This email will update you on the status of Project Stanley.

Last week, Steve Kean and I traveled to Calgary to meet with our Canadian 
lawyers and consultants to outline a strategy for defending the goverment 
criminal investigation of Enron Canada's electricity trading activities.  The 
results were as follows:

There has been no publicity generated as a result of the government 
investigation.  Obviously, this could change tomorrow.  We have retained a 
Canadian public relations firm to assist Steve Kean's group with thepotential 
press inquiries.

Our intellingence indicates that the government's investigation is not moving 
forward in any organized manner.  Our lead lawyer, Glenn Leslie, has spoken 
to the lead lawyer for the government, Jim Sutton, about the possibility of a 
meeting between Enron and the government.  Sutton said he wanted to meet but 
that his team was not ready at this time.  Sutton indicated that several of 
his team members had left the investigation and that he was recruiting other 
team members.  Glenn Leslie learned from another source that the government 
siezed 1700 hours of tapes from our counterparty , Power X, and that they do 
not know where to start the pain staking effort of listening to the tapes.  
Based on this information, we do not believe the proposed initial meeting 
will take place for 2-4 months.

Power X, like the government is far behind Enron in its investigation of the 
alleged unlawful events.  Glenn Leslie has traveled to Vancouver to meet with 
Power X's attorneys to advise them of Enron's position.  Power X has agreed 
to cooperate with Enron and has signed a joint defense agreement.  We do not 
believe that Power X will try to negotiate its own settlement with the 
government without our knowledge.

We have retained several experts to assist Glenn Leslie and his firm with 
developing strategies.  In addition, we have "conflicted" several other 
experts who may be retained by the government.  The meeting last week in 
Calgary was our first opportunity to meet the experts and hear their theories 
of defense.  These include the allegation that Enron and Power X participated 
in "bid riggering" is untrue because the Alberta Power Pool price clearing 
procedure is not a bidding process at all.  We and other market participants 
simply make offers into the pool.  We do not know whether the offer will be 
accepted.  More importantly, we do not know what the price will be.