Prudency

Sorry, I left you off the original list.

Thanks,
Wanda
---------------------- Forwarded by Wanda Curry/HOU/ECT on 03/09/2000 06:23=
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PM ---------------------------

Wanda Curry
03/09/2000 06:22 PM
To: Michael E Moscoso/HOU/ECT@ECT, Wes Colwell/HOU/ECT@ECT, Barry=20
Pearce/LON/ECT@ECT
cc: =20
Subject: Prudency

Please see the attached draft prudency policy and prudency schedule. Barry=
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I need your comments ASAP. I am in meetings until around 11:00 tomorrow. =
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I don't think we can argue that we no longer need prudency without it being=
a=20
change in accounting policy. This years Annual Report FN-3 stills contains=
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the following statement:

The values are adjusted to reflect the potential impact of liquidating=20
Enron=01,s position in=20
an orderly manner over a reasonable period of time under present market=
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conditions. =20

I think the best we can argue is 1)that the liquidity in some commodities=
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(gas for U.S. and maybe power for U.K.) has increased to a level that=20
prudency is no longer required and 2)setting a minimum level of VAR before=
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prudency is required are not a wholesale change in our accounting policy. =
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I have not attempted to address establishing an operational reserve. I thi=
nk=20
the two are separate, but no reason why we can't create one this quarter.

Wes, I need to get with you to determine what ENA would like to do. The=20
earnings situation may be different than expected. ENA has taken a large=
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amount out of prudency (see the attached schedule). We can probably argue=
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for that release to be reduced, pending complete research on power liquidit=
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and implementation of the new RAC calculation. I obviously will not hold a=
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discussions with AA. =20

Let me know what the next steps are. I will be waiting to hear from you bo=
th.

Wanda