1. Privileged and Confidential
El Paso Pipeline Transportation Proposal
Prepared for:
City of Santa Clara
Privileged and Confidential
Kim Ward, Manager
West Gas Origination
September 26, 2001

2. Table of Contents General overview: scope of proposal
Supply/load portfolio: City of Santa Clara
ENA transportation capacity proposal
Benefits of ENA proposal
Next steps
Due diligence
Posting procedures
Appendix
El Paso tariff sheet

3. General Overview
ENA has reviewed the current economics related to transportation and concluded that there is an opportunity for in-state PG&E customer load to acquire physical transportation on EPNG at full tolls (or better) which provides:
Transportation at market based rates
Flexibility to manage price risk by purchasing gas at supply region versus market region
Avoid long term demand charges by entering into open seasons for years when shorter dated capacity is available
Create optionality
We have reviewed Santa Clara’s load and, based on current and future requirements (3,000 MMBtu/d increasing to 20,000 MMBtu/d), the Enron capacity being discussed provides an excellent fit:
the City of Santa Clara completes the construction of its 110 MW generation asset (start date Q2’03?)
Santa Clara can control its gas supply by integrating upstream transportation from the supply pools
This capacity is PG&E recallable (Block II) with primary receipt points of San Juan, Permian, and Anadarko, which will be re-designated to a 60% San Juan/40% Permian primary receipt point allocation (as per upcoming FERC orders)

4. City of Santa Clara: Supply/Load Portfolio
The ENA capacity is designed to fit Santa Clara’s supply shortfall beginning in 2003 as the Redwood capacity expires and the 110 MW facility comes on
Proposed EPNG Capacity from ENA
Estimated load for Santa Clara’s new generation asset in 2003:
110 MW
x 8.5 MMBtu/MWh
x 24 hrs/day
22,440 MMBtu per day
Redwood Capacity of 6,000 MMBtu/d expires in Dec 2002
Physical supply short continues

5. ENA Transportation Proposal
Benefits:
Definitive start date customized for customer needs
Short dated firm obligations:
ENA capacity expires May 31, 2006 and you hold the renewal rights. The optionality of this expiration window could be significant.
Compared to open seasons that the industry just went through and the obligations recently committed to, this capacity is a premium transportation product.
Open Season
Term/Obligation
Estimated Tariff
Probability
Estimated Start Date
Southern Trails
15 years
$0.52
< 30%
May 2002
Ruby
$0.87
50/50
Late 2004
PGT
30/52 years
$0.42
90%
Nov. 2002/2003
TW – Red Rock
5/15 years
$0.68/$0.38
June 2002
TW – Sun Devil
$0.34
June 2005
Sonoran
20 years
$0.39
May 2004
Kern River
10/15 years
$0.70/$0.57
May 2003
El Paso (ENA)
2.5 years
$0.33
100%
Jan 2003

6. ENA Transportation Proposal (cont’d)
Receipt point service will be diversified – 60-70% San Juan and 30-40% Permian
Regulatory uncertainty with El Paso is going to continue to prohibit any real expansions of the pipe until FERC issues regarding fuel requirements, CD shipper rights, and receipt point allocation are resolved (estimated to be February 2002).
ENA will pay either an up-front lump sum payment or an annuity payment, depending on customer preference (based on fair market value at the time of transaction).
Customer has option at the time of transfer to appoint ENA as agent to conduct operational and accounting services:
Nominations at reciept points
Pipeline nominations
Daily balancing
Consolidated statement – pipeline, payables, receivables

7. Transportation Supply Paths
Kingsgate
PGT
NWPL
Malin
PG&E Redwood
Opal
Santa Clara
PG&E Baja
San Juan Basin
El Paso
Topock
El Paso
Permian Basin

8. Historical San Juan/Permian vs Topock

9. Historical Transportation Economics
This capacity, since Jan 2000 through Sep 2001 would have been in the money 68% of the time and saved approximately $15-17 million (daily vs daily) on the 20,000 MMBtu/d we are discussing
Even though current economics, tolls vs market, are at the money, this capacity offers the buyer access to low cost supply and lower volatility supply with minimal downside risk

10. Forward Value of EPNG Transportation
The earlier the start date, the larger the lump sum payment can be (based on current economics).

11. Forward Value of EPNG Transportation
The earlier the start date, the larger the lump sum payment can be (based on current economics).
Present Value of 20,000 MMBtu/d of Capacity
Start Date

12. Next Steps Definitive Agreement is raised (term, volume, economics)
Customer conducts due diligence with EPNG/PG&E
Credit approved with pipe
Customer & EPNG review pipe tariff, recall right obligation, renewal rights
Posting procedures
ENA posts capacity on bulletin board with all terms & conditions