In case you haven't seen this.
---------------------- Forwarded by Mary Hain/HOU/ECT on 03/07/2001 09:38 PM
---------------------------

	Enron Capital & Trade Resources Corp.

	From:  "SCIENTECH IssueAlert" <IssueAlert@scientech.com>
     03/05/2001 05:01 AM

To:
cc:
Subject: PG&E Corp. Receives $1 Billion To Partially Pay Off Debts

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IssueAlert for  March 5, 2001

PGOCorp. Receives $1 Billion To Partially Pay Off Debts

by Will McNamara
Director, Electric Industry Analysis

PGOCorp., parent of nearly bankrupt utility PGOCo., announced that it has
closed a $1 billion loan agreement that will allow it to pay various debts
including its defaulted fourth quarter dividend to shareholders. The loans,
provided by GE Capital Structured Finance Group and Lehman Brothers, will be
secured by the company's equity interest in PGONational Energy Group LLC.

Analysis: Although this may seem like a positive step for the troubled
utility, PGOCo.'s partial payment pales in comparison to its outstanding
debt. Making matters even worse for the company is a new wave of lawsuits
seeking restitution in the amount of $3 billion.

The loans, which PGOCorp. was able to secure due to the strong performance of
its National Energy Group subsidiary, have enabled the corporation to "pay
its outstanding debt obligations on which it has defaulted or would default
in the near future." The obligations that have been paid include: $501
million in payments to commercial paper holders, $434 million in borrowings
under a revolving credit agreement, and $116 million owned to PGOCorporation
common shareholders for the defaulted 4Q 2000 dividend. The loan, which has a
term of two years, includes an option that, "depending on certain factors,"
would give the lenders between 2 and 3 percent of the shares in National
Energy Group. In addition, the loan agreement prohibits PGOfrom declaring or
paying future common stock dividends until the loans are repaid.

In an effort to conserve cash and stave off bankruptcy, on Jan. 10 PGOCorp.
halted payment of its fourth quarter dividend, which had been declared on
Oct. 18, 2000, and was due to be payable on Jan. 15. Soon after that, the
company announced that it would not be able to make certain payments on
commercial paper obligations.

Citing that the risk of bankruptcy played a factor in assuming the loan,
PGOCorp. CEO and President Robert Glynn said that the financing would be
repaid with PGOCorp. shareholder dollars only. In other words, Glynn
reassured customers of the utility that rates would not be increased as a
mechanism to repay this loan. However, PGOcontinues its negotiations with
Calif. Gov. Gray Davis to increase rates for at least a substantial part of
losses already accrued due to skyrocketing prices in the wholesale market.
Reportedly, as of Dec. 31, PGOhad racked up more than $6 billion in
undercollected costs.

In its 8K filing with the Securities and Exchange Commission, PGOCorp.
acknowledged that it would be damaged further if the California Public
Utilities Commission adopts current power payment proposals without an
electric rate increase. Meanwhile, a pending deal between PGOand Gov. Davis
is expected to include the sale of the utility's transmission assets to the
state of California, much like PG&E's counterpart Southern California Edison
(SCE) has already done.

The bottom line of the loans is that PGOis "removed from being in default on
its credit agreements," according to Greg Pruett, vice president of corporate
communications in an interview with CBS.MarketWatch.com. Pruett also said
that the loans amounted to "one less item of significance" that the holding
company has to attend to ensure it doesn't find itself "in a situation where
it could have creditors seeking to force it into bankruptcy."

However, as noted, just as PGOCorp. received this loan, the parent company
and the utility announced that they have been hit with two lawsuits seeking a
total of nearly $3 billion in restitution. PGOCorp. and PGOCo., on the basis
of the newly secured loan, say that they can only make partial payments of $1
billion. Both lawsuits were filed with the Securities Exchange Commission on
Feb. 13. According to CBSMarketWatch.com, one lawsuit alleges that PGOCorp.
violated its fiduciary duties by repurchasing common share of its PGOCo. unit
at a price of $2.3 billion. The second lawsuit claims that PGOCorp. collected
nearly $2.96 billion from PGOCo. under a tax-sharing arrangement, but paid
only $2.29 billion to all governments under the arrangement. The plaintiff in
both suits is identified only as Richard D. Wilson, who seeks to enjoin any
more such buybacks unless "good cause" is shown, and also seeks restitution
of $2.3 billion, with interest, from PGOCorp. The parent company and utility
have discounted the validity of the lawsuits, although they said they were
unable to predict any outcome or how it might their financial conditions.

In its most recent filing with the SEC, PGOalso disclosed that the utility
unit owes $1.1 billion to the California Independent System Operator for
December energy purchases, and another $331 million to a group of
unidentified power generators for January deliveries. At that time, which was
only a few days before PGOCorp. secured the loans, the company said it could
only make partial payments of these debts on a pro rata basis. As a result,
PGOCorp said it could only pay the California ISO about $177 million, and
make payments of $51 million to the power suppliers. It appears that PGOCorp.
has not used any of the funds secured in its loans to make additional
payments to the California ISO or power suppliers.

As noted, PG&E's subsidiary National Energy Group played a prominent role in
its parent's loans. The loans will be secured by the company's equity
interest in National Energy Group, and the lenders could potentially gain a 2
or 3 percent interest in the subsidiary. National Energy Group is PGOCorp.'s
unregulated power producer that sells energy on the East Coast, primarily in
New England. PGOCorp. has previously claimed that its goal is for National
Energy Group to be in a position to contribute 30 percent of earnings for the
parent company by 2002. While the regulated PGOCo. continues to struggle in
debt, National Energy Group has been quite successful. In fact, much of
PGOCorp.'s earnings over 2000 came directly from National Energy Group, which
gained a 233-percent profit increase in 2Q 2000 and an 22-percent profit
increase in 3Q 2000. Clearly, PGOCorp. has benefited greatly from National
Energy Group's ability, as an unregulated subsidiary, to sell power outside
in deregulated markets outside of California. Thus, it is no wonder that,
although PGOCorp. still considers California to be an attractive market, the
core driver of its strategy is NEG, which is able to operate in all lucrative
markets as they become deregulated.

Just last month, PGOCorp. gained approval to implement a shrewd restructuring
of its business units that protects National Energy Group (and other
high-profit subsidiaries) from any impact that the bankruptcy of the
regulated utility or parent company might cause. In other words, if PGOCorp.
and PGOCo. ultimately declare bankruptcy, subsidiaries such as National
Energy Group would not bear any foreseeable impact, protecting some of PG&E's
most profitable business units from financial insolvency. Ironically,
however, through this loan there is now a tie between the unregulated
business of National Energy Group and the regulated PGOCo., although the
ramifications of this connection are not completely clear at this time.

Moreover, while the loan that PGOhas secured certainly helps, it by no means
brings an end to the utility's financial problems. Through the loan, PGOhas
been enabled to pay outstanding debt obligations on which it has already
defaulted or may default on in the near future. However, the payments made in
the amount of $1 billion only reflect a small percentage of PG&E's reported
$6 billion of total debt. Thus, bankruptcy is still a strong possibility for
the company unless some other new major development occurs. Most likely, this
development will be the sale of its transmission system to the state. PGOmay
have to lower its expectations of what it believes its system to be worth
(reportedly $1 billion). However, just as SCE has now been apparently
protected from bankruptcy filing due to the sale of its own transmission
system, PGOmay also find that an asset sale is its only recourse at this
juncture.

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Hi guys!  Lindy's B-day lunch came to $40.30 each.  Thanks, Kim.


If BUFFALO:

Pat
Brady
Sheas and Cindy

If INDIANAPOLIS:

Pat
Sheas
Cindy
Dave

Please note that there are two Saturday games next week.

 - Pick Sheet - Week 16.xls
 - week 15 b4 monday.xls


This is a test.


.79 by .805


The following message is from Ray Bennett, Vice President, Human Resources:

The PEP Quick Reference Guide is attached for your reference.

The Human Resources Department will be conducting training classes on the
mid-year performance management process for those employees who were unable
to attend a floor meeting or would like more detailed information regarding
the PEP system.  Meetings will be held at the Doubletree Hotel in the Granger
A room at the following times:

Tuesday, May 16th, 2000  Wednesday, May 17th, 2000

9:00am - 10:00am   9:00am - 10:00am
2:00pm - 3:00pm   2:00pm - 3:00pm

If you have any questions or need assistance, please call the PEP Help Desk:

Houston: 713-853-4777, option 4
Europe:  44 207783-4040, option 4

or email your questions to: perfmgmt@enron.com

For further information, contact your HR representative.


California,s power crisis has generated heated debate over the last several
months.  Unfortunately, this debate has generated more heat than light.  We
want you to know what the facts are and what we are doing about the crisis.
Please spend a few minutes reading the following overview on the situation
and our position on California energy issues.

What happened in California

The source of California,s current problem is as straightforward as supply
and demand.  California,s economy grew 29 percent since 1998.  This increased
the demand for electricity by 24 percent.  At the same time, regulatory
restrictions prevented new generation from getting built in the state.  So
demand grew but regulations prevented supplies from being added.  The result,
predictably, is a shortage.  This summer, peak capacity will be about 10
percent shy of peak demand, leading to further blackouts in the state.

In addition to the supply and demand imbalance, there are two other related
factors that led to the current crisis.  First, the state,s regulations
forced all sales and purchases into the spot market.  The spot market for
power is extraordinarily volatile.  The way firms behave in a free market
when faced with such volatility is to construct a portfolio of purchases long
term, medium term and short term, to reduce exposure to this volatility.  In
California, state regulation prevented this strategy.  This would be the
equivalent of putting the entire state on an adjustable rate mortgage in the
most volatile interest rate environment imaginable.  Everything was fine
while the power surplus persisted, but when shortages ensued, every megawatt
was purchased at the sky rocketing spot price.

Second, retail markets were not deregulated.  Regulated retail rates remained
in effect, and stranded cost recovery charges were structured to keep
competition out.  This meant that utilities were forced to pay high wholesale
prices in the spot market but were only able to recover costs at the
regulated retail rate.  They are now nearly bankrupt.

In short, California,s problems were caused by regulation, not deregulation.
Regulations prevented competitors from entering the market, prevented new
generation from being built, and prevented prudent hedging against volatile
spot prices.

At the time California was developing its restructuring plan, Enron warned
the state,s policy makers about these risks and proposed alternatives, which,
if adopted, would have averted the current crisis.

Enron,s Role

Many political leaders in the state have elected to fix blame rather than fix
the problem.  Power sellers, including Enron, have been vilified by the
politicians and the media.  Here are the facts:

? Other than a small amount of wind power, Enron is not a generator in the
state of California.  Every megawatt we sold in California we bought in the
same market available to other California purchasers.  Because we are a
market maker, not a generator, we are not biased toward high prices.  We are
interested only in having a market that works so that we can package products
for our customers.
? As a seller to end-use markets in the state, we provided protection from
the problems the states, utilities, and their customers, now face.  We
protected, and still protect, our customers from price volatility.

You may have read that EES recently elected to have the utilities supply
power directly to its customers in California instead of procuring power on
the open market.  Early reports mischaracterized this as a &turnback8 of our
customers to the utilities.  Here are the facts:

? As a result of a variety of factors existing in the current California
market, it made more sense for EES to source power for its customers directly
from the utilities.  This decision reduced EES,s market price risk by
allowing EES to access lower utility rates.
? EES did not terminate any customer contracts, and our customers continue to
receive the financial benefits of their contract prices.
? EES is continuing to work with its California customers to provide them
with other energy-related products and services, including assistance in
reducing the demand for power, particularly at peak times.

Enron is currently proposing solutions to help California work out of its
crisis; Enron continues to sign up customers in the state; and Enron
continues to actively manage its risks and capture opportunities in Western
power markets.  Enron,s primary business is managing risk for our customers
with solutions customized to meet their needs.  There has never been more
demand for our products and services.

The Solution

The solution to California,s crisis is also straightforward.  In summary, the
state must increase supply, reduce demand, reduce reliance on the spot market
and shore up the financial stability of the state,s utilities.

Increasing Supply

California,s process for siting and permitting new generation is nothing
short of Byzantine.  Enron has built plants elsewhere in the country in less
than a year.  In California, it often takes 5 to 7 years.  California simply
must streamline this process.  Ironically, while many of the regulations
generators must overcome are aimed at improving environmental quality, the
regulations are preventing new clean technology from coming online and
displacing current plants, which emit 40 times as much NOx.  California can
have abundant power and cleaner air by expediting the permitting of new
facilities.

Reducing Demand

Customers in California today have no incentive to reduce or shift demand.
They pay the same rate no matter what the market price is.  An open retail
market would trigger demand responses, which would balance supply and demand
at lower prices than today.  California should fully open its retail market.

Reducing Reliance on the Spot Market

In a truly deregulated market, customers would protect themselves from
volatile spot prices by purchasing some of their requirements on a longer
term, fixed-price basis.  The state has instead left procurement in the hands
of the utilities, which it has forced to buy exclusively in the spot market.
Opening the market at the retail level will give customers control over their
price risk.

Restoring the Financial Integrity of the State,s Institutions

The utilities in California are not paying their bills.  This has led to
greater uncertainty in the market, higher costs, and reduced flexibility to
arrive at lasting solutions.  California must permit its utilities to recover
their costs so they can pay their bills and invest in the transmission and
distribution assets necessary to get power from where it is to where it is
needed.

Just as important as doing these things, the state must avoid policies that,
while politically attractive, do not fix the problem or even make matters
worse.  Price caps have been proposed.  They don,t work; have never worked;
and they will not work here.  Price caps succeed only in creating shortages,
which then have to be allocated among competing users.  Imagine how
ineffectively the government would be in determining, for example, whether it
is better to make its limited power supplies available to the Imperial Valley
or Silicon Valley.  Price caps are a surefire way to make the current
shortage worse.

The state has also proposed to take over generation and transmission in
California.  There is no reason to believe, and every reason to doubt, that
the state will be more effective than free markets at investing in,
constructing, operating and maintaining assets.  This will also result in
California tax revenues being spent on power transmission and power
generation -- which the private sector can do -- instead of education, roads
and other public goods -- which the private sector cannot do.

As you are approached by people outside the company or are learning about the
crisis from the media, it,s important for you to know this:  We at Enron will
continue to serve our customers and we will continue to propose real
solutions to the state.


i cannot go.


FYI,   hgm
---------------------- Forwarded by Hector McLoughlin/Corp/Enron on
08/02/2000 02:31 PM ---------------------------

	Enron North America Corp.

	From:  Sheila Walton @ ECT                           08/02/2000 08:22 AM

To: Hector McLoughlin/Corp/Enron@Enron, Norma Villarreal/HOU/ECT@ECT
cc:

Subject: Status Report - ENA NI/Issues - Manager/Director Level

FYI
---------------------- Forwarded by Sheila Walton/HOU/ECT on 08/01/2000 08:20
PM ---------------------------

	From:  Sheila Knudsen @ ENRON                           08/01/2000 06:30 PM

To: Cindy Skinner/HOU/ECT@ECT, Sheila Walton/HOU/ECT@ECT, Kim
Melodick/HOU/ECT@ECT, Fran L Mayes/HOU/ECT@ECT
cc:
Subject: Status Report - ENA NI/Issues - Manager/Director Level

Per Dave's note below - sounds like he want to insure the managers are
staying on top of this and wants proof.  Please keep working with the
managers and push this through.  Any that you have now, please forward to me
so I can update the status report and forward to Dave.

Thanks

Sheila

David W Delainey@ECT
08/01/2000 06:13 PM
To: Sheila Knudsen/Corp/Enron@ENRON
cc: Cindy Skinner/HOU/ECT@ECT, Sheila Walton/HOU/ECT@ECT, Kim
Melodick/HOU/ECT@ECT, Fran L Mayes/HOU/ECT@ECT, Mark Frevert/NA/Enron@Enron,
John J Lavorato/Corp/Enron@Enron

Subject: Status Report - ENA NI/Issues - Manager/Director Level

Shelia, to ensure we are all on the same page, I am looking for a copy of the
review plus a written plan to rectify performance or counsel out from each
supervisor.

Regards
Delainey

---------------------- Forwarded by David W Delainey/HOU/ECT on 08/01/2000
06:10 PM ---------------------------

	From:  Sheila Knudsen @ ENRON                           08/01/2000 05:33 PM

To: David W Delainey/HOU/ECT@ECT, David Oxley/HOU/ECT@ECT
cc: Cindy Skinner/HOU/ECT@ECT, Sheila Walton/HOU/ECT@ECT, Kim
Melodick/HOU/ECT@ECT, Fran L Mayes/HOU/ECT@ECT
Subject: Status Report - ENA NI/Issues - Manager/Director Level

Attached is a report reflecting the status of ENA Manager/Director level
employees who were rated either Needs Improvement or Issues at the mid-year
process.

We will update this report on a weekly basis.

Let me know if you have any questions regarding this - X36628.