Operations Directors Conference October 9, 2001 Transwestern Pipeline Company Steve Harris Vice President Commercial Group

Overview 2001 Results 2002 Plan Market Environment Upside/Downside Projects

2001 Third Current Estimate As of 9/17/2001

2001 Successes $14.7 MM above Plan as of 3rd Current Estimate Subscribed 106,700/d of Red Rock Expansion Capacity (15.5% ROE) All West & East mainline capacity, San Juan & Ignacio to Blanco capacity subscribed New Deal Structures: IT Pool to Pool at CA border (Reliant, Texaco) Index to Index deals (Sempra & Richardson) East to East sharing with alternate West (USGT & Astra)

2001 Successes (continued) Renewed Navajo R-O-W Renewed Laguna R-O-W Marketing capacity through Enron Online Connected 26,000/d of new supply New 200,000/d pipeline interconnect with Oneok Dashboard & Pipeline Profile systems

Transwestern Pipeline Company Commercial Contribution Commercial Group 2002 Operating Plan Commercial Contribution (Millions)

Capacity Subscription Level on Transwestern (including Red Rock)

Expansions to California Filed With the FERC WA 200,000 MMBtu/d Southern Trails PGT Kern EPNG TWPL OR ID WY NV 1,010,000 MMBtu/d UT CO CA 120,000 MMBtu/d OK 150,000 MMBtu/d AZ NM 230,000 MMBtu/d TX

Expansions to California Filed With the FERC Project In-Service Volume TW Red Rock June, 2002 150,000/d EPNG August, 2001 230,000/d PGT (Phase I) November, 2001 200,000/d Southern Trails July, 2002 120,000/d Kern River May, 2002 125,000/d May, 2003 885,000/d TOTAL 1,710,000/d

Additional Expansions Announced Project In-Service Volume TW Sun Devil January, 2004 330,000/d Sonoran (Phase I) Summer, 2003 750,000/d EPNG 320,000/d PGT November, 2003 400,000/d CIG Ruby December, 2003 TOTAL 2,550,000/d

NYMEX Prices ($/MMBtu)

Basin Prices, Border Prices & Transport Rates * ($/MMBtu) $0.320 $0.074 * Transport Rates are net of fuel.

Unhedged Fuel 2001 Actual prices 107% of plan prices Actual unhedged volumes 213% of plan volumes 2002 Volumes to be significantly impacted by Red Rock outages (180,000/d April-May) I to I deals reduce volumes received in-kind

Fuel Prices 2001 vs. 2002 ($/MMBtu) 15,000/d @ $3.96 20,000/d @ $3.55

Potential Impacts 2002 Plan Upside Negotiated rate proceeding: $10MM SoCal rate dispute: $2.2MM Downside Red Rock in-service delay: $1.124MM Gas prices: $.4MM (per $.10 variance) Agave & Amoco options to reduce MAXDTQ: $1.3MM

Load Factor Upside/Downside (Million $) Revenue Difference 85% $202 90% $203 ($1.8) 92% $204 $0.7 95% $205 $1.7

Projects Red Rock Expansion Sun Devil Trans Pecos Southern Trails Caithness/Big Sandy PG&E Potential Opportunities

Red Rock Expansion Incremental 120,000/d delivered to California & East of California Additional hp at Stations 1, 2, 3 & 4 1.210 Bcf/d total deliveries West Supplies from East of Thoreau In-service June, 2001 106,700/d subscribed, resulting in 15.5% ROE

Sun Devil Project $550 MM capital cost 450,000/d capacity to Phoenix Nevada Utah Colorado NNG California Kansas New Mexico Sun Devil Oklahoma TWPL Phoenix Arizona Texas $550 MM capital cost 450,000/d capacity to Phoenix 780,000/d Blanco to Thoreau on TW 330,000/d to CA border on TW

Sun Devil Open Season Results Path San Juan to Thoreau Thoreau to CA Border Thoreau to Phoenix Total Bids Received 651,000/d 265,000/d 440,000/d

TransPecos Project TW/KM LOI executed TP/Pemex LOI tendered: Nevada Utah Colorado NNG California Kansas New Mexico Oklahoma TWPL Arizona Texas TW/KM LOI executed TP/Pemex LOI tendered: 250,000/d @ $.2950/MMBtu Pemex counter-offer: 240,000/d @ $.25/MMBtu NGPL TransPecos

Southern Trails Project Nevada Utah Colorado NNG California Kansas Southern Trails New Mexico Oklahoma Arizona TWPL RFP to purchase West leg, due Oct 15th In-service 7/2002 “East” San Juan to CA border: 87,500 MMBtu/d “West” CA border to Long Beach: -120,000 MMBtu/d Texas

Caithness/Big Sandy Project Nevada Utah Colorado NNG California Kansas New Mexico Arizona Oklahoma TWPL Big Sandy Texas Caithness will build 41 miles to TW Interconnect cost to TW, $550 K 780 MW baseload generating plant Phase I: 520 MW, 90,000/d, Q4 2003 Phase II: 260 MW, 40,000/d, Q3 2004

PG&E Potential Opportunities Bi-directional capability at PG&E/Topock interconnect 20 mile lateral to serve generation plants in Bakersfield area, incremental 300,000/d load