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mow,,,.

  MINUTES
MEETING OF THE
  BOARD OF DIRECTORS
ENRON CORP.
October 8, 2001

  Minutes of a meeting of the Board of Directors. of Enron Corp.
("Company") held pursuant' to due notice at 7:00 p.m. C.D.T., but actually begun
at 7:46 p.m. C.D.T., on October 8, 2001 at the Four Seasons Hotel, Austin Room,
in Houston, Texas,

All of the Directors were present, as follows:

  Mr. Kenneth L. Lay, Chairman
Mr. Robert A. Belfer
  Mr. Norman P. Blake, Jr.
Mr. Ronnie C. Chan
  Mr. John H. Duncan
Dr. Wendy L. Gramm
Dr. Robert K. Jaedicke
Dr. Charles A. LeMaistre
Dr. John Mendelsohn
  Mr. Paulo V. Ferraz Pereira
Mr. Frank Savage
  Lord John Wakeham
  Mr. Herbert S. Winokur, Jr.

  Messrs. Richard B. Buy, Richard A. Causey, David W. Delainey, James V.
Derrick, Jr., James B. Fallon, Andrew S. Fastow, Mark A. Frevert, Stanley C.
Horton, Steven J. Kean, Mark E. Koenig, John J. Lavorato, Michael S.
McConnell, Jeffrey McMahon, and L. Greg Whalley and Ms. Paula H. Rieker, all
of the Company or affiliates thereof, and Mr. Richard N. Foster of McKinsey &
Company, Inc. ("McKinsey"), also attended the meeting.

  The Chairman, Mr. Lay, presided at the meeting, and the Secretary, Ms.
Rieker, recorded the proceedings.

  Mr. Lay called the meeting to order and called upon Mr. Causey to provide
the Financial and Earnings report, a copy of which is filed. with the records of the
meeting. Mr. Causey reviewed both the previous and revised organizational
structure and corresponding financial reporting segments of the Company. He
summarized financial disclosures planned for the third quarter 2001 earnings

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release, including expanded income statement information for each reporting
segment. He reviewed the expected recurring earnings per share (`BPS") of the
Company for both the quarter and nine-month periods compared to actual results
of last year. He then reviewed the third quarter and nine month recurring net
income results by segment and discussed variations from the plan. He also
reviewed expected non-recurring earnings items, including items related to
impairments of assets planned for sale by Azurix Corp., to the restructuring of the
Company's broadband business, and to losses associated with certain investments
by the Company, and a discussion ensued regarding expected market reaction to
the non-recurring items. He summarized the expected reported EPS and the
recurring net income results by segment for both the quarter and nine-month
periods compared to actual results of last year. He provided a report on the
expected impact of the Statement of Financial Accounting Standards No. 142, on
Goodwill and Other Intangible Assets ("Standards"), indicating that the Company
planned to adopt the Standards in the first quarter of 2002 and disclose the
expected impact by the time of the filing of the Company's third quarter financial
statements with the Securities and Exchange Commission. He detailed
components of the Company's total $5.8 billion of goodwill, including
consolidated and unconsolidated goodwill, and reported on the expected write-off
related to the Standards. A discussion ensued regarding the non-recurring
earnings items, the effects of the unexpected resignation of Jeffrey K. Skilling, and
other areas that may be of concern to investors.

  Mr. Causey reviewed the capital structure and cash flow of the Company,
including comparison of estimated debt balances and funds flow from operations
as of September 30, 2001 versus plan and projections for each through year-end
2001. He also reviewed capital deployed by segment as of June 30, 2001,
including assumed capital structures for each segment.

  Mr. Lay called upon Mr. Koenig for the Investor Relations report, a copy of
which is filed with the records of the meeting. Mr. Koenig reviewed the total
return to shareholders ("TRS") of the Company's common stock for the first ten
months of 2001 compared to the Dow Jones Industrial Average, S&P 500 index, a
group of energy peers, the NASDAQ, and a group of broadband companies. He
then reviewed the Company's TRS compared to that of other merchant energy
peer companies. He discussed the price-to-earnings ratio ("P/E ratio") of the
Company's common stock compared to that of the S&P 500 index and other
merchant energy peers, noting. the very significant decline in the P/E ratio of the
Company. He then reviewed the Company's largest shareholders and recent
changes in ownership, and he also reviewed the largest potential investors in the
Company's stock. He provided an update on recommendations of sell-side
analysts to investors, noting that all recommendations remained at least neutral

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  and many remained favorable. He summarized current investor concerns, noting
that investors may have increased comfort levels with areas of concern last
reviewed with the Board but that other areas, including the level of cash flow from
operations, the composition of earnings and related disclosure, financing vehicles,
and related contingent equity issuances, were additional investor concerns.

  Mr. Koenig then presented information on the common stock dividend of
the Company, including total cash requirements, the yield and. payout ratio to
investors compared to the S&P 500 index and to the merchant energy peer group,
and a comparison to the yield of each company in the merchant energy peer group.
A discussion ensued, concluding to " leave the dividend on common stock
unchanged.

  Mr. Lay summarized recent analyst reports and his memo to employees
regarding recent employee survey results, copies of which are filed with the
records of the meeting. He recessed the meeting at 8:58 p.m., C.D.T. on October
8, 2001.

  The meeting reconvened in executive session at 8:10 a.m., C.D.T., on
October 9, 2001 at the Enron Building, Houston, Texas. All of the Directors noted
in attendance on the previous evening returned to the meeting, with the exception
of Mr. Chan who was not in attendance. Messrs. James V. Derrick, Andrew S.
Fastow, Mark A. Frevert, and L. Greg Whalley and Ms. Paula H. Rieker, all of the
Company, and Mr. Richard N. Foster, of McKinsey, also attended the meeting.
Messrs. Raymond M. Bowen, Robert B. Butts, Richard B. Buy, Richard A.
Causey, Wesley H. Colwell, David W. Delainey, James B. Fallon, R. Scott Gahn,
Mark E. Haedicke, Stanley C. Horton, James A. Hughes, Steven J. Kean, Mark E.
Koenig, John J. Lavorato, Daniel P. Leff, Michael S. McConnell, George M.
McCormick, Jeffrey McMahon, and Jeffrey A. Shankman and Mesdames Janet R.
Dietrich, Rosalee T. Fleming, and Louise J. Kitchen, all of the Company or
affiliates thereof, and Messrs. Scott A. Geiselman, Eric D. Mullins, and Howard
B. Schiller and Ms. M. Lisa Price, all of Goldman, Sachs & Co. ("Goldman"), and
Messrs. Joseph C. Dilg, Harry M. Reasoner, and Scott Neal Wulfe, all of Vinson
& Elkins L.L.P. ("V&E"), joined the meeting in progress as noted below.

  Mr. Lay indicated that he had requested Goldman and V&E brief the Board
on the current merger and acquisition ("M&A") climate and on corporate
preparedness and response alternatives.

  Messrs. Dilg, Geiselman, Mullins, Reasoner, Schiller, and Wulfe and Ms.
Price entered the meeting.

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Mr. Geisleman provided a brief overview of the M&A market, a copy of
which is filed in the records of the minutes. He commented on the significant
decrease in the value of the common stock of the Company relative to other
merchant energy peers and the S&P 500 index. He also commented on the current
shareholder base of the Company. Mr. Wulfe presented a review of structural
defenses of the Company and advised- on preparations to effectively manage
responses to unsolicited offers.

  Messrs. Dilg, Fastow, Foster, Geiseeman, Mullins, Reasoner, Schiller, and
Wulfe and Ms. Price left the meeting.

  Mr. Lay stated that minutes of meetings of the Board held on March 16,
2001, June 13, 2001, August 13-14, 2001, and August 27, 2001 had been
distributed to the Directors and were included in the meeting material. He called
for any additions, corrections, or comments. There being none, upon motion duly
made by Dr. LeMaistre, seconded by Dr. Gramm, and carried, the minutes of the
meetings held on March 16, 2001, June 13, 2001, August 13-14, 2001, and August
27, 2001 were approved as distributed.

  Mr. Lay stated that minutes of a meeting of a Special Committee of the
Board of Directors held on August 14, 2001 had been distributed to the Directors
and were included in the meeting material. He called for any additions,
corrections, or comments. There being none, upon motion duly made by Dr.
LeMaistre, seconded by Dr. Mendelsohn, and carried, the minutes of the meetings
held on August 14, 2001 were approved by the members of that Committee as
distributed.

  Mr. Lay called upon Mr. Duncan to review the Executive Committee
meetings held on June 21, 2001 and September 25, 2001. Mr. Duncan reported
that, at the June 21, 2001 meeting, Mr. Jeff Donahue had been elected Managing
Director of Corporate Development. He also reported that a restructuring of a
contract with Sithe/Independence Power Partners, L.P. had been approved. He
reported that, at the September 25, 2001 meeting, the Committee had elected Ms.
Rieker as Corporate Secretary and had also reviewed Project Southwood, which
included the proposed purchase of a pulp mill and execution of related price risk
management contracts but decided to defer approval until consideration by the
Finance Committee and the Board. He then moved approval of the minutes,
which was seconded by Dr. LeMaistre, and carried, and the minutes of the
meetings held on June 21, 2001 and September 25, 2001 were approved as
distributed.

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Mr. Lay then called upon Dr. LeMaistre to review meetings of the
Compensation and Management Development Committee held on September 14,
2001, September 27, 2001, and October 8, 2001. Dr. LeMaistre provided a report
on the meetings, noting review and approval of certain employment agreements
and related matters, and reviewed recommendations by the Committee to approve
amendments to the Enron Corp. Savings Plan, the Enron Corp. Employee Stock
Ownership Plan, and the Enron Corp. Cash Balance Plan. Upon motion duly
made by Mr. Blake, seconded by Dr. Jaedicke, and carried, the amendments were
approved.

  Mr. Lay called upon Dr. Jaedicke to review the meeting of the Audit and
Compliance Committee held on October 8, 2001. Dr. Jaedicke stated that the
meeting had included reviews of third quarter earnings, the Company's reserve
balances, internal controls, physical security initiatives, the respective roles of the
Audit and Compliance Committee and the Finance Committee related to the Risk
Management Policy of the Company, and the on-going compliance monitoring of
the Company. He also provided an oral report, for which the attorney/client
privilege was reserved, summarizing an oral presentation to the Audit and
Compliance Committee in its meeting the previous evening by Messrs. Joseph C.
Dilg and Max Hendrick, III, of Vinson & Elkins L.L.P. ("V&E") on a preliminary
investigation requested by management to be performed by V&E relating to an
employee letter to Mr. Lay concerning related party transactions. He reported that
no additional facts had surfaced in the review and that V&E did not feel further
investigation was necessary. He also reported that the representatives from V&E
had, stated, however, that although approved at the proper levels and properly
accounted for, the related party transactions could be the subject of adverse
publicity. A discussion ensued regarding the matter.

  Mr. Lay called upon Mr. Winokur to review the meeting of the Finance
Committee held on October 8, 2001. Mr. Winokur stated that reports in the
meeting indicated that, since the terrorist events on September 11, 2001, the
borrowing spreads of the Company had increased and overall borrowing capacity
had decreased. He indicated that the overnight liquidity of the Company was
improving and financing had been raised since the September 11 events.

Mr. Foster entered the meeting.

  Mr. Winokur indicated the meeting also included a discussion of the
positive results from the trading operations as well as the expected write-offs in
the third quarter earnings results. He reported that the rating agencies were
expected to afford the Company time in executing its asset sales program. He
reviewed the positive objectives of the Company to simplify its financings,

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produce quality earnings, and reduce debt. He reviewed the maturities and
refinancings planned for the structures referred to as Marlin and Whitewing. He
summarized the respective roles of the Audit and Compliance Committee and the
Finance Committee related to the Risk Management Policy ("Policy") of the
Company. He recommended changes to the Policy and, upon motion duly made
by Mr. Belfer, seconded by Mr. Pereira, and carried, changes to the Policy were
approved.

  Mr. Lay called upon Lord Wakeham to report on the Nominating and
Corporate Governance Committee meeting held on October 8, 2001. Lord
Wakeham stated that, at the meeting, the Committee had received a beneficial
analysis of the corporate responsibility initiatives of other companies of similar
size. He indicated that each company had unique challenges but that the Company
compared favorably in implementing an effective program. He reported that the
next Committee meeting would include a detailed update from management on
corporate responsibility initiatives.

  Messrs. Fastow, Frevert, Bowen, Butts, Buy, Causey, Colwell, Delainey,
Fallon, Gahn, Haedicke, Horton, Hughes, Kean, Koenig, Lavorato, Leff,
McConnell, McMahon, and Shankman and Mesdames Dietrich and Kitchen
entered the meeting. Mr. George M. McCormick joined the meeting in progress as
noted below.

  Mr. Lay called on Mr. Delainey and Ms. Dietrich to begin the presentation
on Enron Energy Services ("EES"), a copy of which is included in the records of
the meeting. Ms. Dietrich reviewed the financial highlights of EES, comparing
earnings, cash flow and capital deployed for the nine months to date and estimated
full year for 2001 versus the prior year, noting strong earnings and improving cash
flow results. She detailed elements of capital deployed by EES, noting that price
risk management assets and accounts receivable were the largest components. A
discussion ensued on the financial results and the economics of the EES business
model. She then reviewed the quarterly additions to total contract value, citing the
metric as useful in the early stage of EES but now being replaced by traditional
financial metrics such as earnings and cash flow. She noted that the status of
deregulation was important to EES' business strategy, and she provided updates
on deregulation in all major markets and commodities of EES.

  Mr. Delainey reviewed the evolution of EES' business model, emphasizing
the importance to increasing profitability by penetrating new geographies and
market segments and achieving shorter sales cycles and a more scalable product.
He also reviewed the major components of the processes established to execute the
model, define the products, and originate new business. He described the

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significant successes experienced in the large consumer business in the U.S.,
which has included many Fortune 500 customers and has experienced significant
growth in the number of transactions and contribution to gross margin relative to a
year ago. Her also discussed opportunities captured to sell services to existing
large consumers. He then reviewed the newer small consumer business in the
U.S., noting the very significant increase in transactions and gross margin
compared to a year ago. He described the marketing channels implemented to
pursue this opportunity, including an agent-based sales force which had
demonstrated significant results since inception during the summer of 2001. He
then reviewed business initiatives in Europe and Canada, noting that the large
consumer business was gaining traction in the U.K., the small consumer business
was the initial area of success in Europe, and the small consumer model had been
introduced in Canada.

  Mr. Delainey reviewed the contribution to EES' gross margin by product,
noting that power products contributed approximately two-thirds of the gross
margin in the third quarter, that natural gas was a product with significant
additional potential, and that services related to demand side and facilities
management, construction and tariffs also contributed positively to gross margin.
He cited a longer-term goal for the business to be evenly split between commodity
and non-commodity products and between large and small business customers.

  Mr. Leff discussed the customer service aspects of EES. He profiled the
very large and growing number of customers and the favorable customer
satisfaction surveys, which had been expanded to include thousands of customers
He reported on the energy asset management function, noting both the overall
increase in business activity and also noting that the net present value of savings
generated by the function continued to increase with a prudent utilization of
capital. He cited the expanding scale of the business in terms of number of
facilities and amount of space managed. He also discussed the gross margin
contribution of the facility services. He then reviewed elements of the risk
management function, commenting on the benefits of the transfer of the function
to the wholesale business early in the year. He discussed the cost structure of the
business, noting the decreases expected in total costs and in operating expenditures
as a percentage of gross margin in 2002.

  Mr. Delainey commented on the continued expansion of the customer base,
the scalability that had been established, progress made in dealing with legacy
issues, efforts to reduce costs, and on the focus of management. in generating
earnings and cash flow on a reduced level of capital deployed. He concluded with
comments on the success of EES in penetrating new geographies and market
segments with new products and scalable execution, noting that these elements

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were expected to result in increased customer satisfaction and increased growth
and profitability. Following the presentation, a discussion ensued.

  Mr. Lay called upon Mr. Lavorato and Ms. Kitchen to begin the
presentation of Enron Americas.

Ms. Fleming entered the meeting.

  Mr. Lavorato began the report, a copy of which is included in the record of
the minutes. He commented on the business principles of the merchant natural gas
and power business, ' including business goals and significant areas of expertise.
He reviewed the very strong increases in earnings before interest and taxes of the
North American activities, both excluding and including reserves and other
earnings reductions.

  Mr. Lavorato also reviewed the net assets of the North American wholesale
business, noting a significant decline in the assets deployed in the business at the
end of the third quarter of 2001. He discussed the financial highlights of the
operations, citing strong earnings and funds flow for the first nine months of 2001
compared to full year 2000 results. He commented on the significant impact of
the net collateral position on the reported cash flow from operations and on total
capital deployed.

  Mr. Lavorato then reviewed the supply and demand fundamentals and
pricing environments in the key North American energy markets. He also
reviewed trends in the commercial headcount of the business. He summarized
employment agreement statistics, noting that contracts for key personnel had been
signed with relatively low cash outflows.

  Mr. Lavorato reviewed the volume growth in the North American
wholesale gas and power businesses, citing that the growth demonstrated the lead
market-making role of the Company, the role played by Enron OnLine in
significantly expanding market liquidity, and the overall growth in the addressable
markets. He discussed the correlation of volume expansion to increased gross
margin for the business. He reviewed the significant increases demonstrated in the
number of average daily transactions and in counterparties in the gas and power
businesses. He also reviewed the average daily volume of Enron OnLine
compared to competing gas and power transaction platforms.

  Ms. Kitchen then reviewed the origination of structured transactions in the
wholesale business, noting that the transactions leveraged off the strong market
knowledge from the trading business. She summarized profitability from the

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transactions for the first nine months of the year, noting the geographic and
product diversity of the results. She then profiled specific transactions in each of
the gas and power sectors.

Mr. Koenig left the meeting.

  Ms. Kitchen also reviewed the significant asset sales that had occurred
during 2001, quantified the sales proceeds and gains from the transactions, and
commented on the value of the Company's market knowledge in timing the entry
into and exit from certain assets.

  Mr. Lavorato then discussed the management of risks related to EES. He
provided background on the risk management practices of EES prior to 2001 and
commented on the significant initiatives to incorporate the EES-related exposures
into the well-established wholesale risk management system. He expressed
confidence in the integration team and in the ability of the wholesale business to
manage the retail exposures and deliver the related commodities at planned prices.
Following his presentation, a discussion ensued.

  Mr. Lavorato provided a summary of the merchant business in South
America, noting that headcount and cost reductions had been effectively
implemented and that business opportunities were generally being pursued with
minimal capital commitments. He provided an update of the Electrobolt project,
noting the commitments of lenders to the project and the economics of the project
to the Company.

  Mr. Lay then called for an executive session. All of the Directors noted in
attendance in the open session were in attendance. Messrs. Butts, Buy, Causey,
Colwell, Delainey, Fallon, Gahn, Haedicke, Horton, Hughes, Kean, Koenig,
Lavorato, Leff, McConnell, and Shankman and Mesdames Dietrich and Kitchen
left the meeting. Mr. McCormick entered the meeting.

  Mr. Lay called upon Mr. McMahon to begin the presentation on Enron
Industrial Markets ("EIM"). Mr. McMahon presented the report, a copy of which
is included in the records of the meeting. He provided an overview of the forest
products and steel markets, noting that the Company planned to develop
businesses in these markets very similar to the Company's wholesale gas and
power businesses. He reviewed achievements by EIM during the past year,
including industry acceptance of its business model and significant growth in
physical deliveries and gross margin, which was expected to continue. He noted
that the growth rate of transaction activity was significantly faster than other new
businesses of the Company. He reviewed financial highlights for the nine months

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and expected full year of 2001 compared to the previous year, noting that returns
on equity were expected to continue improving. He discussed the major
investments in the business, including three pulp or newsprint mills. He reviewed
the staffing of EIM, commenting on the success in attracting strong commercial
employees and optimizing the back office and logistics staff. Following his
presentation, a discussion ensued.

Mr. McCormick left the meeting.

  Mr. Duncan provided a summary of the review of EIM's Project
Southwood at the September 25, 2001 meeting of the Executive Committee and
the decision to defer approval until consideration by the Finance Committee and
the Board. Following a discussion, Mr. Lay proposed to defer approval for
approximately two weeks to provide time to further assess the capital markets.

  Mr. Lay commented on the management's awareness of the need to
maintain a motivated workforce and to carefully review business priorities andd
demands on the capital resources of the Company.

Messrs. Bowen, Foster, and McMahon left the meeting.

  Mr. Lay commented on the importance of an on-going review of the
Company's business priorities and corporate strategy, and a discussion ensued.

  Mr. Lay then called upon Mr. Derrick to provide the Legal report. Mr.
Derrick provided an update on matters related to the Company's interest in the
Dabhol power project in India and on certain legal matters in California.

  There being no further business to come before the Board, the meeting was
adjourned at 1:25 p.m., C.D.T.

  . Q d a
Secretary

APPROVED:


  irman

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