1. - The Shape Of Things To Come - John E. Olson, CFA SVP & Director of Research Sanders Morris Harris Houston, TX 713/220-5151 IPAA Houston Chapter November 12, 2001 THE ENRON MELTDOWN

2. The Top 10 Least Popular People in Houston 1. Ken Lay 2. Jeff Skilling 3. Andy Fastow 4. Osama Ben Ladin 5. Mullah Omar 6. Saddam Hussein 7. John O 8. John O 9. John O 10. John O Source: Unrandom Survey

3. YTD 11/30/01 5-Yr Average20001999199819971996 CMS Energy-22.77.46.3-32.612.934.416.0 Duke Energy-12.620.474.4-18.319.624.42.0 Dynegy-45.0117.6364.4122.7-37.2-24.5162.4 El Paso Energy-36.744.586.713.87.034.680.5 ONEOK-24.932.1110.4-19.9-5.049.221.0 Williams Cos.-31.126.132.7-0.111.554.931.4 Simple Average-28.841.4112.510.91.528.852.2 S&P 500-12.419.2-9.020.928.433.122.7 Enron Corp.-99.039.988.457.339.7-1.415.4 The Energy Conglomerates 5-Year Stock Market Performance (%)

4. Natural Gas Trading (BCF/D) Volumes19992000 9 mos. 2001 Enron13.925.326.2 Duke10.611.913.5 Dynegy8.89.810.9 El Paso4.46.210.1 Reliant7.19.113.7 Total44.762.374.4 Top 25144.0165.0192.5 Total US51.052.353.1

5. Power Trading (MM MWH) Volumes19992000 9 mos. 2001 Enron386586706 Duke121274257 Dynegy70132187 El Paso79106141 Reliant112201271 Total7681,2991,562 Top 252,3543,7363,807 Total US3,7053,8001,851

6. Energy Market Shares GasPower 2000200120002001 Enron15.3%13.6%15.7%18.5% Duke7.27.07.36.8 Dynegy5.95.63.34.9 El Paso4.65.22.83.7 Reliant5.57.15.47.1 38.5% 34.5%41.0% Top 25100.0%

7. Domestic Wellhead Revenues 1970 – 2005E ($ Billions) Year70’s80’s90’s00’s 015.8107.793.8149.8 116.7151.082.3139.1 216.9145.881.5100.7 319.6136.580.3110.1 431.2142.474.2114.0 535.1131.469.9116.7 638.876.699.90.0 744.682.195.20.0 849.872.568.90.0 968.081.182.40.0 Average33.6112.782.8121.7

8. Revenues ($ Billion):199819992000Q3 Duke Energy8.711.633.652.4 Dynegy10.710.521.540.0 El Paso19.022.347.151.8 Enron27.236.295.4184.2 Reliant Resources4.37.919.138.0 Total70.188.5216.8366.3 Marketing & Trading Results Annual Revenue Trends 1998 - 2001 Annualized

9. EBIT ($mm):199819992000Q3 Duke Energy1332094182,472 Dynegy1732097771,548 El Paso2932629391,264 Enron9681,2992,2523,092 Reliant Resources40194851,080 Total EBIT1,6071,9984,8719,456 Marketing & Trading Results 1998 – Q3 2001 Earnings Profile Annualized Run Rate

10. Standard & Poor’s 400 Returns On Average Equity: 1970 – 2006E Year70’s80’s90’s00’s 010.4%15.6%16.6%22.7% 111.1%14.9%10.9%10.7% 212.0%11.3%12.7%13.8% 314.7%12.3%15.7%14.6% 414.7% 22.8%15.0% 512.4%12.2%22.5%15.1% 614.5%11.6%24.8%14.9% 714.5%15.7%24.6%0.0% 815.2%19.4%21.3%0.0% 917.3%18.8%24.8%0.0% Average13.7%14.6%19.7%15.2%

11. S&P 400 Industrials Capital Structures

12. Dynegy Corp. Imputed Profitability Profile (%) 20002001E2002E2003E2004E2005E Marketing & Services30.223.824.824.324.1 Midstream Services2.07.79.811.912.010.8 Transmission & Services0.014.49.89.28.58.0 Global Communications0.0-130.7-82.4-18.410.315.1 Total21.7%17.8%18.8%19.8%20.3%20.4% % Leverage64.5%56.8%56.4%53.6%49.7%48.0%

13. El Paso Energy Imputed Profitability Profile Imputed ROEs (%):199920002001E2002E2003E2004E2005E2006E Pipelines21.823.125.223.721.619.617.815.9 Merchant Energy4.014.513.716.117.919.621.322.8 Field Services13.018.015.320.726.132.239.547.7 Production9.931.257.752.747.443.540.637.8 Other-7.1-18.3-27.9-26.0-25.0-23.0-21.0-18.3 Composite ROEs12.3%17.6%20.3%21.0%21.1% 21.4%21.6% % Leverage67.2%68.9%68.8%67.2%64.5%61.2%57.5%53.3%

14. Duke Energy Imputed Profitability Profile (%) 199920002001E2002E2003E2004E Electric Operations22.522.321.022.521.820.9 Gas Transmission25.622.522.023.422.621.5 Field Services6.210.712.210.911.412.4 Trading & Marketing7.222.042.934.842.348.3 Global Asset Dev.-3.31.9-0.91.21.52.1 Other Energy Services-47.3-28.61.65.15.26.3 Real Estate Operations36.423.318.219.717.316.2 Other Operations-4.5-8.4-29.4-3.6-2.5-1.5 Eliminations & Minority-38.9-75.5-125.1-84.4-88.7-93.7 Total Consolidated15.416.617.417.0 16.9 % Leverage55.359.857.556.855.953.5

15. Imputed ROEs20002001E2002E2003E2004E2005E Pipeline Group242724191512 Portland General13 121087 Capital & Trade192220 19 Energy Services245467807569 Broadband Services-60-80-44-23-81 Corporate & Other-33-51-35-25-19-14 Composite ROEs131415 % Total Leverage57%59%56%52%49%45% Enron Corp Imputed Profitability Profile (%)

16. Enron Asset Profile ($ Billions) Capital & Trade (ECT):9/30/01 Risk Mgmt Assets Adjusted Assets Americas26.7-- Europe And Other14.8-- Global Assets7.6-- Pro Forma ECT Total49.118.730.4 Energy Services1.5-- Portland General4.3-- Gas Pipelines3.5-- Broadband Services1.3-- Corporate2.2-- Total61.818.743.1

17. Analyst Salvage Model (Partnerships Added Back) $ BillionsAssetsDebt Good Bank32.011.8E Bad Bank11.15.0E Total Firm43.116.8 RM Assets18.7 Total Assets61.835.5

18. AssetsRMANet Assets Trading41.518.722.8 Global3.0--3.0 Energy Services1.5--1.5 Broadband1.3--1.3 Corporate2.2--2.2 Chapter 1149.518.730.8 Non Chapter 1112.3--12.3 Total Assets61.818.743.1 * Risk Management Assets: Swaps, Options, etc. Bankruptcy Filings – I ($ Billions)

19. Bankruptcy Filings – II ($ Billions) AssetsDebt Trading (ex RMA)22.88.7E Energy Services1.51.0 Broadband1.41.5 Other (Corp. & Global)5.12.0E Total31.813.2 RM Assets18.70.0 Filed Assets49.513.2

20. Bankruptcy Filings – III ($ Billions) AssetsRMAStatus Portland General4.31.8Sold: $2.9B Pipelines3.51.1NNG Sold: $1.5B Global, Etc.4.60.8-- Total12.43.9

21. Natural Gas Industry Asset Base Yearend, 1994 Data ($ Million)

22. Natural Gas Industry Asset Base June 2001 ($ Million)

23. Base Load Economics Coal vs. Natural Gas Capital Cost ($/kw): Coal Fired (A) Gas Fired (B) Gas Fired (C) Gas Fired Base Plant935524 SO2/Nox Control156000 Total Capital Cost1,091524 Heat Rate9,6456,743 10,000 Fuel Price ($/mmbtu)1.355.003.752.50 Capacity Factor75% Levelized Power Cost ($/mwh): Capital Costs20.269.73 Fixed O&M2.941.58 Variable O&M1.631.00 Total Direct Costs24.8312.31 Fuel Costs13.0233.7225.2925.00 Total Power Costs37.8546.0337.6037.31 (A)= $5.00 Gas (Conventional Wisdom) (B)= Breakeven Coal/Gas Economics With New CoGen Plant (6,743 Heat Rate) (C)= Breakeven Coal/Gas Plant Economics With Old Gas Plant (10,000 Heat Rate)

24. Expected Level of Capacity Additions Region20012002200320042005Total AZNMA_CANVA3,1645,3036,5738,6282,66626,334 ECAR_MAIN7,2268,2818,47810,6513,80038,437 ERCOT6,3756,6052,16151720615,863 FRCC1,9103,7961,3044,46687312,349 MAAC6982,4021,4692,6081,0918,269 MAPP7885834291161,9773,893 NEPOOL1,6614,6241,037394817,797 NWPA7201,5361,4662,4851,0327,239 NYPP2493411,1263,8508386,405 RMPA2956861,0145383482,880 SERC6,98311,21910,34310,4742,46641,485 SPP2,4872,2061,6532,2075699,123 32,55847,58237,05246,93615,948180,075 Of the total expected additions of 180,000 MW, 55% are already under construction or operating. The Midwest and Southeast account for 44% of total additions and 50% of the additions not yet under construction.

25. Projected Gas Production Needs 2001E – 2005E (Billion Cubic Feet Daily) Year Industry Total Our Total 2001E3.52.6 2002E6.22.7 2003E8.33.0 2004E4.52.9 2005E0.23.1 Total (BCF/D)22.714.3 Current Production (May, 2001)53.5 Imputed Five Year Growth43%27% Average Annual Growth Rate8.5%5.4%

26. The Energy Conglomerates 2002 Multiples PricePrice or P/E to Per Share:11/30/0102ECFFOBookAAGRROE CMS Energy$23.0311.13.00.9139%131% Duke Energy$36.1512.36.92.2102%67% Dynegy$30.3511.79.92.258%65% El Paso Energy$44.5012.27.52.482%64% ONEOK$17.2011.04.61.2110%66% Williams Cos.$26.729.76.12.465%42% Simple Average$29.6611.45.91.886%66% S&P 500$1139.4526.5NM4.1331%192% Enron Corp.0.260.50.20.35%14%

27. Natural Gas Production Average Annual Growth Rates: 1970 - 2000 Annual Change (%) Year70’s80’s90’s00’s 05.91.32.92.4 12.8-1.1-0.61.5 20.0-7.10.81.5 30.6-9.71.41.5 4-4.78.54.01.5 5-7.1-5.8-1.21.5 6-0.7-2.41.41.5 70.33.50.31.5 8-0.22.91.5 90.21.2-0.31.5 Average-0.3%-0.9%0.8%1.6%