Wyoming

Would a meeting between one or both of you with Gov. Geringer of Wyoming make
any sense given attached memo?
---------------------- Forwarded by Richard Shapiro/NA/Enron on 05/31/2001
07:43 PM ---------------------------
From: Paul Kaufman/ENRON@enronXgate on 05/31/2001 04:45 PM
To: Richard Shapiro/NA/Enron@Enron, Lisa Yoho/NA/Enron@Enron
cc:

Subject: Wyoming

Wyoming Governor Geringer has been a leader on energy issues in the West
since (at least) the end of 2000 (when California's energy crisis pushed the
Western Governor's Association to hold an emergency session in Denver).
Based on discussions with his staff, it appears that the Governor likes our
company and supports our efforts to open markets. His public comments, which
are developed by the Governor's office with little outside influence, match
both the direction and intent of many of our own policy objectives.

You asked that I summarize my observations from yesterday's meeting of the
Wyoming Energy Commission.

I participated in the first session of the Wyoming Energy Commission at the
Governor's invitation. (We were invited as the keynote speaker for the
session). The Commission was created by the Wyoming legislature to look at
Wyoming's energy future from the standpoint of both consumers and the
producers. The Commission was given a $1 million budget and authority to
take legislative and regulatory positions on behalf of the state.

In conversations with the Governor's staff; it appears that they are familiar
with commodity markets--particularly ag products. They understand the
concept of basis and also understand that energy commodity markets work best
when there is adequate transmission capacity, gas pipeline capacity and rail
capacity. They also understand that their are some contraints on the
transmission system (a complete constraint moving east, off-peak constraints
moving north, south, and west), limited take away capacity on the one major
pipeline serving the state (Kern--perhaps due to downstream constraints), and
some problems with the cost of rail transportation (if not a constraint).
While they have a working understanding of all these things, they haven't
been able to put it all together in a cohesive way. They want our help in
putting together the various pieces of the energy puzzle.

I can't help but think that there is opportunity for Enron in Wyoming either
as an advisor (for a fee) or as a business partner--e.g., there has to be
some room for combining the energy markets--i.e., arbitraging the value of a
coal-fired kWh and a gas-fired kWh or providing some incremental improvement
to the market for their sale of commodity out of state. There also may be
some opportunity to develop coal-fired or gas-fired plant.

Indeed, Wyoming is a major producer of natural gas (including coal-bed
methane) and coal. They want to produce more, but want to avoid the boom and
bust cycle of a resource dependent state. (For example, the state moved from
a $250 million deficit in FY 1999 to an approximately $750 million surplus in
FY 2000). They also want to diversify the state's economy and bring economic
development. For example, a major focus of the state's Business Council has
been to recruit "server farms"--because of their load and high load factors.
They talked about co-locating server farms and generation along the southern
tier of the state (which has a large amount of fiber optic bandwidth
available). While it is unclear, the bandwidth they are mentioning may be
EBS fiber.

Let me know how you want to proceed. It's rare when you get a Governor that
has some understanding of commodity businesses and wants to provide
leadership on energy issues.