Re: MPR for 6/20/00

Ted,

Question 1) The investments in CALME and APACHI are booked on an accrual
basis. I have had several meetings with Commercial and Accounting
representatives over the last year and all have stated that any earnings are
effectively reinvested back into the Assets. Therefore, the Market Values
that are reflected on the MPR are actually Book Values. The Book Values are
typically adjusted the last week of the month and are 1 month behind as the
Internation groups wait until the GL is closed before communicating the
updated values.

Question 2) Thanks for the heads-up on India. I spoke with Sheila Glover
and we are now aware of the details behind Rediff.com. We need to ensure
that these positions are not accounted for on the DPR by India so that we do
not double-report the P&L. The long-term solution is to establish a
communication line for future investments. Between Sheila, Donna Lowry, and
I we can develop a plan.

Question 3) The 3 bonds that you are referencing were purchased by Jeff
Kinneman for Jim Easter. During our last conversation, Jim told Jeff that
these are Strategic investments and should not be reflected on the MPR.

There is still some uncertainty/confusion as to when an investment is
classified as Merchant. We could insist that all publically traded
investments not included in the Equity books would qualify. Having said
that, I would like to know if the Gas Authority of India, Ltd (GAIL) and
Europe's investment in MG are considered to be Merchant investments.

I will be on vacation this Friday and all of next week so please include
David Maxwell on any responses. David and I will stay in touch so as to make
adjustments as needed.

Thanks,
Todd

From: Ted Murphy
06/22/2000 03:07 PM

To: D Todd Hall/HOU/ECT@ECT
cc: Sally Beck/HOU/ECT@ECT, Rick Buy
Subject: Re: MPR for 6/20/00

Mr. Hall,
I have just reviewed the Merchant Portfolio Summary for 6/20 and have the
following questions:
1) CALME shows an asset of $291.9MM and APACHI shows an asset of $113.0MM
and they show no p&l for the year
Is this possible in a world of changing interest rates and equity premiums
and commodity prices?
2) India recently invested in an IPO (rediff.com) for which there was a
simultaneous DASH to buy and sell (sounds like a Merchant deal).
Where does this show up?
3) There are several bonds (publicly traded, registrered securities, housed
in our Prime Broker accounts) owned by various Enron entities
that I do not believe are on the DPR. Shouldn't they be? And if so, who is
deciding not to include?
Pls advise at your earliest convenience as you always do.
Thanks
Ted

From: D Todd Hall 06/21/2000 01:16 PM

To: Rick Buy/HOU/ECT@ECT, Andrea V Reed/HOU/ECT@ECT, Sally Beck/HOU/ECT@ECT,
Ted Murphy/HOU/ECT@ECT, Richard Causey/Corp/Enron@ENRON, Carol Jean
Marshall/HOU/ECT@ECT, Raymond Bowen/HOU/ECT@ECT, Jeff
Skilling/Corp/Enron@ENRON, Jeff Donahue/HOU/ECT@ECT, L'Sheryl
Hudson/HOU/ECT@ECT, Monica Reasoner/HOU/ECT@ECT, Hope Vargas/HOU/ECT@ECT,
Adarsh Vakharia/HOU/ECT@ECT, Joseph W Sutton@Enron, Michael S
Galvan/HOU/ECT@ECT, Maria LeBeau/HOU/ECT@ECT, Wes Colwell/HOU/ECT@ECT, Mark
Frevert/NA/Enron@Enron, Thomas Myers/HOU/ECT@ECT
cc:
Subject: MPR for 6/20/00