Sorry, I left you off the original list.

Thanks,
Wanda
---------------------- Forwarded by Wanda Curry/HOU/ECT on 03/09/2000 06:23 
PM ---------------------------


Wanda Curry
03/09/2000 06:22 PM
To: Michael E Moscoso/HOU/ECT@ECT, Wes Colwell/HOU/ECT@ECT, Barry 
Pearce/LON/ECT@ECT
cc:  
Subject: Prudency

Please see the attached draft prudency policy and prudency schedule.  Barry, 
I need your comments ASAP.   I am in meetings until around 11:00 tomorrow.   
I don't think we can argue that we no longer need prudency without it being a 
change in accounting policy.  This years Annual Report FN-3 stills contains 
the following statement:

  The values are adjusted to reflect the potential impact of liquidating 
Enron,s position in 
  an orderly manner over a reasonable period of time under present market 
conditions.  

I think the best we can argue is 1)that the liquidity in some commodities 
(gas for U.S. and maybe power for U.K.) has increased to a level that 
prudency is no longer required and 2)setting a minimum level of VAR before 
prudency is required are not a wholesale change in our accounting policy.  

I have not attempted to address establishing an operational reserve.  I think 
the two are separate, but no reason why we can't create one this quarter.

Wes, I need to get with you to determine what ENA would like to do.  The 
earnings situation may be different than expected.  ENA has taken a large 
amount out of prudency (see the attached schedule).  We can probably argue 
for that release to be reduced, pending complete research on power liquidity 
and implementation of the new RAC calculation.  I obviously will not hold any 
discussions with AA.  

Let me know what the next steps are.  I will be waiting to hear from you both.

Wanda