Greg Piper E-Commerce in Energy: What Will it Change? World Energy Congress October 28, 2001

Enron Corp. Wholesale Services Global Services Retail Services Energy Services for Industrial and Commercial Customers Marketing and Delivery Of Commodities Worldwide Natural Gas Transportation and Electric Distribution As of June 30, 2001 Assets: > $63 Billion Revenues: > $100 Billion

Role of E-Commerce In Energy Open Markets Better Allocation of Resources Consumer Savings and Product Choice High Quality of Service Improved Access to Capital Lower Intermediation Costs Improve Price Discovery Liquidity More Efficient Markets E-Commerce Wired Energy Economy

Free, Internet-based, Global Transaction System Which Allows Customers to View Real Time Commodity Prices From Enron and Transact Instantly Online Case Study: EnronOnline 1.4 Million Transactions $840 Billion Gross Value >1,800 Products Offered Since Inception (Late 1999)

Markets Available On EnronOnline Commodity Types

Benefits of EnronOnline Real-Time Price Discovery Secure Transaction Environment Known Quality and Delivery Specifications Faster than Traditional Channels Access to Complementary Markets and Product Information Simple Access via the Internet Expanded Market Reach Enormous Scalability Enhanced Risk Control Broadened Information Access Increased Liquidity to Enron’s Market-Making Services Increased Efficiencies Benefits to Enron Benefits to Customers

Increased Efficiency Marginal Cost Per Transaction (Indexed) Transactions Per Marketer ,084

Increased Transaction Velocity Total Enrononline Transactions by Quarter

Efficiently Increasing Order Flow Across New Markets * Other Markets Include Crude & Products, Coal, LPG, Petrochemicals, Pulp & Paper and Weather Derivatives EnronOnline Transactions as a % of Total Enron Transactions

Next Evolution? W ired Energy World Order Capture EnronOnline Exchange A Exchange B Fulfillment Services Confirms/Logistics/Settlements Central Process Hub Company X Company Y Company Z Risk Capture Completed Trades Completed Trades

Automates Mid and Back Office Functions Will Allow Industry to Process More Transactions More Efficiently Will Reduce Errors Will Allow For More Straight-Through-Processing Currently Set Up For North America Gas And Power

Conclusion Open Markets And E-Commerce Are Driving the New Energy Economy EnronOnline Is Helping Energy Markets Work Better And Faster –Easier Price Discovery –Lower Transaction Costs –More Convenience –Next Step: Central Process Hub For Logistics And Settlements E-Commerce Doesn’t Create Markets… …. It Just Accelerates Them.