BUSINESS HIGHLIGHTS

Weather Risk Management
The Weather Desk is please to announce the completion of a large transaction in Europe designed to protect construction workers from lost wages on days when construction is halted due to adverse weather conditions.  Enron completed this deal with a European bank that in turn is selling this protection to a fund manager for construction workers. Under the terms of this transaction, Enron will pay the bank when the number of "frost days" reaches a predetermined amount outlined in the contract. Frost days are calculated when the hourly temperature falls below the strike temperature. This innovative transaction is the first of its kind and presents many possibilities for future contracts with companies whose earnings are dependent on the weather.

This transaction originated in the London office and was structured in the Houston office. Please call Sandeep Ramachandran at (713) 853-0964, Paul Murray at +44 (207) 783-4769 or Sanjeev Khanna at (713) 853-3849 for further information.

Enron Net Works - Organizational Changes
Beth Perlman, currently CIO for EA Systems, will work closely with Mark Pickering on a number of key projects for Enron Net Works.  Additionally, Beth plans to explore various commercial opportunities within Enron.  Replacing Beth in her current role will be Steve Hotte, currently CIO for EGS.

Anthony Dayao will continue as CIO for EES Systems.  In addition to his current responsibilities, Anthony will assume responsibility for creating a combined Wholesale/Retail Power Trading and Risk Management system.

Jeff Johnson will move into the new role of CIO for EGM/EIM Systems.

John Paskin will transfer to the Houston office from London to take up the new role of CIO for Corporate Systems. His group will include the ISC, Enterprise Portal, Intranet Solutions, CRM strategy, Treasury Systems, Development Support and will matrix into HR IT Systems.

Continuing in their current positions are Inja Chun, CIO for EBS Systems; Paul Freeman, CIO for Enron Europe; Jay Webb, CIO for eCommerce, which now includes Commodity Logic Systems; and Jenny Rub, CIO for Infrastructure.

All of the above positions report into to Mark Pickering in the Office of the Chairman for Enron Net Works.  Transitions into their new positions will begin within the next two weeks and should be complete by the end of the year.

The search for a CIO for EGS and an individual to lead the Enterprise Framework group are ongoing.


IN THE NEWS

"It's easy for the market to kick a company when it's down, but these challenges do not last for a solid company, and we think Enron is one."  
by David Howard Sinkman; October 22, 2001 from Reuters English News Service.


WELCOME
New Hires
EIM   - Janet Clements, Marcus Mays
EWS - Arnie Stifel

Transfers (to or within)
EWS - Kathy Bass, Ofelia Morales, LaDonna Finnels-Neal, Edith Cross, Berney Aucoin, Brian Butler, Oliver Jones, Brad Morse, Narsimha Misra, Robert Bowen, Anna Santucci, Devon Williams, Kevin Ashby Robert Gerry, Angela Finnels, Rogers Herndon
EIM - Marvin Carter, Angel Tamariz
EGM - Richard Kottke, Dimitri Tagaropulos

 
EnronOnline Figures
Below are the latest figures for EnronOnline as of October 24

*  Total Life to Date Transactions > 1,600,000
*  Life to Date Notional Value of Transactions > $ 885 billion


Enron Wholesale Services Best Practice Tips
IBuyit Office Supplies Ordering
Use the Catalog to select office supplies.  Purchasing will reject all office supply requests entered as non-catalog items.  The most frequently purchased office supply items from Corporate Express and Lee Stationery & Office Supply Co. are in the eProcurement Catalog.  If you are unable to locate an office supply item, use the Product Request feature from the Advanced Search screen, and include your name and contact information in the Comments field. You may also contact the iBuyit Catalog team (ibuyit.catalog@Enron.com <mailto:ibuyit.catalog@Enron.com>) or Mark Hudgens at 713-345-6544 to add the item.
Timesaving Tip:  If you are referencing the hard copy catalog while searching the eProcurement Catalog, please take note:
?	Corporate Express: Drop the first 3-alpha characters from the MFG#. For example, search for MFG# MMM2018 by entering 2018.
?	Lee Stationery & Office Supply Co.: Drop the first 3-alpha characters and remove any dashes from the Product No. for example, search for Product No. MMM 6539-YW by entering 6539YW.


INFORMATION TOOLS YOU CAN USE

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	Contacts:  		http://experience.enron.com
	Carrie Robert		713-853-3522
	Jennifer Brockwell	713-345-7358


Enron Business
Here is the revised link to Enron Business, which is on desktops now at http://home.enron.com/pubs/enronbiz/2001/vol4/index.htm and coming soon by mail.  If you live in the U.S., you'll find it in your mailbox at home and if you're outside the U.S., it should be coming to your office.

In this issue:
*   	Get to know Greg Whalley and Mark Frevert a little better
*	Our internal communications survey results -- what you told us and what we're going to do
*	How employees around the nation responded to Sept. 11
*	The Analyst/Associate program -- holding some of Enron's future stars
*	Crude -- more than just a drop in the barrel
*	The Insider -- what is bid week and how does it work?
*	Extreme Enron -- martial artist, orchid chaser, hydroplane racer, ultramarathoner and more


NEWS FROM THE GLOBAL FLASH


Update on France 
During 2001 the French team has traded 30 TWh of power and closed about 2,400 bilateral trades with various counterparties (26 trading counterparties and 9 origination counterparties, including French industrials). This is a huge 3,000% increase compared to last year, making France the second largest power trading market in the Continent. Since French power was launched on EnronOnline in April 2001 it has seen more than 800 trades totaling 4TWh, and so far Enron is the only company to trade French power online as a market-maker.  We currently quote online Peak and Baseload products, day-ahead, weak-ahead, month-ahead, calendar years 2002, and 2003. 

Power trading conditions have significantly improved in France since the French grid operator (RTE) introduced Programme Responsible Contracts at the end of 2000, allowing counterparties to trade blocks on the grid. Liquidity has been increasing dramatically, as RTE has created an intra-day market, and has auctioned interconnector capacity, notably France-UK, and France-Italy.   Also the EC has asked EdF to auction 6,000MW of virtual capacity products, and Enron successfully participated in the first 1,200MW auction in September.  Enron will also participate in the Powernext spot exchange market for 1MW day-ahead peak and baseload products, along with 12 French and foreign counterparties, when it is launched in early November.  A balancing market showing referenced market prices for balancing services in France is expected to be implemented Q1 2002.

France's size and geographical position will make it a natural hub for trading on the Continent. The increase of physical, but also financial trading, the sale of more Interconnector capacity and VPP products, and improved future market mechanisms will contribute to the further development of the market. 

Congratulations to the French Team for this tremendous success!

Enron Signs Ground-Breaking Coal Deals in Korea and China
In a landmark deal, Enron has become the first ever trading company to win a coal supply contract into Korea. This is a watershed event in the Pacific market, as all previous Korean coal tenders have required mine ownership for participation.  Japanese industry newsletter Tex Report noted the significance of this event, writing: "This is the first supply by Enron to one of the electric utilities of South Korea.  Taking this opportunity, Enron seems to be planning to commence thermal coal exports in earnest to the Asian region, including Japan, from now on."  Under the contract, Enron's coal team will deliver 250,000 tonnes of steam coal to Korea Southern Power Ltd, one of the five semi-autonomous generating companies created when the national company, KEPCO, split up last year.  Coal Group Vice President Stuart Staley said, "Same trend, different country.  As we've learned in Europe and the US, electricity deregulation necessitates change in fuel procurement practices.  Korea is one of the world's largest markets for sea-borne steam coal, and this seems to mark the beginning of a fundamental change in their approach." 

In a related deal, Enron has signed a multi-year purchase agreement with Yankuang Group, a major Chinese mining company.  This coal will not only be used to meet Enron's Asian supply obligations (including the Korean deal above), but some of it may even reach Europe as a result of plummeting freight rates.  Sydney-based Manager Jez Peters said, "This is big. China is going to be the single largest factor affecting the international coal market, and this deal, along with our relationships with the other major Chinese exporters, gives us great strategic placement."  

Enron's European Weather Risk Management Team Signs Biggest-Ever Weather Derivatives Deal in Europe  
Enron's European weather risk management team led by Paul Murray has sold a five-year call option to a Dutch counterparty in Europe's largest ever weather derivatives transaction - which to Enron is worth a total of 50 million Dutch guilders (USD 20,600,000) in notional value.  A handful of other weather derivatives traders were known to have gained pieces of the deal.  The overall transaction, brokered by ABN Amro, is a capital markets transaction on behalf of a Dutch company which is hedging itself against 'frost days' when the weather is too cold for construction workers to be able to do any building work - but still need to be paid - as is their right under Dutch law.

The counterparty, which does not wish to be named, examined a number of alternatives to hedge their risk before deciding that a weather derivative would suit their purposes best.  This indicates just how robust the European weather market has become as a year ago a deal such as this was just would not have been possible."

Enron Signs Swiss Trading Joint Venture  
On 1 October 2001 ewz, Switzerland's leading municipal power company of Zurich, and Enron announced the creation of a trading joint venture that will be located in Zurich and will go into operation at the end of October 2001. 

The JV will be equally managed by ewz and Enron and will focus on electricity trading, portfolio management and power plant optimization in the wholesale markets in Switzerland and neighboring countries.  The JV combines ewz's long-established extensive knowledge of the Swiss market and Enron's trading and risk management expertise. 

"This is a groundbreaking deal for Enron on the continent as the JV will be an ideal platform for additional partnerships in Switzerland and abroad. This venture is also highly valuable because it will allow Enron to enter into complex deals based on the JV's hydro-production/pump storage capabilities and intraday trading," said Peter Kreuzberg who is commercially in charge of the risk and optimization aspects of the JV.

Although Switzerland has no energy law yet, the market is extremely important on the continent because of its central location between Europe's largest net exporter - France -- and its largest net importer - Italy - and its position south of Germany, which has the most liquid market. "Switzerland's large interconnector capacities makes it the ideal geographical location for trading," said Peter Heydecker, who will be Enron's co-CEO in the new JV.  "Most importantly, this JV will build trust towards Enron in the market and will make us part of the 'the 'inner circle of the utility club'."

This deal was the result of a great team effort, with substantial contributions from Lars Athenhofer, Michael Schuh, Mauro Renggli, Martin Bloch and Crispin Leick.

Dry Bulk Freight Group Steaming Ahead
Enron's global dry bulk freight group, headquartered in the London office, trades physical shipping freight capacity for dry commodities such as steel, iron ore, grain and coal as well as offering financial derivatives to help counterparties manage their risk exposure to this volatile market.  Physical and financial freight capacity is bought and sold as either 'time charter' (think 'car hire for ships') or 'voyage contract' (more like a sea taxi service).  Enron is the only true market maker in 'Forward Freight Agreements' (shipping options) and trades both on the phone and through EnronOnline.

The growth of the group's traded volumes has been exponential. From a standing start in April 2000, the team has now traded more than 25 million tonnes of physical freight capacity with more than 40 million tonnes in OTC trade ytd (2001).  Compare this to six million tonnes OTC the year before.  To help drive this growth the team has grown over the past 12 months to a total of 5 commercial people.

The group expects to top 120 million tonnes of total freight contracts traded (physical and financial) by year-end. Among an increasing number of new counter parties are the likes of RWE, EDF trading, TXU, Innogy, EON, Billiton, BHP and RAG.

Innovations being launched by the dry bulk team include:
Floating rate contracts for ship-owners, which are very attractive in the current flat market, as rates are expected to pick up next year.
Pooling the requirements of ship-owners and cargo-owners that allow both groups to optimise their physical flows while decoupling them from price risk. 
Interchangeability on time charter contracts, which allows owners to change ship during an existing contract route, which is one of the key routes.
Ad hoc structures based on freight derivatives for financial institutions.

"All these new initiatives are designed to increase flexibility for our counterparties and drive liquidity into the shipping market," explains Pierre Aury, head of Enron's global dry bulk freight team.  "Our activities in the dry bulk shipping sector present a classic example of how Enron's entry into a historically inefficient market brings in new players, increases options for trading, reduces transaction costs and of course, generates new revenue streams for both ourselves and our customers."

LEGAL STUFF
The information contained in this newsletter is confidential and proprietary to Enron Corp. and its subsidiaries.  It is intended for internal use only and should not be disclosed.


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