John,

Wessex has to start work around now on next year's budget - one of the first
tasks for me to do is to come up with next years insurance costs.

I am proposing to cost this on the basis of reverting back to a standalone
insurance programme for Wessex as opposed to being part of the Azurix Global
Insurance Programme.  The main reasons for this are:

Following the hefty premium rise in 2001 the global programme is now on a
par with a standalone programme with regard premiums but more expensive
overall due to the much higher excess levels at Azurix.

Due to the above it could easily be argued that the global programme is not
offering best value for Wessex acting as a standalone company which of
course it must do under its licence - this causes potential 'RAG 5' problems
with the regulator.

The levels of coverage previously enjoyed by Wessex prior to the global
programme had been more than adequate for approximately 10 years.

If AZX assets are sold this year there may be no need for an Azurix
programme but to consider absorbing Wessex into any Enron programme will
probably only add to the problems above given that Wessex and Enron are such
diverse entities in terms of size, activities, locations and therefore
insurable risk.

Please could you confirm what I am proposing is OK with Enron.

Regards.

Mark Watts

Treasurer


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