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 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: Janet R Dietrich X-To: Louise Kitchen X-cc: X-bcc: X-Folder: \ExMerge - Kitchen, Louise\'Americas\EES X-Origin: KITCHEN-L X-FileName: louise kitchen 2-7-02.pst 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