John,

As a follow up to our conversations this week and the testing that has been done, I wanted to outline our view of the current status:

Testing/Performance:  To date Houston Street has not met the minimum technical standards that were outlined in our discussion on Monday.  As we explained, Houston Street must be able to handle a continuous price update standard of 20 - 30 updates per second and a peak price update standard of 100 - 200 updates per second.  During our testing yesterday we experienced fatal errors on several occasions when sending continuous price updates.  It appears that we are not receiving responses to our updates in a timely manner and therefore are timing out the connection to maintain the operational integrity of our system.  We estimate that each bundle of messages (20 - 40 updates per bundle) sent to Houston Street was taking around 3 seconds to process.  Given the test performance to date is not acceptable we do not believe the interfaces are ready to go live at this point.

Legal:  Enron has requested that Houston Street incorporate the EnronOnline short descriptions as product identifiers on the Houston Street site.  Enron has requested that Houston Street have each customer wishing to transact with Enron acknowledge that they are transacting under the same terms and conditions as they would transact under on EnronOnline.  Houston Street will warrant that no customer will transact with Enron without acknowledging such.  Houston Street will determine whether acknowledgement will occur on the web site or in the trading agreement or both.  Enron has forwarded its comments on the Houston Street Trading Agreement for review by Houston Street.

I will contact you later today to discuss what the next course of action is.  Thanks.