Re: CONFIDENTIAL - Residential in CA

I like the idea, particularly if we can time any decision to turn the
customers back so it falls after the failure to get some action out of Sacto
(instead of after our earnings release).

The only problem I see is that we would need a decision from the top that
we're not going to turn the customers back if we get direct access (so we can
end the debate). I don't think it helps us if we get lucky, get direct
access back, then make a decision to return customers to the utility.

Karen Denne@ENRON
04/13/2001 10:30 AM
To: James D Steffes/NA/Enron@Enron
cc: Jeff Dasovich/NA/Enron@Enron, Paul Kaufman/PDX/ECT@ECT, Sandra
McCubbin/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Janel
Guerrero/Corp/Enron@Enron, Mark Palmer/Corp/Enron@ENRON, Susan J
Mara/NA/Enron@ENRON, Peggy Mahoney/HOU/EES@EES, Harry
Kingerski/NA/Enron@Enron, Dan Leff/HOU/EES@EES
Subject: Re: CONFIDENTIAL - Residential in CA

Before any decision is made, I think we really need to weigh in with EES on
the ramifications (both PR and legislative) of turning back 16,000
residential customers. I strongly believe that the public hit we will take
will be far greater than our actual out-of-pocket losses. We will be
crucified by the public, media, consumer groups, legislators, governor,
attorney general, etc., and this action will reaffirm our reputation of
packing up and leaving when it's not in our interest. The impact of this
action would be exacerbated since it is on the heels of UC/CSU.

I would also argue that this hurts our national dereg efforts. If we're
advocating that competition and choice benefits consumers and then we turn
around and pull out of a market and abandon customers when we're not
"profiting," we'll kill any chances we have of ever serving retail customers
in California -- or in any other state. We look foolish advocating for
direct access when we're not willing to serve our existing -- let alone
future customers

What about a preemptive strike that engages these 16,000 customers to weigh
in on direct access -- i.e. a letter that says "Enron may be forced to cancel
its contract -- call/write/send the enclosed postcard to your legislator and
tell them you want to keep your right to choose your energy service provider."

Our credibility is on the line. Before we take this action, we need to be
cognizant of all the long-range strategic implications, and we need to
seriously weigh the negative impact this will have on our corporate
reputation, on our legislative abilities and on our commercial success going
forward.

kd

James D Steffes
04/12/2001 09:05 PM
To: Jeff Dasovich/NA/Enron@Enron, Paul Kaufman/PDX/ECT@ECT, Sandra
McCubbin/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Janel
Guerrero/Corp/Enron@Enron, Mark Palmer/Corp/Enron@ENRON, Karen
Denne/Corp/Enron@ENRON, Susan J Mara/NA/Enron, Peggy Mahoney/HOU/EES@EES,
Harry Kingerski/NA/Enron@Enron
cc: Dan Leff/HOU/EES@EES

Subject: CONFIDENTIAL - Residential in CA

In the meeting today, no decision was made about what to do with Enron's
16,000 residential customers. Each of the contracts gives a basic 30 day
out right to Enron.

That being said, I think that we have a short window to push for DA before
any public action impacts us in Sacramento.

I realize that the ultimate action (which I think is inevitable) makes it
harder for our advocacy on DA, but real $ are flowing out of the company.

EES will give us notice when a decision is reached.

Thanks,

Jim