2002 Operational Costs

I understand what you are looking for, and Bob Hall and I look forward to s=
itting down with you to review operations costs for Enron Americas. I do t=
hink it will be meaningful to you to look at the components of the aggregat=
e number to understand all of the functions that are provided and the drive=
rs behind the cost structure for each function. They are different. Some =
costs are impacted by number of transactions, some are not. For instance, =
all operating companies are allocated a portion of the cost of producing th=
e DPR each day and posting results on the Executive Reports Viewer. Regard=
less of the number of transactions, there is a fixed cost for aggregating t=
hat information. That fixed cost estimated for the year likely will not c=
hange. What may change is the allocation methodology used -- i.e. if EEL a=
dds four new product lines to be aggregated on the DPR and if it is a very =
manually intensive task to get that information daily, then we may adjust t=
he allocations such that EEL's percentage of the total cost of producing th=
e DPR will be appropriately increased. =20

For the past two years, we have created the operations budget for Enron Ame=
ricas with a defined set of services as the underlying assumption in the bu=
dgets. There have been times when we have had to add personnel to handle n=
ew businesses that have been created that were unknown during the budget pr=
ocess (ex:wellhead desk) or deals that are done that are very operationally=
intensive (ex: asset management deals). When this happens, we calculate t=
he fully-loaded cost of the person or persons required to support that new =
activity and have the commercial person responsible for that business sign =
off on the additional expense to be incurred that was not in the original o=
perations budget - a change order to the original budget. =20

I know that Wes is coordinating the budget review meetings for Enron Americ=
as, so I will work with him to make that happen. In addition, Greg Piper a=
nd I are trying to get a time that works for you and John Lavorato early ne=
xt week so that we can discuss the mechanics of a service level agreement. =
--Sally =20

-----Original Message-----
From: =09Kitchen, Louise =20
Sent:=09Thursday, September 6, 2001 2:01 PM
To:=09Beck, Sally
Subject:=09thanks for your voicemail - just to clarify though

I am not looking for an aggregate number - I am looking for a number per tr=
ansaction which we can contract at between EA and ENW.

Thanks