Here is a suggested draft of a response to the deputy AG's letter. We plan
to send it tomorrow afternoon after we receive your comments.

Paul E. Stein, Deputy Attorney General
State of California
Office of the Attorney General
455 Golden Gate Avenue, Suite 11000
San Francisco, CA  94102
Dear Mr. Stein:
This responds to your letter of July 13, 2001, which I received on July 16,
regarding your discussions with Mike Kirby and me on behalf of Enron Energy
Services (EES).  This will confirm that you agreed that our discussions with
the Office of the Attorney General on the subject of its subpoenas served
upon EES are without prejudice to, and will not waive, any rights by EES to
object to either this investigation or the subpoenas in any subsequent
action or proceeding.  Your letter of July 13, 2001, notes some, but by no
means all, of EES's objections to the subpoenas.  Without attempting to
catalogue these objections, the following points in your July 13 letter
merit mention:
*	Confidentiality order:  This confirms we will provide you with a
suitable alternative confidentiality order for your review this week.
*	Customer notification:  EES has been, and continues to be in the
process of, providing appropriate notice to all commercial customers
(without regard for any other definition) in California with regard to your
request for their contracts.  We do not agree that our duty, if any, to
resist production under the terms of these contracts has been discharged.
*	Territoriality:  Our objections to your requests for out of state
documents and the testimony by out of state residents arises under
California statutes, common law, and California and the Constitution of the
United States.
*	Document repository:  We do not believe the Attorney General is
entitled to production of any documents other than at a central location.
*	Production:  Without waiving any of our objections to either the
Attorney General's investigation or the subpoena, EES is prepared to produce
documents which reside within California which are unambiguously called for
by the subpoena served on June 27, 2001, on the condition that we reach a
mutually acceptable confidentiality order to govern their production.
Assuming a mutually agreeable protective order, we are ready to begin doing
so on or about July 30.
Thank you for your courtesies in these matters.
Sincerely,
Michael E. Molland





> -----Original Message-----
> From:	Molland, Michael E.
> Sent:	Monday, July 16, 2001 10:19 AM
> To:	'Robert.C.Williams@enron.com'; 'Richard.B.Sanders@enron.com';
> 'sbishop@gibbs-bruns.com'; 'mlk@pkns.com'; 'mtuohey@velaw.com'; Fergus,
> Gary S.
> Cc:	'arguedas@caclaw.net'; 'aruby@rubyschofield.com';
> 'meltzerlaw@aol.com'; Smith, Amanda D.; Meringolo, Peter
> Subject:	FW: Status of EES Response to AG Subpoenas
>
> 	Attached is copy of the letter from the Deputy AG, which purports to
> summarize the status of EES's planned response to the AG's subpoenas. As
> these things go it is not grossly inaccurate. I suggest we send a
> clarifying response that makes the following points:
>
> 	. All discussions with the AG, and any interim production of
> documents, are made without prejudice to our rights to stand on any and
> all objections to the subpoena if the AG files an enforcement action.
> 	. We have more objections to their proposed protective order than
> are reflected in their letter. However, we will modify their proposed
> protective order and send them an order acceptable to govern the
> production of certain in-state EES documents in the next few days.
> 	.We are in the process of providing notice to all commercial
> accounts (without regard for any other definition) that their contracts
> have been requested and may be produced to the AG. Whether our duty, if
> any, to resist production under the terms of some of these contacts has
> been discharged is unclear and we don't agree that it has been discharged.
> 	. Without waiving any of our objections to either the investigation
> or the subpoena, we will voluntarily produce documents which reside within
> California which are clearly and unambiguously called for by the subpoena
> , on the condition that we reach an acceptable confidentiality order to
> govern their production. We are ready to begin doing so on or about July
> 30.
>
> 	I suggest we send this letter before the close of business today.
> Please let me know if you think we should modify this position, or add to
> it.
>
>
>
>
> -----Original Message-----
> From:	Paul Stein [mailto:Paul.Stein@doj.ca.gov]
> Sent:	Friday, July 13, 2001 7:32 PM
> To:	mmolland@brobeck.com
> Subject:	Status of EES Response to AG Subpoenas
>
>  << File: ees 071301.wpd >>

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