Re: ENA Group Expenses

Dave:

Based on our discussions this morning:

1. Internal Costs -- a capacity charge will be determined for each wholesale
business unit based on a time allocation matrix that each lawyer and
paralegal prepares. The time allocation matrix will be revised during the
year if material changes in the work occur.

2. Outside Costs -- require internal sign-off by GC and COO to spend more
than $10,000 on a potential transaction AND a written transaction budget for
proposed outside legal expenses more than $10,000. Wherever possible, a firm
cap on legal fees should be negotiated. A memorandum will be sent from the
GC and [Chairman of the Wholesale Group?] laying out the procedure to all
employees.

3. Selection of Outside Lawyers -- expressly add billing rates and
efficiency as key considerations, in addition to quality, in the selection of
outside counsel. [Dave, we need to complete our discussion on this point.]
Our new policy needs to be reviewed with outside counsel.

4. Reopener! -- need to review where business changes significantly.

David W Delainey
10/19/2000 12:33 PM

To: Wes Colwell/HOU/ECT@ECT, Sally Beck/HOU/ECT@ECT, Mark E
Haedicke/HOU/ECT@ECT, David Oxley/HOU/ECT@ECT, Stephen H Douglas/HOU/ECT@ECT,
Vince J Kaminski/HOU/ECT@ECT, Scott Tholan/Corp/Enron@Enron, Brian
Redmond/HOU/ECT@ECT, Eric Thode/Corp/Enron@ENRON
cc: John J Lavorato/Corp/Enron@Enron, Mark Frevert/NA/Enron@Enron
Subject: ENA Group Expenses

Guys, notes from the morning meeting. Please review and comment.

Specific action items:
a) i)further calculation of ENA/Non- ENA capacity charges, ii) estimation of
outside legal and iii) formulation of charge out/feedback process to the
business units;
b) need budget/review for competitive analysis, technical and restructuring.

Regards
Delainey