Re: Litigation Disclosure

The Intratex disclosure looks fine. Check with Rex Rogers about what he wants
to do about disclosing California litigation risk.

Gary Peng/ENRON@enronXgate
04/26/2001 10:04 AM

To: Charles Cheek/ENRON@enronXgate, Robert Eickenroht/ENRON@enronXgate,
Richard B Sanders/HOU/ECT@ECT
cc: Rex Rogers/ENRON@enronXgate
Subject: Litigation Disclosure

Find below the Litigation and Other Contingencies footnote from the the
December 31, 2000 Annual Report. Please update the section of the disclosure
for which you are responsible for inclusion in the first quarter 2001 Form
10Q . Also, please let me know if there are any new items that should be
considered.

Please respond no later than Wednesday May 2.

Gary
3-6841

14 LITIGATION AND OTHER CONTINGENCIES

Enron is a party to various claims and litigation, the significant items
of which are discussed below. Although no assurances can be given, Enron
believes, based on its experience to date and after considering appropriate
reserves that have been established, that the ultimate resolution of such
items, individually or in the aggregate, will not have a material adverse
impact on Enron's financial position or results of operations.

Litigation. In 1995, several parties (the Plaintiffs) filed suit in
Harris County District Court in Houston, Texas, against Intratex Gas Company
(Intratex), Houston Pipe Line Company and
Panhandle Gas Company (collectively, the Enron Defendants), each of which is
a wholly-owned subsidiary of Enron. The Plaintiffs were either sellers or
royalty owners under numerous gas purchase contracts with Intratex, many of
which have terminated. Early in 1996, the case was severed by the Court into
two matters to be tried (or otherwise resolved) separately. In the first
matter, the Plaintiffs alleged that the Enron Defendants committed fraud and
negligent misrepresentation in connection with the "Panhandle program," a
special marketing program established in the early 1980s. This case was
tried in October 1996 and resulted in a verdict for the Enron Defendants. In
the second matter, the Plaintiffs allege that the Enron Defendants violated
state regulatory requirements and certain gas purchase contracts by failing
to take the Plaintiffs' gas ratably with other producers' gas at certain
times between 1978 and 1988. The trial court certified a class action with
respect to ratability claims. On March 9, 2000, the Texas Supreme Court
ruled that the trial court's class certification was improper and remanded
the case to the trial court. The Enron Defendants deny the Plaintiffs'
claims and have asserted various affirmative defenses, including the statute
of limitations. The Enron Defendants believe that they have strong legal and
factual defenses, and intend to vigorously contest the claims. Although no
assurances can be given, Enron believes that the ultimate resolution of these
matters will not have a material adverse effect on its financial position or
results of operations.

On November 21, 1996, an explosion occurred in or around the Humberto
Vidal Building in San Juan, Puerto Rico. The explosion resulted in
fatalities, bodily injuries and damage to the building and surrounding
property. San Juan Gas Company, Inc. (San Juan Gas), an Enron affiliate,
operated a propane/air distribution system in the vicinity, but did not
provide service to the building. Enron, San Juan Gas, four affiliates and
their insurance carriers were named as defendants, along with several third
parties, including The Puerto Rico Aqueduct and Sewer
Authority, Puerto Rico Telephone Company, Heath Consultants Incorporated,
Humberto Vidal, Inc. and their insurance carriers, in numerous lawsuits filed
in U.S. District Court for the District of Puerto Rico and the Superior Court
of Puerto Rico. These suits seek damages for wrongful death, personal injury,
business interruption and property damage allegedly caused by the explosion.
After nearly four years without determining the cause of the explosion, all
parties have agreed not to litigate further that issue, but to move these
suits toward settlements or trials to determine whether each plaintiff was
injured as a result of the explosion and, if so, the lawful damages
attributable to such injury. The defendants have agreed on a fund for
settlements or
final awards. Numerous claims have been settled. Although no assurances can
be given, Enron believes that the ultimate resolution of these matters will
not have a material adverse effect on its financial position or results of
operations.

Trojan Investment Recovery. In early 1993, PGE ceased commercial
operation of the Trojan nuclear power generating facility. The OPUC granted
PGE, through a general rate order, recovery of, and a return on, 87 percent
of its remaining investment in Trojan.

The OPUC's general rate order related to Trojan has been subject to
litigation in various state courts, including rulings by the Oregon Court of
Appeals and petitions to the Oregon Supreme Court filed by parties opposed to
the OPUC's order, including the Utility Reform Project(URP) and the Citizens
Utility Board (CUB).

In August 2000, PGE entered into agreements with CUB and the staff of the
OPUC to settle the litigation related to PGE's recovery of its investment in
the Trojan plant. Under the agreements, CUB agreed to withdraw from the
litigation and to support the settlement as the means to resolve the Trojan
litigation. The OPUC approved the accounting and ratemaking elements of the
settlement on September 29, 2000. As a result of these approvals, PGE's
investment in Trojan is no longer included in rates charged to customers,
either through a return on or a return of that investment. Collection of
ongoing decommissioning costs at Trojan is not affected by the settlement
agreements or the September 29, 2000 OPUC order. With CUB's withdrawal, URP
is
the one remaining significant adverse party in the litigation. URP has
indicated that it plans to continue to challenge the OPUC order allowing PGE
recovery of its investment in Trojan.

Enron cannot predict the outcome of these actions. Although no assurances
can be given, Enron believes that the ultimate resolution of these matters
will not have a material adverse effect on its financial position or results
of operations.

Environmental Matters. Enron is subject to extensive federal, state and
local environmental laws and regulations. These laws and regulations require
expenditures in connection with the
construction of new facilities, the operation of existing facilities and for
remediation at various operating sites. The implementation of the Clean Air
Act Amendments is expected to result in increased operating expenses. These
increased operating expenses are not expected to have a material impact on
Enron's financial position or results of operations.

Enron's natural gas pipeline companies conduct soil and groundwater
remediation on a number of their facilities. Enron does not expect to incur
material expenditures in connection with soil and groundwater remediation.