Tana,

State of incorporation has been captured for a large number of the 
counterparties and has been used as the basis for the determination of 
financial trading status by our tax group.

If we are going to prevent a utility/gov/pension fund from trading financial 
products because of state law and we have state of incorporation, we should 
ensure that the entity we are barring is at least in the same state as the 
law in question.

If this has not been the case, one way to update the information would be to 
list the states which have restrictive legislation and then apply the list to 
the companies for which we have state of incorporation information. An Excel 
Vlookup would accomplish this quite quickly. This is not perfect, but would 
at least ensure that utilities in states without the legislation are not 
barred - although I recognize it might bar some companies in states where the 
legislation may be so specific as not to preclude the trading of financial 
products for some utilities under certain circumstances.

Frank: Could you please forward an updated list of state of incorporation 
information to Tana?

One last point (thanks, Bob): If a particular state has restrictive 
legislation, is it our obligation to prevent the utility from trading 
financial products, or does the obligation rest with the utility? i.e. is 
there any reason for us to be barring them, or can we simply give them the 
ability to transact financial products with EnronOnline and rely on their 
internal controls? If we don't have any legal obligation to police, I'm 
reluctant to do anything which would imply we are assuming this 
responsibility.

Mark: Can you comment on this last point?

Thanks,

Dave


   
	Enron Capital & Trade Resources Corp.
	
	From:  Tana Jones                           15/09/99 20:11
	

To: David Forster/LON/ECT@ECT
cc: Mark - ECT Legal Taylor/HOU/ECT@ECT 
Subject: Re: State of Incorporation  

Our review of the counterparty list is not considering, for the most part, 
state of incorporation.  The biggest consideration with derivatives is the 
country of incorporation (and additionally, the country(ies) in which trading 
will take place).  For the bulk of our swap counterparties, i.e. energy 
companies, state law currently isn't an in issue on approval of swap 
trading.  It is more of an issues with governmentals, utilities, insurance 
companies, pension funds and the like, and we do not capture that information 
until we are in active neogtiation with a counterparty.  With utilities, you 
cannot make a general assumption that any particular state law that applies 
to one utility will apply to another.  Each utility need to be looked at 
individually to see which state or federal law may apply to that counterparty.

The bulk of you customer list is not financial counterparties we are in 
active negotiation with, so we are not capturing state of incorporation.  I 
know the Global Contracts Group has been trying to capture that information.  
You may want to talk to Mary Gosnell.