Re: Are we finding value in outsourcing?

Good job Rodney - keep me up to speed and let me know where I can help.

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 07/18/2000
11:48 AM ---------------------------

Enron North America Corp.

From: Rodney Malcolm 07/18/2000 10:08 AM

To: David W Delainey/HOU/ECT@ECT
cc:
Subject: Re: Are we finding value in outsourcing? - GE Plastics

I believe you would be the grief master on this subject at least in terms of
"you better start delivering on this stuff". By the way the pitch to
Colonial pipeline went okay yesterday. Good news - Bill Scott CEO said we
were the only company that could deliver exactly what he asked for. Bad news
is that he thought it should be 25% lower. I believe his reaction is simply
a gut reaction from a former trader and we are following up with information
to get him better educated as to why this is a good deal for him. We have
$20 - $30mm in the deal and this creates roughly $70mm of value or savings
(depending on your assumptions) for Colonial. I believe we can get to a
trade with them. I'll keep you updated.

Thanks,
Rodney

David W Delainey
07/17/2000 11:19 PM
To: Rodney Malcolm/HOU/ECT@ECT
cc:
Subject: Are we finding value in outsourcing? - GE Plastics

Rodney, interesting title- is someone giving you grief on this strategy?

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 07/17/2000
11:13 PM ---------------------------

Enron North America Corp.

From: Rodney Malcolm 07/16/2000 11:08 AM

To: David W Delainey/HOU/ECT@ECT, Raymond Bowen/HOU/ECT@ECT
cc: James A Ajello/HOU/ECT@ECT
Subject: Are we finding value in outsourcing? - GE Plastics

This week we will begin discussions on structure and pricing with GE
Plastics. At the risk of getting committed to earnings delivery I thought it
would be helpful to give a range of value to us & GE at least before the
economics start to deteriorate in negotiations. Currently the proposal would
require GE to step up to ten year fixed price positions that would create the
following split up of economics:

Savings to GE $33MM PV
Value to Enron $15MM with $10MM of this value in bookable mark to market
$40 MM in capital invested in the Demand Side Management Projects.

I think that this suggests there should be value in our outsourcing efforts.

Thanks,
Rodney