Joe

We have had several conference calls since last Saturday. Perhaps you should 
talk to Orlando and join us from now on. This subject is in state of flux.

As you know, those measures triggered a hostile reaction from D/Cs and from 
Gs. 

Aneel (Jose Mario and Jose Alves) called me on Saturday asking for help. We 
discussed this subject internally over the weekend.

On Monday, Joao defended ANEEL in the COEX meeting. However, we were the only 
ones. Other players were very angry. They perceived the action as pure 
intervention (despite necessary and timely for most). ANEEL was informed 
about the COEX reaction and thanked us for our position.

We examined the Resolutions in great detail. Unfortunately, it seems that 
ANEEL went far beyond its institutional responsibilities. The substance is 
OK. The format is legally weak.

Our strategy (we will try to sell to Abradee, CBIIE, COEX and ABRACEEL) is to 
remove the spotlight from the legal arguments and propose to our industry 
peers to focus on the design of a new Market agreement (to create a sense of 
buy-in). We know that the changes will be only cosmetic. The basic principles 
of the resolution should be maintained.

As per Enron's suggestion, I spoke to ANEEL again (Jose Mario and Jose Alves) 
showing them how difficult the situation is. In our view, thard he only way 
to validate the measures is to write a new agreement (Fred and Debora are 
working on that). I was open in saying that the Resolution are weak from a 
legal standpoint. They agreed with us. Publicly they say otherwise. They said 
they are willing to negotiate. We also expressed our view to ANEEL that part 
of the reaction is parochial: some COEX members will lose their jobs. ANEEL 
agrees. That is why they are inviting all CEOs and Chairmen of the Board to a 
meeting tomorrow, where ANEEL will explain what is happening and ask for 
support from top management.

Why has ANEEL approached us? Perhaps two reasons: 1) They know we defend 
markets 2) We wrote Informativo Regulat?rio # 3, attached (which basically 
purports the replacement of COEX by a professional Board - I discussed those 
issues with Rick Shapiro before the IR was issued to understand Enron's view 
on power pool governance)

Your comments/involvement would be very important. It is a pretty delicate 
and messy situation. 

My personal view.

1) This was a necessary evil. MAE would not function otherwise. Our merchant 
plants would be in jeopardy.
2) I would dare to say that this is a "window of opportunity" to get MAE 
working (and therefore our long term strategy)
3) However, the way ANEEL did was disastrous. They should have acted long 
before. (imposing gradual penalties). Now they suddenly "fired" 26 CEOs of 
the largest utilities in Brazil
4) We should support ANEEL. However, it has to be in a very diplomatic way. 
Orlando will take care of Abradee. Joao - COEX. S,rgio CBIEE. We have to walk 
over a fine line. If we push to hard, they will reject Enron (together with 
ANEEL's Resolution) 
5) We should be the champions in drafting a new Market Agreement




LM













Joe Kishkill
04/25/2001 01:07 PM
To: Luiz Maurer/SA/Enron@Enron
cc: Joao Carlos Albuquerque/SA/Enron@Enron, Orlando Gonzalez/SA/Enron@Enron, 
Sergio Assad/SA/Enron@Enron, Fred Sampaio/SA/Enron@Enron, Jose 
Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Brett R Wiggs/SA/Enron@Enron 

Subject: Re: MAE/COEX - ANEEL Resolutions  

when are we talking?



Luiz Maurer
04/24/2001 09:42 AM
To: Joao Carlos Albuquerque/SA/Enron@Enron
cc: Orlando Gonzalez/SA/Enron@Enron, Joe Kishkill/SA/Enron@Enron, Sergio 
Assad/SA/Enron@Enron, Fred Sampaio/SA/Enron@Enron, Jose 
Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Brett R Wiggs/SA/Enron@Enron 

Subject: Re: MAE/COEX - ANEEL Resolutions  

Perfect

LM



Joao Carlos Albuquerque
04/24/2001 09:30 AM
To: Orlando Gonzalez/SA/Enron@Enron, Joe Kishkill/SA/Enron@Enron, Sergio 
Assad/SA/Enron@Enron, Luiz Maurer/SA/Enron@Enron, Fred 
Sampaio/SA/Enron@Enron, Jose Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Brett R Wiggs/SA/Enron@Enron 

Subject: MAE/COEX - ANEEL Resolutions

At the COEX meeting yesterday, it was clear from the lawyers presentation 
that there are grounds to legally challenge ANEEL's resolutions. Some 
romantic guys were kind of going in that direction.
My position  was to take the subject to a Market Assembly for the 
shareholders to deliberate.
Also everybody knows, and some acknowledged,  that MAE governance was not 
working. Our line of action at the Assembly would be to support the general 
direction of the measures, and at the same time, preserve MAE autonomy, 
opening a negotiable line with ANEEL. 
The main point of discussion will be if we should discuss without going to 
court or after challenging ANEEL in court.
The Assembly was called for next Thursday, April 26th.
Fred is going to talk to Luiz Maurer for us to have a deep exam of the 
resolutions and see what points we can propose to ANEEL to improve. Also, in 
that negotiable line, we should discuss/propose some names to the new COEX.
We need to discuss this subject tomorrow.

Jo?o Carlos