ETS Risk Management Policy

pls print. df
---------------------- Forwarded by Drew Fossum/ET&S/Enron on 12/15/2000
11:32 AM ---------------------------

From: Dan Fancler 12/14/2000 06:00 PM

To: Sally Beck/HOU/ECT@ECT, Cassandra Schultz/NA/Enron@Enron, Kent
Miller@Enron, Dave Neubauer/ET&S/Enron@ENRON, Robert Hayes/FGT/Enron@ENRON,
Steven Harris/ET&S/Enron@ENRON
cc: Jerry Peters/NPNG/Enron@ENRON, Lee Ferrell/ET&S/Enron@Enron, Drew
Fossum@ENRON, Tony Pryor/ET&S/Enron@ENRON, Bob Chandler/ET&S/Enron@Enron

Subject: ETS Risk Management Policy

I would like Sally Beck and Cassandra Schultz to review the attached Risk
Management Policy to tell us if they have any concerns about ETS management
approving the document. The second document titled Procedures are the
controls that are in place or in some cases will be in place by the end of
the 1st quarter of 2001. (Daily Position Reporting will be available upon
implementation of the planned trading system.)

We are asking the Marketing VPs to review the policy and accompanying
procedures with an eye toward recommending the trading limits as allowed by
the policy. Also, please note the last page of the procedure document which
provides an example of the Hedge Documentation, (provided to us by the
Corporate SFAS 133 team) that will be required to maintain hedge accounting.

Drew, Tony, Lee, Bob and myself thank you for your input before the documents
go for final approval. If you feel a meeting is needed to discuss the
content, it will be arraigned.