---------------------- Forwarded by David W Delainey/HOU/ECT on 01/26/2001 
05:15 PM ---------------------------


James L Bouillion
01/25/2001 11:43 AM
To: David W Delainey/HOU/ECT@ECT, Tod A Lindholm/NA/Enron@Enron, Rod 
Hayslett/FGT/Enron@ENRON, John Keiser/FGT/Enron@ENRON, Susan 
Ralph/Houston/Eott@Eott, Kerry Roper/GPGFIN/Enron@ENRON, Elaine 
Concklin/ET&S/Enron@ENRON, Michael Moran/ET&S/Enron@ENRON, Darrell 
Orban/EWC/Enron@ENRON, Wade Stubblefield/HOU/EES@EES, Billie 
Akhave/EPSC/HOU/ECT@ECT, Peter Hutchinson/Stockton/TS/ECT@ECT, James 
Derrick/Corp/Enron@ENRON, Richard Causey/Corp/Enron@ENRON, Bob 
Butts/GPGFIN/Enron@ENRON, Stephanie Harris/Corp/Enron@ENRON, John 
Sherriff/LON/ECT@ECT, Jeffrey A Shankman/HOU/ECT@ECT, Mike 
McConnell/HOU/ECT@ECT, Rino T Manzano/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, 
Roberto Figueroa/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Wilma 
Mendiola/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jaime 
Sanabria/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Stanley 
Horton/Corp/Enron@Enron, Russell L 
Appelget/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc: Jere C Overdyke/HOU/ECT@ECT, Paul Clayton/HOU/ECT@ECT, Earline 
Kendall/HOU/ECT@ECT, David Marshall/HOU/ECT@ECT, Mary Grisaffi/HOU/ECT@ECT, 
James P Studdert/HOU/ECT@ECT, Rob Cole/HOU/ECT@ECT, Ken Mathis/HOU/ECT@ECT, 
Paul E Parrish/NA/Enron@Enron, Richard Vincent/NA/Enron@Enron, Terry 
Yamada/Corp/Enron@Enron 
Subject: Property Insurance Renewal 3/1/2001

Due to adverse loss experience the insurance market is "hardening" resulting 
in higher rates and more restrictive terms and conditions. Property insurance 
rates are generally rising for everyone and particularly those with poor loss 
experience. Unfortunately, Enron falls in the latter category. In the past, 
not withstanding our loss experience, Enron has enjoyed very competitive 
rates and a deductible of $500,000 for both property damage and business 
interruption (traditionally, property insurance policies contain a monetary 
deductible for property damage plus a day waiting period for business 
interruption (normally 30 to 90 days)).  For the period 1993 through 2000 
Enron paid premiums of approximately $114,100,000 and collected losses of 
approximately $ 212,200.000.  This trend is continuing under the current 
policy which is expiring on 3/1/2001. 

Current renewal terms being offered require an estimated premium of  
$17,000,000 and a deductible of $5,000,000 per loss for property damage and 
business interruption. This is the lowest deductible achievable unless we are 
willing to accept a waiting period for business interruption. 

Realising the potential costs and budgetary and contractual implications 
associated with such a change, we are continuing negotiations and seeking 
alternatives to the current renewal terms. However, we should all be prepared 
for an increase in premiums and the level of loss which we retain through 
deductibles. I will keep you advised as these negotiations progress. 

Please forward this notice to all concerned parties within your group. If 
there are any questions, please give me a call at ext. 36263.