ENRON TRANSPORTATION SERVICES BUSINESS REVIEW November 15, 2001 2002 Plan

Enron Transportation Services Commercial Group Northern Natural Gas Transwestern Florida Gas

2002 Plan

Enron Transportation Services Commercial Group 2002 Plan

Northern Natural Gas 2002 Strategy Replace “2001 Extreme Spread” Revenue achieved in 2001 of $14.8 million Negotiate/rollover $21.7 million of traditional business Structure, negotiate and close $45.7 million of non-traditional business Continue development focus on ethanol and power connects Continue South-end Strategy of enhancing grid connectivity Negotiate contract extensions prior to Rate Case 2002 Plan

Northern Natural Gas Non-Traditional Revenue Capacity realignment structures Storage Stacking Inventory/Asset Monetizations Indexed Based Transport Enron Online Offers Option Base Pricing Regression Analysis Synthetic Transport & Storage These are non-capital ways to get non-traditional margins 2002 Plan

Transwestern Pipeline Company 2002 Strategy Negotiate & close open transport & fuel positions of $ 23.3 MM Projected 92% average west throughput (1.044 Bcf/d) excluding Red Rock construction outages - manage commodity & fuel risk through weather hedges Enhance existing fuel hedges & Index to Index transport deals through basis swaps or other financial products Negotiate rollover of ROFR contracts prior to trigger dates Continue expansion strategy to enhance supply/market access Develop strategic business partnerships: PG&E, Red Cedar & SoCal/Southern Trails 2002 Plan

Enron Transportation Services Enron Transportation Services Business Development Transwestern Sta 1 Heat Recovery $20 million Form a non-regulated affiliate to develop, build, own and operate a 15 MW power plant at Tranwestern’s Compressor Station No. 1 using waste heat exhausted from the new combustion turbine placed in service under the Redrock expansion. Project rationale: earn positive operating cash flows, attractive ROE; test case for comparable projects at other locations (FGT, NNG). Principle risk: volatile power prices Seeking long term power sales with Mohave Electric Co-op, ENA West Desk 2002 Plan

Enron Transportation Services Business Development Sun Devil Project $680 million Develop new facilities on Transwestern to transport 0.5 bcf/d of natural gas from San Juan to power generators in Phoenix. Project rationale: earn positive operating cash flows, attractive ROE. Principle risks: SJ – Permian, SJ – Cal Border gas price spreads; competition from KMI’s Sonoran Pipeline in the supply area; competition from EPNG in the market area. Open season closed August 30 – 1.3 Bcf/d in bids received; A+ estimates completed; currently negotiating commercial commitments with anchor shippers; FERC application to be filed in 2Q-2; commercial service in 2nd half 2004. Numbers below reflect the volume of bids received that are unqualified or more realistic than the total of the open season bids. San Juan – 351,000 Phoenix – 220,000 Cal Border – 65,000 Total 586,000 Prelim environmental cost estimate to prepare for FERC app is $9.4mm 2002 Plan

Enron Transportation Services Business Development TransPecos $135 Enron Transportation Services Business Development TransPecos $135.5 million Form a 50/50 joint venture with KMI to develop, build, own, and operate a new 190 mile, 250,000 mmbtu/d pipeline across the Texas panhandle. The project provides PEMEX with diversification in gas supplies (access to NNG, NGPL, TW, and EPNG). Opportunity to earn positive cash flows, attractive equity returns. Upsides associated with increased throughputs on NNG and TW. Principle risks: PEMEX credit concentration, competition in the market area with EPNG. LOI signed between TW and KMI; commercial proposal tendered to PEMEX; A+ cost estimates completed; PEMEX discussions ongoing. 2002 Plan

Enron Transportation Services Business Development Alaska Highway Pipeline $500 million Rejoin the Alaska Northwest Natural Gas Transportation Company (ANNGTC) with a minority interest of 9.4 percent. Other participants include TCPL, Foothills, PG&E, DUK, EPNG, SEM, NiS, and WMB. Pursuant to ANGTA, ANNGTC was authorized to develop, build, own, and operate a new 745 mile pipeline capable of transporting up to 4 bcf/d of gas from the Alaskan North Slope to the Alaska/Canada border for ultimate delivery to markets in Canada and the lower 48 states of the US (“Alaska Highway Pipeline”). Project rationale: recognize 26 MM gain resulting from re-instatement of historic capital contributions previously written off by Northern Arctic Gas Company (“NAGC”), an Enron affiliate; participate in distributions from the ANNGTC Partnership following successful completion of the pipeline. Principle risks: allowed rate of return, ANS Producer support, emergence of competing projects, historic residual contingent liabilities. Status: MOU imminent; commercial proposal for ANS Producers in 4Q-01; restated Project Agreements in 1Q-02; commercial operations in 2007. 2002 Plan