In a recent organizational memo, I mentioned what a great time this is to be 
at Enron.  I believe that more strongly than ever, given the new markets we 
are entering, the enhanced focus of the company on markets and regions around 
the world that best fit with our core competencies, and the phenomenal growth 
of the company, perhaps best evidenced by the earnings report of the first 
quarter.  But, there are challenges as well: California, and its regional and 
global implications, and the general market conditions that have brought our 
stock price well off its recent highs.  With respect to each of these and 
other challenges, there are invariably opportunities: for example, the 
enhanced opportunity for the FERC to finish the job of opening wholesale 
electricity markets in the context of California; and, in the context of a 
lower stock price, a recognition that accelerated growth in earnings will 
bring the stock price to new highs in the not too distant future.  One way 
that earnings can grow beyond Wall Street expectations is by bringing a bit 
more discipline to how all of us spend money at Enron.  We in Government 
Affairs can point to many efforts and processes that have been designed to 
instill that spending and resource allocation discipline in the last few 
years.  We have always done our part, but there is always more that can be 
done.

To increase earnings and, correspondingly, the stock price, I recently met 
with various Government Affairs group heads to discuss ways Government 
Affairs can do things better and more cost effectively.  We looked at group 
travel costs, outside services, and other budget items.  Attached for your 
review and use is a copy of a new Travel Policy and new Cell Phone Policy, 
which I believe, will ensure consistency across the group and deliver cost 
savings.  Such travel policies already exist in various regions such as Enron 
Europe. (Regional Business Unit travel policies will continue to be applied, 
where applicable)

Further, as a result of our review of the budget, we have identified savings 
across the North American group in excess of 1.5 million dollars (USD).  This 
is in addition to almost 2 million dollars (USD) by which the Enron Europe 
Government Affairs budget has been reduced, as well as significant reductions 
that have occurred in the South American group. Finally, I have also decided 
to create a global government affairs hiring committee, which will evaluate 
the need for any proposed hires (new and existing positions).  The purpose of 
the committee will be to assess whether the need is valid and, assuming it 
is, determine the most effective way to fill the position.  By encompassing a 
cross-section of the Government Affairs group globally, it is my hope that we 
will arrive at better hiring decisions.  The hiring committee will consist of 
Aleck Dadson (Toronto), Sue Nord (Houston), Jim Steffes (Houston), Paul 
Dawson (London), Doug Wood (London), Nick O,Day (Tokyo), Sergio Assad (Sao 
Paulo), Linda Robertson (Washington) and myself.   The committee will meet on 
an as needed basis.

I believe that these changes will allow us all the opportunity to provide 
more cost effective and efficient service to the business units we support.  
I encourage each of you to review the new policies and provide feedback. 

Thank you