Greg Piper E-Commerce in Energy: What Will it Change?

World Energy Congress

October 28, 2001

Enron Corp.

WholesaleServices

Global Services

RetailServices

Energy Services forIndustrial and CommercialCustomers

Marketing and DeliveryOf CommoditiesWorldwide

Natural Gas Transportationand Electric Distribution

As of June 30, 2001•Assets: > $63 Billion•Revenues: > $100 Billion

Role of E-Commerce In Energy

Open Markets

• Better Allocation of Resources

• Consumer Savings and Product Choice

• High Quality of Service

• Improved Access to Capital

• Lower Intermediation Costs

• Improve Price Discovery

• Liquidity

• More Efficient Markets

E-CommerceWiredEnergy

Economy

FreeFree, , Internet-basedInternet-based, , GlobalGlobal Transaction System Which Allows Customers to Transaction System Which Allows Customers to View View Real Time Commodity PricesReal Time Commodity Prices From Enron and From Enron and Transact InstantlyTransact Instantly Online Online

Case Study: EnronOnline

1.4 Million Transactions

$840 Billion Gross Value

>1,800 Products Offered

Since Inception (Late 1999)

Markets Available On EnronOnline

Commodity Types

Benefits of EnronOnline

• Real-Time Price Discovery

• Secure Transaction Environment

• Known Quality and Delivery Specifications

• Faster than Traditional Channels

• Access to Complementary Markets and Product Information

• Simple Access via the Internet

• Expanded Market Reach

• Enormous Scalability

• Enhanced Risk Control

• Broadened Information Access

• Increased Liquidity to Enron’s Market-Making Services

• Increased Efficiencies

Benefits to EnronBenefits to Customers

Increased Efficiency

Marginal Cost Per Transaction

(Indexed)

25

100

1999 2000

Transactions Per Marketer

672

1999 2000

3,084

Increased Transaction Velocity

Total Enrononline Transactions by Quarter

5,001

60,044

115,000

149,964

222,676

275,880

325,641340,996

0

25,000

50,000

75,000

100,000

125,000

150,000

175,000

200,000

225,000

250,000

275,000

300,000

325,000

350,000

4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01

Efficiently Increasing Order Flow Across New Markets

23%

85%

52% 52%

28%

75%

0%10%20%30%40%50%60%70%80%90%

100%

Natural Gas Power Other

3Q-2000 3Q-2001

* Other Markets Include Crude & Products, Coal, LPG, Petrochemicals, Pulp & Paper and Weather Derivatives

EnronOnline Transactions as a % of Total Enron TransactionsEnronOnline Transactions as a % of Total Enron Transactions

Next Evolution?Wired Energy World

Order Capture

EnronOnline

Exchange A

Exchange B

Fulfillment ServicesConfirms/Logistics/Settlements

Central Process Hub

Company X

Company Y

Company Z

Risk CaptureCompletedTrades

CompletedTrades

• Automates Mid and Back Office Functions

• Will Allow Industry to Process More Transactions More Efficiently

• Will Reduce Errors

• Will Allow For More Straight-Through-Processing

• Currently Set Up For North America Gas And Power

Conclusion

• Open Markets And E-Commerce Are Driving the New Energy Economy

• EnronOnline Is Helping Energy Markets Work Better And Faster– Easier Price Discovery

– Lower Transaction Costs

– More Convenience

– Next Step: Central Process Hub For Logistics And Settlements

• E-Commerce Doesn’t Create Markets……. It Just

Accelerates Them.