Message-ID: <6017492.1075858663692.JavaMail.evans@thyme>
Date: Wed, 24 Oct 2001 12:59:00 -0700 (PDT)
From: chairman.ees@enron.com
Subject: Organizational Changes
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Re: Organizational Changes

Over the last several quarters, EES has successfully implemented a number o=
f new business models, organizational structures and processes.  The result=
 has been tremendous customer contracting in the U.S., Canada and Western E=
urope in 2001.  In all cases, EES's large consumer market share has expande=
d and we have rapidly increased our market penetration in the small consume=
r market - Enron Direct.  This effort, in itself is impressive, especially =
given that at the same time, EES has had to significantly restructure and r=
e-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 c=
reation of a new exciting channel in the Enron Direct USA business.

A)=09EES Europe:

Effective immediately, Sean Holmes will be moving to London to manage EES E=
urope.  We believe that Sean has the broad based experience in the EES busi=
ness model, products, retail energy risk management and demand side managem=
ent to take the European business to next level. Charlie Crossley-Cooke wil=
l manage our small consumer (Enron Direct) franchise.  This franchise has c=
ontinued to grow, in the UK and on the continent, and has provided signific=
ant income to EES in 2001. Enron Direct will also continue to provide mid a=
nd back office services to EES Europe. Paul Turner will manage our large co=
nsumer business in Western Europe.  Paul will be replacing Stuart Rexrode w=
ho will be returning to EES in Houston.  Over the last few quarters, our pe=
netration of this market, primarily in the UK, has grown dramatically with =
completed contracts with Sainsbury, Guiness, Kraft and Pirelli.  Many of th=
ese transactions include gas, power and demand side management.  We would l=
ike to thank Stuart for all his hard work toward the continued growth of th=
e 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 a=
nd services for both the large and small consumer markets.  As in North Ame=
rica, its main role will be to ensure viable and innovative products are co=
ntinually available in the pipeline to ensure the continued growth of the E=
uropean business. The Product Group will also ensure product diversity betw=
een gas, power and energy efficiency products.  We continue to be committed=
 to the development of the demand side management aspects of our business t=
o differentiate us from our competitors. On a final note, the EES Europe co=
mmodity structuring and DSM groups will now report to Sean in addition to C=
harlie, Paul and Roy.=20

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 t=
o effectively manage and build on this integral function in EES USA.

B)=09Enron Direct USA - Dealer Network

Effective immediately, Stuart Rexrode will manage this new sales channel in=
side Enron Direct USA.  Stuart will be building this new more sophisticated=
 agent selling channel by creating franchise like relationships with numero=
us "dealers" across the US.  This dealer network will consist of small know=
ledgeable entrepreneurs and consultants that have been in the energy market=
s for many years and have great regional expertise and customer relationshi=
ps. EES will provide a franchise like program where we provide resources an=
d products to this agent base in exchange for exclusive provision of sales =
services and customer aggregation.  We hope that this network can provide t=
he 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, pow=
er and DSM.  Phyllis Anzalone and her team are already working on the devel=
opment 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 identifica=
tion and build out to date of this newest business model in EES.

In conclusion, everyday we are getting better and more effective.  We shoul=
d be very pleased with the financial and operating performance of EES for 2=
001.  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.  Th=
is is approximately 10% over 2001 plan and 120% growth in recurring earning=
s year on year.  The business model is working and we are one step closer t=
o the goal of becoming the leading global energy retailer.  The All-Employe=
e meeting will be on November 1 where we look forward to discussing with yo=
u our operational and financial results for 2001 and our plan, strategies a=
nd objectives for 2002.