Matthew, would your Monday meeting be a good time (if the time change works) 
for me to introduce myself and say a few words via video conference or the 
like to your organization?

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 02/09/2001 
09:01 AM ---------------------------


Matthew Scrimshaw
02/09/2001 03:04 AM
To: Enron London EES Group
cc: John Sherriff/LON/ECT@ECT, Michael R Brown/LON/ECT@ECT, David W 
Delainey/HOU/ECT@ECT, Janet R Dietrich/HOU/ECT@ECT, Dan Leff/HOU/EES@EES, 
Marty Sunde/HOU/EES@EES, Richard Lewis/LON/ECT@ECT 
Subject: EES Europe - Outsourcing Reorganisation

Introduction

EES has been operating in Europe since late 1999 and in that time a lot of 
progress has been made.  The teams who have worked on Outsourcing in Europe 
have learnt a tremendous amount over the last year.  We now have a much 
clearer idea of what should work today in the different jurisdictions that 
comprise Europe and those elements of our offering with which customers are 
most comfortable.

The phenomenally strong financial performance in 2000 of Enron Direct and 
ETOL graphically demonstrate the future potential in Europe for a broad 
retail energy business.  With Enron's retail energy presence in Europe firmly 
established, we are restructuring our Outsourcing product offering and the 
organisation to develop and deliver it, so that we broaden our activities and 
successfully grow our earnings in line with shareholder expectations.

We now have a renewed focus in 2001.  The emphasis will be to work on only 
the largest deals (by energy commodity spend) in those markets where we 
already have a robust wholesale energy business and there is regulated and 
economic third party access to retail power distribution systems.  The main 
thrust of our offering will be commodity and Demand Side Management (DSM) 
projects and our associated price risk management capabilities.  Commodity is 
Enron's core competence and one where Enron should be in a position to 
generate sizeable gross margin at closure.  DSM projects are also important 
as they will deliver gross margin and are what differentiate us from the 
commodity competition.  We will be focussing on shorter project lead times at 
the front of a deal to ensure that we get to closure promptly - we need to 
see 80% of the value in 20% of the time.  Whilst we retain an understanding 
of O&M, this will not form part of our core offering and we will only 
consider involvement in an O&M capacity on attractive margin transactions 
where it is essential to the customer.  As the business develops it is likely 
that, to some extent, we will build the necessary O&M delivery capability to 
enhance the product offering in the future.

In those markets where we have limited wholesale capability or the third 
party access to power distribution systems is not feasible in a retail 
context, we will build and develop Utility Representation Services (URS) in 
conjunction with a DSM project offering.  This knowledge based business will 
allow us to develop retail customer networks in advance of economic system 
access and also provide valuable market information back to the wholesale 
business.  URS is ERPAG's core business and gives us a tremendous platform to 
create a pan European URS competence.

Expertise in Supply Side Management has increasingly become an issue for the 
origination team in EES Europe as we have begun to get into material deal 
development.  Whilst it is vital that we remain totally coordinated with the 
wholesale business for price risk management services, there will be a 
renewed emphasis within EES Europe to develop those commodity skills that do 
not reside in the wholesale business to allow us to promptly and effectively 
price and structure retail commodity transactions to the delivery point.

Given the renewed focus outlined above, we have taken the opportunity to 
streamline the Account Delivery and Management team, typically redeploying 
staff where they can immediately support the development of new business for 
EES Europe.  Effective Account Management remains a key capability for EES 
and as we close deals with customers we will review our staffing need in this 
area.

Organisation

After eighteen months working on establishing the outsourcing business in 
Europe, Ron Bertasi has decided to transition back to the US during the first 
half of 2001.  In the short term he will complete the Trillium property deal 
and ensure that the energy and property deals are both successfully 
launched.  I would like to take this opportunity to thank Ron, on behalf of 
everyone in Europe, for all his hard work over the last eighteen months in 
establishing the European Outsourcing business and in particular his 
leadership on the Trillium deal which represents a substantial landmark for 
the business.

Stuart Rexrode is now head of European Energy Services Outsourcing.  Stuart 
will continue in a customer facing capacity as a lead originator, whilst 
ensuring that all of the dimensions that comprise the Outsourcing team remain 
appropriately focussed.  Bob Manasse will head up the origination team and 
ensure that the deal pipeline remains full of substantial good quality 
prospects.

Hala Tayyarah has been promoted to Manager within the Commodity team and will 
provide commodity pricing support to the origination team.  Hala will report 
to Peter Redpath until such time as a head of Supply Side Management is 
appointed.

Reporting to Peter Redpath, Peter Ramgolam will lead a new activity, 
Transaction Economics, supporting Origination by developing cashflow models 
to determine deal economics, identify improvements to structures to optimise 
value and capture transactions for risk management purposes.

Also reporting to Peter Redpath, John Parker will lead the implementation of 
a Position Management activity.

The attached organisation charts show these changes in the revised structure 
of EES Europe which is effective immediately.  Whilst these charts are 
relatively self explanatory for the levels shown, there will be detailed 
discussions over the next day or so to explain what the changes mean for 
individuals.  Where boxes are labelled TBA, we hope to make appointments in 
the near future.

At 10.30am on Monday 12th February we shall be holding a one hour EES-Europe 
all employee meeting in the Auditorium in place of the usual weekly staff 
meeting.  At this session we will talk about the 2001 Earnings Plan and 
provide clarity on the deal process for Outsourcing and the reasoning behind 
it.  Also, it will be an opportunity for you to raise any questions you may 
have.  I look forward to seeing you there.

Matthew