Message-ID: <2085073.1075840821837.JavaMail.evans@thyme>
Date: Tue, 22 May 2001 00:26:00 -0700 (PDT)
From: janet.dietrich@enron.com
To: louise.kitchen@enron.com
Subject: Still working on it but here's where we are
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X-From: Janet R Dietrich <Janet R Dietrich/HOU/EES@EES>
X-To: Louise Kitchen <Louise Kitchen/HOU/ECT@ECT>
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First off, CONGRATULATIONS! I hear you now have an adorable baby boy (same =
weight as my 2nd girl- 9 lbs/1 oz.?). That's really great Louise. Are you g=
etting any sleep?

Hate to hit you with business but someone said you're on email so I thought=
 I'd try. We're basically finished reviewing/tweaking the business models w=
ithin EES and it's probably time to see if we can bring closure to the SIC =
Code split. I'm forwarding you a couple of emails to help remind you where =
we were on this, but basically, we had general agreement on the SIC Code sp=
lit, we just needed to agree on the volumetric delineation point for the EN=
A SIC Codes. I had proposed 24 MW/3000 MMBtu/d and below would fall to EES,=
 you had proposed 10MW/1000MMBtu/d and below. The majority of EES' business=
 will fall within the Eastern Interconnect, and my split had more to do wit=
h the fact that the ENA Originators/Mid-Marketers were focused on 25 MW and=
 above. After the meetings we just went through with the EES sales groups, =
I would be surprised if many of our customer targets have sites > 20 MW's i=
n the ENA SIC Codes. I don't foresee any major issues if we lower the delin=
eation point to 19 MW's.=20

Would love to get your views soon if possible. If you'd like me to follow u=
p with John L. since you're out, I can certainly do so. Also, I've met with=
 the Industrial Market group (Ray Bowen) and we've set up a coordination pl=
an for EIM/EES to lever the relationships that each organization currently =
has where the other group may have opportunities.=20


---------------------- Forwarded by Janet R Dietrich/HOU/EES on 05/21/2001 =
09:06 PM ---------------------------


David W Delainey
03/24/2001 02:49 PM
To:=09Louise Kitchen/HOU/ECT@ECT
cc:=09John J Lavorato/Corp/Enron, Janet R Dietrich/HOU/EES@EES=20
Subject:=09Still working on it but here's where we are

Louise, I would like you to re-consider our original proposal for a few rea=
sons.  I have a lot of history on this one given I've been on both sides of=
 the fence and was the original creator of what ultimately became the EIM g=
roup.  As a result, I  have been in many discussions with Lou and Jeff on t=
hese issues.

In the original agreement between EES and ENA the following SIC codes were =
excluded from EES as part of the minority shareholder agreement in 1996/199=
7:
=09Mining (except Oil and Gas);
=09Oil and Gas Extraction
=09Textile Manufacturing
=09Paper Manufacturing
=09Chemical Manufacturing
=09Petroleum and Coal Products Manufacturing
=09Plastics and Rubber Products Manufacturing
=09Glass Manufacturing
=09Primary Metal Manufacturing
=09Fabricated and Metals Products Manufacturing
=09Machinery Manufacturing
=09Rail Transportation.

All other SIC codes fell within EES.  In 2000, with the buy-back of the min=
ority shareholders, Lou, Jeff and I agreed to move several of the lower pro=
cess load SIC codes into EES including Textile Manufacturing (like Springs =
Industries), Glass Manufacturing (like Owens Corning), Fabricated and Metal=
s Product Manufacturing (like General Cable and American National Can) and =
Machinery Manufacturing (like Lockheed Martin).  This was primarily because=
 these customers tend to be of lower energy sophistication and consumption,=
 numerous sites (in deregulated and regulated environments) and of small si=
ze.  The EES value proposition fit these customers much better than wholesa=
le.  We have completed numerous significant term transactions and outsource=
s in these industries (see parenthesis for several).

For the other SIC codes, these remained in ENA and EIM.  EES has no interes=
t in paper mills, smelters, fertilizer manufacturers, refiners, etc.  We ne=
ither have the products or pricing capability to manage or close very large=
 process oriented consumers.  However, there are divisions inside these com=
panies that we have been able to have some success.  For example, the speci=
ality chemicals divisions of the large chemical companies tend to be signif=
icantly smaller loads and ignored from a capital, DSM and commodity point o=
f view by the large purchasing agents.  Another example, is the gasoline re=
tailing networks for the large oil and gas/refining companies which can be =
very small loads spread over thousands of sites.  Another example, is the s=
pecialty paper/container board divisions of the paper companies.  In severa=
l of the large oil and gas and petrochemical companies we have found fertil=
e ground in their office buildings and research centers.  Our proposal to l=
imit EES's activities in the ENA SIC codes by consumption size was to give =
us some freedom to target these divisions inside these companies which ENA =
would normally ignore.  If there is a better way to split this out than by =
a size definition lets discuss.  Finally, given the more targeted and sophi=
sticated sales process utilized in EES (by necessity), it would be easier t=
o coordinate between the companies based on a size sort where EES had limit=
ed access to ENA's SIC codes versus the opposite.

On the surface your proposal looks reasonable; however, it fails to suffici=
ently manage the issues. For example:
=09- how would you manage a customer like Wal-Mart which may use more than =
10 MW at a site but requires a national or regional  solution for all 10,00=
0 sites in both deregulated and regulated jurisdictions;
=09- how will we sufficiently manage the ENA sales force which tends to ove=
r-cover and "under-product" for the vast majority of these industries and c=
ustomers ie) I think it would be a disaster for EES and ENA;
=09- and EES has the relationship based selling capability and basic produc=
ts to successfully manage these customers (you could argue right now that i=
s all we have!).

On a final note,  I believe strongly that John and I should send out a note=
 to both organizations clarifying these issues because:
=09a) it is way overdue - years in fact - it was always difficult when I wa=
s upstairs to get Lou to cooperate;
=09b) it is extremely destructive and un-productive for multiple Enron grou=
ps to communicate and target the same customer;
=09c) I don't believe that the employees (on both side of the fence) will h=
onor the obligation unless it is expressly stated, openly communicated and =
enforced by the two management teams;
=09and d) we need to be proactive, because "cleaning" it up after the dual =
call, etc significantly damages our credibility as Enron with a number of t=
hese customers.

It may be worthwhile in the same exercise to let you know what we may be do=
ing in the the utility and generator markets in the interest of open commun=
ication and ensure your buy-in.

I look forward to futher discussing this with you. Our motivations are not =
to try and  enter ENA markets but to split the industrial and commercial se=
gments between the two companies clearly which increases productivity and s=
hareholder value.

Regards
Delainey

=09
---------------------- Forwarded by David W Delainey/HOU/EES on 03/24/2001 =
01:51 PM ---------------------------


Janet R Dietrich
03/23/2001 05:28 PM
To:=09David W Delainey/HOU/EES@EES
cc:=09=20
Subject:=09Still working on it but here's where we are

fyi

---------------------- Forwarded by Janet R Dietrich/HOU/EES on 03/23/2001 =
05:28 PM ---------------------------


Louise Kitchen@ECT
03/23/2001 05:27 PM
To:=09Janet R Dietrich/HOU/EES@EES
cc:=09=20
Subject:=09Still working on it but here's where we are

Janet,

Tried to get through to you but no success so far this afternoon.  I have r=
emoved the split from East to West.

Load

Power
ENA > 10 MW Hourly Peak Demand
EES < 10 MW Hourly Peak Demand

Gas=20
ENA > 1,000 MMBTUs/day
EES < 1,000 MMBTUs/day

I am still working on the codes but the issue is that things like Fertilize=
r companies are not included in the lists so they may cause more confusion =
tha add value.

Louise





