US Power, Gas Companies Restrict Dealings With Enron
Dow Jones Energy Service, 11/08/01
USA: Enron provides financing data, restates earnings.
Reuters English News Service, 11/08/01
Enron Thinks Ex-CFO Got More Than $30M Thru Partnerships
Dow Jones Corporate Filings Alert, 11/08/01
Dynegy confirms in talks with Enron over possible tie-up
AFX News, 11/08/01
USA: Dynegy says in talks with Enron over possible deal.
Reuters English News Service, 11/08/01
U.S. Stocks Open Higher on Retail Sales Data, European Rate Cuts
Dow Jones Business News, 11/08/01
Dynegy/Enron Talks -4: Follows SEC Inquiry Launch
Dow Jones News Service, 11/08/01
Dynegy Confirms Discussions With Enron
Business Wire, 11/08/01
USA: UPDATE 1-Before the Bell - Dynegy flat, Enron slips.
Reuters English News Service, 11/08/01
FERC 'Watching With Interest' Enron's Woes, Chairman Says
Dow Jones Energy Service, 11/08/01
Ripples From Enron's Troubles Hit Its Trading Partners
Dow Jones Energy Service, 11/08/01
Enron in Talks With Dynegy; to Restate Earnings (Update8)
Bloomberg, 11/08/01

Fitch Comment on Wessex Water Ratings Following Enron Downgrade
Bloomberg, 11/08/01

NewPower 3rd-Qtr Loss Narrows After Adding Customers (Update2)
Bloomberg, 11/08/001

Dynegy May Offer at Least $8 Bln to Acquire Enron (Update5)
Bloomberg, 11/08/01

Enron Bonds Gain as Dynegy Considers $8 Bln Buyout (Update1)
Bloomberg, 11/08/01

Enron Confirms Dynegy Talks
TheStreet.com, 11/08/01

Stocks Surge On Rate Cuts, Jobless Numbers
TheStreet.com, 11/08/01

Some Glamour Stocks That Are Ugly Down Deep
RealMoney.com, 11/08/01

Top Of The News
Enron Trades Itself
Forbes.com, 11/08/01

US Power, Gas Companies Restrict Dealings With Enron
By Jon Kamp, Kristen McNamara and Mark Golden
Of DOW JONES NEWSWIRES

11/08/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
(This article was originally published Wednesday.)

NEW YORK -(Dow Jones)- Trading companies in Enron Corp.'s (ENE) key North American power and gas markets are restricting their dealings with the ailing Houston-based giant, people at those companies said Wednesday.
Concerns have mounted because Enron, which accounts for about a quarter of the trade in the country's power and gas markets and which makes a market for those commodities on its Internet-based system EnronOnline, has seen its share price fall by about 75% and its credit ratings downgraded since mid-October due to uncertainties about its extremely complex financial structure.
"We've restricted our business with them," said Mike Smith, chief financial officer for Mirant Corp. (MIR) unit Mirant Americas Group, a Top 10 trader of power and gas in the U.S.
Smith wouldn't be more specific, but his comments echoed those of others in the business.
"Our exposure to Enron is insignificant compared with the previous exposure," said Al Butkus, spokesman for Aquila Inc. (ILA), a Top 5 U.S. power and gas trader.
Tractebel Energy Marketing, the North American subsidiary of the Belgian company Tractebel S.A., has limited the term of transactions with Enron to three years or less, a person at the company said. And a power broker said some medium sized western utilities have stopped trading with Enron even for near-term delivery.
Enron didn't return calls seeking comment.
The Wall Street Journal reported Wednesday that Enron was in talks for a capital infusion and possible acquisition by competitor Dynegy Inc. (DYN). Also, Enron said Thursday it was restating its financial statements from 1997 through the second quarter of 2001, saying its financial and audit reports are unreliable for all those periods. The company fired its treasurer and general counsel.
Key Markets

Enron's ability to transact in its core markets - North American wholesale gas and power - is essential if the company maintain the earnings and cash flow needed to emerge from its current credit crisis, Wall Street analysts and ratings agencies have said. Standard & Poor's and Moody's Investors Service downgraded Enron's credit
to within two steps of junk-bond status last week and have it on watch for
further downgrade. Enron still has its supporters. Exelon Corp. (EXC) is
monitoring its own risk management, but hasn't changed its relationship with
Enron, said Chief Financial Officer Ruth Ann M. Gillis.

"We haven't changed our relationship," Gillis said.
Enron is a very important factor in the vitality of the wholesale energy markets, she said. They're still the "largest, best" of the companies out there, she said.
Likewise, a trading floor manager at one energy company said Enron called earlier in the week and asked that the company increase its trading on EnronOnline. The company's EOL volumes had fallen, but it honored Enron's request out of respect for Enron's still market-making power.
PPL Corp. (PPL) moved to mitigate its exposure to Enron following the downgrades, a person in the marketing organization at PPL EnergyPlus said.
"Enron would not be a first choice to do long-term transactions," the person said. "For shorter terms, deals, they wouldn't be considered equally with everyone else. There's just too much risk there."
Since Enron's troubles began several weeks ago, energy trading partners had stood by the company in ways that stock and bond traders hadn't. Until this week, "business as usual" was an almost constant refrain. Energy companies' immediate exposure to Enron was limited to a maximum of seven weeks of receivables, and Enron was paying its bills.
But for some of those companies, business as usual also meant not changing value-at-risk formulas, even though the formulas were generating ever lower allowable volumes of business with Enron as the company's credit quality deteriorated, one risk manager said Wednesday.
Lower value-at-risk limits got most trading companies to flatten their portfolios by taking positions to offset currently profitable long-term positions with Enron.
PPL, for example, is still following its credit policy and as a result has limited its dealings with Enron, which has seen its credit quality fall, the person at PPL EnergyPlus said.
"We've taken a look at our book," the person said. "Based on the events of this and last week, we've taken some action to mitigate the risk based on their ratings downgrade."
Trading companies constantly evaluate their counterparties' credit and adjust their dealings accordingly, but rarely have been required to address problems on the scale of Enron's recent difficulties.
"It certainly ranks just behind California," the person at PPL said.
Enron Claims Trading Normal

An Enron spokesman, reached later, said the company continues to see a normal range of transactions, including long-term deals.
"We've not seen closing out of positions," spokesman Eric Thode said.
Susan Abbott, a managing director in corporate finance at Moody's, said the ratings agency wasn't aware of significant changes in trading companies' dealings with Enron. The agency continues to watch for new restrictions, in particular margin calls, which could quickly strain Enron's liquidity. A drop in new business with Enron isn't as much of a concern, she said.
"If you're restricting new business with the company, what you're doing is moving the company out of the market in an orderly way," Abbott said.
PPL is shying away from doing deals with Enron and is limiting the dollar amount and terms of the deals it will do with the company, but hasn't yet imposed margin calls or required additional collateral, the person in the marketing organization said.
"Neither the credit thresholds nor our exposure threshold have been breached," the person said.
PPL said it's limiting exposure to Enron for shorter-term deals too, the person said.
"Their liquidity just isn't there anymore," the person said.
No large company can afford to pull the plug on Enron, given the company's centrality to the power and gas markets.
"Enron is such a large player and they're so important in terms of maintaining the liquidity of the markets," said Sandy Fruhman, spokeswoman for Reliant Energy Inc. (REI). "We see this as a situation that has potential downsides for the entire industry."
Enron's North American wholesale trading unit brought in $1.9 billion in income before interest and taxes in the first nine months of the year, up from $1.1 billion in the same period last year.
Reliant continues to do business, but Fruhman wouldn't say specifically whether it had restricted its dealings.
"We're monitoring the situation carefully and making sure we follow prudent business practices," she said. "But we're trying to work with them, because it's in the best interest of the entire industry to overcome their current problems."
-By Jon Kamp, Dow Jones Newswires; 312-750-4129; jon.kamp@dowjones.com
(Kristen McNamara, Mark Golden and Andrew Dowell in New York, John Edmiston in Houston and Erik Ahlberg in Chicago contributed to this article.)

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

USA: Enron provides financing data, restates earnings.

11/08/2001
Reuters English News Service
(C) Reuters Limited 2001.
HOUSTON, Nov 8 (Reuters) - Enron Corp. said on Thursday it has provided additional information about off-balance sheet and other transactions that led to an investigation by the U.S. Securities and Exchange Commission and a shattering of the energy trader's credibility.
Houston-based Enron also confirmed it is in talks with its hometown rival Dynegy Inc. over a possible business combination. Terms of any transaction have not been agreed on, the two companies said.
Enron said that it will restate its earnings from 1997 to 2000, and the first two quarters of 2001 as the company addresses concerns raised by the SEC and shareholders.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron Thinks Ex-CFO Got More Than $30M Thru Partnerships

11/08/2001
Dow Jones Corporate Filings Alert
(Copyright (c) 2001, Dow Jones & Company, Inc.)
ISSUER: ENRON CORP.
SYMBOL: ENE

10:02
DJ CFA SOURCE:SEC 8-K
ISSUER: ENRON CORP.
SYMBOL: ENE

REASON CODES: 5 -- Other Materially Important Events

WASHINGTON (Dow Jones)--Enron Corp. (ENE) said it believes the
company's former chief financial officer, Andrew Fastow, received more than
$30 million from managing and investing in several partnerships that did
business with the energy giant.

The company disclosed the information in a Form 8-K filing released
Thursday by the Securities and Exchange Commission.

Enron said it believes it committed $16 million in initial capital to
one of the partnerships run by Fastow and paid $394 million in capital
commitments to another partnership he managed.

The partnerships were described to Enron's board as potential sources
of capital to buy assets from Enron, potential equity partners for Enron
investments, and counterparties to help mitigate risks associated with Enron
investments, the filing said.

As reported, shareholders and analysts have questioned whether the
partnerships posed a conflict by putting Enron's CFO, who has a fiduciary
duty to Enron shareholders, in a position of reaping financial rewards for
representing partnership investors in business deals with Enron.

On Oct. 24, Enron dismissed Fastow as its financial chief.

As reported, the board of Dynegy (DYN) tentatively agreed last night
to acquire Enron for about $8 billion in stock, or roughly $10 a share.

Enron is a Houston-based energy and utilities company.

-Dan Lowrey; Dow Jones Corporate Filings Alert; 202-393-7402;
dan.lowrey@dowjones.com

10:30

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Dynegy confirms in talks with Enron over possible tie-up

11/08/2001
AFX News
(c) 2001 by AFP-Extel News Ltd
HOUSTON (AFX) - Dynegy Inc, a ChevronTexaco Corp affiliate, confirmed it is in talks with Enron Corp over a possible business combination.
Dynegy said it has not agreed to the terms of any transaction with Enron.
Dynegy added that it does not anticipate making any further announcement with respect to a possible transaction until a definitive agreement is reached or discussions are terminated.
aw/shw For more information and to contact AFX: www.afxnews.com and www.afxpress.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

USA: Dynegy says in talks with Enron over possible deal.

11/08/2001
Reuters English News Service
(C) Reuters Limited 2001.
HOUSTON, Nov 8 (Reuters) - Dynegy Inc. said on Thursday it is in talks over a possible combination with Enron Corp., the beleaguered energy-trading giant crippled by an SEC probe and investor doubts about its ability to raise cash.
Dynegy has not agreed to the terms of any transaction with Enron, the Houston-based rival of Enron said.
Dynegy said it does not anticipate making any further announcement with respect to a possible transaction until a definitive agreement is reached or discussions are terminated.
A source close to the talks told Reuters on Wednesday that Dynegy is in talks to buy Enron in a deal that would involve a stock swap and $1.5 billion in capital from ChevronTexaco Corp., which has a big stake in Dynegy,
The deal, which could be announced officially this week, was expected to give what the source called a "modest premium" to Enron shareholders, whose stock has plummeted in value as a fast-moving financial crisis enveloped the company.
Enron shares, which traded as high as $90 in August of last year, dropped to a 10-year-low of $7 during Wednesday trading, before rallying on news of the Dynegy talks and closing at $9.05 a share.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

U.S. Stocks Open Higher on Retail Sales Data, European Rate Cuts
By Erin Schulte

11/08/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)
The Wall Street Journal Online
Stocks logged solid gains Thursday as investors focused on a few bright spots in sales reports from U.S. retailers. Interest-rate cuts from two European central banks also bolstered confidence.
The Dow Jones Industrial Average was up 40 to 9595 soon after the opening bell, after losing 36.75 in the previous session. The Nasdaq Composite Index gained 21.20 to 1858.80, after inching ahead 2.45 points on Wednesday.
Other indexes also lost ground on Thursday. The Standard & Poor's 500-stock index advanced 6.50 to 1122.30, the New York Stock Exchange Composite Index moved up 2.50 to 571 and the Russell 2000 Index edged up 1.90 to 442.70.
Bonds were mixed and the dollar fell.
Traders said interest-rate cuts by the European Central Bank and the Bank of England helped to underpin U.S. equities. Both banks lowered key rates by a half percentage point on Thursday, in an effort to keep the regional economy from slipping into recession.
Investors are hoping October sales figures show that consumer spending is on the road to recovery and will gain steam during the holiday shopping season. Consumer spending slowed significantly in the wake of the Sept. 11 terrorist attacks.
Wal-Mart Stores said sales at stores open at least a year rose 6.7%, including the results of its Sam's Club chain. The nation's biggest retailer, whose same-store sales topped analysts' expectations, also said total sales for the four weeks ended Nov. 2 jumped more than 14% to $16.62 billion. Its shares rose 1.4%.
But Federated Department Stores posted a steeper-than-anticipated 8.7% drop in same-store sales. The company, which operates the Bloomingdale's and Macy's chains, said total sales also suffered, falling 8.9% to nearly $1.12 billion. Its shares slipped.
Trendy discounter Target said same-store sales climbed 2%, while total sales for the week ended Nov. 3 increased 8.9%; its stock edged higher. And TJX, which owns popular discount clothier T.J. Maxx, said same-store sales climbed 4%, while total retail sales jumped 12% for the month.
In addition to sorting through the retail-sales reports, investors also will have two economic indicators to scrutinize Thursday morning.
The Labor Department reported initial jobless claims fell to 450,000 in the week ended Nov. 3 from 496,000 a week earlier. Economists surveyed by Thomson Global Markets anticipated 513,000 jobless claims for the latest period.
A separate Labor Department report showed a 2.4% decline in prices of imported goods for October, following a 0.1% rise in September. Economists had forecast a 0.5% fall in prices.
Among stocks to watch, Dynegy held talks to buy Enron for roughly $7 billion to $8 billion in stock, one-tenth of what Enron was worth 15 months ago. The energy trading and power firm also is expected to inject $1.5 billion into Enron.
Exxon Mobil won a significant victory as an appeals court ruled that a jury's $5 billion punitive-damage verdict for the Exxon Valdez oil spill was excessive and should be reduced. Its shares rose 1.2%.
Gains in key international markets may help put U.S. investors in a buying mood. Frankfurt's DAX index was up 1.6% in intraday trading, while London's Financial Times-Stock Exchange 100-Share Index was 0.6% higher. Earlier, Japan's Nikkei 225 average closed with a gain of 1.4% and Hong Kong's Hang Seng Index jumped 2.6%.
On Wednesday, U.S. blue-chip stocks came under pressure from weakness in overseas markets, particularly in Tokyo, as well as profit-taking following the Federal Reserve's decision Tuesday to cut interest rates.
In major U.S. market action Thursday:
Stocks climbed. On the Big Board, where 32.2 million shares traded, 624 stocks rose and 259 fell. On the Nasdaq, 88.3 million shares changed hands.
Bonds were mixed. The 10-year Treasury note slipped less than 1/8, or $2.50 for a $1,000 bond, pushing the yield to 4.19%. The 30-year bond rose almost 3/8 to yield 4.77%.
The dollar fell. It traded at 89.84 U.S. cents to the euro, compared with 89.81 late Wednesday in New York. The dollar fell to 120.69 yen from 120.92.
For continuously updated news from The Wall Street Journal, see WSJ.com at http://wsj.com.
Copyright (c) 2001 Dow Jones & Company, Inc.
All Rights Reserved.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Dynegy/Enron Talks -4: Follows SEC Inquiry Launch

11/08/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
The talks between Enron and Dynegy follow a sharp drop in Enron's stock over the past several weeks as controversy arose over the companies dealings with certain partnerships.
The SEC later requested information from Enron related to the company's dealings with those partnerships, which were set up and run until recently by Andrew S. Fastow, who was recently replaced as Enron's chief financial officer.
The investigation is centered on disclosure controversies that have damaged the Houston energy company's credibility. Internal partnership documents indicate Fastow and possibly a handful of associates made millions of dollars from the partnerships. Fastow severed his ties with those partnerships in July.
Internal documents related to one of the Fastow partnerships disclose that Enron also did as much as hundreds of millions of dollars of business with an entity connected to another company official, who has since left Enron, the Wall Street Journal reported on Oct. 26.
While Enron disclosed its Fastow-related transactions in SEC filings, a computerized search of the SEC's database of public filings produced no reference to this other employee-related entity known as Chewco.
Over the past couple of days, Enron has been scrambling to line up quick financing from a prominent outside investor and has been in discussions with private-equity firms and power-trading companies.
Discussions between Dynegy and Enron began about 10 days ago, but reportedly intensified last weekend.
Also Thursday, Enron restated its earnings for 1997 through 2000 and the first half of 2001 due to the transactions and resulting account adjustments.
-Thomas Gryta; Dow Jones Newswires; 201-938-5400

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Dynegy Confirms Discussions With Enron

11/08/2001
Business Wire
(Copyright (c) 2001, Business Wire)
HOUSTON--(BUSINESS WIRE)--Nov. 8, 2001--Dynegy Inc. confirmed today that it is engaged in discussions with respect to a possible business combination with Enron. Dynegy has not agreed to the terms of any transaction with Enron.
Dynegy does not anticipate making any further announcement with respect to a possible transaction until a definitive agreement is reached or discussions are terminated.

CONTACT: Dynegy Inc. 713/507-6400
09:36 EST NOVEMBER 8, 2001

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

USA: UPDATE 1-Before the Bell - Dynegy flat, Enron slips.

11/08/2001
Reuters English News Service
(C) Reuters Limited 2001.
NEW YORK, Nov 8 (Reuters) - Dynegy Inc. shares traded flat and Enron Corp. slipped as the market mulled news that the companies are in an advanced stage of talks for Dynegy to acquire Enron by means of a stock swap, according to a source familiar with the deal.
Terms of the possible combinmation have not yet been decided, but Enron stockholders would likely receive an amount of Dynegy stock that would give them a "modest premium" over current Enron stock prices, said the source, who spoke on condition of anonymity.
Enron shares traded at $8.50, down from $9.05, and Dynegy was at $33, in line with the price at the prior New York Stock Exchange close.
More broadly, the U.S. stock markets were expected to gain at the open, based on the upward moves of equity-index futures. The Standard & Poor's 500 December contract rose 7.5 points to 1,127.00 and the Nasdaq 100 index contact added 19.00 points to 1,554.50.
Shares in XO Communications Inc. rose to $1.38 per share from $1.17 in very active pre-open trade on Thursday as the voice and data services company posted a narrower third-quarter loss.
Markets overseas rallied on back-to-back interest-rate cuts by the European Central Bank and the Bank of England on Thursday. The reductions follow the Federal Reserve's rate cut two days ago, the U.S. central's bank's 10th such move of the year.
Among other issues active ahead of the regular trading session, Intel Corp. rose to $28.80 from $28.29, BEA Systems Inc. traded up to $15.25 from $14.71 and Cisco Systems Inc. improved to $19.40 from $18.93.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

FERC 'Watching With Interest' Enron's Woes, Chairman Says

11/08/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
(This article was originally published Wednesday)

WASHINGTON -(Dow Jones)- The U.S. Federal Energy Regulatory Commission is "watching with interest" the problems confronting Enron Corp. (ENE), but isn't intervening in the matter, Pat Wood III, FERC's chairman, said Wednesday.
"We're watching the impact Enron or other entities would have on the markets," Wood told reporters during a press conference following the commission's meeting Wednesday. "We are watching with interest," he said for emphasis.
But the commission doesn't intend to intervene in the U.S. Securities and Exchange Commission's investigation of financial hedging instruments with partnerships overseen by Enron's former financial officer, Wood said.
The dealings led to a $1.2 billion writedown in Enron shareholder equity earlier this year.

-By Bryan Lee, Dow Jones Newswires; 202-862-6647; Bryan.Lee@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Ripples From Enron's Troubles Hit Its Trading Partners
By Sarah Spikes
Of DOW JONES NEWSWIRES

11/08/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
LONDON -(Dow Jones)- Enron Corp.'s (ENE) financial troubles have created a new problem for U.K. power market players, and they don't quite know how to respond.
Enron's significant presence in the U.K. market means there are many trading partners who are counterparties in deals with a company whose creditworthiness is now less secure than when those deals were struck. Companies are reluctant to cease doing business with a firm of Enron's size and stature, but they're also aware of the risk of becoming creditors to a bankrupt Enron.
Since Enron revealed a $1.2 billion reduction in shareholder equity last month related to controversial transactions with entities connected to former Chief Financial Officer Andrew Fastow, the company's shares have tumbled; its senior unsecured debt has been downgraded by Fitch Inc., Standard & Poor's Corp. and Moody's Investors Service; and the U.S. Securities and Exchange Commission has launched a formal investigation into the matter.
Already, many have backed off from trading power with Enron, citing the need to minimize exposure, but to what, exactly, they're not sure.
Three Options For Enron's Trading Partners

Enron's problems give rise to three major options for counterparties. They can wait, anticipating that Enron will go bust, and then terminate their contracts; they can try to invoke a controversial clause in their contracts and get Enron to put up more collateral; or they can back off from new forward trading and hope a company like Dynegy Inc. (DYN) will take Enron over and assume the contracts. One is available only if Enron goes bankrupt, and the other two are available right now, but most market-makers are still undecided.
"No huge power merchant has ever had serious problems with their credit in the U.K. market before, so the viability of any theoretical option is uncertain," said a partner in a London-based law firm with an international energy practice.
If a company takes the first option - continuing to trade with Enron - and Enron does go bankrupt, the trading partner would then be able to terminate existing contracts.
Sarah Moynihan, an associate with Allen & Overy, the firm that wrote the Grid Trade Master Agreement - the contract used by most power trading parties in the U.K. - says the GTMA allows parties to terminate outstanding transactions with an insolvent company.
"To terminate any transactions under one master agreement though, they would have to terminate all of them," she added.
Terminating parties would be reimbursed, or charged, based on a marked-to-market value of their contracts. Power prices have been on a steep decline since the introduction of the New Electricity Trading Arrangements in March, so parties with majority selling positions through Enron would suffer financial penalties when they had to resell their power for less, but if they had bought through Enron, they would be able to get the same power for less money on the U.K. market today.
"Market participants calculate the mark-to-market value all the time anyway, but particularly as this is the first NETA winter, the trust in price forecasting isn't as strong as it could be, so you may not be confident that (would be able to get) the equivalent of your contract...and you will live without peace of mind in the meantime," said the head of trading at a large generating and trading company.
"Even if you were successful in terminating contracts, you might not get paid, and then who will trade with you, if you have a big debt owed to you by someone who can't pay it?" said a lawyer from a London law firm with an international energy practice.
The only U.K. power-related company to go into insolvency recently was Independent Energy a small supply company. In that case, Innogy Holdings PLC (U.IOG), the company which took it over, assumed its contracts.
Many Can't Afford To Lose Enron As A Partner

Enron has always traded with a wide range of counterparties, some of which other big players wouldn't go near because of their relative lack of size and financial strength. This means there will be many companies that may not be able to afford to let Enron go.
Not trading with Enron will make recovery harder, but a trading party will appear foolhardy if it continues to trade with a company that eventually goes under.
The second option open to Enron's trading partners involves trying to invoke a muddied clause in the GTMA - the material adverse change, or MAC, clause.
By asserting that the company's credit is not compatible with one with which they would normally agree to trade, they may be able get Enron to put up more collateral in support of the contracts. By asserting that Enron's credit isn't as secure as they expected when they agreed to the contracts, they may be able get Enron to put up more collateral in support of the contracts.
The problem is that it's hard to be sure that a change in circumstances warrants invoking the MAC clause. However, this hasn't stopped some counterparties from asking their lawyers to investigate the feasibility of invoking MACs in their contracts with Enron, said lawyers who declined to be identified.
"People are definitely talking about the chances of getting a MAC through these days," said one lawyer who declined to be named.
Having to put up more capital would worsen Enron's situation, particularly if several counterparties were to ask for it, and most aren't interested in making Enron's situation worse.
"Enron helps the U.K. market. It would be unhelpful for them not to be there and do what they do in terms of providing liquidity," said British Energy PLC (BGY) Chief Financial Officer Keith Lough in a conference call Wednesday.
He said BE's dealings with Enron are two-way - Enron takes part of its baseload generation from BE's nuclear facilities while BE takes peak power from Enron for its direct sales unit.
So far, the dilemma means most companies are taking the middle ground. They are reducing the number of new forward contract deals they do with Enron, but they aren't ceasing altogether and they aren't trying to get out of existing contracts.
This partly reflects confidence that Enron will remain solvent, either on its own or through a merger.
The company does have several things in its favor.
First, Enron secured $1 billion in new credit lines using its gas pipeline assets as collateral. Second, there is no evidence that Enron is on the wrong side of the U.K. power market. Many traders say Enron has in fact gone into the first NETA winter short - a strategy that appears prescient in light of the warmest October in recent memory and low power prices.
-Sarah Spikes, Dow Jones Newswires; (+44 20) 7842 9345; sarah.spikes@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron in Talks With Dynegy; to Restate Earnings (Update8)
2001-11-08 11:09 (New York)

Enron in Talks With Dynegy; to Restate Earnings (Update8)

     (Updating to add stock movement.)

     Houston, Nov. 8 (Bloomberg) -- Enron Corp., the largest
energy trader, restated and reduced its earnings for the past four
years because of losses from partnerships that are under
investigation by the Securities and Exchange Commission.

     Dynegy Inc. said it may acquire Enron, whose shares have
plunged 89 percent this year. Dynegy's board last night weighed a
proposal to pay $8 billion in stock, said people familiar with the
situation. Concerns Enron may be lowered to a junk credit rating
within days stalled the talks, the people said.

     Houston-based Dynegy is concerned that a reduction to junk
status would precipitate a cash crisis by requiring Enron to repay
early $3.3 billion of bonds. Enron's credit rating, currently
rated ``BBB'' by Standard & Poor's Corp., or two levels above
junk, is on review to be lowered.

     ``Merging with Enron is fraught with potential problems for
Dynegy,'' said Commerzbank analyst Andre Meade. ``The bulk of
Enron's value is in its trading business, and it's trading
business is people.''

     Enron shares were little changed after the announcement hich
will result in a $96 million reduction in 1997 net income, $113
million in 1998, $250 million in 1999 and $132 million in 2000. In
2001, the changes result in an increase to net income of $17
million and $5 million in the first and second quarters,

respectively, and reduction of $17 million for the third quarter.
     Enron also fired Treasurer Ben Glisan and Kristina Mourdant,
a lawyer for an Enron division. The company ``now believes''
Glisan, Mourdant and two other employees no longer working for
Enron bought interests in subsidiaries of a partnership run by
former Chief Financial Officer Andrew Fastow.

      Enron said it believes Fastow made more than $30 million
from partnerships called LJM1 and LJM2 which he ran.

                       `Running Out of Time'

     ``Enron is running out of time and that's what's pushing them
to the bargaining table,'' said Zach Wagner, an analyst with
Edward Jones & Co., who cut his recommendation on Enron to
``reduce'' from ``accumulate'' on Oct. 23.

     Dynegy would gain a wholesale energy business, the leading
energy manager for commercial and small-industrial customers, and
an Internet energy trading operation many times larger than its
own, said UBS Warburg LLC analyst James Yanello.

     ChevronTexaco Corp., which owns about 27 percent of Dynegy,
is also involved in the talks.

     ``If history is any guide, Dynegy is stingy when it comes to
acquisitions, so I don't expect them to do anything stupid'' such
as overpaying for Enron, said Yanello. ``A deal could provide
Dynegy with tremendous opportunity.'' He rates Dynegy ``strong
buy'' and doesn't own shares of either company.

     Enron Chairman and Chief Executive Officer Kenneth Lay
wouldn't hold a management position with the combined company
under terms being discussed Wednesday, the Wall Street Journal
reported. He would get a seat on the board, the paper added.

     ChevronTexaco is considering adding $1.5 billion to the
transaction to help Enron. It would provide another $1 billion
when the purchase is closed, the New York Times and Wall Street
Journal reported.

     The companies agreed on a breakup fee providing Dynegy with
about $400 million if Enron accepts a higher offer, people
familiar with the talks said.

     Dynegy spokesman Steve Stengel, Enron spokesman Mark Palmer
and ChevronTexaco spokesman Fred Gorell declined to comment.

                         Losing Confidence

     Companies that trade natural gas, electricity and other
commodities with Enron may pull back if Enron's finances
deteriorate to the point that it loses its investment-grade credit
rating, investors say.

     ``Dynegy has to act fast,'' said Roger Hamilton, a money
manager with John Hancock Advisers Inc., which sold its Enron
shares in recent weeks. ``If Enron can't get financing and its
bonds go to junk, they lose counterparties and their marvelous
business vanishes.''

     Moody's Investors Service lowered its rating on Enron's bonds
to ``Baa2'' and Standard & Poor's cut the debt to ``BBB.'' in the
past two weeks.

     Federal regulators may overlook antitrust concerns in order
to keep Enron afloat, Hamilton said.

     Securities regulators are investigating trading by
partnerships run by Fastow, the former financial director. The
entities bought and sold Enron shares and assets, with trades
costing Enron $35 million and $1.2 billion in lost shareholder
equity. Enron ousted CFO Fastow last month.

     Shares of ChevronTexaco rose 34 cents to $87.80 in early
trading.  Dynegy, the fifth-largest U.S. natural gas marketer,
rose 25 cents to $33.25.

     Enron shares and bonds have tumbled in the past month. One of
its bonds, an issue paying 6.725 percent that matures in November
2008, fell to 69.11 cents on the dollar, according to Bloomberg
data, down from 71.90 cents yesterday.

     ``We would be very surprised if Dynegy buys the whole
company,'' said Tim Ghriskey, president of Ghriskey Capital
Partners, which doesn't own Enron or Dynegy shares. ``All the
(Dynegy) board has to do is look at what's happening to their
stock price today, and you'd wonder why they would want to do it
in the face of what's happening with the stock.'' Ghriskey made
his comments on Wednesday.

                       Enron Meets Creditors

     Enron is to meet with J.P. Morgan Chase & Co., Citigroup Inc.
and other lenders on Friday to discuss merger plans and a possible
increase in the amount the company pays for existing credit lines,
according to bankers familiar with the matter.

     The company has invited more than 300 creditors to its
offices in Houston to listen to presentations by Enron's financial
team, led by its new chief financial officer, Jeffrey McMahon, the
bankers said.

     Dynegy began in 1985 as Natural Gas Clearinghouse, a gas-
trading company. In 1998, the company took the name Dynegy -- a
combination of the words dynamic and energy -- to reflect its
expansion beyond natural gas. Chuck Watson, the company's
president from 1985, became chairman and chief executive in 1989.

     Watson is an investor with Enron CEO Lay in the Houston
Texans, who begin playing in the National Football League next
year, and is a board member at Baker Hughes Inc. As of an April
filing with the SEC, Watson owned 12.3 million Dynegy shares, or
about 5.1 percent of the common stock.

Fitch Comment on Wessex Water Ratings Following Enron Downgrade
2001-11-08 10:48 (New York)

FITCH COMMENT ON WESSEX WATER RATINGS FOLLOWING ENRON DOWNGRADE

Fitch-London-08 November 2001: In light of the recent downgrade
of the Senior Unsecured and Short-term ratings of Enron Corp
("Enron") to 'BBB-' and 'F3' respectively, Fitch has commented
today on the ratings of the Azurix Europe Limited group of
companies. Enron, in conjunction with Marlin Water Trust, owns
Azurix Corp. ("AZX"), which in turn owns Azurix Europe Limited
("AEL", rated 'BBB+/F2'). AEL is the ultimate UK parent of
Wessex Water Services Limited ("WWSL", rated 'A-/F2'). AEL owns
WWSL via an intermediate holding company, Wessex Water Limited
("WWL"), rated 'BBB+/F2'. The Outlook for the ratings of AEL,
WWL and WWSL is Stable. WWSL is one of the UK's 10 monopoly,
regulated water and sewerage companies.

Fitch has not changed the ratings of the AEL group companies
but notes the deteriorating credit profile of Enron, the
group's ultimate US parent. Ring-fencing provisions between AEL
and AZX are not considered by Fitch to be entirely watertight,
particularly as AEL is allowed to loan funds to subsidiaries of
AZX, which can be used for acquisitions and for general
corporate purposes within the acquired businesses.
Notwithstanding, the companies remain largely insulated from
potential negative events at Enron.

Credit protection is derived from a GBP425 million banking
facility to AEL, which prohibits the company from making
dividends or loans directly to AZX. AEL is also prohibited from
taking on additional indebtedness and engaging in any business
other than owning WWSL. In addition, under the banking
facility, the total amount that can be borrowed by AEL in its
name, yet on-lent to AZX subsidiaries, is capped at GBP240m.
The capped amount was originally earmarked to help fund AZX's
growth aspirations. All loans from AEL to AZX subsidiaries are
short-term, on commercial terms, are senior obligations of the
SPV (AEL's direct counter-party) and are guaranteed by AZX.
However, hypothetically, these loans may have been re-invested
in a subordinated stake in a water project. Mitigating this
risk profile, the bank facility has certain ratio thresholds
measured on a consolidated AEL group and a de-consolidated AEL
basis. Considering a worst case scenario, (assuming a failure
to recover the maximum amount that could be on-lent to entities
outside the AEL group), within the bank facility's ratio
thresholds, Fitch calculates that the AEL group would be able
to maintain its current rating category.

Going forward, Enron has publicly stated that is does not view
AZX as a core strategic asset. The latter has stated that it is
pursuing the disposal of certain assets, including those in
North America that have since been sold for USD150m. This deal,
which is not expected to have any impact on AEL, is due to
close soon. At this time Enron has made no public statement
about the future of the AEL business although it is reviewing
its options internally. Fitch will continue to monitor
developments in this respect and would expect to review the
ratings of AEL and WWSL in the context of clear announcements
from Enron. A key factor in assessing the remaining AEL group
would be the level of debt "crystallised", or assumed, by that
entity.

The assigned ratings reflect Fitch's approach to rating
regulated utilities in the UK, which starts with the
consolidated debt and income profiles of the ultimate UK
holding company, (in this case AEL), while considering both
intermediate holding companies (here, WWL) and the operating
business (WWSL). The ratings of AEL and WWL are supported by
strong operating performance in the monopoly business of WWSL,
which is regulated by Ofwat, and delivers relatively
predictable cash flows within the context of its regulatory
price controls.

NewPower 3rd-Qtr Loss Narrows After Adding Customers (Update2)
2001-11-08 10:38 (New York)

NewPower 3rd-Qtr Loss Narrows After Adding Customers (Update2)

     (Adds job cuts in fourth paragraph.)

     Purchase, New York, Nov. 8 (Bloomberg) -- NewPower Holdings
Inc., a venture formed by Enron Corp. to compete with traditional
gas and electric utilities, said its third-quarter loss narrowed
after cutting costs and adding customers.

     The loss was $67.1 million, or $1.15 a share, compared with a
loss of $69.9 million, or $2.96, a year earlier. Revenue tripled
to $54.7 million from $18.2 million, the company said. NewPower
was forecast to have a loss of $1.16 a share, the average estimate
of three analysts polled by Thomson Financial/First Call.

     NewPower added 80,000 customers in the third quarter and
expects to have 840,000 to 860,000 customers by the end of the
year. The company, based in Purchase, New York, reduced sales,
general and administrative costs by 41 percent, primarily by
cutting systems-development and professional expenses.

     The company is eliminating 40 jobs, or 22 percent of its
workforce, to cut costs, Chief Financial Officer William Jacobs
said on a conference call. The company expects severance costs of
$16 million in the fourth quarter.

     Enron, the largest energy trader, owns about 44 percent of
NewPower. Houston-based Enron, whose shares have fallen 73 percent
since Oct. 16 amid concern over affiliated partnerships run by its
former chief financial officer, said it had $544 million in losses
on investments including NewPower in the third quarter.

     Shares of NewPower rose 39 cents to $1.20 in midmorning
trading. The company went public in October 2000 for $21 a share.

                              Fourth-Quarter

     Excluding severance costs, NewPower expects a fourth-quarter
loss of $41 million to $46 million, or 65 cents to 73 cents a
share, and a full-year loss of $210 million to $215 million, or
$3.55 to $3.63.

     The company was expected to lose 74 cents in the fourth
quarter, according to First Call's average of three analysts'
estimates. The full-year's loss was expected to be $3.71, the
average of four analysts' estimates.

     In 2002, NewPower expects to have a loss of $100 million to
$125 million, or $1.59 to $1.99 a share. The average estimate of
four analysts polled by First Call was $2.26.

     NewPower expects to be profitable in 2003 with 1.5 million
customers. The company is focusing more on small businesses. It
now has 25,000 small-business customers and expects to have more
than 35,000 by the end of the year.

     International Business Machines Corp. owns 1.5 million shares
of NewPower, less than 5 percent of the company.

Dynegy May Offer at Least $8 Bln to Acquire Enron (Update5)
2001-11-08 10:17 (New York)

Dynegy May Offer at Least $8 Bln to Acquire Enron (Update5)

     (Updates with Dynegy statement.)

     Houston, Nov. 8 (Bloomberg) -- Dynegy Inc.'s board last night
failed to agree to pay $8 billion in stock to acquire Enron Corp.
in part because of concerns the biggest energy trader may be
lowered to a junk rating within the coming days, people familiar
with the situtation said.

     Dynegy, a Houston-based energy trader, said the talks were
continuing. The company is concerned that Enron's ``BBB'' credit
rating may be lowered by Standard & Poor's Corp. The rating
company is reviewing the company, which it downgraded Nov. 1.
ChevronTexaco Corp., which owns about 27 percent of Dynegy, is
also involved in the talks.

     The prospect of a lower credit rating, which would force
Enron to repay $3.3 billion of bonds that mature in 2003 early,
along with an investigation by the Securities and Exchange
Commission investigation into partnerships run by former Chief
Financial Officer Andrew Fastow prompted Enron's board to consider
selling the company.

     Enron today said it would restate its financial statements
since 1997 after concluding some of the accounting for its
partnerships didn't comply with generally accepted accounting
principles.

     ``Enron is running out of time and that's what's pushing them
to the bargaining table,'' said Zach Wagner, an analyst with
Edward Jones & Co., who cut his recommendation on Enron to
``reduce'' from ``accumulate'' on Oct. 23.

     Shares of Enron fell 45 cents to $8.60 cents in early trading
on the news, which was previously reported by the Wall Street
Journal and New York Times. The stock reached a record $90.75 in
August 2000. With 850 million shares outstanding, the company has
a market value of about $7.7 billion.

     Dynegy would gain a wholesale energy business, the leading
energy manager for commercial and small-industrial customers, and
an Internet energy trading operation many times larger than its
own, said UBS Warburg LLC analyst James Yanello.

                          `Stingy' Buyer

     ``If history is any guide, Dynegy is stingy when it comes to
acquisitions, so I don't expect them to do anything stupid'' such
as overpaying for Enron, said Yanello. ``A deal could provide
Dynegy with tremendous opportunity.'' He rates Dynegy ``strong
buy'' and doesn't own shares of either company.

     Enron Chairman and Chief Executive Officer Kenneth Lay
wouldn't hold a management position with the combined company
under terms being discussed Wednesday, the Wall Street Journal
reported. He would get a seat on the board, the paper added.

     ChevronTexaco is considering adding $1.5 billion to the
transaction to help Enron. It would provide another $1 billion
when the purchase is closed, the New York Times and Wall Street
Journal reported.

     The companies agreed on a breakup fee providing Dynegy with
about $400 million if Enron accepts a higher offer, people
familiar with the talks said.

     Dynegy spokesman Steve Stengel, Enron spokesman Mark Palmer
and ChevronTexaco spokesman Fred Gorell declined to comment.

                         Losing Confidence

     Companies that trade natural gas, electricity and other
commodities with Enron may pull back if Enron's finances
deteriorate to the point that it loses its investment-grade credit
rating, investors say.

     ``Dynegy has to act fast,'' said Roger Hamilton, a money
manager with John Hancock Advisers Inc., which sold its Enron
shares in recent weeks. ``If Enron can't get financing and its
bonds go to junk, they lose counterparties and their marvelous
business vanishes.''

     Moody's Investors Service lowered its rating on Enron's bonds
to ``Baa2'' and Standard & Poor's cut the debt to ``BBB.'' in the
past two weeks.

     Federal regulators may overlook antitrust concerns in order
to keep Enron afloat, Hamilton said.

                             SEC Probe

     Securities regulators are investigating trading by
partnerships run by Fastow, the former financial director. The
entities bought and sold Enron shares and assets, with trades
costing Enron $35 million and $1.2 billion in lost shareholder
equity. Enron ousted CFO Andrew Fastow last month.

     Shares of ChevronTexaco rose 34 cents to $87.80 in early
trading.  Dynegy, the fifth-largest U.S. natural gas marketer,
rose 25 cents to $33.25.

     Enron shares and bonds have tumbled in the past month. One of
its bonds, an issue paying 6.725 percent that matures in November
2008, fell to 69.11 cents on the dollar, according to Bloomberg
data, down from 71.90 cents yesterday.

     ``We would be very surprised if Dynegy buys the whole
company,'' said Tim Ghriskey, president of Ghriskey Capital
Partners, which doesn't own Enron or Dynegy shares. ``All the
(Dynegy) board has to do is look at what's happening to their
stock price today, and you'd wonder why they would want to do it
in the face of what's happening with the stock.'' Ghriskey made
his comments on Wednesday.

                       Enron Meets Creditors

     Enron is to meet with J.P. Morgan Chase & Co., Citigroup Inc.
and other lenders on Friday to discuss merger plans and a possible
increase in the amount the company pays for existing credit lines,
according to bankers familiar with the matter.

     The company has invited more than 300 creditors to its
offices in Houston to listen to presentations by Enron's financial
team, led by its new chief financial officer, Jeffrey McMahon, the
bankers said.

     Dynegy began in 1985 as Natural Gas Clearinghouse, a gas-
trading company. In 1998, the company took the name Dynegy -- a
combination of the words dynamic and energy -- to reflect its
expansion beyond natural gas. Chuck Watson, the company's
president from 1985, became chairman and chief executive in 1989.

     Watson is an investor with Enron CEO Lay in the Houston
Texans, who begin playing in the National Football League next
year, and is a board member at Baker Hughes Inc. As of an April
filing with the SEC, Watson owned 12.3 million Dynegy shares, or
about 5.1 percent of the common stock.

Enron Bonds Gain as Dynegy Considers $8 Bln Buyout (Update1)
2001-11-08 10:12 (New York)

Enron Bonds Gain as Dynegy Considers $8 Bln Buyout (Update1)

     (Updates note prices in second and fourth paragraphs.)

     New York, Nov. 8 (Bloomberg) -- Enron Corp. bonds gained as
Dynegy Inc. considered paying about $8 billion in stock for the
biggest energy trader. An acquisition would bolster Enron's credit
rating, which was recently lowered, traders said.

     Enron's 7.88 percent coupon notes due in 2003 rose 5 cents to
be bid at 82 cents on the dollar this morning from 77 cents
yesterday, traders said. The yield declined to 22 percent from 27
percent. The debt was trading near 100 last month.

      ``Enron bonds have been in free fall,'' said Joe Walker, who
follows Dynegy bonds for SWS Securities in Dallas. Enron's
bondholders ``now have the opportunity of going to a much stronger
source.''

     Enron's 6.4 percent notes due in 2006 traded at 84 cents on
the dollar today, up 10 cents to 12 cents from yesterday, traders
said. The company's longer-dated debt, bonds with maturities of 10
years or more, rose as much as 10 cents.

     While Moody's Investors Service rates Enron's credit as
``Baa2'', one rung higher than its ``Baa3'' grade for Dynegy,
other ratings companies including Standard & Poor's and Fitch Inc.
have assigned Dynegy a higher rating. Also, Enron's ratings have
been cut in recent weeks and face further reduction, while
Dynegy's credit outlook is stable.

     Enron bonds and shares have fallen in recent weeks on concern
about partnerships run by the company's former chief financial
officer and concerns the company's trading business will be hurt
by the downgrades. Dynegy and Enron, both based in Houston, met
yesterday to negotiate terms of a buyout, said people familiar
with the situation.

Enron Confirms Dynegy Talks
By TSC Staff <<mailto:letters@thestreet.com>>

TheStreet.com
11/08/2001 08:00 AM EST

Enron (ENE:NYSE - news - commentary) and rival energy trader Dynegy (DYN:NYSE - news - commentary) confirmed Thursday they were in merger talks.
According to reports, Dynegy held talks to acquire Enron for up to $8 billion in stock and to make an immediate cash infusion of up to $2 billion to help relieve Enron's debt crisis. The possible agreement is said to have the backing of ChevronTexaco (CVX:NYSE - news - commentary) , which owns about a quarter of Dynegy.
Enron shares continued their recent fall, dropping 16 cents to $8.89, while Dynegy jumped $1.83 to $34.83.

Stocks Surge On Rate Cuts, Jobless Numbers
By Kevin Burke <<mailto:kburke@thestreet.com>>
Staff Reporter
11/08/2001 09:42 AM EST

TheStreet.com
Updated from 8:49 a.m. EST
Stocks surged at the open following surprising moves by two European central banks and a positive report from the Labor Department.
The Dow was recently gaining 39 points, or 0.41%, to 9594. The Nasdaq was up about 17 points, or 0.95%, to 1855, and the S&P 500 was unchanged at 1116.
Both the Bank of England and European Central Bank announced half-point reductions in their key lending rates Thursday, the BOE dropping its to 4% and the ECB lowering to 3.25%. The cuts were larger than expected and reflected increased economic risk in a low-inflation environment, the banks said.
Overseas markets were uniformly higher on the moves. London's FTSE 100 was gaining fractionally at 5219, while Germany's Xetra DAX was up 1.5% to 4936. In Asia, Japan's Nikkei gained 1.4% to 10,432 while Hong Kong's Hang Seng added 2.6% to 10,539.
The Labor Department said initial claims for jobless benefits fell unexpectedly by 46,000 to 450,000 in the week ended Saturday.
Retail sales reports for October were also pouring in Thursday, with Wal-Mart (WMT:NYSE - news - commentary) posting a slightly higher-than-expected gain in same-store sales. Limited (LTD:NYSE - news - commentary) said same-store sales fell 6% while Gap Stores' (GPS:NYSE - news - commentary) fell 17%.
The Enron (ENE:NYSE - news - commentary) saga continued with news that rival energy trader Dynegy (DYN:NYSE - news - commentary) has held talks to buy the company for up to $8 billion in stock. The possible deal is said to have the blessing of ChevronTexaco (CVX:NYSE - news - commentary) , which owns 27% of Dynegy.
The price of crude oil was rising Thursday after Saudi Arabia's oil minister warned of impending OPEC production cuts. Prices were up almost 4% on the news, the biggest jump since just after the terrorist attacks.
The 10-year Treasury note was recently losing 6/32 to 106 11/32, yielding 4.20%.

Some Glamour Stocks That Are Ugly Down Deep
By Brett Messing <<mailto:bmessing@oscarcap.com>>
Special to TheStreet.com
11/08/2001 08:16 AM EST

RealMoney.com
I know it's tempting. I know what you're thinking: If I can catch a big ride on one of these beaten-down stocks, I can get my portfolio back to where it was in March 2000.
Forget it. Rip up those old statements. Treat them like UFOs. Instead, think singles and doubles instead of homers. While a number of glamour stocks have been decimated, they deserve to be decimated. I am an opportunist. I've looked at all of them. They are a collective disaster, and they are not worth the risk.
Let's start with Jim Cramer's favorite punching bag, Enron (ENE:NYSE - news - commentary) . As bad as this situation is, it is going to get worse before it is over. And while the Bushies may have been willing to help out Bill Gates with his little Justice Department problem, they will not go near this one with a 10-foot pole. Enron is not an energy company. It is a trading company. Moreover, it appears they are not particularly good traders.
Instead of Enron, invest your money with the best trading company in the world, Goldman Sachs (GS:NYSE - news - commentary) . These guys have probably been picking Enron's pockets for years. Isn't it interesting that Goldman Sachs was unwilling to participate in the recent short-term loans to Enron, an investment banking client? They might actually know what's behind the curtain.
I worked at Goldman Sachs for eight years, and I have tremendous respect for them. They know how to trade. They made a ton of money handling Sid Bass' recent 125 million-share block of Walt Disney (DIS:NYSE - news - commentary) stock. Forget about the 6-cent-per-share fee they charged. How about the 10 million to 20 million shares that they kept for themselves? I imagine that Goldman made more than $30 million on this one trade. Not a bad day's work.
Stay away from Qwest (Q:NYSE - news - commentary) . Taken in the best light, the company is way too aggressive with its accounting; Qwest bullies the analyst community and it overpromises and underdelivers. Qwest has justifiably lost the trust of the investment community. It will take years of execution and fence-mending to earn this trust back. Ask Cendant CEO Henry Silverman. He is still paying for the damage inflicted upon him by former Cendant Chairman Walter Forbes, who has pleaded not guilty to conspiracy and wire fraud charges.
Go with WorldCom (WCOM:Nasdaq - news - commentary) instead. These guys actually get it. They are among the telecom industry's best operators, and they are the best dealmakers. Like everyone else, they goofed, but they have found religion. This quarter's operating results show some promise. Previously skeptical analysts at Lehman and Merrill had some nice things to say about the company. I think WorldCom is an up stock from here. It is not going back to the $60s, but I could see it above the driving age by year-end.
I know it's also tempting to think that if the economy rebounds, consumer finance stocks will scream. You are turned on by Providian (PVN:NYSE - news - commentary) and Conseco (CNC:NYSE - news - commentary) . Providian recently hired my pals at Goldman Sachs to help them out.
Forget this, too. Providian feels like a doughnut to me. Their balance sheet is a mess. We do not know how bad it is. They may not know how bad it is. Moreover, they were not candid with the investment community.
Conseco announced that Gary Wendt and other senior managers bought a bunch of stock with their own money. While I love to see management buying stock, this one feels too staged to me. Pre-Wendt, Conseco had a long history of management buying stock with loans from the corporate treasury. Moreover, 1 million shares (or $3 million) is not that much money to Wendt. I would like to see him buy $25 million of restricted stock directly from the company.
Conseco is probably the best speculative bet of the bunch, but I would still pass. It is a very high-risk situation, given the leveraged state of its balance sheet. Wendt is a tremendous manager, and he did a great job with GE Capital. However, he would not be the first guy to have a sequel that bombs at the box office.
Go with Citigroup (C:NYSE - news - commentary) instead. Citigroup is the biggest and best financial services company in the world. While Wendt is something special, I would draft Weill and Rubin ahead of him in my CEO Rotisserie League.
The best way to make money is to stay out of trouble. Stick with singles and doubles. Don't be tempted.

Top Of The News
Enron Trades Itself
Dan Ackman ,
Forbes.com , 11.08.01, 8:47 AM ET

NEW YORK - Enron, once a star, has lately looked more like a truck racing down a Texas highway with a load of burning lumber: no one knew where it was going or why.
Finally, it seems to be nearing a rest stop as Enron (nyse: ENE) is reportedly about to sell itself to its much smaller rival Dynegy (DYN ) for $8 billion in stock, a fraction of its former value. As part of the deal, ChevronTexaco (CVX ) , which owns 27% of Dynegy, would pump at least $1.5 billion in cash into Enron upon the inking of an agreement and an additional $1 billion when the deal closed.

The deal, if consummated, represents a possible way out for Enron, which has been humbled by an accounting scandal, the resignation and firing of top executives, the defection of investors, and massive losses.

The rough outlines of what humbled Houston-based Enron are known, but the details remain a mystery, as well as the subject of a Securities and Exchange Commission investigation and at least one major lawsuit, with more to come.

Once basically an oil and natural gas pipeline company, Enron expanded into energy trading, broadband telecommunications and other businesses. It was often said to be at the center of a "revolution," perhaps several revolutions, with telecommunications, the Internet, and energy deregulation among them.

But a revolution is not a tea party. For a while, the fact that few investors understood what Enron did was probably a plus. Between 1997 and the end of 2000, Enron's share price climbed steadily from less than $20 per share to over $80 per share. It had a $70 billion market value as recently as a year ago.

During the run-up, Enron's financial conditions don't seem to have justified the surge. Revenues were growing wildly, from $20 billion in 1997 to $101 billion in 2000. But much of that increase was due to the fact that Enron was now a trading company, and revenues were of a different type altogether.

In any event, profits, after a huge jump between 1997 and 1998, increased much more slowly, from $878 million in 1998 to $1.4 billion. Of course, whether these profits were real is now very much in doubt. Last quarter, Enron reported a $618 million loss, mostly due to accounting charges.

The road down has been a lot steeper. Over the last 12 months, the stock fell all the way back and closed Wednesday at $9.05, wiping out all the gains and then some.

Today, the inscrutability of Enron's finances is considered a bad thing. Jeffrey Skilling, the company's new chief executive officer, resigned in August after just six months at the helm. Kenneth Lay, 58, the former C.E.O. and a close friend of President George W. Bush, was brought back in. Lay will have a seat on the combined company's board, but no day-to-day job, according to reports.

Lay earned $12 million in total compensation from Enron in 2000, not counting his profits from the exercise of $123 million in options. Other Enron executives also exercised tens of millions in options in 2000, when the stock was flying high. Enron paid Skilling, once Lay's top lieutenant, $84.5 million over the last five years.

Last month, the company's problems became public. It disclosed $1 billion in write-downs and a $1.2 billion reduction in shareholder equity. The reduction in equity arose from "related party" transactions that turned out to be with investment partnerships involving Andrew Fastow, the chief financial officer. Fastow was forced to resign on Oct. 24. The Securities and Exchange Commission is investigating.

Today, Enron is expected to send the S.E.C. answers to questions the agency has posed in its investigation. Dynegy officials have seen those answers already, and the public should see them soon.

Enron will meet Friday with its creditors about the company's continuing crisis and the proposed merger. The hope is a deal with Dynegy, also based in Houston, will lead Enron out of the storm and cause its trading partners to have enough confidence to do business with the company.

Enron's credit rating is in jeopardy. Both Moody's Investors Service and Standard & Poor's have already cut it to two rungs above junk status. On Nov. 5, Fitch cut it to one notch above junk.

As part of the deal, Dynegy, which had 2000 revenues of $29.5 billion, would be taking on Enron's $12.8 billion debt load. But this figure does not include billions of dollars of other debt, accumulated off the balance sheet, that has played a major role in Enron's current problems. Some of Enron's assets will likely be sold to pay down the debt.

The acquisition would combine Enron, a dominant player in the trading of electricity and natural gas in the U.S., but which has been selling off hard assets such as utilities, with Dynegy, a company that uses trading to maximize earnings from its power plants.

Dynegy will pick up the pieces of Enron, hoping it can make some sense of it. After that it may make some money, too.


---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 11/17/2000
05:40 PM ---------------------------

Becky Pham
11/15/2000 02:58 PM
To: Vince J Kaminski/HOU/ECT@ECT
cc: Shirley Crenshaw/HOU/ECT@ECT
Subject: 2001 budget for Research

Sir,

I just got word that your bottom line needs to be 2,200K.  This is net of
Corp Charges and Intercompany billings.  In order to get to this number, we
have to reduce your budget by 83K.  Do you have any suggestions in which
category(ies) we need to reduce?

 Budget  10,521,000
 I/C billings   8,238,000
 Subtotal   2,283,000
 Per Delainey   2,200,000
 Need to dec by      83,000

Here are my suggestions based on Oct expenses:

 Category   Oct expense  Budget  Decrease Yearly amount

 Periodical/subscription  5,200   10,000  3,000  36,000
 Tuition and Reimbursement 11,000   21,000  4,000  48,000

This will bring you to the bottom line suggested by Delainey.  Please let me
know your decision by November 21.  If you have any questions, call me at
5-7094.  Thanx.


Concur Expense (XMS) Upgrade!

On July 2, 2001, Enron,s Corporate Expense Management Solution will undergo
an upgrade to version 6.0.2.
The Integrated Solution Center (ISC) has developed a transition plan
containing several important deadlines affecting
all XMS users.

       Transition Schedule

Important Date #1 - Monday, June 18th
? American Express transactions will no longer be loaded into the current XMS
system starting June 18th.  Beginning June 18th, all AMEX transactions will
be loaded into the new Concur Expense (XMS) system.
?  Beginning June 18th, the ISC will be solely responsible for adding new
users to the current XMS system.  On July 2nd, new users created in SAP HR
will be  automatically loaded into the new Concur Expense (XMS) system.

Important Date #2 - Wednesday, June 27th
? This marks the deadline for entering new expense reports into the current
XMS system.  All open expense reports in XMS must be submitted and approved
by June 27th.  All users will be locked out of XMS after this date!!

Important Date #3 - Monday, July 2nd
? The new version of Concur Expense (XMS ver. 6.0.2) goes LIVE!!!

For a list of frequently asked questions (FAQ), please click on the following
link:  http://isc.enron.com/site/xmsfaqs.htm

If you have any other questions on any of the above items, please contact the
ISC Call Center at 713-345-4727.


Robert, I would like to give all four tickets to Cynthia for this round since
	you will be spending time with Duke next week at the Winter Ops meeting.
	Will catch you on the next round.
	Cynthia come by and get the tickets.  Thanks. Lynn

 -----Original Message-----
From: 	Rivers, Cynthia
Sent:	Tuesday, September 04, 2001 9:32 AM
To:	Blair, Lynn
Subject:	RE: Baseball Tickets

Lynn, I'll take a later game.  I did need 4 tickets.  Thank you for considering me for the tickets!

 -----Original Message-----
From: 	Blair, Lynn
Sent:	Friday, August 31, 2001 4:47 PM
To:	Rivers, Cynthia; Benningfield, Robert; Hernandez, Bert
Cc:	Blair, Lynn
Subject:	FW: Baseball Tickets

	OK, here is what I have:
		For Wednesday, September 12 - Cynthia and Renee (NGPL) (2 tickets)
		For Wednesday, September 12 - Robert and Duke (2 tickets)
		For Thursday, September 13 - Bert and Texaco (4 tickets)

	Cynthia I am assuming you only wanted 2 tickets.  If that is not correct let me
	know and we can give one of you the 12th and the other a later game.

	Thanks. Lynn

 -----Original Message-----
From: 	Blair, Lynn
Sent:	Thursday, August 30, 2001 2:57 PM
To:	Berger, Larry; Blair, Lynn; Bodnar, Michael; Buchanan, John; Kowalke, Terry; Zadow, Raetta; Aldinger, William; Collins, Marion; Conklin, Jacob; Coon, Galen; Cooper, Tim; Cramer, Lanny; Howard, Jack; Laferla, Lynda ; Phillips, Mary; Rivers, Cynthia; Blair, Jean; Bryan, Randy; Callans, Nancy; Carr, James; Clapper, Karen; Perry, Renee; Porter, Diana; Walden, Shirley; Washington, Kathy; Wilkens, Jerry; Adams, Jean; Benningfield, Robert; Dykes, Tangie; Forbish, Sherry; Greaney, Chris; Hibbard, Scott; Janzen, Randy; Linhart, Joe; McDaniel, Janet; Scurlock, Debra; Sturr, Kathy; Woodson, Harry; Giambrone, Laura; Hernandez, Bert; McEvoy, Christine; Miller, Beverly; Minter, Tracy; Mulligan, Amy; Ward, Linda
Subject:	Baseball Tickets

	I have 4 baseball tickets for Wednesday, September 12 and 4 tickets for Thursday, September 13
	for the Astros vs Giants.  If anyone has a customer they would like to take, please
	let me know by Wednesday, September 5th.  Thanks. Lynn


John Edward Kampmann, we'll call him Jack and so can you.
  "Ruscitti, Kevin" <Kevin.Ruscitti@ENRON.com> wrote: we have a new email at home but i'm not sure what it is.  i'll find out and let you know.any names picked out for the baby.  don't tell me joe, mickey, billie or whity.  i'd feelmore comfortable with michael jack kampmann.-----Original Message-----
From: Richard Kampmann [mailto:rkampmann@yahoo.com]
Sent: Thursday, September 06, 2001 12:26 PM
To: Ruscitti, Kevin
Subject: RE: Big day

Kev,
Everything is great, Dr.; said Patty is having a "text book pregnancy", music to my ears.  She is due on the 21st but they say 1st kids can be as much as 2 weeks late before they induce....  wild stuff.  Do you guys have a home email address?  What is Lisa's email?  when this kid comes I want to tell EVERYONE we care about ASAP!!!!!
  "Ruscitti, Kevin" <Kevin.Ruscitti@ENRON.com> wrote: Kamp,

Thanks for the Napa stuff. How's everything going? How's
Patty doing? You guys must be getting pretty pumped. Keep
us informed - let us know how everything's going.

Kevin

-----Original Message-----
From: Richard Kampmann [mailto:rkampmann@yahoo.com]
Sent: Friday, August 31, 2001 11:26 AM
To: Ruscitti, Kevin; Lisa Kevin Ruscitti
Subject: Re: napa valley

Sorry so late.

--- "Ruscitti, Kevin" wrote:
> kamp,
>
> just a reminder about the napa valley restaurant and winery list.
> hope
> everything's going great.
> the big day is nearing. keep us informed. tell patty we're thinking
> about her.
>
> kevin
>
>
>
**********************************************************************
> This e-mail is the property of Enron ! Corp. and/or its relevant
> affiliate and may contain confidential and privileged material for
> the sole use of the intended recipient (s). Any review, use,
> distribution or disclosure by others is strictly prohibited. If you
> are not the intended recipient (or authorized to receive for the
> recipient), please contact the sender or reply to Enron Corp. at
> enron.messaging.administration@enron.com and delete all copies of the
> message. This e-mail (and any attachments hereto) are not intended to
> be an offer (or an acceptance) and do not create or evidence a
> binding and enforceable contract between Enron Corp. (or any of its
> affiliates) and the intended recipient or any other party, and may
> not be relied on by anyone as the basis of a contract by estoppel or
> otherwise. Thank you.
>
**********************************************************************

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Craig -

Regarding the Neumin Production trades executed yesterday, I have a couple of
comments.


---------------------- Forwarded by Tory Bracy/Corp/Enron on 12/13/99 05:14
PM ---------------------------

"Nyna K. Kent" <NK02@hou-metro.harris.tx.us> on 10/01/99 09:12:33 AM
To: Alina Bolua <AB02@hou-metro.harris.tx.us>, Angie Lathan
<apayne@galaxycable.com>, "Carla (Home)" <fordc@swbell.net>, "Debbie's Work"
<caruthers@studenthousing.com>, Evelyn Cherny <EC01@hou-metro.harris.tx.us>,
Irma Arevalo <IA01@hou-metro.harris.tx.us>, Tory Bracy/Corp/Enron@ENRON
cc:

Subject: obituary

> Kathy had just become a widow and needed to put an
> obituary in the paper about her late husband, Anthony.
>
> She called the newspaper and asked, "how much to put an
> obituary in the paper?"
>
> "The cost is $0.50 per word," said the newspaper editor.
>
> "Fine, please print "Bubba died."
>
> The startled newspaper editor explained that there was a
> 7 word minimum charge.
>
> Kathy thought for a moment, then said, "Okay, then, please
> print 'Bubba died. 1983 pickup truck for sale.'"
>


I've had a number of discussions with Mary Nell Browning over the last couple of days in relation to opportunities with Enron outside of the Enron Europe legal department, including the possibility of her moving into a commercial role. She is presently talking to a few of my people about this. It did occur to me that there maybe a role for her in Global Assets, commercial or legal and I've suggested that she calls you to discuss.

She tells me that she's presently minded to take the voluntary redundancy offered. I have told her that in her case, I'm prepared to give her the benefit of that package until the end of the year to give her more time to find a role internally, in what is clearly a tough time here.

I would appreciate any help you could give. I will also try and catch up with you to chat about this.

Many thanks

Michael Brown


Okay I'll go for a ticket.

Are you back in town.  Do you want to go to the cafeteria for lunch.
--------------------------
Sent from my BlackBerry Wireless Handheld (www.BlackBerry.net)


It looks great.
m


I am pleased to introduce you to Crystal Hyde and Fredrik Erisson. They are
both joining are team as Analyst's working for JonAlan's group.

Crystal Hyde comes to us from Houston where she worked in risk on the gas
desk.  Fredrik Eriksson is from Sweden and just finished up his degree at the
University of Portland. They are both excited to be in Portland and look
forward to working with everyone.  If you have an opportunity, please
introduce yourself  and make them feel welcome.

Thanks,

Jessica


i just spoke to someone who said they would make sure you get in for an
interview.  i will know more in a couple of days.


I hope that there is no more confusion!

The opening of each brokerage account should require two signatures for
control purposes.  ONE of those signature MUST BE either of Ted Murphy or
Rick Buy (their titles frequently change but check the Enron Corp. corporate
workbook).  The SECOND signature MUST BE an officer of the entity opening the
account.  We suggest the level of authority used by ENA but certainly
whatever appears in the entity's unanimous consent or resolution authorizing
the opening of brokerage accounts.  I think that Marie previously sent you a
form.  Let us know if you have any questions.

What is the timing on the Enron Brazil Power Holdings XII Ltd. account?

Regards.  Sara

Nancy Muchmore@ENRON_DEVELOPMENT
10/08/99 11:48 AM
To: Marie Heard/HOU/ECT@ECT
cc: Sara Shackleton/HOU/ECT@ECT, Robert H
George/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruce
Harris/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
Subject: Re: brokerage account

I guess I meant Enron South America generally--Enron Brazil Power Holdings
XII Ltd. is one of its companies.  I think you answered my question on a
general basis--thanks very much.  Sorry if I confused you.

Also, I need to know if anyone from ENA needs to be appointed in addition to
ESA people.

Robert:  Who at Enron South America should be appointed?

Nancy

Marie Heard@ECT on 10/08/99 11:35:17 AM
To: Nancy Muchmore/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Sara Shackleton/HOU/ECT@ECT, Robert H
George/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruce
Harris/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT

Subject: Re: brokerage account

Nancy,

I am confused by your e-mail.  I thought the brokerage account was going to
be opened for Enron Brazil Power Holdings XII Ltd., not Enron South America.
We typically require any one of the President, any Managing Director or the
Vice President, Finance and Treasurer, together with any one of the Managing
Director, Legal, Rick Buy or Ted Murphy.  Of course, the level of officers
may vary from entity to entity.

Marie

Nancy Muchmore@ENRON_DEVELOPMENT
10/07/99 03:35 PM
To: Marie Heard@ECT
cc: Sara Shackleton@ECT, Robert H George/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
Subject: brokerage account

Marie:  Who are the people you normally appoint to sign, etc., on brokerage
accounts?  Should Enron South America consider using the same people in order
set up this account?  We could then appoint Enron South America people
later.  Thanks.  Nancy
---------------------- Forwarded by Nancy Muchmore/ENRON_DEVELOPMENT on
10/07/99 03:35 PM ---------------------------

Robert H George
10/07/99 03:16 PM
To: Nancy Muchmore/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:

Subject: brokerage account

---------------------- Forwarded by Robert H George/ENRON_DEVELOPMENT on
10/07/99 06:17 PM ---------------------------

Patrick H Hickey@ECT
10/07/99 11:32 AM
To: Bruce Harris/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Robert H George/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT

Subject: brokerage account

I spoke with Ted Murphy regarding setting up the brokerage account for the
Copel shares.  He indicated that the easiest thing to do is coordiante with
Sara Shackelton (ECT finance lawyer).  Typically, she sets up the paperwork
and Ted (or Rick) signs off on setting up the account (she has done this many
times).  Robert may have already done this or it may not be necessary in this
case - I will leave that up to him.  Regardless, Ted (or Rick) does need to
be one of the people who sign the documents.  Sorry for the delay.

Patrick


I have drafted a detailed outline on our receivables due from the underscheduling penalty.  Because the penalty has not been implemented by the CAISO, our case needs to clearly lay out the CAISO has failed to implement FERC orders and what our receivable is even though we have no invoices to rely on.

The biggest "to dos" on this are: (1) update our receivable amount to the extent we can get more data from CAISO (we have asked for data informally from CAISO), (2) lodge discovery questions re: the computation of our receivable (I drafted questions in Section 5), and (3) review Enron's past positions on this matter.

I am assuming that sections 1. and 2. will go in our pleading and/or policy testimony and that sections 3. AND 4. will be beefed up and/or updated by Murray O'Neil (with help from Stokley and Blair).

I am on vacation from 8/11//01 - 8/24/01 so please look at this ASAP so that I can answer any questions before I leave.


Paul, thanks for your email.

We are working hard to get the Sun Devil project ready for FERC filing, likely by Sept 2002.  If you would like to send a qualification package, please remit to my project engineer at:

Enron Transportation Services
Mr. Arnold Eisenstein
PO Box 1188
Suite ECN 4674
Houston, TX  77251-1188

best regards,
Kevin Hyatt

-----Original Message-----
From: Rehrig, Paul [mailto:Paul.Rehrig@Harrisgroup.com]
Sent: Thursday, February 28, 2002 11:19 AM
To: Hyatt, Kevin
Cc: Ward, Bill
Subject: Sun Devil Expansion

Kevin

I am a project manager with Harris Group in Denver.  We specialize in the
design of compressor stations and have considerable experience in the
western U.S.  I was hoping to get an update from you on the Sun Devil
Expansion project.  Have you applied with FERC?  Is there any opportunity
for our company to submit a proposal for the project?  Would you like to see
a Qualification Package that expands on our experience?

Thanks in advance for your assistance.

Paul Rehrig
Project Manager
Harris Group Inc.
303-291-0355
paul.rehrig@harrisgroup.com


Shirley.

OK

Vince

 -----Original Message-----
From: 	Crenshaw, Shirley
Sent:	Monday, May 21, 2001 9:18 AM
To:	Kaminski, Vince J
Subject:	FW: Energy Leader Consulting Generation Evaluator (EGE)

Vince:

This is the gentleman that wants to meet with you on the 29th?

 -----Original Message-----
From: 	"Steve Mitnick" <SMitnick@earthlink.net>@ENRON [mailto:IMCEANOTES-+22Steve+20Mitnick+22+20+3CSMitnick+40earthlink+2Enet+3E+40ENRON@ENRON.com]
Sent:	Monday, May 21, 2001 9:13 AM
To:	Crenshaw, Shirley
Cc:	VKamins@enron.com
Subject:	Energy Leader Consulting Generation Evaluator (EGE)

Shirley:
As requested, herein is information regarding the meeting with Vince Kaminski.
The presentation on the EGE tool's applications and the Allegheny Energy case study is timed to take an hour.  If the meeting is most conveniently scheduled for Tuesday, May 29, might I request it be set for late afternoon (as my other appointments are the next day).
And, as Vince will recall, I was Co-Leader of the energy consulting business of PHB Hagler Bailly, and developer of the Ramp Up, Real Time, 75check and Electric Strategy tools.  Presently, I am CEO of Energy Leader Consulting (ELC).
    Background
The U.S. power generation industry has become increasingly efficient in recent years.  Rapidly growing new entrants seek profit maximization aggressively.  Utilities, who still control most power plants, endeavor to adopt the entrants' methods.  Yet, inefficiency among many utilities remains widespread.
Utility inefficiency arises from adherence to decades-old habits and in unit commitment and dispatch and planned maintenance scheduling.  Many utilities, notwithstanding the industry-wide trend towards profit maximization, cling to ingrained routines.
Inefficiency can also arise from the diseconomies of small scale.  A utility may operate a relatively small system (fewer than a dozen plants).  A small system lacks portfolio diversification and perspective in its focus on its regulated customers, playing the wholesale market at the margin.
For a variety of reasons, utilities are reluctant to cut back the starts of their generating units, let alone shut down any (even temporarily or seasonally).  Economically inefficient units continue to be committed, week after week, and run in the half-load range.
    EGE Objectives
EGE identifies and assesses generating units of a utility with questionable commitment routines.  Taking into account transmission and reliability factors, the procedure points towards profit opportunities that may be exploited by another industry participant.
    I. An industry participant can use EGE as a basis for a medium or long-term wholesale power transaction with a utility; or to price wholesale power more aggressively, to take market share from the utility (i.e., compel changes in unit commitment habits).
    II. An industry participant can use EGE to spot and quantify efficiencies that would come from a merger or acquisition.
    III. A power plant developer can use EGE to estimate the incremental value a new plant will enjoy when the target utility's unit commitment routines inevitably become rationalized.
    Specific EGE Concepts
EGE reduces and analyses the extraordinary but unwieldy continuous emission monitoring data base intelligently focusing on profit opportunities.
It produces indicative statistics such as:
    a. the frequency distribution of starts per week;
    b. the frequency distribution of starts by day/15-minute segment during the week;
    c. the frequency distribution of load level;
    d. the frequency distribution of hours of operation per start;
    e. average heat rate and approximate fully-allocated cost in the half-load range;
    f. average ramp rate from the half-load range;
    g. the frequency distribution of unused connected capacity during the highest demand hours; and
    h. forced-off maintenance outage rate (where indicated).
Indicative statistics are generally aggregated by month/year; in some cases, by temperature range.  (They can be by regional wholesale prices as well.)  EGE establishes if the target utility has changed unit commitment routines significantly in recent years.
EGE is based upon uniquely timely actual hourly operating data.  EGE is now updated for the 4th quarter 2000 (through December 31, 2000).  EGE 1st quarter 2000 (through March 31, 2001) will be available approximately June 15, 2001.
EGE also compares and ranks generating units' commitment and dispatch with that of similar units operated by the target utility (as well as other regional generators).  Some utilities operate a group of economically marginal units at the half-load level for lengthy time periods (without an apparent reliability basis), splitting the limited economic demand for power among the units.
Other EGE supporting data:
    i. planned maintenance schedule (where indicated);
    j. actual maximum generating capacity;
    k. actual minimum generating capacity (actual maximums and minimums can differ significantly from government-reported values);
    l. average heat rate in the full-load range; and
    m. average heat rate in the three-quarter-load range.
With respect to a generating units' average heat rate in the half-load, three-quarter-load and full-load ranges, it can be instructive to rank these relative to similar generating units within a region.  It can also be of interest to identify significant seasonal variations in average heat rates and maximum capacities, and changes in recent years in these parameters.
    The Real-World Example of Allegheny Energy
Allegheny Energy can serve as a case study to illustrate the application of EGE.  In the 4th quarter 2000, for instance, one high-cost generating unit was started virtually every weekday morning (52 times) and committed for the whole day (in all but two cases).  Arguably, there are power products that could substitute for this routine (in part at least) at a profit to the seller of the product and Allegheny Energy.
Another high-cost Allegheny Energy generating unit was started virtually every weekend during the autumn (nine times) and committed for most of the coming week.  At another plant, two high-cost units were operated too often in the expensive half-load range (some 550 hours) and three-quarter-load range (another 400 to 600 hours); they were seldom called upon to run at higher levels.  Again, there are power products that that address these practices and might appeal to Allegheny Energy.
    Offering of Energy Leader Consulting (ELC)
EGE is a procedure, not a software package or data base.  ELC believes this format is more effective in arming clients with the information they need to act upon profit opportunities.
ELC transfers its "knowledge" about the EGE procedure and the supporting data methods in a straight-forward four-step process:
    1. Enron would select one to three target utilities.
    2. ELC would perform the EGE procedure on the target utilities.
    3. Employing this real-world analysis as a pedagogic tool, ELC, in a one-day seminar with Enron personnel, would instruct how to perform the procedure in the future (without the assistance of ELC).
    4.  Optionally, ELC would provide EGE supporting data, quarterly, to Enron.
The basic EGE supporting data set is national including all generating units under the continuous emission monitoring program (virtually all fossil fuel units).  Parameters that are incorporated, and the data set format, will be specified upon request.  Custom modifications will be considered.
.........................................................................
Steven A. Mitnick
Chief Executive Officer
Energy Leader Consulting
4807 41st Street, NW
Washington, DC 20016
(202) 997-0924 voice
(202) 537-0906 fax
SMitnick@EnergyLeader.com


FYI

 -----Original Message-----
From: 	Kitchen, Louise
Sent:	Monday, December 31, 2001 12:54 PM
To:	Colwell, Wes; Hodges, Georgeanne; Milnthorp, Rob; Zufferli, John; Hedstrom, Peggy; Myers, Thomas; Bradford, William S.; Will, Lloyd; Beck, Sally; Hall, Bob M; Presto, Kevin M.; Forster, David; Reeves, Leslie; Gaskill, Chris; Superty, Robert; Lagrasta, Fred; Luce, Laura; Tycholiz, Barry; Redmond, Brian; Vickers, Frank; Gossett, Jeffrey C.; Arnold, John; Grigsby, Mike; Allen, Phillip K.; Neal, Scott; Martin, Thomas A.; Shively, Hunter S.; Wynne, Rita; Rub, Jenny; Webb, Jay; Haedicke, Mark E.; Buy, Rick; Calger, Christopher F.; Duran, W. David; Robinson, Mitch; Curry, Mike; Heizenrader, Tim; Belden, Tim; White, Stacey W.; Steffes, James D.; Aucoin, Berney C. ; Roberts, Mike A.; Oxley, David
Cc:	Lavorato, John
Subject:	NETCO

The New Year has arrived and we really to finalize a lot of the work with regards to moving into NETCO.  Obviously we still do not have a deal but the deadline is approaching and preparations need to be finalized.

The main areas to focus on over the next week are:-

(i) 	Re-start/Integration Plans (due on Jan 7)				To be forwarded to Louise
	These plans need to be detailed and show clear detailed timelines and detailed responsibilities for getting us up and running as soon as possible.
	The current restart date is January 21, 2001 but may be pushed forward to January 14, 2002.
(ii)	Budget (due Jan 3, 2002)						To be forwarded to Faith Killen
	First year budget to include all start up costs (some of which can be amortized)
(iii)	Seating Plans								Tammy Shepperd to co-ordinate
	We need to start the planning process for seating as we will be living on floors 5 & 6 of the Enron South building.
	I have asked Tammy Shepperd to commence the seating plan and we would look to start the moves as soon as possible but with a large number occuring around January 11,2002.
(iv)	Due Diligence
	We continue the process with two new companies this week (Wednesday and Thursday). Andy Zipper is taking the lead for the company arriving on Wednesday, please help him with his requirements.

I would ask that both John and I are notified of any changes to the Netco personnel list on a timely fashion and that the list is maintained on a continual basis.  Please forward all alterations to Jeanie Slone who has responsibility for the master list.

Communication - I believe that the New Year combined with a internal communication issues may be a good time to review what we want to say on Netco and what our policies are.  I am asking David Oxley to co-ordinate with all of you on this.  I know a lot of you believe that we need to only communicate once we have retention programme in place for the estate which may be a good idea but we we need to make sure that we lose as few people as possible.

If you are unavailable this week, please ensure you delegate this work out.

Happy New Year

Louise


- Saibi_1201.doc