The first phase of the energy.enron.com pilot program was launched earlier 
this week.  Through this site we will initially offer a one- and two-year 
fixed-price gas product to small and medium-sized businesses behind four 
utilities in Ohio and Illinois.  We are contacting these customers using a 
direct mail piece (attached below) that was released Monday.  Customers 
accessing the site can receive real-time quotes for our retail gas products 
and a contract.

The objectives of the pilot are two-fold.  First, to learn what small and 
medium-sized businesses like and dislike about purchasing energy products 
through the web.  Second, to understand the technical and business process 
challenges we will face in offering these products on a larger scale through 
the web.  We wanted to achieve both these objectives in a low profile 
manner.  Thus we used a limited customer pilot.  Our basic philosophy is to 
quickly try, learn and improve, and then scale up.

The team of EES and IBM employees who worked on this initiative did a 
fantastic job despite some setbacks.  We delayed the launch of the site about 
8 weeks for two principal reasons.  First, we concluded that we needed to add 
a price comparison feature to the site.  This proved more difficult than 
expected and still requires improvement.  Second, we experienced technical 
problems with the stability of the underlying database application that 
required a fair amount of time to resolve.

Going forward, we have two paths occurring in parallel.  First, the design 
and technical performance of the existing site will be continuously improved 
over the next weeks and months.  We will add the capability to sell power 
products in a limited number of states in the next 8 weeks or so.  A process 
is in place to learn and document as much as possible throughout this 
on-going pilot period.  

In parallel, we have engaged McKinsey & Co. to help with a 4-6 week 
mid-market strategy development effort that will help define the specific 
products, target customers, and sales channels necessary to pursue the 
mid-market in an aggressive way.  Out of this effort will also come some 
high-level requirements for a technology and business process platform that 
is scaleable and flexible enough to support a large number of transactions 
and a broad array of products.  We envision offering a wider array of power 
and gas products in more markets nationally, as well as other non-energy 
products, such as facility services, capital, and insurance.  This second 
generation platform will take advantage of the learning that occurs 
throughout the pilot period and will integrate with our mid-office billing 
and customer service systems.  We will also try to leverage as much as 
possible from the success of EnronOnline.

A complete post-development assessment is underway and will be completed 
within about two weeks.  Based on our learning during the first phase of the 
pilot,  we will implement specific processes to reduce development cycle time 
and improve customer response to our offerings.

Finally, I'd like to recognize the hard work of the team members that 
contributed to the development version 1.0 of the site.  Thank you all.

EES     IBM     CSC

-  Suzanne Farrow   -  Stephen Dodd   -  Teresa Carroll Childers
-  Marianne Castano   -  Regina Newsome   -  Angie Dixon
-  Jennifer Hillegonds   -  Trisha Vo
-  Mike Garred    -  Marc Lerro
-  Becky Merola    -  Vince Lopez
-  Sue Landwehr    
-  Roy Boston
-  Elizabeth Linnell
-  Chris McCaig
-  Priya Jaisinghani
-  Malcolm Adkins
-  Jeff Stephens
-  Tracy Adams
-  Diann Huddleson

I will continue to provide updates as we progress.  If you have any questions 
please call me at 3-6091.

Mike Harris