Enron Trade Services Inc.

Mark as you may recall we are investigating ways to broaden the safe harbour
exemption Enron Australia Finance Pty Ltd (EAF) has under Australian
securities legislation to derivatives. Currently the exemption just covers
electricity related products. Our objective is to be granted an exemption
that will cover all products EAF would trade through EOL. The catalyst for
this change is to prepare ourselves for legislative changes due next year
that will require a license or an exemption to trade derivatives.

Under existing policy the Australian regulator (ASIC) requires the receipt
of an exemption to be subject to the prudential oversight. Alternatively the
receipent could be guaranteed by an entity subject to such oversight. Certain
overseas regimes are specifically identified as being satisfactory, including
that applying to a futures commission merchants registered under the
Commodity Exchange Act.

Recent investigations have indicated that a company we acquired through MG
now known as Enron Trade Services, Inc. (ETSI) is licensed by the CFTC. I
understand this company is incorporated in Delaware. I spoke to Justin when
I was in London and we could not identify any impediment to such a guarantee
arrangement.

As the next step I was proposing to ask Sullivan & Cromwell for advice to
confirm
the exact licence that ETSI has under the Commodity Exchange Act
that there are no US regulatory obstacles to such an arrangement.

Would you confirm this approach would be acceptable to you. Assuming it is
would you suggest the appropriate contact at Sullivan and Cromwell who would
be qualified to advise on this matter.