Re: Trading Authority

Drew,

Thanks for the procedures. We need to add Theres Branney to the list of
people that can trade. She is now trading in the storage group in the same
capacity as Morgan and myself. We are all extremely confident of her
knowledge and ability to do these trades. Is there anyone I need to contact
to get her name added to this trading authority?

Sue

From: Drew Fossum 10/25/2000 05:15 PM

To: Kent Miller/ET&S/Enron@ENRON, Sue M Neville/ET&S/Enron@ENRON, Morgan
Gottsponer/ET&S/Enron@ENRON
cc: Rod Hayslett/FGT/Enron@ENRON, Dave Neubauer/ET&S/Enron@ENRON, Bob
Chandler/ET&S/Enron@ENRON, Michael Moran/ET&S/Enron@ENRON, Danny
McCarty/ET&S/Enron@Enron

Subject: Trading Authority

Per your request, Kent, I've talked to Rod and confirmed with him the
procedures we need to be following on all trading activity until we complete
final ETS derivative trading rules and procedures.
1. For any financial trades, always check with Bob before executing the
trade regarding FAS 133 hedge treatment. Rod emphasized the fluid nature of
the FAS 133 interpretations, so getting the experts involved early is
critical. If we decide a trade ought to qualify for hedge accounting, the
key facts need to be written up and given to the auditors for sign off on the
same day the trade is executed.
2. For trades that qualify as hedges, in addition to (1) above, Kent and
Dave Nuebauer need to sign off on the trade.
3. For trades that don't qualify as hedges, a higher level of approval is
essential. Until we get a formal set of rules in place and are up and
running with our ability to calculate VAR, etc., I would suggest that all
trades must be approved by Danny and Rod. I would also suggest that legal
approval be obtained from either me or Mike Moran.
4. Sue and Morgan should be allowed to enter into trades, as well as Kent,
consistent with the above guidelines. Enron does not require that all trades
be executed by officers, and that approach should work here also so long as
items (1)-(3) are adhered to.

I believe these rules are clear and can be adhered to without much
interpretation or administrative burden. If anyone has a concern regarding
this approach, please give me a call. DF