Message-ID: <10419657.1075851755570.JavaMail.evans@thyme> Date: Wed, 20 Dec 2000 23:30:00 -0800 (PST) From: william.bradford@enron.com To: tracy.ngo@enron.com, jason.williams@enron.com Subject: Re-Alignment Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: William S Bradford X-To: Tracy Ngo, Jason R Williams X-cc: X-bcc: X-Folder: \Jason_Williams_Nov2001\Notes Folders\Private folders\Jays stuff X-Origin: WILLIAMS-J X-FileName: jwilli10.nsf FYI. Let's discuss. Bill ---------------------- Forwarded by William S Bradford/HOU/ECT on 12/21/200= 0=20 06:32 AM --------------------------- Enron Americas - Office of the Chairman From: David Delainey and John Lavorato@ENRON on 12/21/2000 02:02 AM Sent by: Enron Announcements@ENRON To: ENA Employees cc: Joe Kishkill/SA/Enron@Enron, Orlando Gonzalez/SA/Enron@Enron, Brett R= =20 Wiggs/SA/Enron@Enron, Remi Collonges/SA/Enron@Enron, Jeffrey A=20 Shankman/HOU/ECT@ECT, Mike McConnell/HOU/ECT@ECT, Jeffrey=20 McMahon/HOU/ECT@ECT, Raymond Bowen/HOU/ECT@ECT, Louise Kitchen/HOU/ECT@ECT,= =20 Philippe A Bibi/HOU/ECT@ECT, Rebecca=20 McDonald/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, James A=20 Hughes/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Mark Frevert/NA/Enron@Enron, Gr= eg=20 Whalley/HOU/ECT@ECT, Richard Shapiro/NA/Enron@Enron, Steven J=20 Kean/NA/Enron@Enron, James D Steffes/NA/Enron@Enron, Ben F=20 Glisan/HOU/ECT@ECT, Mark Koenig/Corp/Enron@ENRON, Rick Buy/HOU/ECT@ECT, Joh= n=20 Sherriff/LON/ECT@ECT, Jeff Skilling/Corp/Enron@ENRON, Kenneth=20 Lay/Corp/Enron@ENRON, Cliff Baxter/HOU/ECT@ECT, Michael R Brown/LON/ECT@ECT= ,=20 Mark Palmer/Corp/Enron@ENRON=20 Subject: Re-Alignment Thanks to all of you, Enron North America has had an outstanding year in=20 2000. Some of the more notable accomplishments include: a) 100% plus increase in EBIT from 1999 actuals to 2000 forecast; b) significant rationalization of the balance sheet including the sale of t= he=20 (i) Wind River/Powder River gathering assets, (ii) East Coast Power=20 generating assets, (iii) HPL and (iv) five of the six Eastern Peakers; c) ENA is the leading energy merchant by a factor of two; d) physical electricity volume grew by 34% YTD 1999 to YTD 2000 forecast; e) natural gas volumes grew by 82% YTD 1999 to YTD 2000 forecast; f) 500% growth in daily transactions from November 1999 to November 2000 du= e=20 to the highly successful Enron OnLine distribution channel; and g) ENA reaching its 25% ROCE target. These are truly outstanding accomplishments and our expectations for growth= =20 and opportunity in Enron North America for 2001 are consistent with that=20 success. In order to reach these goals, we felt it necessary to re-align a= =20 number of our organizations. A number of these changes are completed. The= =20 goals of such re-alignment include: a) increase overall productivity with the goal to ensure that every employe= e=20 is in a position to contribute regardless of skill set; b) increase overall market coverage, deal flow and information generation= =20 with the goal to increase bid/offer income, increase the velocity of deal= =20 flow, improve customer coverage and promote quality information transfer to= =20 our trading organization; c) increase deal quality and earnings quality with the goal to (i) allocate= =20 our resources towards the best transactions and (ii) significantly increase= =20 our =01&mid-market=018 originated transactions in our portfolio; d) promote real time decision making and a closer tie between our trading a= nd=20 origination (mid-market and structured) organizations in order to better=20 align those functions to reduce the amount of un-productive internal focus; e) increase the overall velocity of the capital being utilized consistent= =20 with our goal of a 25% plus return on capital employed; and f) identify and recognize a host of new leaders in the organization that ar= e=20 critical to meeting our goals next year. With these objectives in mind, patterned after the successful business mode= ls=20 in Calgary and Portland, effective immediately the following changes are=20 being implemented: a) East Power =01) a single East Power Team incorporating trading, mid-mark= et=20 and origination will be formed under the co-leadership of Kevin Presto and= =20 Janet Dietrich who will report to the Enron Americas - Office of the Chairm= an=20 (EA OOC). This team will have one income statement, one book and a joint= =20 accountability. However, a clear delineation of responsibilities inside the= se=20 teams will continue to exist in which the trading organization will manage= =20 the risk, income statement and product development aspects of the=20 partnership. The originators will have the primary responsibility to genera= te=20 origination income, provide coverage, deal flow, lead strategy formulation,= =20 provide information and generate strategic positions. Overall, the team wi= ll=20 be rewarded based upon increasing the value of the book, meeting=20 coverage/deal flow targets and meeting its strategic/growth goals in the=20 Eastern power markets. The team will be responsible for covering the IOU=01= ,s,=20 muni=01,s/co-ops, industrials and IPP=01,s and will utilize all ENA=01,s pr= oduct=20 capabilities including the power commodity, assets and capital. The team wi= ll=20 further be broken down into several key strategic regions and business unit= s=20 including:=20 (i) ERCOT =01) managed by Doug Gilbert Smith and Bruce Sukaly; (ii) NE =01) managed by Dana Davis and Jeff Ader; (iii) Midwest =01) managed by Fletch Sturm and Ed Baughman; (iv) SE =01) managed by Rogers Herndon and Ozzie Pagan; (v) East Power Development =01) managed by Ben Jacoby; (vi) East Power Structuring - managed by Bernie Aucoin; and (vii) East Power Fundamentals and the =01&Genco=018 =01) managed by Lloyd= Will =20 b) West Power =01) there will be no changes to the Portland office which is= =20 managed by Tim Belden and Chris Calger . Both Tim and Chris will continue = to=20 report to the EA OOC. c) Canada and Mexico =01) there will be no changes to the Canadian or Mexic= an=20 offices which are managed by Rob Milnthorp and Max Yzaguirre respectively. = =20 Both Rob and Max will continue to report to the EA OOC. d) U.S. Natural Gas =01) there are several changes anticipated in this busi= ness=20 consistent with the goals and objectives described above. The changes=20 primarily affect the East, Central, West and Texas gas regions. Each region= =20 will consist of a single gas team incorporating trading, mid-market and=20 origination. Each team will have one income statement, one book and a joint= =20 accountability. However, a clear delineation of responsibilities inside the= se=20 teams will continue to exist in which the trading organization will manage= =20 the risk, income statement and product development aspects of the=20 partnership. The originators will have the primary responsibility to genera= te=20 origination income, provide coverage, deal flow, lead strategy formulation,= =20 provide information and generate strategic positions. Overall, the team wil= l=20 be rewarded based upon increasing the value of the book, meeting=20 coverage/deal flow targets and meeting its strategic/growth goals in the=20 Eastern, Western, Central and Texas gas markets. The team will be=20 responsible for covering the LDC=01,s, muni=01,s/co-ops, industrials, IOU= =01,s, IPP=01,s=20 and the producers. There will be an increasing focus on the upstream side = of=20 the business including the producers, transporters and storage providers in= =20 addition to market area opportunities. The team will utilize all of ENA=01,= s=20 product capabilities including the gas commodity, assets and capital. Each = of=20 these groups will report directly to the EA OOC; East Gas =01) a single East Gas Team incorporating trading, mid-market and= =20 origination will be formed under the co-leadership of Scott Neal and Frank= =20 Vickers who will be returning from Portland to join this team. =20 West Gas =01) in a similar manner, a West Gas Team will be formed co-manag= ed by=20 Phillip Allen and Barry Tycholiz, who will be joining us in Houston from th= e=20 Canadian team. The Denver office under Mark Whitt will be integrated under= =20 this team. Central Gas =01) in a similar manner, a Central Gas Team will be formed=20 co-managed by Hunter Shively and Laura Luce. The Chicago office will be=20 integrated into this team. Texas Gas =01) the Texas Gas Team will be managed by Tom Martin. This team = will=20 continue to manage the gas trading business around HPL until the pending sa= le=20 is concluded in Q2 2001. After the sale of HPL, this team will build a Tex= as=20 gas business without ownership of the HPL assets. =20 Financial =01) this group will continue to be managed by John Arnold with n= o=20 significant changes. Derivatives =01) this group, lead by Fred Lagrasta, will offer derivative a= nd=20 financial mid-market products and services to the natural gas market=20 specifically targeting CFO=01,s and treasury departments. Fred will contin= ue to=20 maintain certain existing mid-market accounts with a number of producer and= =20 industrial accounts where relationships are well formed. Otherwise,=20 mid-market coverage will gravitate to the regions. The New York office gas= =20 marketing efforts will continue to be managed by Fred. Upstream Products =01) this group, lead by Jean Mrha, will develop several= =20 distinct product offerings for the upstream segment of the gas market. Thi= s=20 group will develop and market the product in conjunction with the regions.= =20 This is consistent with our desire to have a broader product offering and= =20 greater market penetration in the upstream segment. These products include= =20 producer outsourcing, similar to our successful Petro-Canada and Suncor=20 relationships in Canada, physical storage re-engineering, compressor=20 services, wellhead liquidity products and offshore asset and capital=20 products. In addition, Jean will manage our Bridgeline joint venture with= =20 Texaco. =20 Gas Structuring =01) this group will be lead by Ed McMichael, reporting to = Frank=20 Vickers, will provide structuring and deal support to all the gas teams. Gas Fundamentals =01) this group will be lead by Chris Gaskill, reporting t= o=20 Hunter Shively, will provide fundamentals to all the gas teams. =20 Julie Gomez will continue to support the gas floor through several identifi= ed=20 projects including long-term supply/demand analysis and, natural gas=20 transportation capacity trading opportunities. =20 There is an expectation of some customer overlap between the gas and power= =20 groups; for example, the combination utilities and the IPP=01,s. The teams= will=20 coordinate with regard to the combination utilities like Con. Edison or=20 PG&E. With regard to the IPP=01,s, to the extent that the product offering= =20 involves an underlying power position, the power teams will manage. We have= =20 asked Janet Dietrich to coordinate such overlaps between the two=20 organizations in Houston.=20 e) Technical/Restructuring - In the effort to consolidate and centralize ou= r=20 technical resources (engineering, development, operations, pipeline) to=20 ensure that this skill base is available to all ENA groups and utilized=20 productively across the organization, Brian Redmond will form and manage th= e=20 Technical Services Group. This group will manage ENA=01,s technical risks = and=20 will provide, on a cost basis, technical services for the entire ENA=20 organization. This group will manage the interface with EE&CC and OEC. In= =20 addition, the Restructuring Group, currently managed by Dick Lydecker, will= =20 report to Brian Redmond. This group is currently monetizing a large portio= n=20 of the merchant investment portfolio given our current strategies. This=20 group will have continuing responsibility to manage troubled commodity and= =20 capital transactions that need considerable time and attention to manage ri= sk=20 and monetize.=20 In addition to these responsibilities, Brian will manage the pending sale a= nd=20 transition of the HPL asset over the next couple quarters as regulatory and= =20 securities approvals are obtained in order to complete the sale. Brian wil= l=20 report to the EA OOC. f) Principal Investing =01) with the departure of Jeff Donahue to new=20 opportunities in EBS, ENA=01,s venture capital function will be managed by= =20 Michael L. Miller. This group makes small investments in distributed=20 generation, power quality and technology companies that can benefit from=20 Enron=01,s distribution channels and expertise. Michael will report to the= EA=20 OOC. g) Corporate Development =01) Tim Detmering will assume the corporate=20 development responsibilities for ENA as Jeff transitions to his new role an= d=20 will report to the EA OOC. h) Generation Investments =01) there will be no changes to this group manag= ed by=20 Dave Duran. Dave will continue to report to the EA OOC. i) Energy Capital Resources =01) there will be no changes to this group=20 currently lead by C. John Thompson and Scott Josey. John and Scott will=20 continue to report to the EA OOC. As a final note in the interest of keeping things simple, Enron Americas wi= ll=20 have two operating divisions - Enron North America and Enron South America= . =20 As a result, we will continue to conduct business under these two operating= =20 companies; therefore, eliminating the need to change legal entities et al. = =20 If you are currently a commercial employee of ENA or ESA you will continue = to=20 conduct business in that company.=20 We look forward to another exciting year in the North American energy=20 market. This is certainly a company unrivaled in the marketplace with the= =20 most talented employees. The opportunities are endless. We wish you and= =20 your family a very happy and safe holiday season.