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DRAFT - HPL Transition Plan

This confidential transition plan outlines Enron's strategic objectives and immediate actions in preparation for the merger with HPL. Key objectives include satisfying conditions precedent to close, transferring accounts, and ensuring operational IT systems. Essential strategies to protect transaction value, manage unforeseen costs, and optimize the transaction structure are also detailed. A transition team represents various areas, tasked with developing actionable items and prioritizing resources to achieve a successful transition. Meetings and ongoing status checks will ensure coordinated efforts and timely execution towards the final close.

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DRAFT - HPL Transition Plan

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  1. DRAFT - HPL Transition Plan Strictly Confidential & Subject to Attorney Client Privilege January 18, 2000

  2. Objectives • Satisfy Enron Conditions Precedent to Close: • Accounts transferred • Assets and liabilities transferred (A/S liabilities resolved) • IT systems operational • Protect transaction value for Enron: • Unforseen costs and liabilities • Continued operation of the asset • Optimize transaction structure • Protect key Enron employees, proprietary information/strategies • Traders crucial to ongoing business in Texas • Key accounting, risk management, and technical staff • Position Enron to compete in Texas market post-Close: • Retain supplier/customer relationships • Retain ability to offer products

  3. Strategy • Transition team established representing each area of the deal: Team Lead: Jim Coffey Human Res: F. Mayes/K. Neal Deal Structure: P. Wade/A. Koehler Operations: S. Schnieder/K. Kaase Prod. Serves: J. Zivley/G. Weissman Field Ops. D. Pribble/B. Brasher Marketing: G. Brazatis Engineering: N. Cocavessis/M. Carriere Regulatory: T. Shelton Info Tech: T. Yanowski Trading: T. Martin/E. Gottlob Bus. Ops: B. Hall/R. Wynne/E. Terry Finance: R. Dutt Legal: B. Gray/S. Braband Tax: Rhett Jackson Acctg: S. Orsak/E. Shield/G. Whirtling • Kick off meeting held 1/16: • Transition teams tasked with developing detailed action items for their areas • Action items will be consolidated and a critical path will be established based on available resources • Ongoing status meetings to track action items from each area of the transition team: • Resolve conflicts, prioritize resources, coordinate activities • Develop common interface point with AEP

  4. Immediate Needs & Actions • Determine who is staying with Enron and who is going with AEP: • Expedite AEP interview process according to an agreed protocol and schedule • Gives AEP sufficient time to fill in employee gaps prior to Closing • Provides Enron with certainty as to who is stay with Enron • Protect access to non-HPL information during the transition process • Co-locate all HPL employees on 35th floor to control access to non-HPL information • Will require current non-HPL occupants on 35 to re-locate • Prevent access of HPL employees to trading floors • Manage trading positions to ensure no additional exposure • Work to resolve Cushion Gas issue with AEP • Continue to run simulation to ensure firm purchase/sale books remain flat • Reserve against marked term deals to offset unwind cost at Closing • Continue to run separate ENA book to ensure value of Texas Spec. trading remains with Enron

  5. Immediate Needs & Actions • Provide guidance to Enron employees to comply with the Transaction Agreements: Legal drafting employee memos on the following: • What can be said to employees • Conduct of business prior to Closing • Collection and transfer of HPL information • Obtain resources to support understaffed areas with increased transition workload (HR, business ops, accounting) • HR will have to manage development of severence packages, interview processes, and employee concerns in addition to ongoing ENA activities. • Accounting will have to create a clean balance sheet for HPL that will require significant transfer of ENA assets out of HPL. • Business Ops will have to support the separation and set up of a separate HPL IT systems, and a duplication of HPL procedures. • Expedite A/S line repair and IT System set-up • Enron must track and manage the completion of these activities to ensure they do not delay Closing.

  6. Follow up Activities • Fully develop “To Do” list for each transition area • Develop critical path to reach Close while maximizing transaction value • Prioritize resources based on critical path • Implement and track ongoing status

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