EFS: Construction Services and Facility Services Groups

Ray, in EES, the Construction Services (also known as EFS) companies operat=
e on a stand alone basis from Enron and have clear liquidation value to the=
parents - EES and Enron Corp. It is my opinion that we should be trying t=
o "un-buckle" these companies from Enron over the short term to ensure thei=
r continued viablility as we find a sale. In my view un-buckling means a) =
stop the factoring of any Construction Services receivables that end up mov=
ing cash out of Construction Services up into the parents; b) utilizing tho=
se receivables plus, if necessary, Enron's interest in Construction Service=
s to obtain sufficient collateral to renew the St. Paul surety bond. This =
surety bond is necessary to continue contracting; and c) terminate the swee=
ping of cash from Construction Services bank accounts to Corp immediately. =
There will be a meeting early next week with St Paul to renew the surety b=
ond. I am hopeful that meeting these conditions will be enough to reinstat=
e the surety bond. The Construction Services group employs approximately 2=
,600 people and is worth (given current backlog) between $100 and $125 mill=
ion dollars. Mark and his team are actively trying to sell over the next 6=
0 to 90 days and we control 100% of the stock of this company.

The other part half of the former EFS is the Facility Services group (also =
know as ServiceCo). Again, these companies largely operate independently of=
Enron and have going concern value outside of Enron. Currently, we have o=
utside technology and financial partners in the Facility Services Groups th=
at make it impossible to factor receivables or move cash out of Facility Se=
rvices bank accounts without the approval of the board which includes sever=
al outside directors. We currently own approximately 85% of the firm that =
employs approximately 1,400 people and is worth minimum $50 million dollars=
(cash value). Mark and his team are actively trying to sell or otherwise =
dispose over the next 60 to 90 days.

EES also manages several joint ventures (DSM and O&M related mostly) with c=
ustomers where we would have to have outside approvals to move cash out of =
these entities. These include Owens Corning Energy LLC (Owens Corning), LE =
Hesten Energy LLC (Lily), Tenant Services Inc. (Simon Properties), EBC Prop=
erty LLC and Enron Distributed Energy Services LLC. In all cases, we need =
to be observant of corporate governance issues with these entities.

As officers, I thought it prudent to ensure that you and your team had all =
available information. I would also like your approval to move forward wit=
h my recommendations for the Construction Services group as above.

We appreciate everything you are doing.

Regards
Dave Delainey