California Product Offerings June 2001 This information is presented for discussion purposes only and is not intended to create a binding contract or commitment and may not be relied upon as a basis for a contract by estoppel or otherwise. Prices quoted are indicative and are subject to change pending execution of a definitive agreement.

Legislative Issues ABX1 - Suspended Direct Access (DA) in February but implementation was delayed pending a date subject to CPUC discretion Recent CPUC proposal establishes a date (July 1, 2001) to suspend a retail end user’s right to choose their electricity provider Alternate proposal would NOT suspend DA but solicits feedback on how to ensure that funds are collected from ratepayers SBX43 - Extended to commercial and industrial customers in San Diego a frozen energy rate of $65/MWh and is retroactive to February 7, 2001. Frozen energy rate ends with PG&E and SCE rate freeze end date

California Rate Stabilization The California Public Utilities Commission (CPUC) approved a system average increase of 3 cents, with asymmetrical increases across customer classes. The new design is reflected in the updated tariffs for SCE, while PG&E’s the new rate design is captured in an advice letter The increases went into effect on June 1, 2001 and should show up on your July bill Medium to larger commercial and industrial customers will be subjected to 40% to 75% price increases depending on their applicable rate schedule and consumption pattern Enron can offer a quantifiable savings on the generation component of your electricity bill

California Energy Market Outlook Rotating blackouts in California throughout the summer NERC estimates about 260 hrs of “lights out” over the summer Tight capacity conditions in the Pacific Northwest will limit California import availability due to rain shortfall 2/3 of the power supply is hydropower in the Pacific Northwest CAISO may be short as much as 5,500 MWs during peak periods Continued heavy loading on the transmission system Electric power system will be vulnerable to: Overall increased temperatures and weather spikes Higher than expected generator unavailability Fuel costs for existing and new gas-fired generation plants

Enron Products Value to Customer Fixed Price Commodity Enron will deliver physically or via third party, retail electricity for all accounts under contract Customer will receive, for a fixed price, retail power consisting of ancillary services, losses to UDC, congestion and ISO administration fees Transmission, Distribution, surcharges, exit fees & other UDC related costs are excluded from the fixed price The product offering consists of 3, 4, or 5 year terms Value to Customer Customer Control: Freedom to choose electricity provider of lower cost Lower Price: Enron’s commodity price will beat the UDC generation component

Enron Products Value to Customer Index Price Enron will deliver physically or via third party, retail electricity for all accounts under contract Customer will receive, for an index plus fixed basis price, retail power consisting of ancillary services, losses to UDC, congestion and ISO administration fees Transmission, Distribution, surcharges, exit fees & other UDC related costs are excluded from the fixed price Reference point is Dow Jones NP-15 or SP-15 Index as Reported in Wall Street Journal Billed index is a blend of 55% on-peak index price and 45% off-peak index price Value to Customer Customer Control: Freedom to choose electricity provider Market Price: Customer participates in 100% of market movement

Fixed/Index Combination Enron Products Fixed/Index Combination Enron will deliver physically or via third party, retail electricity for all accounts under contract Customer will receive fixed priced retail generation for the balance on 2001 and move to an index plus fixed basis structure for the balance of the contract term Retail power consists of ancillary services, losses to UDC, congestion and ISO administration fees Transmission, Distribution, surcharges, exit fees & other UDC related costs are excluded from the fixed price Value to Customer Customer Control: Freedom to choose electricity provider Lower Price: Enron’s commodity price will beat the UDC generation component

Combination with Enron Option Enron Products Combination with Enron Option Enron will deliver physically or via third party, retail electricity for all accounts under contract Customer will receive fixed priced retail generation for the balance on 2001 Enron will serve the remaining term of the agreement at a predetermined fixed basis plus either (a) a fixed energy rate or (b) the index. The choice is Enron’s option. Retail generation includes ancillary services, losses to UDC, congestion and ISO administration fees Transmission, Distribution, surcharges, exit fees & other UDC related costs are excluded from the fixed price Value to Customer Customer Control: Freedom to choose electricity provider Lower Price: Enron’s commodity price will beat the UDC generation component

Current Risks PG&E and SCE have debts that are greater than their assets. In the event that the CPUC allows recovery of such costs, the customer would be responsible for such charges The ISO has incurred significant debts in the past when the DWR does not purchase the net CA short. Any charges associated with recovery of ISO costs will pass to the customer Known Surcharges - $10/MWh Jan 4, 2001 surcharge applies to Direct Access and Utility customers - the CPUC determined that all customers, including DA customers, should pay this surcharge. The customer would be responsible for such surcharge

Current Risks -Continued- Any subsequent surcharges are the responsibility of the customer for Utilities' undercollection during 2000 for historical or future DWR costs Any regulatory decisions that levy additional charges will be the responsibility of the customer Incremental wholesale capacity charges (ICAP) Tax increases or decreases Changes to Transmission, Distribution and UDC related charges Reversal of March 27 decision to not include DA customers in the rate increases (3 cent rate increase); if CPUC changes its mind, then customer would bear that cost