Power Trading

Hi folks:
Very glad to hear about the new developments. Just to recap what we
discussed this morning about different things you need to look into to set up
trading operations and the contacts:

1. Licence to trade: Regulatory people: I guess you know about this part
better than me.

2. Trading & Risk Mgmt: Global Risk Mgmt oversight: John Sherrif in London
has the overall responsibility outside Western Hemisphere. Research group can
help with the structuring models used for trading.

3. Risk Conrols: Before trading group is operational, it needs to get the
authorization from the Board of Directors of Enron along with total position
limits and possibly value@risk limits. These limits are typically by
commodity type and by region. Risk Assessment & Control (RAC) under Rick Buy
performs the internal control function ensuring that the businesses adhere to
these trading limits. Ted Murphy is the VP in RAC overseeing the trading
operations. The value@risk models come from the Research group, but
day-to-day monitoring of the numbers is done by Ted's group.

4. Credit Risk: A credit reserve number is computed for each deal (again, the
models are created by Research) and is transferred to the credit group under
Bill Bradford (also in RAC). This is basically like buying insurance from the
corp. , so that if there is a couterparty default, the loss is covered by the
reserve pool of the credit dept.

5. Legal: The name I was given is Alan Aronowitz for legal help.

6. Back Office: Initially can survive with Excel spreadsheets. You should
contact the IT though when the plans finalize to talk about systems.

Australia is the most recent place where we set up the trading operations.
You can talk to Paul Quilky, the trader there to talk about these issues
(mention to him that Grant Masson in Research gave his name).

Barry Pierce in London was incharge of back office at the begin there.
I can coordinate for talking with people next week. Give me a call Monday if
possible. I hadn't the time to search for the presentation stuff today. Will
do it next week.

Krishna.