Enron North America and Enron Europe will offer credit derivatives through 
the EnronOnline website in the near future.  These products will provide for 
regularly scheduled payments by the purchaser and a payment by the seller in 
the event of the bankruptcy of a specified &Reference Entity.8  

For a number of reasons, including those identified below, Enron maintains a 
&Restricted List8 in connection with its credit derivatives business, which 
will list those entities that may not be included in the list of Reference 
Entities or that have been deleted from the list of Reference Entities.  This 
list is designed to comply with legal requirements, to deal with potential 
conflicts of interest that might result because of our diverse activities, 
and to prevent the appearance of impropriety in connection with Enron,s 
credit derivatives trading activities.  The credit derivatives Restricted 
List is designed for other purposes as well.  For example, a company may be 
placed on the Restricted List if Enron is not able to assume any further 
credit exposure to that company or believes that market conditions do not 
warrant the trading of Credit Derivatives on such Reference Entity.

A company ordinarily will be placed on the credit derivatives Restricted 
List, either before or after it has become a Reference Entity on which credit 
derivatives are traded, in the following circumstances:

when Enron is actively engaged in effecting a material transaction with 
respect to such company that has not been publicly announced;

when Enron has an applicable standstill agreement or other confidentiality 
agreement in place with such company;

when Enron has a legal duty to keep such company's information confidential 
and such company has not expressly consented to being a Reference Entity for 
purposes of the trading of credit derivatives (such a legal duty may be a 
fiduciary duty but may not rise to that level);

when some part of Enron acquires material, nonpublic information about a 
company or its securities in the course of its business activities;

when Enron has reached or exceeded its credit limits with respect to such 
company.

The purpose of this memorandum is to alert you to this new business and to 
request your assistance in evaluating proposed Reference Entities prior to 
the trading of credit derivatives based on such companies.  Below is a list 
of proposed Reference Entities.  Please take a few minutes to look at this 
list and then let me know if you are aware of any reason such companies 
should placed on the credit derivatives Restricted List.  If you have any 
questions, please contact me at (713)853-7459 or Paul Simons in the London 
office at 44-20-7783-6566.

Cinergy Corp.
Duke Energy Corporation
Dynegy Inc. 
El Paso Energy Corporation
PG & E Corporation
Southern Company Inc, The

AOL
Lucent Technology
Nortel
Qwest Communications