Over the past several months, we have reviewed in detail our trading contracts and the companies through which we conduct our trading business in California.  In order to reduce Enron's non-market risks ( e.g. legal, credit and regulatory) in the volatile commodity markets in California or any " future California", we propose the following changes:

1.    Mandatory Uniform Set-Off Provisions in All Trading Contracts for All Commodities -- set-off language varies commodity by commodity in trading contracts.  Set-off is one of the most critical tools available to Enron in a major default situation and it is critical to have set-off language and to have it be uniform commodity to commodity so that Enron can get the best advantage from set-off and not just the least common denominator.

2.     Master Netting Agreements For Appropriate Counterparties With Multiple Masters With Significant Opposite Exposures -- where it is necessary to have multiple masters with a counterparty, a "bridge" should be put in place between the masters whenever there is significant opposite exposures under the two or more masters.

3.     Merge EPMI into ENA -- power trades are done through EPMI.  Merging EPMI into ENA and conducting power trades through ENA is much more efficient from both a credit and legal point of view.

4.     No Automatic Termination for a Bankruptcy Event -- in the PGE/SCE situation, it should be the non-defaulting party's (Enron in this case) option to terminate rather than an automatic termination on "inability to pay debts as they become due".

Let me know if you have any other proposed changes to our trading contracts or entities through which we conduct our trading.  I believe these changes will (i) improve efficiency, (ii) reduce risks, (iii) develop the opportunity to do more business with certain counterparties and (iv) substantially improve Enron's position in the next California type market.  The long range goal is to conduct as much as possible of the trading business through a single entity and a single or limited number of standardized agreements.