Jan - June, 2000 Accomplishments: Mike Dahlke

SK - I've printed this out and added to the file. mm
"In connection with mid-year VP PRC, I would like each of you to prepare a
list of accomplishments, 2000 goals achieved, etc."

Steve,

Per your July 7th request:

Performance Based Rates Analysis and Training for SK-Enron. The ultimate
commercial objective is to establish a rate making framework for Korean gas
distribution companies that will allow theJV's operating companies to retain
profits derived from efficiency gains and earned returns that exceed the
statuatory rate of return. Analysis of several PBR mechanisms demonstrated
the potential benefits from replacing the current Cost of Service framework
with an incentive based system. An eductional workshop based on the results
of this analysis was organized and presented to Executive, Financial and
Regulatory staffs of the JV and its 9 City Gas Companies.
Improved Cost of Service Rate Filing Procedures and Methods. The commercial
objective is to improve the results achieved by SK-Enron's City Gas Companies
when preparing and negotiating new rates under the current COS framework
employed in Korea. Several areas within the current framework where
"forward-looking" cost calculation methods could be employed to better match
costs that will be incurred while new rates are in effect and the revenues
earned were identified. The need and benefit of determining the cost of
service for each class of customer was also demonstrated. Results of the
analysis and methodology for determining COS by customer class was presented
to the Executive, Financial and Regulatory staffs of the JV and its 9 CGCs.
Elimination of 10% Dividend Restriction imposed on the City Gas Companies of
SK-Enron. The commercial objective is to more effectively employ cash
generated within the JV's CGCs by freeing these companies from a Ministry of
Commerce, Industry, and Energy "guideline" limiting dividends to 10% of each
company's par stock value. The initial approach was to develop a program
that would consolidate all of the JV's CGCs into the Joint Venture company
and thereby eliminate the need for dividends that would give the holding
company access to opertating cash flows. The regulatory implications of such
an effort were analyzed and provided to the project team. Opinion sampling
of local regulators indicated strong opposition to such a strategy. This
insight plus tax issues of Enron's partner, led to the conclusion that
implementation of this strategy would be difficult. A direct lobbying
program to convince MOCIE to lift this guideline is currently being developed.
Feasibility of EnronOnLine launch in Korea. The commercial objective is to
create the opportunity for Korean companies to become customers of Enron's
worldwide trading network. Initial due diligence has established the
feasibility of offering commodity products such as crude oil, refined
products, and LPG and has identified issues the must be addressed with the
Korean government to effectively deal in financial and weather derivatives.
Required Korean consents and other regulatory matters for Project Summer.
The commercial objective is to enhance Enron shareholder value. Regulatory
consents possibly required were identified and contractual issues with
Enron's partner have been highlighted.
Gas transmission company ratemaking workshop for Korean Gas Company (KOGAS)
and Korean Energy Economics Institute (KEEI). The commercial objective is to
have Korea adopt an open access gas tranmission rate framework that is
supportive of LNG marketing by Enron in Korea and improving gas supply cost
of the JV's CGCs. A workshop for representatives of KOGAS and KEEI was
organized in Houston and introductions were made to the FERC staff in
Washington DC. The KEEI work product from its rate study effort has not been
made available as of this date because of internal issues within KOGAS.
Keynote speaking role for APACHE CEO at Asia Pacific Economic Council Energy
Ministers Meeting. The commercial objective of this effort was to improve
Enron APACHE's ability to shape policies relating to its business by raising
the profile of its CEO amoung senior energy officials from throughout Asia.
Rebecca McDonald was one of three Key Note speakers for the opening of the
conference. She was accorded this honor even though Enron contributed a
fraction of the financial support for the conference that several other
energy companies did. Her remarks on e:commerce and energy received
considerable positive attention from many attendees including the Korean
delegation.
Meeting with US Embassador to Korea. The commercial objective was to improve
Enron's chances of winning bids for energy assets, particularly electric
generation facilities scheduled to be privatized by the government. A
meeting was organized for myself, SK-Enron's Chief Operating officer, and the
JV's General Manager of Operations. Based on the experience in bidding late
in 1999, the Embassador was urged to advocate for more transparent and less
subjective bid evaluation procedures that substantially increased the
likelihood of closure on asset sales. Ultimately, sucessful privatization
will create both asset acquisition and commodity marketing opportunities.