Synergies between Renewable Energy, Energy Efficiency, and Emissions Offsets  National Trading Program  International Trading Platform Enron is well situated to become the leader in comprehensive attribute offerings  Green Products: Renewable Energy + Emissions Credits/Offsets+Energy Efficiency Savings + Financial Packages Pioneering New Attribute Markets Regulatory Issues  Framework for “currency”  Verification  Preventing Double Counting  Stripping off Attributes  Consistent Generation Information  Recognition of energy efficiency as tradable commodity  Property Rights  Imports/Exports Regulatory Solutions  Promoting regional and national attribute registries  Encouraging creative demand side solutions  Streamlining regulations & reporting standards  Placeholders for future market opportunities © 2000 SB-REP-1000

Renewable Demand Federal Executive Orders –Greening the Government Goal: 2.5% of facilities electric consumption supplied w/ new renewable resources (1,355 GWh) –Energy Efficiency: 35% decrease in energy usage from 1998 levels by 2010 State and City Purchase Orders LA City Gov’t Purchases : 10% starting July ’01 City of Chicago: 20% w/in 5 years New York State Gov’t Facilities: 20% by 2010 Maryland State Gov’t Facilities: 6% Federal Tax Credits and Incentive Monies Customer Demand (2-4%) Examples of Green RFPs –City of Chicago (80 MW) –State of New Jersey (123,000 MW) –State of Pennsylvania (5% of Department of General Services purchase) –BPA (1,000 MW) Utility Green Pricing –80 programs (73 MW MW planned) Corporate commitment (11 Companies to purchase 1000 MW)

NV: 1% by 2009 (50% solar) AZ: 1.1% by 2007 (60% solar) NM: 5% of Standard Offer TX: 2.2% by 2009 (2000MW) PA: 2% default provider NJ: 6.5% by 2012 CT: 7% by 2009 MA: 4% new by 2009 (1% each year thereafter ME: 30% by 2000 (requirement per year) Total: 3,800 MW by Incentive Funds* (1.7 billion through 2010) *in conjunction w/ restructuring Renewable Regulatory Demand Renewable Portfolio Standards Systems Benefit Funds © 2000 SB-REP-1000

Environmental Legislative and Regulatory Hurdles CURRENT STATUS: Multiple state approaches are creating marketplace barriers –programs lack uniformity, efficiency, cost efficiency and clarity RPS –definitions vary, percentage requirements vary Disclosure –labels vary; reporting requirements and timing for reporting vary; definitions for fuel mix vary; interim standards –internal and external costs Verification RESULT: Illiquid Market; difficult to project value of Renewable energy © 2000 SB-REP-1000

Generation Credit Market There are two components to generation: the environmental attributes and the energy. A “credit” represents all of the attributes associated with the underlying energy. A credit based system allows the two components to sell as a bundled product (attribute+energy); or as two separate products –Environmental Attributes can be stripped away from the energy, quantified, packaged and sold as “Credits” –Electricity is sold separately as generic energy What is a “Credit”? Background: A credit based system facilitates purchases of renewable energy resources, and provides verification for compliance with state regulatory requirements such as purchase mandates and disclosure. © 2000 SB-REP-1000

Strategy Going Forward Status of REC Trading Markets –CA (APX), OH & IL (APX), TX, NePool –Developing markets: NY, PJM, NE RTO, WSCC Facilitate/develop regional trading Work for national trading platform © 2000 SB-REP-1000