Today's meeting

Thanks for the meeting today.

A couple of takeaways would be the following:

1. Stop for a moment and look at where you are today with mid/back office systems and people related to your transaction counts and physical vs. financial. Remember, volume doesn't matter. It is how many transactions, how many schedules, how many invoices, etc. Even plain vanilla deals get a paper confirm and get entered into systems. Second, where are you going to be in 3 to 5 years and what will it cost to hire and build that machine. I know you will have more power plants and physical reserves than Enron, but we process massive amounts of transactions that are related to physical flows, assets and positions, including all of EES' resource to load and customers. We also do significant volumes of options as well as plain vanilla. Remember, even though EnronOnline shows alot of "vanilla" stuff, our voice transaction counts have gone way up as well and we haven't decreased the amount of highly structured derivatives we have in the system.

2. What functions are proprietary vs. what is something that you would be willing to let go. The questions we ask ourselves are if it is core or are we best in class. If things are not proprietary and you are not the best at it, maybe you should consider outsourcing.

3. We can get a team from our Calgary office to your E&P purchase any day you want to start reviewing that processing deal.

4. Maybe we can get 4 guys and hit a baseball game. Rumor has it we have great seats.

5. Don't get hung up on the separate entity thing yet. If it makes sense, it will happen. Even if there was a separate entity today with security and some of your ownership, if it was processing your transactions, you would have outsourced to it so you still have to go through the outsource or not discussion anyway so you might as well do it first.

I thought it went real well. You guys asked all the right questions and are clearly thinking about where to go.

Tell the family hello and call me when you get back week after next.

GP
COO Enron Net Works
713-853-6635