Ken and Mark,

Richard Lewis mentioned to me that you had recently read an article about 
Regenesys, the large-scale battery technology being developed in the UK, and 
wanted to know more about Enron's potential interest in this technology.  I 
am a Manager in our UK Origination and have tracked the progress of Regenesys 
since it first came on the scene over one year ago.  We have watched it with 
interest given the historical peak/off-peak spread in this country's power 
market.  Bruce Stram and I have also co-ordinated our efforts on the 
preliminary analysis.

Below is a brief summary of Regenesys, our initial views on the technology 
and our response going forward.

Technology Summary
large-scale battery system using two oppositely-charged electrolytes that are 
separated by an ion exchange membrane
current generating plant capacity up to 14.75 MW per unit (or 120 MWh per day)
response time within 20 milliseconds
it can release full power within a few seconds thereby yielding brief 
capacity of up to 500 MW
$1500 / kW capital costs initially which are expected to decrease to approx. 
$750 / kW 
18 month build time for facility which requires a site of just under 1 
hectare (50 m x 60 m)


Latest Developments
Innogy announced last month that it will proceed with it's first Regenesys 
plant at Aberthaw Power Station in the UK
Tennessee Valley Authority has just signed some form of agreement with Innogy 
on the Regenesys technology but there are no firm decisions to build a unit 
there yet

Our Cynical Point of View
Innogy have got to go a long way before they can make this technology 
commercially successful
Our initial analysis shows that based on the peak/off-peak spreads they need 
to achieve capital costs less than $600 / kW to be successful - we have not 
seen evidence that this can be achieved
Innogy have been hyping up the technology in the past month to support the 
forthcoming spilt of National Power and to prepare for a potential floatation
There has been a flurry of press releases and news articles recently yet the 
specifications of the technology (including capital cost) have not improved 
since we first looked at this in July 1999
Innogy touts this as a revolution in energy storage for peak/off-peak 
arbitrage, however, commercially it does not compare to having large-scale 
diesel standby generation

On the Brighter Side
The real potential for this technology could be in supporting grid systems 
It has good black start and frequency response capabilities

Way Forward
We are evaluating the commercial attraction of the black start and frequency 
response characteristics with respect to our interests in the UK
I will continue to liaise with Bruce Stram in evaluating any further 
potential in the US

Please let me know if you would like any further details on the above.

Regards,

Chris