1. 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.

2. 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, Frozen energy rate ends with PG&E and SCE rate freeze end date

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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