-----Original Message-----
From: 	EES Distribution,   On Behalf Of EES Office of Chairman,
Sent:	Wednesday, October 24, 2001 2:59 PM
To:	All EES@ENRON
Subject:	Organizational Changes

Re: Organizational Changes

Over the last several quarters, EES has successfully implemented a number of new business models, organizational structures and processes.  The result has been tremendous customer contracting in the U.S., Canada and Western Europe in 2001.  In all cases, EES's large consumer market share has expanded and we have rapidly increased our market penetration in the small consumer market - Enron Direct.  This effort, in itself is impressive, especially given that at the same time, EES has had to significantly restructure and re-tool its execution capabilities, systems and mid and back offices.  I can assure you that these processes, systems and capabilities are improving.  This is only the result of a lot of hard work from back to front across EES, EES risk and Enron Networks.

In that light, I am pleased to announce a number of organizational changes which demonstrate our continued commitment to the European market and the creation of a new exciting channel in the Enron Direct USA business.

A)	EES Europe:

Effective immediately, Sean Holmes will be moving to London to manage EES Europe.  We believe that Sean has the broad based experience in the EES business model, products, retail energy risk management and demand side management to take the European business to next level. Charlie Crossley-Cooke will manage our small consumer (Enron Direct) franchise.  This franchise has continued to grow, in the UK and on the continent, and has provided significant income to EES in 2001. Enron Direct will also continue to provide mid and back office services to EES Europe. Paul Turner will manage our large consumer business in Western Europe.  Paul will be replacing Stuart Rexrode who will be returning to EES in Houston.  Over the last few quarters, our penetration of this market, primarily in the UK, has grown dramatically with completed contracts with Sainsbury, Guiness, Kraft and Pirelli.  Many of these transactions include gas, power and demand side management.  We would like to thank Stuart for all his hard work toward the continued growth of the European franchise.

We are also pleased to announce the formation of the European Product Group led by Roy Poyntz.  This group will lead the development of new products and services for both the large and small consumer markets.  As in North America, its main role will be to ensure viable and innovative products are continually available in the pipeline to ensure the continued growth of the European business. The Product Group will also ensure product diversity between gas, power and energy efficiency products.  We continue to be committed to the development of the demand side management aspects of our business to differentiate us from our competitors. On a final note, the EES Europe commodity structuring and DSM groups will now report to Sean in addition to Charlie, Paul and Roy. 

As part of this change, Deb Merrill will be assuming the lead role in Deal Management in EES USA replacing Sean.  Deb has been an integral part of EES from many years and we believe she has all the experience and skill sets to effectively manage and build on this integral function in EES USA.

B)	Enron Direct USA - Dealer Network

Effective immediately, Stuart Rexrode will manage this new sales channel inside Enron Direct USA.  Stuart will be building this new more sophisticated agent selling channel by creating franchise like relationships with numerous "dealers" across the US.  This dealer network will consist of small knowledgeable entrepreneurs and consultants that have been in the energy markets for many years and have great regional expertise and customer relationships. EES will provide a franchise like program where we provide resources and products to this agent base in exchange for exclusive provision of sales services and customer aggregation.  We hope that this network can provide the customer acquisition velocity and low cost acquisition model benefits of the mass market agents but provide a more sophisticated agent in front of larger clients in order to sell higher value products that include gas, power and DSM.  Phyllis Anzalone and her team are already working on the development of this dealer network and will become part of this group reporting to Stuart.  Phyllis and her team deserve a lot of credit for the identification and build out to date of this newest business model in EES.

In conclusion, everyday we are getting better and more effective.  We should be very pleased with the financial and operating performance of EES for 2001.  We have an EBIT target of $75 million for Q4 which is only $4 million higher than Q3, We will finish the year at approximately $247 million.  This is approximately 10% over 2001 plan and 120% growth in recurring earnings year on year.  The business model is working and we are one step closer to the goal of becoming the leading global energy retailer.  The All-Employee meeting will be on November 1 where we look forward to discussing with you our operational and financial results for 2001 and our plan, strategies and objectives for 2002.