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Enron North America. AC_01_ENA-1 Market-Making + Technology + Scale + Select Assets = Sustainable Competitive Advantage Enron North America North America.

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Presentation on theme: "Enron North America. AC_01_ENA-1 Market-Making + Technology + Scale + Select Assets = Sustainable Competitive Advantage Enron North America North America."— Presentation transcript:

1 Enron North America

2 AC_01_ENA-1 Market-Making + Technology + Scale + Select Assets = Sustainable Competitive Advantage Enron North America North America Energy Markets Providing Tremendous Market Opportunity –Very Large and Rapidly Growing –Increasingly Volatile and Complex Enron is the Leading Provider of Energy in North America Enron Employs the Most Valuable, Flexible Network –Clear Liquidity and Information Advantages –Consistent Earnings Growth –Superior Returns on Invested Capital

3 AC_01_ENA-2 Enron’s Leading Market Position –Further Distancing From Next Tier of Marketers –Major Positive Impact of EnronOnline –Broad-Based Network Growth Enron’s Energy Network Conclusion Enron North America

4 AC_01_ENA-3 North America Enron’s Leading Market Position Third Quarter 2000 (TBtue/d) DukeDynegyAEP Sempra 13.1 15.0 14.1 10.9 9.9 Enron FY00 Power Gas Aquila 40.5 13.3 13.2 12.3 PG&EReliant Coral Southern Source: Gas Daily, Power Markets Week, Oil Daily 19.2 Enron 1999 3QYTD 37.4

5 AC_01_ENA-4 (Average Daily Transactions) Expanded Market Reach, Scalability, Information and Liquidity North America Natural Gas and Power Transactions EnronOnline Traditional 19992000 650 917 1,499 1,898 2,165 2,166 2,761 3,049 3,076 3,171 3,463 3,539 4,922 4,042 EnronOnline – “The” Energy Market-Maker

6 AC_01_ENA-5 (Bcf/d) Canada U. S. 1997199819992000 10.4 11.5 13.9 24.7 +77% North America Physical Natural Gas Volumes

7 AC_01_ENA-6 Marketing Offices Leased Capacity NYMEX Leased Storage Gas Marketing Activity Henry Hub Henry Hub Henry Hub Henry Hub 1999 Canada 4.4 6.3 2000 43% West 2.4 19992000 118% Texas 2.0 2.7 19992000 35% East 4.1 7.4 19992000 80% Central 2.3 1999 2000 5.9 156% Enron’s Wholesale Gas Network 1.1 (Volumes in Bcf/d)

8 AC_01_ENA-7 1997199819992000 (Million MWh) North America Physical Power Volumes +52% 192 402 381 579

9 AC_01_ENA-8 Power Marketing Activity Transmission Grid Marketing Offices NYMEX Marketing Hub Power Plants In Operation In Operation; Sale Pending Under Development 2000 West 1999 239 121 97% 260 (Volumes in Million MWh) Enron’s Wholesale Power Network MAIN Palo Verde Hub Entergy Hub Cinergy Hub Palo Verde Hub Entergy Hub Cinergy Hub Palo Verde Hub Entergy Hub Cinergy Hub MAPP ERCOT FRCC SERC SPP WSCC NPCC TVA Hub MAAC COB Hub Palo Verde Hub 20001999 340 East 31% 260 ECAR PJM Hub Cinergy Hub ComEd Hub

10 AC_01_ENA-9 Gas Pipeline Nominations (Thousands) +304% North America Network Growth Q4 1999Q4 2000 Power Volumes (Million MWh) 381 579 +52% 19992000 West East Natural Gas Volumes (Bcf/d) 13.9 24.7 +77% 19992000 Canada U.S. West Central East 27 30 32 78 126 156 Physical Delivery Points 2,520 2,280 +10% 19992000 Power Gas EnronOnline Products (N.A. Gas and Power) +340% 75 330 19992000

11 AC_01_ENA-10 North America Network Growth Commodity Books 150 314 +109% 19992000 Systems Expenditures ($ Millions) $116 $134 +15% 19992000 Customers 1,250 1,010 +24% 19992000 Transaction Costs (Indexed) 25 100 19992000 220,247 775,071 Total Transactions (Physical and Financial) +252% 19992000 -75%

12 AC_01_ENA-11 Marketing Offices Gas Pipeline Access Electric Grid Access NYMEX Leased Gas Storage Power Plants In Operation In Operation; Sale Pending Under Development COB Hub Palo Verde Hub Entergy Hub MONTERREY PJM Hub SAN FRANCISCO Expansive Market-Making Least-Cost Packaging Reliable Delivery Broad Customer Reach Cross-Commodity Expertise Innovative Products The Most Flexible, Reliable and Valuable Energy Network Enron North America CALGARY PORTLAND DENVER OMAHA HOUSTON TORONTO NEW YORK WASHINGTON CHICAGO Henry Hub

13 AC_01_ENA-12 Enron’s Leading Market Position Enron’s Energy Network Conclusion Enron North America

14 AC_01_ENA-13 Products & Services Information $ Products & Services Information $ Rapid Capture of Real Time Market and Grid Information Quickly Disseminated and Acted Upon By Enron Products & Services Enron North America’s Energy Network Products & Services Information Producers Financial Market Industrials Utilities Marketers Power Plants /IPPS People Technology Contractual Assets Owned Assets Clear Information and Liquidity Advantage $ $ $$ $

15 AC_01_ENA-14 Greater Flexibility and Speed to Market More Effective Risk Management in Volatile Markets Price Advantages Superior Market Knowledge Premium Structured Products Generating Consistent Earnings Growth Regardless of Market Conditions Network Competitive Advantages Value Enron North America Value Formula Core Capabilities Physical Commodity Products Financial Risk Management Capital Structuring and Services Asset Development And Operation += Regional and Cross-Commodity Arbitrage Liquidity Provision + Enron Culture Innovative Best and the Brightest Employees Entrepreneurial Environment

16 AC_01_ENA-15 Tuning the Network Enron’s Network Approach is Flexible and Less Capital Intensive Enron’s Increased Liquidity Diminishes Need for Certain Assets Other Market Participants Value Assets Differently Actions Result in Equal Earnings Power with Less Invested Capital Enron Can Uniquely Replicate Assets Through Contracts and Market-Making Contracted Sales 1999 Peakers- 900 MW 2000 Peakers- 1,600 MW Houston Pipe Line (Intrastate)

17 AC_01_ENA-16 MAIN Cinergy Hub E MAPP WSCC SPP ERCOT ECAR NPCC MACC SERC Developing 750 MW Plant Permitting in Progress, In Service Summer 2003 Strategic Location With Expansion Opportunities Pastoria, California Network Power Options Mexico Developing 245 MW Gas-Fired Plant Acquired Long-Term Contractual Access to 700 MW Enron Controls Plant Dispatch Alberta, Canada Power Plants: In Operation In Early Development In Operation; Sale Pending Offices Transmission Grid Enron’s Continual Market Assessment Drives Future Decisions

18 AC_01_ENA-17 Enron North America Further Enhancing Strong Returns Accelerating Earnings with Minimal Incremental Capital Capitalizing on People, Technology and the Network for Greater Returns Than Traditional Assets Generate Further Expanding Strong Market Franchise for Future Growth Opportunities Growth in Return on Capital Employed (Indexed to 1998) 1.0 0 2.0 3.0 4.0 5.0 6.0 7.0

19 AC_01_ENA-18 Market-Making + Technology + Scale + Select Assets = Sustainable Competitive Advantage Enron North America North America Energy Markets Providing Tremendous Market Opportunity –Very Large and Rapidly Growing –Increasingly Volatile and Complex Enron is the Leading Provider of Energy in North America Enron Employs the Most Valuable, Flexible Network –Clear Liquidity and Information Advantages –Consistent Earnings Growth –Superior Returns on Invested Capital

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