Briefing Note Enron Canada Corp. March 22, 2001 Ontario Business & Market Overview

Enron Canada - Profile Enron Canada is responsible for Enron’s activities in the Canadian energy sector, particularly gas and electricity trading, marketing and finance. Enron Canada was established in Calgary in 1991 to trade and market natural gas, and currently trades over 6 bcf of gas per day in Canada. Enron Canada Gas Volumes (MMcf/d) Enron Canada has offices in both Calgary and Toronto and employs over 115 people (96 in Calgary alone and 20 in Toronto and Montreal combined).

Enron Canada - Profile As indicated in the Risk Advisory survey below, Enron Canada is viewed as a leading provider of portfolio management services in the Canadian energy sector. Risk Advisory’s 1999 Survey Polled Over Eighty Canadian Natural Gas Producers, Industrials, and Local Distribution Companies. Here are some of the categories in which Enron ranked first: Here are some of the categories in which Enron ranked first: Competitive Pricing Range of Products Offered Ability to Transact at Quoted Prices Ability to Advise on Future Market Direction Response Time on Pricing Requests Derivative Product Expertise Relationship with Counterparty Innovative customized strategies / structures, both physical & financial From a cumulative perspective, Enron Canada was viewed as the top provider of Natural Gas Portfolio Management Services

Enron Canada - Profile Enron Canada’s Calgary office has also been actively involved in Alberta’s electricity market, recently investing over CAD $300 million for the power generated over the next 20 years from a 706-megawatt power plant. In 1995, Enron Canada established an office in Toronto in anticipation of and to participate in the deregulation of the Ontario electricity market. Enron Canada has been a very active participant in the restructuring of the Ontario electricity market. Enron Canada was represented on the Market Design Committee and is presently represented on the Board of Directors and Technical Panel of the IMO. Enron Canada Corp. is currently seeking an investor for up to 100% of the investment in the Moore Power Project (“Moore Project”), a peaking power generation facility to be constructed in southwestern Ontario. Although the project is currently on hold pending the resolution of an Ontario market-opening date, Enron Canada Corp. is also reviewing the option to retain and/or further develop the project. The Moore Project is a 166 MW ISO permitted simple cycle natural gas fired merchant plant, sized for expansion to 470 MW simple cycle with interconnections into both Ontario and Michigan. The plant has further potential for future conversion to combined cycle operation. The Moore Project will be constructed south of Sarnia, Ontario. The plant will initially have a 200 MW interconnect to the Ontario 230 kV grid and a 470 MW interconnect to the Michigan 120 kV grid.

Enron Canada - Profile The Ontario Electricity Financial Corporation (OEFC) has also recently awarded Enron Canada the responsibility of assisting OEFC in the management of the Non-Utility Generation (NUG) contracts (Ontario parlance for “QF contracts”) formerly held by Ontario Hydro. NUG contracts under administration account for more than 1,600 MW of the supply in Ontario and $750 million in cash flow per year. Enron Canada has undertaken a major expansion of its Toronto office over the past year. It has invested and is continuing to invest heavily in the development of the information and business systems which Enron and its customers will need in the new Ontario marketplace.

Eastern Canada – Commercial Initiatives SectorOpportunities Industrials (> 25 MW) Covering top 55 industrials (approximately 8 to 10 completed transactions or near execution representing nearly 500MW of load) Leveraging electricity into new gas business NUGs Won OEFC (government) RFP to manage 1,600 MW of non-OPGI generation Providing portfolio management and wholesale electricity services G6 Retail Initiative (< 25 MW; Not Yet Public) Proposed new retail business in association with 4 major municipally-owned utility affiliates, to supply electricity: Industrial / Commercial Residential Services ENERconnect is a services transaction to provide wholesale and retail settlements to approximately 45 MEUs ENERconnect relationship used as platform for providing similar services to industrials and others. Generation Looking at: Industrial Power-by-the-hour Back-up generators OPGI Divestiture Moore Project Trading Operating-Reserve Dispatchability / Flexibility Short-term Trading NUGs

Population 11,669,344 % of Canada 37.9% Average Annual Growth (’91-’00) 1.3% Labour Force (000s), Feb ,322 Employment (000s), Feb ,939 Real Growth % Nominal GDP, 1999 (millions) 396,775 % of Canada 41.4% CPI Inflation % Unemployment Rate, Feb % Exports ($billions) 288,312 Imports ($billions) 246,773 Ontario Debt ($billions) Federal Debt 1999 ($billions) Ontario Fact Sheet

IMO Ontario Power Generation Hydro One Ontario Electricity Finance Corporation / Non- Utility Generators British Energy Independent Electricity Market Operator. Responsible for overseeing the reliability of the Ontario power system. In the open market, the IMO will be in charge of amending the markets rules, as well as collecting and publishing market information. Generation division of former regulated utility, Ontario Hydro Currently own 93.5% of the generation available in the Ontario Province (25,650MW) Must divest down to 35% of total market capacity within 10 years Planning to sell Lambton (1975 MW) coal units and Lennox (2130 MW) natural gas/oil units in Also agreed to sell Bruce (3140MW on line) to British Energy. The owner and operator of the transmission and distribution operations formerly provided by the provincially owned utility. Ontario Electricity Finance Corporation is the holding company established to manage Ontario Hydro’s stranded debt OEFC holds PPAs with Ontario’s 94 NUG units (1768 MW capacity) OEFC with assistance of contract administrator (Enron Canada Corp) will actively manage the power sales from its portfolio of NUG power Completed 18 years lease (with an option for another 25 years) on Bruce Nuclear Station (3140 MW on-line and 3076 MW laid up) As a result, British Energy controls approximately 11% of generation in Ontario Confidential: Enron Canada bought from British Energy a 3 year, 500MW contract starting on the market opening date, valid if market opens prior to December 1, 2001 Ontario – Key Players

Load : All time 20-minute peak demand reached 24,007MW in January The highest summer peak was 23,435 MW in Load is very weather dependent Average Load ( ): »Jan-Feb On Peak = 19,677MW »Jul-Aug On Peak = 18,791MW » = 18,443 MW Average Year-over-Year Load Growth ( ): »1999 On Peak = 2.3% »2000 On Peak = 1.8% » On Peak = 1.4% Supply : Average Generation: »In 1999, OPG generated an average of *18,928 MWh during all On Peak hours. »In 1999, OPG generated an average of *20,215 MWh during Jan-Feb On Peak hours. »In 1999, OPG generated an average of *20,766 MWh during Jul-Aug On Peak hours. Installed Capacity Mix: »31.7% Nuclear (8728 MW) »27.5% Coal (7560 MW) »26.5% Hydro (7230 MW) »7.9% Oil/Gas (2162 MW) »6.4% NUGs (1766 MW) Ontario Supply and Demand * Taken from a table on the IMO website, representing weekly generation by type of fuel. No data is available for 2000.

*Installed Capacity From The IMO 18-Month Outlook, November 2000 Winter Installed Capacity Reserve Margin

Summer Installed Capacity Reserve Margin *Installed Capacity From The IMO 18-Month Outlook, November 2000

*IMO Transitional Information Ontario – Imports/Exports

*Major Intertie Capability : IN OUT –Manitoba Interface –Summer –Winter –Hydro Quebec Interface –Summer 1, –Winter 1, –New York Interface –Summer 1,850 2,350 –Winter 2,150 2,450 –Michigan Interface –Summer 1,500 2,350 –Winter 1,600 2,400 –Minnesota Total Capability Summer 5,007 5,543 Winter 5,448 5,720 *From the IMO 18-Month Outlook (November 2000) Ontario - Imports/Exports