Reporting Structure

Rob, independent of dotted/solid lines, you already have the primary and
complete responsibility to manage the office and the business. At the risk
of being bold, I think the undercurrent of your note and your discussions
with Haedicke over the last couple of days is a matter of absolute control.
Ownership and passion are important characteristics of our best commercial
people but so is fostering a diversity of opinions and ideas. With the back
and mid office, the current Enron model is based upon scale and
standardization which generates tremendous operating leverage. Further, it
helps us manage risk and is a board mandated control issue. In the
long-run, it is actually less costly (ie) systems that don't work together,
less transferable human capital, un-managed legal risks, etc.

A lot of your points are very valid and Haedicke has never and never will get
in the way of managing commercial business; however, Mark, Wes, Sally, Beth
et al have a mandate to provide a flexible, scalable but standardized
delivery mechanism, that manages our risk across the broad empire. Don't
quit protecting the business and your people; however, please help accomplish
some of these goals as well.

In short, I would like to keep the reporting structures the same.

Lets take the earliest opporunity to discuss this.

Regards
Delainey

---------------------- Forwarded by David W Delainey/HOU/ECT on 11/02/2000
09:41 AM ---------------------------

Rob Milnthorp
11/02/2000 09:17 AM
To: David W Delainey/HOU/ECT@ECT
cc:
Subject: Reporting Structure

Dave, at the risk of rocking the boat, I would like you to consider the
following. As you know, with the exception of Origination & Finance, all
other Canadian departments (Trading, Legal, Ops, Acctg, HR, Govt, & IT)
report directly to someone in Houston while having a dotted line to me.

In my mind, this is completely backwards (ie. it should be a solid line to
me, and a dotted line to their respective counterparts in Houston) for the
following reasons. First, performance feedback is not communicated to these
individuals in a timely manner if at all. Even when it is, more times than
not, it is perfunctory in nature. In fact, I think that feedback is given
somewhat reluctantly because the manager in Houston has really no idea
whether the individual in Canada is doing a good job or not.

Second, it is sub-optimal. I seem to be spending more and more time dealing
with issues between the Canadian employee and their respective manager in
Houston. Many of these conversations revolve around my first point. Case and
point, we almost lost Laura Scott earlier this year because she was feeling
unappreciated and felt that her boss had no idea the hours/effort she was
putting in. And just yesterday, I had a very unsatisfactory phone call with
Mark Haedicke regarding Peter Keohane. The result - I now have a very
demotivated lawyer on my hands.

Third, it is costly. Having senior people fly up to Calgary/Toronto to "stay
in the loop" and to complete performance reviews is both costly from both a
dollar and time perspective.

Frankly, I'm not looking for more performance reviews to do, but I do think
its important that staff receive meaningful feedback in a timely fashion. I
know what these people do - I work with them every day. It is my job to lead,
inspire, and motivate but lately it feels like it is my job to liase between
Houston and the employee.

I would appreciate your thoughts on this.

Regards
Milnthorp