Thanks for your comments below. 

We consulted our AA folks in drafting the disclosures.  It wasn't a big deal 
for Enron's 10Q because the positions between NNG and TW are eliminated in 
the consolidated statements.  As for the Form 2 and the Brown Covers, there 
are specific GAAP disclosure requirements that we have to include on a 
stand-alone basis.  Since most of these positions will be gone by year end, 
it won't look nearly as massive as it was at the end of the third quarter.  
In fact, if Roger Willard had given us his final word about the transactions 
in time, we would have booked the ultimate net transactions in September and 
we wouldn't have had all these gross positions.  I don't feel quite as bad 
about not getting it right in the unaudited third quarter financials as I 
otherwise would, since we did review the transactions and the noteholders 
disclosures with AA before the 3rd quarter was released and before the 
noteholders reports were distributed.  

As always, Legal and Regulatory will have ample opportunity to comment on 
Brown Cover and Form 2 disclosures before they are finalized. 


   
	
	
	From:  Drew Fossum                           12/11/2000 10:59 AM
	

To: Bob Chandler/ET&S/Enron@ENRON
cc: Rod Hayslett/FGT/Enron@ENRON, Dave Neubauer/ET&S/Enron@ENRON, Steven 
Harris/ET&S/Enron@Enron, Mary Kay Miller/ET&S/Enron@ENRON 

Subject: Quarterly Noteholder Reports

I've reviewed the draft NN and TW quarterly reports to noteholders.  I 
haven't had a chance to compare these to prior quarterly filings, but I have 
three questions/concerns.  First, the discussions of "Price Risk Management 
Activities" seem overly detailed and cumbersome given the true commercial 
impact of the deals involved.  For example, we disclose the total notional 
amount of gas involved in the Transcanada deal, the "fair value" of the 
trades, and a variety of  other details, even the total economic impact of 
the deal to us is pretty small (about a million dollars if I remember 
right).  The base gas deal, by comparison, was discussed in one sentence.  
Can we avoid making the thing look bigger than it really is by disclosing 
something more meaningful like VAR (which I assume would be a much smaller 
number)?  Second, disclosing TW and NN trading activity separately makes the 
Transcanada deal look like a bigger thing than it really was, since the TW 
and NN portions offset one another.  I know we need to disclose deals 
separately for each operating company, but is there a way things like 
notional value and "fair value" (or VAR) can be aggregated to more accurately 
reflect the total impact of the deal--currently it looks like both TW and NN 
were out doing huge commodity deals.  Third, I have never been that concerned 
about overly broad disclosures in the noteholder reports because of the 
limited distribution.   However, if these disclosures will be Arthur 
Anderson's template for the Enron Corp. 10Q or the FERC Form 2s, I have a 
real problem.  

Please let me know if I can be of help in talking through these issues.  DF