. While this may not be the intent of OOM requests it is realistically the result and one that should be garnering the attention of regulators to a higher degree than other theoretical scenarios. The continued practice to over regulate this market will deter generator development. I have heard some arguments that the CAP market in NYC will ensure investment and construction of new generation. To be clear the argument pointed to the current cap of ~$112/kw/year and that this would ensure that generation would be developed. ICAP payments are not a guaranteed revenue stream to any generator, especially payments of $9.40/kw/month. New generation will result in more competition for the payments which will result in lower capacity prices, especially in the longer term. There is only a fixed amount of load and reductions in ICAP prices do not result in an increase in demand for ICAP, prices will come down; a review of the recent ICAP auctions proves that this true. The larger the assumption for ICAP payments in a new generator development proforma, the increased risk that is assumed going forward, especially in light of the high regulatory risk in this market. A 25% decline in ICAP payments would be devastating to a proforma that relied heavily on ICAP as a revenue stream. Certainly the recent auction clearing prices suggest that the volatility is greater than 25% and therefore concludes that an assumption for high ICAP revenues are not a substitute for a viable and competitive energy market. Certainly looking at the current forward prices, the surplus of ICAP and the mitigated volatility it will not be long before generators with low capacity factors and high maintenance costs will be closely examining the economics of continuing to participate in the market. In conclusion the modeling of the 138 KV in NYC promises to reduce OOM requests by 70%, hopefully this will be the result. Certainly a significant increase in information for OOM requests should be posted that should include what load pocket, how much generation is loaded OOM and any other information that is pertinent including a mechanism to request an audit of those OOM requests to determine their validity. If all the requests are always valid then there should not be a problem subjecting requests to an audit. OOM requests are a deviation from the market based software dispatch, these exceptions to the normal dispatch should be examined as closely as generators are scrutinized when they deviate from their scheduled dispatches. Joe ---

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OUT: Reduction of OOM?
QUESTION: Rod and Paul: I have checked the ISDA between Kaiser and ENA and it has our standard setoff language which permits setoff of amounts owed by or to the Non-Defaulting Party and its Affiliates against amounts owed by or to the Defaulting Party under the ISDA and other agreements. Please call me once you have located the Metals agreement as Greg indicated to me in a voice mail that he needs an answer this morning. Rod, If we get comfortable on the legal side with this arrangement, are there other credit issues that need to be considered?
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ANS: Kaiser
Subscription probe for list AllActiveMA (larry.may@enron.com:19) This is a periodic automatic posting from the AllActiveMA mailing list. Do NOT reply to this message unless you want to be unsubscribed from this mailing list. Your current settings for the AllActiveMA are: Automatic acknowledgement of list postings: No Conceal your email address from queries: Yes Digest mode: No Send mailing list messages to you: Yes Send your own mailing list postings to you: Yes You have posted a total of 0 messages to the list since subscribing on 10/26/01 15:28:15. For a list of valid mailing list commands, please send a message to ListCaster@LISTSERV.AMUNET.EDU with the word "HELP" in the message body.
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answer: Subscription probe for list AllActiveMA (larry.may@enron.com:19)
Online would like to open this counterparty immediately for trading. Can you let me know ASAP whether you have any legal issues with them. Thanks.
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answer:
RUSH EOL APPROVAL - Public Service Electric & Gas Co.