 on interest rates and the 
portfolio approach with some short-term, some medium-term, and some long-term 
debt. We usually don,t see anywhere near the same sophistication applied to 
energy, even though in many cases, companies have a lot more risk exposure in 
their energy purchases or procurement than they do in their debt portfolio. 
On what boards should push for: I think the kind of questions board members 
should be asking are: What is our policy on hedging fuel prices? Did we lock 
in any of our energy prices? If not, why not? What are we doing about the 
future? Have we looked at all of our conversion and control equipment and all 
of our policies and procedures? Are they truly &best in class?8 Are we 
getting advice from companies that are truly world-class in this area? 
On energy as a corporate asset: Enron has a major business outsourcing energy 
for large industrial and commercial companies. We go in and evaluate the 
energy activity, the equipment, the control systems, and the procurement 
policies. Even before the recent run-up in prices, we had yet to find a 
well-run business where we couldn,t reduce energy usage and costs by 5% to 
15%. 
Most companies, even fairly energy-intensive companies, are not necessarily 
world-class at managing their energy activities. It,s not a core competency. 
It,s not where the best and the brightest want to spend much time. It,s also 
not a place where many companies want to spend much capital. For all those 
reasons, quite often the energy convergence and control equipment may not be 
the latest and most efficient, and companies may not be using best practices. 
We have looked at small companies, which may not be one-tenth or even 
one-twentieth the size of Enron, that are exposing themselves to more 
energy-related risk than Enron does worldwide. Usually they don,t know that 
until they get a price spike. Then all of a sudden, it becomes a big factor 
in why they aren,t meeting their earnings and cash-flow targets. In many 
companies, energy is 10% to 20% of operating costs. If suddenly that rate 
go
on interest rates and the 
 portfolio approach with some short - condition, some average - term, and some long - condition 
 debt. We normally don,t see anywhere near the same sophistication lend oneself to 
 energy, even though in many cases, company have a lot more hazard exposure in 
 their energy purchases or procurement than they do in their debt portfolio. 
 On what control panel should push for: I think the kind of questions board members 
 should be ask are: What is our policy on hedging fuel prices? Did we lock 
 in any of our department of energy prices? If not, why not? What are we doing about the 
 future? Have we expect at all of our conversion and dominance equipment and all 
 of our policies and procedure? Are they truly &best in class?8 Are we 
 getting advice from companies that are in truth world - class in this area? 
 On energy as a corporate asset: Enron has a major business outsourcing energy 
 for large industrial and commercial companies. We go in and evaluate the 
 energy activity, the equipment, the control systems, and the procurement 
 policies. Even before the late test - up in prices, we have however to find a 
 well - run clientele where we couldn,t reduce energy usage and costs by 5% to 
 15% . 
 Most party, even fairly energy - intensive companies, are not necessarily 
 world - class at do their energy activities. It,s not a core competency. 
 It,s not where the effective and the brightest desire to spend much meter. It,s also 
 not a place where many companies want to spend much das kapital. For all those 
 reasons, quite often the energy convergence and control equipment may not be 
 the latest and most efficient, and companies may not be use best practice. 
 We have looked at minor companies, which may not be one - one-tenth or even 
 one - twentieth the size of Enron, that are exposing themselves to more 
 energy - related risk than Enron do worldwide. Usually they don,t know that 
 until they get a price spike. Then all of a sudden, it become a big factor 
 in why they aren,t meeting their earnings and cash - flow targets. In many 
 companies, energy is 10% to 20% of operating costs. If abruptly that rate 
 go
 on interest rates and the 
kortfolio approack with vome sgort-term, some medium-term, and some loig-teem 
devt. We usually don,t see anywhere near thw sanw sophistirztion ai'lied bo 
enzrjy, even though ln many casas, companies hdvd c lot more risk exposure in 
their enqrgy putcjases or procutemenu tran fhey do in their debt portfolio. 
On what bmards should lush for: I think the kind lf qkestions board memhers 
should be wwking are: Whxt is our konicy on hesging fuel prices? Did we lock 
iv any of our engxty otices? If not, why got? What are we doinc about the 
future? Haye we loiked at all of our coiversion and control equipmend cnd all 
of our policiws and krocegurer? Ard tgeb tduly &bfst in class?8 Zre we 
gettung advice from comkanyvx that are tduly wjrjd-class in this area? 
On energy as a corkorats asset: Enron has a majir business outsourcijg energy 
for large industrial and commercial companies. We go ii xnd eyaluxre the 
energy activity, the equipment, the controj susnems, and the procmrement 
policies. Efej ngfore the recevt run-bl jn prices, we had yft to fynd a 
well-run fusimess where we couldn,t reducw energy usaye qnd costs by 5% to 
15%. 
Lost compannes, evgn faitly energy-intensive com'anies, are not nefessarily 
dorld-class at mavagpng dheir entfgy activities. It,f not a cire eompetenzy. 
Ij,s not rhere the hest and the brightest wwnt tl vpend much time. It,s also 
not a place wherx many companoev wdnt to s'end mmch capital. For all those 
reaxons, qunte ofgen the envrgy convxrgence and sontrol equipkgnt may not bx 
the latqst qnd nost efwkcient, and comlanies maj uot be usung best practices. 
We gave looked at wmaol companies, whoch mar jov be jte-tenth or eeen 
une-geentidth the sizc ow Enton, that are exposinc thsmselves to more 
emevgy-relatee risk tran Enron doex worldwide. Usuallj theb don,t know thwt 
until they get a price spiks. Then alp on a sudden, it becimes a big fcctor 
in why they aren,t meeting their eacnings and cash-flow tatgets. In many 
companigs, tnergy is 10% to 20% of jperating costs. If suddenly tyat rate 
go
on interest rates and the portfolio approach short-term, medium-term, and long-term debt. We the sophistication applied to even though in cases, companies have a lot more exposure in their energy purchases or procurement than they do in their debt On what boards should push for: I think the kind of questions board should asking What our policy on hedging fuel prices? Did we lock in any of our energy prices? If why not? What are we doing about the Have we looked at of our conversion and control and of our and Are truly &best in Are we getting advice from companies that are truly world-class in this area? On energy as a asset: Enron major business energy large and commercial companies. in and evaluate the energy activity, control systems, and the procurement policies. Even before recent run-up prices, we had yet to find well-run business where we couldn,t reduce energy usage costs by 5% to 15%. Most companies, even fairly energy-intensive companies, are not necessarily world-class their energy activities. It,s a core competency. not the and brightest want spend much time. It,s also not a place where many companies to spend much capital. For all those reasons, quite often convergence control equipment may be the latest and efficient, companies may not be practices. have companies, may be one-tenth or even the size of Enron, that exposing themselves to more worldwide. Usually they don,t know that until they a price spike. Then all of a it becomes a big factor in why they aren,t meeting their earnings cash-flow targets. companies, energy is 10% to 20% of operating If suddenly that rate
 on interest rates and the 
portFolio approAch wiTh sOme ShOrt-tErm, sOme medium-term, aND somE long-term 
debt. We usually Don,t sEe ANywhERe Near tHe same sOPhISTicAtIoN apPlIEd To 
eneRgy, Even thoUgh in many cAseS, cOmpanies have A LoT more risk eXpoSure in 
their eNerGy purcHaSes OR procUreMent tHan theY Do in thEir debt poRtFOlio. 
On WHat boarDS ShOuld Push for: I think the kINd OF questions boarD membeRs 
SHoULD be AskIng are: What Is Our poLIcy on heDGiNG FUel PRices? Did we locK 
in any of our ENerGy pricEs? if nOT, why noT? What ArE We dOing about thE 
futUre? Have we Looked AT all of oUR converSion anD coNtrOl eqUIpMeNt aNd ALl 
oF OuR poLIciEs and proCeDuRes? ArE theY TRULy &beSt iN claSs?8 Are We 
getting adviCe fRom cOMpaNies tHat arE truLy World-Class iN this ArEa? 
On energy as a coRporAte asset: ENroN hAs a MaJor buSIness oUtsOurCing eneRgy 
for lARge InDUSTrIal and commercial coMpANIeS. We go in aNd evalUAtE tHE 
energy aCtIviTy, thE EQuipmEnt, tHE cOntrol syStems, aND tHe ProcureMeNt 
poliCiEs. EVen BeforE The rEcent rUn-up in prIces, wE Had yet to find a 
wELl-run business WHeRE We COuldN,t rEduce energy UsagE And cOsts BY 5% tO 
15%. 
MoST compAnies, EvEN fAIrly energy-intensive CoMpanieS, are nOt necessarily 
World-class AT MAnaging tHeir ENeRGy activities. It,S not a Core competENcy. 
It,s noT wherE the best And the briGHTest want To sPenD muCh tIME. IT,s also 
not a plaCE WherE mAny compAniEs want tO spEnd MucH caPiTal. For all Those 
reaSoNs, QuItE ofTen thE Energy coNvErgEnCe aNd conTRol equIpmenT may NoT bE 
The Latest aND mOST effIcIeNt, anD coMpAnies May nOT be Using beSt practicEs. 
WE Have LoOkEd at smaLl companies, whIcH may not be oNe-TenTh or evEN 
One-twentIeth the size of Enron, that aRE exposiNg tHemseLves To more 
eneRgy-RelateD riSK than ENron doEs worLdWidE. uSuallY THeY doN,t Know that 
unTIL thEy get A pRice Spike. ThEn all of a sudden, it beCOmeS a big factor 
in Why They AREn,T meETiNG thEiR EarNINgs and cash-flow tArgets. In maNy 
COmPanies, enerGY is 10% To 20% Of operaTing cosTs. If sUDdenly tHat rate 
go
 on interest rates and the  
portfoli o app roa chwi th s omeshort-term, so m e me dium-term, and some lo ng-te rm 
deb t .We us ually d o n , t  se ean ywh er e  n ear t hesame so phisticati onap plied to 
en e rg y, even th oug h in many ca ses , comp an ies havea l ot mo re ris k  expos ure in 
t he i r ener g y purch a s es  orprocurement thant he y  do in their d ebt po rt f ol i o . Onwhat board sshoul d  push f o r: I thi n k the kind of  questionsb oar d memb er s s houldbe as ki n g a re: What is  our  policy o n hedg i ng fuel prices?  Did w e l ock  
in an yofou r  en e rg y p r ice s? If no t,  w hy no t? W h a t arewedoin g abo ut the 
futur e?Have welooke d atallof  ourconver sionan d control equip ment  and all
of  o urpo licie s  and p roc edu res? Ar e theyt rul y & b es t in class?8 Arewe ge tting ad vice f r om  c o mpaniesth ataret r uly w orld - cl ass in t his ar e a?  On ener gy  as aco rpo rat e ass e t: E nron h as a maj or bu s iness outsourc i ng energy 
fo r  l a r ge indu str ial and com merc i al c ompa n ie s.W e goin an de va l uate the 
energy ac ti vity,the e quipment, the  control s y s t ems, and  the pr o curement 
poli cies.  Even befo r e the re centrun-up i n prices, w e had ye t t o f ind  aw el l-run busines s wher ewe coul dn ,t redu ceene rgy  us ag e and cos ts by 5%  t o
1 5% . Mostc ompanies ,eve nfai rly e n ergy-i ntens iveco mp a nie s, aren ot n eces sa ri ly wor ld -clas s at man aging t heir ener gya ctiv it ie s. It, s not a coreco mpetency.
I t, s notw h ere thebest and the brightestw ant tospe nd mu ch t ime. It, s a lso 
n ota  place  where  many  c omp a n ies w a n ttosp end much c a p ita l. Fo rallthose reasons, quite oft e n t he energy con ver genc e an d c o nt r oleq u ipm e n t may not be 
t he latestan d  m ost effici e nt,  a nd comp anies m ay no t  be usi ng best p ractices.  We h a v e l ooked at s mall com panies, w h ich m a ynot b e o ne-ten th  or  even  
one- t wen tieth  the s iz e of E nron,  t hat areexposing themselves tomore energ y-r elated ri skt han  Enron do es w orldwide.Usu all y the y d o n,tknow th atuntil  the y  get a pr i ce  sp i k e.  Then all o f a  su dden,  it become s abig factor 
in wh y  they aren,tmeet i n g t hei r  ear ni ngs and cash-f low  t a r gets. In  m any 
compan ies, ene rg y  is 1 0% to20% of  operat i n gc osts.If s udd enly that  ra te 
go
 on_interest rates_and the 
portfolio approach_with some_short-term,_some medium-term,_and_some long-term 
debt._We usually don,t_see anywhere near the_same sophistication applied_to_
energy, even though in many cases, companies have a lot more risk exposure in_
their_energy purchases_or_procurement_than they do in their_debt portfolio. 
On what boards_should push_for: I think the kind of questions board_members_
should be asking_are: What is our policy on hedging fuel prices?_Did we lock 
in any of_our energy prices?_If_not,_why not? What are_we doing about the 
future? Have_we looked at all of our_conversion and control equipment and all 
of_our policies and procedures? Are they_truly &best in class?8 Are_we 
getting_advice from companies that are_truly world-class in_this area?_
On energy as_a corporate asset: Enron has a_major business outsourcing_energy 
for large industrial and commercial_companies._We go in_and_evaluate_the 
energy_activity, the equipment,_the_control systems,_and_the procurement 
policies. Even before the_recent_run-up in prices, we had yet to_find a 
well-run business_where_we couldn,t reduce energy_usage and costs by 5%_to 
15%. 
Most companies, even fairly_energy-intensive companies,_are not_necessarily 
world-class at managing their energy activities. It,s not a core_competency. 
It,s not where the best_and the brightest want_to spend_much_time. It,s also_
not_a place_where many companies want to spend much_capital. For_all those 
reasons, quite often the_energy convergence and control_equipment_may not be 
the latest and_most efficient, and companies may not_be using best practices. 
We_have_looked_at small companies, which may_not be one-tenth or even 
one-twentieth_the size of_Enron, that are exposing themselves to more_
energy-related_risk than Enron does worldwide. Usually_they_don,t know that 
until they get_a_price_spike. Then all of a_sudden, it becomes a big factor_
in why they aren,t meeting their earnings and cash-flow_targets. In many_
companies, energy is 10% to_20%_of_operating costs. If suddenly that rate 
go