Transaction Procedures and Documentation

At year end, with the flurry of business, it came to my attention that our
practices and procedures for transaction documentation were getting "loose"
particularly in respect of physical and financial power trading, as compared
to our well developed practices and procedures on the physical gas side.

I think there are four fundamental issues that need to be addressed:

1. Enron Canada now being responsible for financial trading confirmation
(Houston being still responsible for Financial Master, etc. negotiation and
documentation);

2. the onset of physical and financial power trading as a result of
deregulating Canadian markets, principally respecting Alberta and the PPA
position, and hopefully in the near future Ontario;

3. employee turnover;

4. familiarity with, and consistency of, documentation within legal,
commercial and operations, to facilitate deal flow and accuracy/quality
control.

Accordingly, I would like to implement the following action plan:

1. Greg, I would like you to be responsible for coordination of the
following:

(a) ensure that the Physical Power Master and related documents (Guarantees,
Certificates, etc.) that you have developed is available in the system in a
user friendly way that is consistent with Credit Worksheets so that first
drafts can be prepared by Sharon/Linda/Michelle for review by Legal;

(b) ensure that the forms of Confirmation Letter under the Physical Power
Master and the GTC's are available in the system in a user friendly way so
that Confirms/GTC's are prepared properly and consistently by Operations or,
where Legal is involved, first drafts can be prepared consistently and
accurately by Sharon/Linda/Michelle;

© ensure that the forms of Confirmation Letter under the Financial Master
and the GTC's/Omnibus forms are available in the system in a user friendly
way so that Confirms/GTC's are prepared properly and consistently by
Operations or, where Legal is involved, first drafts can be prepared
consistently and accurately by Sharon/Linda/Michelle - including coordinating
with Tana Jones spending a few days in our office with Operations and the
Legal Assistants to review the documentation process (as noted above
Financial Master, etc. preparation, and the forms, will continue to reside
with Houston);

(d) ensure that the Library of Inserts is being maintained and updated to
include new products and product changes, especially physical power products
and financial products, for consistency of pricing terms and indices,
delivery points, etc. and ensuring that the same descriptors are being used
by Legal (Canada and Houston) and Operations ( note this involves some
proactivity by the Legal assistants to ensure that they include new or
revised descriptors into the Library of Inserts as they are developed on a
transaction by transaction basis).

2. Chris, although some of these matters may not yet be relevant to Toronto,
you should coordinate with Greg to make sure that you and Michelle have the
documentation applicable to your market similarly organized. Although I do
not believe it is now necessary, you may also want to consider at what point
in the future it may be necessary for Tana to visit in Toronto to help set up
the financial trading Confirms, GTCs, etc.

3. Greg, within the next six weeks I would like you to co-ordinate internal
luncheon seminars with the traders and marketers, both power and gas, to
review with then our policies and procedures for transacting and contracting,
including reviewing the Master, Credit and transaction initiation and
documentation process; appropriate and limited uses of GTCs; products and
applicable force majeure principals (i.e. gas - firm, firm less than 31,
interruptible; power - firm LD and system firm, including the unit
contingent nature of the PPA); contract execution policies; confidentiality
and use of non-public information. These seminars should be mandatory, and
Rob Milnthorp will help to make them so, and any exceptions ought to require
Rob's approval. Finally, at least for physical gas, Sharon has the seminar
materials from seminars given a couple of years ago. These seminars ought to
be repeated annually for at least new employees. Similarly, Chris needs to
do likewise for the Toronto office, if not now appropriate, at an appropriate
time in the near future.

Also, Greg, Mark should help with any of the foregoing in any way you see
appropriate.

We will discuss the foregoing at our next Wednesday group meeting. Greg
please coordinate with Tana.

Peggy, please invlove Dianne and Melinda and any others from your group as
you consider appropriate.

This is a priority matter. Trading and marketing are our core business
functions, and the practices and procedures for transacting need to be
efficient, fluid, consistent, reliable and accurate.

Peter.