FYI.  Here is the background information on the deal.

Jim

---------------------- Forwarded by James D Steffes/NA/Enron on 05/11/2001 
07:46 AM ---------------------------


Eric Letke@EES
05/10/2001 01:35 PM
To: David W Delainey/HOU/EES@EES, Janet R Dietrich/HOU/EES@EES, Vicki 
Sharp/HOU/EES@EES, Dan Leff/HOU/EES@EES, Sean A Holmes/HOU/EES@EES, James D 
Steffes/NA/Enron@Enron
cc: Kay Chapman/HOU/EES@EES, Jeremy Blachman/HOU/EES@EES 

Subject: Urgent - City of Chicago

This is on Dave's calendar at 1:00 in his office. 
---------------------- Forwarded by Eric Letke/HOU/EES on 05/10/2001 01:34 PM 
---------------------------


Eric Letke
05/10/2001 01:23 PM
To: David W Delainey/HOU/EES@EES, Janet R Dietrich/HOU/EES@EES, Vicki 
Sharp/HOU/EES@EES, Dan Leff/HOU/EES@EES, Sean A Holmes/HOU/EES@EES, James D 
Steffes/NA/Enron@Enron
cc: Jeremy Blachman/HOU/EES@EES 
Subject: Urgent - City of Chicago

FYI.  Background on the City deal.  I will organize a meeting for tomorrow 
afternoon to get a decision.
---------------------- Forwarded by Eric Letke/HOU/EES on 05/10/2001 01:19 PM 
---------------------------


Eric Letke
05/08/2001 07:24 PM
To: Jeremy Blachman/HOU/EES@EES, Vicki Sharp/HOU/EES@EES, Elizabeth 
Tilney/HOU/EES@EES, James M Wood/HOU/EES@EES, Sean A Holmes/HOU/EES@EES, 
Peggy Mahoney/HOU/EES@EES, James E Keller/HOU/EES@EES
cc: Edwin Essandoh/HOU/EES@EES, Michael Lindert/HOU/EES@EES, Roy 
Boston/HOU/EES@EES, Suzanne Rhodes/HOU/EES@EES, Edward Hamb/HOU/EES@EES, 
Roger Persson/HOU/EES@EES (bcc: Eric Letke/HOU/EES)
Subject: Urgent - City of Chicago

Remote email trouble.  This is important.  Please review and provide comments.
---------------------- Forwarded by Eric Letke/HOU/EES on 05/08/2001 07:18 PM 
---------------------------


Eric Letke
05/08/2001 07:14 PM
To: Eric Letke/HOU/EES@EES
cc:  
Subject: Urgent - City of Chicago

It is decision time.  The City has verbally agreed to ALL of our "5" major 
issues.  Their General Counsel and Ed Essandoh are trading drafts of proposed 
language today and tomorrow.  The deal is not without risk in the next 30 
days.  However, the City has responded to all of our demands, has gotten the 
proper people involved, and seems very interested in completing this 
transaction.  Overall, from what I have seen in the last 3 weeks, it appears 
we have a good deal here.  Following you will find:

Notional Deal Valuation
 
 -  You will only find the deals we anticipate would close at the July 
Council mtg, good chance others may come but they are not considered here.

Positive Forces for Enron

Risks for Enron (w/Plan to Mitigate)

Estimated Costs to Finish the Deal (conservative estimate)

Action Plan/Timeline


Notional Deal Valuation 

Department   Estimates Ann Spend  TCV  MTM

Airports *    $15   $120  $2.0

Water Dept    $10   $80  $1.2

DGS     $10   $80  $1.2

CTA - Non-Traction   $15   $120  $2.0

Total     $50   $400  $6.4

Note: We are currently working on the Airports.  The City has commit the 
other facilities if we can do it by the June City Council meeting.  We think 
the above deals are similar in nature and can be ready by June introduction.


Positive Forces for Enron

The Mayor has endorsed this to his people and is willing to do so publicly.

Powerful political forces are removing obstacles to this deal.

City Officials are ready to back this deal in front of City Council.

Concessions from the City to this point have been unprecedented (according to 
outside counsel, consultants, and City employees/officials).

Risks for Enron

MBE/MWE perception of total contract value versus obligations to MBE/MWE 
requirements.  The Compliance Department has agreed to evaluate the rule of 
law against our administrative costs since this is a commodity deal.  
Perception needs to be managed.  Plan to mitigate:  Hire MWE/MBE consultant 
to work with appropriate Enron people to develop a plan.  THIS needs to be 
resolved before any public announcement.

Public perception needs to managed.  Plan to mitigate:  It is our intent to 
work with Peggy's group to hire a local PR consultant.  The Enron people will 
manage how we interact with this group.

There is a chance that City Council could possibly not approve our contract 
and ordinance once the Mayor submits it.  Plan to mitigate:  We are designing 
a plan to deploy political consultants and lobbyists to influence the process.

Enron will need a "face" in Chicago to work with City Council, deal issues, 
and potentially the media.  Plan to mitigate:  Eric does his current job from 
Chicago in June and part of July.

Estimated Costs to Finish the Deal (conservative estimate)

Outside Counsel (Contract, City Council work)    $30,000

PR Consultant        $20,000

MBE/MWE Consultant       $20,000

Travel and Housing (Eric)      $15,000

Internal Structuring & Legal        $5,000

Total         $90,000

Action Plan/Timeline

Final written language for major issues     5/9

Ed Essandoh to finalize all language (in Chicago)   5/10

Meetings to set plan to mitigate Risks for Enron    5/11 

Meeting with City to discuss action plan and roll-out to Council  5/14

Action Plan Further Defined      5/15


It is imperative that we make a decision on this deal now.  We look bad 
enough killing it after all the city's concessions.  However, we will look 
worse in the public eye if we back out later.