Changes to DPR and Loss Notification Reporting, Limit Changes, etc.

Please see the BOD approved limit changes and notification level changes
currently in effect for today's business, 12/12/00: 1) see Risk Mgmt memo for
summary of changes to policy, see Policy for summary of limits in effect
except for Temporary Limits noted below (I sent you these same documents a
week ago, so you're probably already familiar with them). As you make these
changes, I'd suggest revising the order of the commodity listings on the DPR
to conform more closely with the management / trading responsibility
organization structure announced November 8th (let me know if you do not have
the e-mail from Skilling/lay with the attached org. charts.) Also see the
assignment of Head Traders to specific commodities below - the EWS memo below
was approved by Greg Whalley yesterday.

So I'd suggest deleting the South America and Asia Africa subtotals and
putting under Enron Americas and Enron Europe, respectively.

Other changes we've discussed:
removing Structured Derivatives reporting as that P/L should be aligned
against power or gas risk limits

Other DPR Issues to address:
The Risk Management policy requires Loss notification monitoring and
reporting to be measured without the effect of change in prudency and without
origination:
Reporting changes in prudency - we'd like this to be a bit more transparent,
there's Lavorato's "Management Book", and Schedule C, and we're not clear
what drives the changes, so it's more rather than less difficult to
measure/evaluate trading results
Developing a consistent approach among commodities to report origination vs.
trading - - - few commodity groups report origination separately, yet the
area at the bottom of the DPR that says "US and International Originations"
implies that the amounts reported above exclude origination when that in fact
is not the case
Need to get EES and the UK to report earlier so we can see preliminary DPR
with all risk and P/L by 8 a.m. Houston time

Temporary Limits and Discretionary VaR Allocations approved by the BOD, but
not reflected in the Policy above:

12/7 - 12/22 Permanent
Aggregate VaR Limit $140 MM $100 MM

NA Gas $110 MM $60 MM ($60 permanent limit, + $15 Discretionary VaR on
12/6 + $35 Temporary VaR)

UK Power $20.3 MM $15.3 MM ($15.3 limit until 1/1/01 + $5MM Temporary VaR)

Other Limit Issues - I'll let you know if these are extended or modified:
EES's $2MM of Discretionary VaR expires Friday, the 15th
After 12/22, we'll need to re-evaluate the $15MM Discretionary VaR allocated
to NA Gas

Regards,
Cassandra.