2. I shall not today attempt further to define the kinds of material I understand to be embraced... but I know it when I see it. 1964 – Justice Potter Stewart

5. Interest rate chart 10.51% in 1974 13.35% in 1980 Source: (www.federalreserve.gov)

6. Long term gasoline chart Gasoline Prices 1919 - 2005 $1.38 in 1981 $2.27 in 2005 $0.37 in 1973 $0.63 in 1978 Source: (www.eia.doe.gov)

9. Emergency Petroleum Allocation Act of 1973

12. Capped Domestic Crude Oil Prices “New Crude Oil” – No Price Cap “Stripper Oil” – No Price Cap

15. CONTROLLED OIL CERTIFICATE UN-CONTROLLED OIL CERTIFICATE

21. Price controls rescinded January 1981

24. long term crude chart Source: (www.eia.doe.gov)

26. U.K Taxes on North Sea Crude Oil Japanese trading companies seeking to Wall Street begins to arbitrage crude oil increase top line revenue

30. National Energy Policy Act - 1992

33. “you have to understand that market realities have diverged from traditional valuation methodologies”

34. 1. Duke Energy Trading & Marketing, LLC55,885,662 mwh 2. PG&E Energy Trading Power51,330,085 mwh 3. Southern Company Energy Marketing LP42,940,259 mwh 4. Aquila Energy Marketing Corp.39,964,588 mwh 5. Reliant Energy Services, Inc.31,288,607 mwh 6. El Paso Merchant Energy22,339,315 mwh 7. Entergy Power Marketing Corp.18,201,513 mwh 8. Constellation Power Source16,466,585 mwh 9. MIECO, Inc.12,254,449 mwh 10. Sempra Energy Trading11,269,371 mwh 11. Enron Power Marketing Inc. 9,305,833 mwh 12. Williams Energy Marketing & Trading 7,722,926 mwh 13. TXU Energy Trading 6,838,664 mwh 14. New Energy Ventures, Inc. 6,822,925 mwh 15. HQ Energy Services 6,762,105 mwh 16. LG&E Energy Marketing Inc. 6,505,649 mwh Second Quarter 2000 Top Power Marketers (source – PowerMarketers.com)

36. Source: (www.ferc.gov)

38. Source: (www.nasdaq.com)

42. Current market expansion

43. 1.The crude oil trading boom of the late 70’s was based on the gaming of a poorly conceived attempt to legislate energy prices. 2.The crude oil trading boom in the mid 80’s to mid 90’s was based upon a response to evolving tax laws in the U.K., the trading of cargoes of crude oil to bolster top line revenue and by the introduction of the ultimately self- extinguishing practice of arbitrage trading. 3.The boom in power trading in the late 90’s was based upon extraordinary stock market valuations, creating ravenous desire on the part of power marketers to demonstrate superior market share as measured in MWH traded.

44. Continued deregulation Changing load shapes Accurate price reporting Higher ethical standards Clearing of OTC energy products Non-correlated asset High energy prices High volatility Big money Energy is hot Balance sheet & order flow Hedge funds

45. Where do we go from here?

46. 1. Next big thing… 2. Volume growth 3. Sustained volatility 4. Worldwide deregulation 5. Higher allocations to energy 6. Financial institution presence 7. Hedge fund presence 8. Consolidation among utilities 9. Niche players 10.Robust fundamentals

47. We have just begun…