Richard / Jeff,

To give you an up-date on certain specific non-deliveries / non-payments in 
the Dutch power market, I would report as follows:

1. Non-deliveries of physical power by Enron to various counterparties 

I understand that Enron re-commenced deliveries to our counterparties 
approximately 10 days ago.  This was because Enron was allowed to contract 
domestic power in the Netherlands in a process from which Enron had peviously 
been excluded. The long and short of it is, however, that we are now only 
dealing with the historical non-delivery situation, i.e., our disputes over 
the amounts invoiced to us for non-delivery.  Please note in this regard:

Re. non-deliveries to REMU:   REMU were billing us everday for non-deliveries 
at superpeak prices (i.e., 577 Euros / MWh or higher) for all hours.  We 
disputed properly all those bills under the invoice dispute procedures set 
out in our contract on the basis that we believe that we did not fail to 
supply all hours and / or the prices for the hours when we did fail to supply 
were not always at superpeak.   The portions of their invoices which we did 
not dispute, we paid in due form.

We have not received any bills from them since on or about 7th February.  The 
disputed amount of their previous invoices amounts to $1.6M.  Initally, REMU 
did not try to agree  with us what the figure should be, despite our 
invitations to them to discuss the issue with us.  Commercial met with REMU 
during the week before last to discuss the issue and REMU were still in the 
process of deliberating what the figure should be. However, they now tell us 
that they will claim full damages (and not just cover damages) against us and 
will send us an invoice next week in this regard.  We have written to them 
formally to deny their claims in this regard.    

In addition,  please note that REMU decided not to pay Enron $0.8M  in 
January with regard to deliveries which we made to them in December '99 - on 
the mistaken assumption that they could payment net that against their 
non-delivery claims.  We sent REMU last Friday a notice requiring payment for 
December deliveries and reserving all our rights on this issue (my 
instructions from Commercial until last Friday were not to send this notice 
as it might have jeopardised the delicate negotiations over the amounts which 
we truely owe them on our non-deliveries).  On the basis of their current 
stance (i.e., to claim full damages against us, etc), I secured Commercial's 
consent to send the notice.  Commercial also mentioned this non-existence of 
a legal basis to withhold the January payment when they met REMU during the 
week before last.

Re. non-deliveries to ENECO:  We disputed a couple of their invoices in 
accordance with contractual provisions as per REMU''s above.  They claim that 
they then sent us a letter (a copy of which we never received to the best of 
our knowledge and, in fact, a copy of which they have since failed to provide 
us, despite our requests) claiming that we were in default under the contract 
- although not actually closing us out.  Clearly we do not know what their 
letter which failed to arrive said nor have they been able to explain it 
verbally.  Hence we are waiting for a copy of the missing letter.  Value of 
remaining contract $ -5 M

Re non-deliveries to Westland & Maastricht:  They have not invoiced us yet - 
counterparties relaxed - Commercial discussing reasonable cover damages 
payment to these counterparties for our previous non-deliveries.

2. Non-payments of monies owed to Enron on swaps 

Last year we bought (i.e., we receive floating price) some whole year 2000 
swaps, the underlying reference price source being the APX, from these 
counterparties:

Electrabel
Bayernwerk
Norsk Hydro

First payment date on all the swaps was 7.2.2000 - none of them have paid us. 

Electrabel (cries of "APX has been rigged", etc., etc.,)  wants to escrow the 
money which they we to us. We have written to them under the ISDA Form, 
crystallising their default date as at close 11th February and reserving all 
our rights. Clearly, we have also refused to allow them to place the money 
they owe us on escrow and that they should pay it to us forthwith (approx. 
Euros 5.2m for January).  Commercial having reasonable discussions with 
Electrabel on this matter at present - hence we are not closing them out at 
this stage (although we have reserved all our rights).  Signed Deemed ISDA 
confirm for this deal, thus no dispute over the deal per se.

Bayernwerk - mainly using the old chestnut "we didn't sign your confirm and 
you didn't sign ours - hence no deal" (total nonsense in law).  
Correspondence gone back to them telling them that their excuses aren't 
legally valid and to pay up, reserving all our rights. There is a query over 
whether ISDA Form would or would not apply to this deal - even if it was not 
to apply, they are still liable for debt or for anticipatory / repudiatory 
breach of contract (as they have told us that they won't pay as the do not 
acknowledge that the swap exists owing to no confirm signed between the 
parties (although they acknowledge the terms of the deal!!)).  Payment due to 
us on 7.2 2000 was $0.5 M.  Value of entire contract to us $ 1.5 M.  We have 
reviewed the tapes etc - and it is pretty clear that we are in the right.  
Joe Gold has given us the green light to sue Bayernwerk - instructions have 
gone out to Ed Patton at Clifford Chance to commence proceedings.

Norsk Hydro (last couple of days) - we understand that they acknowledge that 
a swap was done (conversation between Commercial and Norsk Hydro of yesterday 
on tape) but that they didn't want to pay on account of adverse market 
conditions!!   Default letter gone out to them, and Joe Gold has given us the 
green light to sue them - instructions have gone out to Ed Patton at Clifford 
Chance to commence proceedings.  Payment due to us on 7.2.2000 was $ 0.5M.  
Value of entire contract to us $ 2.5 M.

3. Amounts Enron owes to swap counterparties

Note that all payments for January were made to counterparties by Enron 
relating to all our swap contracts where we had sold floating price being the 
APX for 2000.  Evidence gathering still going on re those counterparties who 
we know rigged the market to check whether we have a strong enough case to 
win court actions should we not pay them on the swaps later on and get sued. 

Kind regards

Mark