Texas-Cristobal Mega-Transco Growth Options & Synergy Savings Executive Summary February 4, 2000 PricewaterhouseCoopers LLP PricewaterhouseCoopers Securities LLC 1

Objectives This Engagement Evaluates areas of revenue growth Examines commercial, strategic, and organizational aspects of each option Provides a preliminary value assessment Provides a preliminary assessment of synergy savings in: Operations & Maintenance (O&M) costs General & Administrative (G&A) costs Broader Objectives To assist Texas in its internal examination of the value of the deal initial discussions and negotiations 2 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Growth Options & Synergy Categories Five Growth Options Improve Pricing & Network Utilization Implement Radical Outsourcing and Technology Joint Ventures Acquire Transmission Assets and Performe O&M for Others Develop Merchant Facilities Enhance Rights-of-Way Synergy Savings Lower O&M costs Lower G&A costs Synergies apply to both pipes and wires 3 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Texas’ Value Proposition Texas brings superior commercial, strategic, and organizational expertise to the mega-transco An overall P/E four times that of Cristobal partners A proven track record of creating value Ability to design and commercialize innovative products and services Regulatory knowledge and expertise Successful track record of spinning off businesses Superb organizational and management skills 4 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Growth Option 1 - Improved Pricing & Network Utilization Definition Increase electric and gas throughput and profits through innovative pricing and products Preliminary Value Potential EBITDA of $42 - $125 MM Timeframe 40%, 75%, and 100% in years 1, 2, and 3 Key Success Factors Optimize realtime gas and electric information Regulatory approval of rates 5 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Growth Option 2 - Implement Radical Outsourcing & Technology Joint Ventures Definition Adopt radical outsourcing of non-core functions Implement new network technologies by sharing risks with technology innovators Preliminary Value Potential EBITDA of $31 - $50 MM Timeframe 25%, 50%, 75%, and 100% in years 1, 2, 3, and 4 Key Success Factors Willingness to strip staffing to strategy, finance, and contracting Ability to implement cutting edge technologies 6 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Growth Option 3 - Acquire Transmission Assets and Perform O&M for Others Definition Acquire other RTOs or transmission assets from utilities Take on O&M responsibilities of others Preliminary Value Potential EBITDA of $53 - $151 MM Timeframe May be slow to develop 25%, 50%, and 75% in years 3, 4, and 5 Key Success Factors Aggressive bidding for assets and contracts Utilities’ willingness to sell assets 7 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Growth Option 4 - Develop Merchant Facilities Definition Develop new transmission facilities explicitly for open access Decide when and where to build electric or gas transmission lines Preliminary Value Longer term option with little or no potential value in the five year horizon Timeframe Slow to develop Key Success Factors Ability to recongnize new capacity and line siting needs (gas versus electric) Ability to gain rapid regulatory and right-of-way approvals 8 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Growth Option 5 - Enhance Rights-of-Way Definition Add new energy facilities to existing lines and rights-of-way Site new cable, fiber optic, and telecommunications lines Implement existing rights-of-way for alternative uses such railroad or for tourism Preliminary Value Longer term option with little or no potential value in the five year horizon Timeframe Slow to develop Key Success Factors Ability to recognize implementable alternative uses of existing RoW Ability to gain regulatory approval 9 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Range of EBITDA Contributions from Growth Options 10 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Synergy Savings - Operations & Maintenance Definition Achieve Texas’ level of O&M costs per mile in Cristobal’s gas network “Texasize” the O&M practices in Cristobal’s electric network Preliminary EBITDA Contribution Pipes-to-Pipes $84 MM Pipes-to-Wires N/A Timeframe 50% in year 1, 100% in year2 11 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Synergy Savings - General & Administrative Definition Achieve Texas’ level of G&A costs per mile in Cristobal’s gas network “Texasize” the G&A practices in Cristobal’s electric network Preliminary EBITDA Contribution Pipes-to-Pipes $14 MM Pipes-to-Wires $4 MM Timeframe 50% in year 1 and 100% in year 2 12 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Total EBITDA Contributions Months from Approval $ Million Note: Values for growth options are mid points of estimated EBITDA range 13 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Incremental Market Value from Growth & Synergy $ Million 14 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Incremental Market Value at 17X EBITDA 15 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Relative Contributions of Growth and Synergies Overtime (At EBITDA x17) All figures in $ Million 16 PricewaterhouseCoopers Securities PricewaterhouseCoopers

Conclusions The realization of incremental market value at several multiples of EBITDA is possible only through the participation of Texas in the mega-transco deal The EBITDA contributions from growth options and synergy savings range from $94 million in year 1 to $318 million in year 5 At 17 multiple, the incremental market value of growth and synergy savings represent $1.6 billion in year 1 to $5.4 billion in year 5 These values represent increments over mega-transco’s preliminary market value of $17 billion of 9% in year 1 and 32% in year 5 Additional EBITDA contributions may be realized for other growth options once more information becomes available 17 PricewaterhouseCoopers Securities PricewaterhouseCoopers