============= Page 1 of 31 ============= y- BOARD OF DIRECTORS' MEETING December 12, 2000 E0004392275 =XH005-02449 ============= Page 2 of 31 ============= Financial and Earnings Report Fourth Quarter Earnings by Segment If MM) Fourth Quarter Total Year 2000 1999 2000 1999 Wholesale Energy Operations $571 $263 $2,05.4 $ 1,317 Transmission & Distribution 190 202 719 685 Retail Energy Services 37 7 107 168) Broadband Services (32) - (60) - Corporate and Other (72) 1 (227) 48 Interest, MI, & Income Tax (389) (214) (1,369) (1,025) Net Income -recurring $ 305 $259 $1,224 $957 Net Income (SMM) Fourth Quarter Total Y ear Plan Actual Plan Actual Transportation & Distribution Transportation & Storage $ 100 S 55 $263 $ 263 Portland General Group 30 38 129 145 Wholesale North America 56 158 329 643 Europe 36 44 125 140 International Regions 166 3 227 56 Enron Energy Services 18 20 37 46 Enron Broadband Services (3) (32) (42) (71) Corporate and Other (55) 41 124 65 Azurix (3) (22) (19) 163) Recurring Net Income $345 $305 $1,173 $1,224 Balance Sheet Debt 2000 Activity (fMM) Tata Y..r P1., Opening Debt Balance S(81152) S (8.280) Funds Flow from Operations 2.640 2.300 Chang. in Working Capital 140 40 Proceeds horn Sales of Assets 562 1.307 Capital Expenditures (2,142) (1,764) Equity Investments (2.4641 (1,597) Dividends (527) (450) Other 47 4424) Period Activity (1.548) (508) Period Ending Debt Balanc. S (S.700) f 81 700) E0004392276 1 EXH005-02450 ============= Page 3 of 31 ============= Financial and Earnings Report E0004392277 EXH005-02451 ============= Page 4 of 31 ============= •, ~IOv Investor Relations Update Total Return to Shareholder 2000 Year-to-Date` Relative Valuation (PIE Ratio*) E0004392278 December 31, 1999 31. h 26x 16x Enron SAP P- 500 Group L December 6, 2000 51x Enron UP! 1 EXH005-02452 40.5% EP.rpy En- D,0A S&P 500 NASDAQ 1, .r,J ============= Page 5 of 31 ============= Largest Shareholders* (As of November 28, 2000) Change Front Name Shams Held Location W30100 ./.raw C.p/tY ComoMkn 40,000,000 D.m. (11,700,0001 Fkwcy M.r.gan.nl and Rr.rch 19,000.000 Bo.40 2,900,000 WO.rr. Invrbn.nlMrug.tw.L 6.. 10,000,000 Bonbon 1,100,000 A n.rl t C.ntt.y Invuan.nt Man.g..n.+1 14,000,000 K..e Chy 000,000 A,.rk.. E.pra. Fhsbl Advbm. 14.200.000 Mhn..poib 1.600.000 Sodh B. .y A.W Map-1, 12,004,000 H.w York (z000,000) Norl/wn Tn.t Globel Mtlbn.nb 9,400,000 Ch10000 300,000 Mory.t Ot..by D..t WObr Advbo o 7.600.000 N.w Y0k (.,077,000) 1.4- 111 Lynch A..N M-9--t 7,715,000 Pl.k.boro 075,000 D... ron RCM Global 1-It- 6.000.000 San Franabao 300,000 VBS W.rbvg 6,000,000 50001 4 (1,500,000) 001400. Sach. Anal M.np. ,.nl 5,000000 41.0 Yea - D.uboh. A...t MgmVMOga Qar.1.0 5,100,000 London 955.000 AIM MO.g.n..nl Grow 5,500,000 150.000 3,400,000 V.. K.rp.n Fund. 5.500000 H__ 3,200,000 Opp.nbbn. Fondo 5,200,000 N.. YOk 1,306,000 Rarer A...b M.ngw..M 5,000.000 PM4del1M. 650000 Rob.0 KapKN ForvYt.kq 4,500,000 Stockho6n - MsKay 5h1.14. 4,005,000 Now Y.k (435,000) Flnl UN.. 3,100,000 Ch 400*0 70,000 MFS Fb...oIY S.rvka 3,376,000 Boaon 650000 Enron -Segment Valuation (Est.) Mid-Year 2000 SIG -1 SIG ~ I{ WI..Lr.b pb0 ฎ5 T00 Tat December 2000 SIG 670 M.4d. rbbt nl5 Tao TaW~ Investor Relations Update Enron - Segment Valuation (Estimated Analyst Consensus) Per Business Segment Valuation Method Total Share (Millions) Wholesale 35% Premium to Market P/E $32,000 $38.00 (32x) x 2000 Net Income Retail Income Analyst Consensus- $13,000 $15.00 NPV Approach Broadband Services Analyst Consensus - $9,000 $10.00 NPV Approach Transportation & GPG -15 P/E x Distribution 2000 Net Income. PGN -$1.7 Billion $6,000 $7.00 6$ 0.000 70.00 Investor Concerns/Issues • Enron Broadband Services - General Broadband Industry Valuation Declines - Concerns on Rate of Market Acceptance of Bandwidth Trading - Ability to Deliver on Content Services • Azurix - Enron Write-of Risk Related to Reduced Valuation - Enron Capital/Cash Commitment • California Wholesale Power Issues - Refunds, Price Caps, Re-Regulation, Lawsuits, Etc. • New Power Company - Enron's Share of Equity Losses ("Bum Rate") - Market Value Decline • General -. Earnings Generation from UM (Related Party) Activity E0004392279 2 EXH005-02453 ============= Page 6 of 31 ============= TRANSITIONING TO A PROFESSIONAL PARTNERSHIP MODEL WHY A PROFESSIONAL PARTNERSHIP MODEL? World's leading corporations all struggle to retainlmotvate ... relative to leading top talent ... professional firms McKisey & Company aicroso& 1~ P. S~ ฎ Craved,, Swain. & Moore CREATING A PROFESSIONAL PARTNERSHIP MODEL FOR ENRON Traditional Corporate Eneon'. Professional High I roving Model Partneah Model h Leadership Appointed by Board Board appoints corporate Slanted by peen and renlor officers; OTC appoints other management ey positions: most partners elected by peen Organizational Hierarchical line Some hiwachylaM Relatively net structure organtaatlon (e.g., authority, but few layers; no ogaiaaNon; no gmt. small number of limits on number of paban o , number of par ner. executives at the top) Oovemance Hierarchical Mix of Boad, OTC. and Participative, led by cxanmatte leadership -.M- Career path. Well defined. inflexible Mix of traditional career Flexible track.; up or career tracks tracks and lledble tract. ore policy Advancement Tenure based; Meritocracy based on clew Medboecy, based on assessed by direct criteria: asees.ed by peers clear criteria: asst supervisor by peers Compensation San- bonus at risk Significant pay at risk Significant pay at risk Accountability Top down. metric Mutual accountaditty; Mutual accountability; driven holistic Ileliatrc HOWEVER, ENRON NOW FACES THE TYPICAL CHALLENGES OF A HIGHLY SUCCESSFUL COMPANY Perception that "room at the Lop" • Current stock valuation inphies is Invited given a very young substantial earnings growth senior leadership team • Creation of additional shareholder Perception that current stock value will require even higher options have less upside than growth rates those of the past • These growth levels will require • Reality that several -.-lives the rapid and broad development have become independently of new businesses beyond the wealthy boundaries of existing business units Substantial external demand for boron talent KEY ATTRIBUTES OF SUCCESSFUL PROFESSIONAL PARTNERSHIP MODELS • Unlimited number of senior roles (i.e., continuous growth of the partnership) • Meritocracy for advancement and compensation (not tenure or hierarchy driven) Transferability of skills and flexibility to pursue multiple career paths Financial alignment (significant upside and significant risk) that creates strong sense of ownership and mutual accountability • Collegiality and community fostered by common purpose and frequent ad hoc teaminghtetworks • Nonhierarchical governance; periodic rotation and broad involvement in leadership roles and duties Strongly held set of shared values GOVERNANCE STRUCTURE • Reopduibttty to shareholders In L Board of Director appoihthWimrwving corporate etflcers and authorizing major policies and strategy I Omrw of the Ch.1onao Rponaiba for settingiapproving 11 corporate policy, personnel ove Policy Cwnnitee nunagemaet policy, and corporate strategy goal Responsible for tactical ongoing manatFmem Goinmittees InfHativeal Coordination Task Fortes • Personnel Rmkw New business • Executive Coweitlees building Committee (PRCo) Cost reduction • Analyst/ • As su efficiency. Associate return on Invested Committee capital, balance .heel Improvement E0004392280 1 EXH005-02454 ============= Page 7 of 31 ============= ARCHITECTURE FOR ENRON'S PARTNERSHIP • Obligation to build the organization Broad skill sets/diverse management Partners responsibilities • Strong people leadership • Evaluated by corporate PRC (higher career/compensation risk) - - - - - - - - - - ----------------: -----_______-------_- Non-partners • More focused activities and roles • Pre-defined positions and career tracks • Lower compensation at risk THREE TRACKS TO PARTNERSHIP Mo MD VP vP VP ---------------------------------------------- Director Dim for Director Manager Manager Manager Analyst specialist specialist Associate Strategic professional Commercial and technical Support core aaneeerdal • Roles critical b Traditional tdrdeat, activities supporting karasouch a, ad uakniod partnership ovmoadd as nil. amadaaadro role rotes • Key staff iadasldp only rod. eligible for • Multiple veer paths b Poalem, estates far parteareep, 1. Oarbvsan, partnership wg.d>ylon leadr. Mare serer/ Fewer pre o..kt arrtirr moil 00rd pampensauon rhk ro/eskars Paan requires Naghq track. • Less.aeabv,p aaSn risk PERSONNEL ROLES Key roles Of of 1-Chat rman Erdudes, elects, and seta compeneatlon for C Policy ComrnltteeMD. • Appoint all Corporate Policy CommKt, and PRC member, • Approves MD and VP compensation schemes and eraluanonhtctim erneria corporate Policy Committee Soft MD and VP eraloaeon and alectitn criteria • Set MD and VP compare,tien lev.t and 'curve tilt- He- and decide. on MD and VP eraItl Ionl.ledion app..M App...- election states from PRC. Det-inc, prtn.rabl. rots MD PRC (COrporm Policy Committee MO. and aekct.d other EratuoM., ranks, and elect. all MD. and TecMical VP PRC - Evaluate, rank., ad elects all Commercial ad (selected MDs) Strategic Professional and Technical VP. Support VP PRC Evaluates, ranks, and elects Support VP. TWO LEVELS OF PARTNERSHIP Expectations • Proven ability to build and grow businesses; demonstrated commercial impact Managing Director • Expensive -nuship I. organization (MD) • Responsibility to lead/participate in corporate govemanc. Increased • Extensive crossorgancational network Tenure • Broad, diverse skill base • Breadth and tr f bil • Measumbl. commercial impact (direct or ans era ity of skill • Career and Via Prsident enabling) g) compensation (vP) Strong idrinsics n problan sohig, risk people k.dership, and communications • Deep functional skill set DEFINING PARTNERSHIP TRACKS Strategic P. ofts•bal cm.rr.dr and technical Support ROW directly critical eaanadaF Raw career, easl'y or responsible b dal aolang rdcs ue- sVucb ft should not to W M . s Sad dodq Race aranages o .1e /lenme dpd4:ant a.ardal Poi. M o w, to Emm'. (ousbvdng Transferability of MO. risk tdsslm epparedeea • Art. ked s • RAC • mri -rmrs • slrudtrin Rpegne eprasrs l DAM t g criti g g • Tradr. • Selected leadership Sun s a ca 4gal ( awe. rapm*ngi • Yovuwd gang - Legal ideal relate. W • Aronan ng (AP/AR) • llakws d Accounting • Sdecf.d roranars of - HR • IT Fbr.Me warrp. - rT • 1%PR (rapport roles) - Finance AOPS OR/ PR AOPS CURRENT COMPENSATION PRINCIPLES Compensation tenets Relative level of compensation at-risk for partners • Partners have mom: compensation at risk than a typical Options/ corporate executive rstrictd shares • Increasing variability/ spread In compensation ranges Cash by level bonus • Corporate-wide bonus ...,.._.:. Bas. pods for each VP Range of MD compensation salary partnership level E0004392281 2 EXH005-02455 ============= Page 8 of 31 ============= CHALLENGES IN COMPENSATING PARTNERS FOR NEW BUSINESS BUILDING VENTURES Approach I Use salary, cash bonus, and Easy to lose focus on the importance of Enron corporate options! business building restrfcled shorts ao the cob part- reluctant to donate beat people tools to compensate all to . over verdure with more distant and . ~_ prmeas ltgihp Impact on stock price Approach 2 Create special incentive. Violates key tenet of partnership (i.e., (e.g., formulaic single profit pool) compensation vehicles) to Value of new ventures my not be readily be had by those or accurately reflected In stock prlom individuals directly Involved Leaders with formulaic mmpenaatlon may with the crentlon of new be reluctant to -pull the plug' on nen- businesses performing businesses Approach 3 Create specific Align. entire leadership group toward cornpm.ation vehicle. creation of new businesses linked to building new Allows partners to have a portion of busiresse., but whh carnpensatlon tied to long term Enron distributed ownership growth 1. . vehicle otter than shock price roes entire partnership IMPACT OF PARTNERSHIP INTEREST IN NEWT BUSINESS GROWTH 1. Increased support across the organization for new businesses EES EBS 2. Increased accountabilityf'pushback" from partnership group for key decisions • Azurix El RELATIVE IMPACT OF HYBRID COMPENSATION APPROACH Equity interest in new businesses Optionslrestrich d shams cash bonus Base scary VP Range of MD compensation NEW BUSINESS OPPORTUNITY CATEGORIES AND FUNDING SOURCES Type of growth opportunity Funding sources Enron equity GOVERNANCE An independent Board will ensure Integrity and consistency in key compensation issues by • Identifying which new business ventures are placed in each category • Determining funding sources and proportions • Approving specific valuation methodology, take-out provisions, and caps BUILDING THE ENRON OF TOMORROW Tomorrow's Enron Today's Enron Yesterday's Enron Vision • World's First • World's Most • World's Most Natural Gas Innovative Valued Company Major Company Strategic Growth in • New business Broad-based emphasis traditional building around business building asset-based Enron's core development by businesses competencies leveraging intangible capital (i.e., knowledge, talent, networks) Organizational • Corporate Networked Professional concept Model model Partnership Model E0004392282 3 EXH005-02456 ============= Page 9 of 31 ============= TRANSITIONING TO A PROFESSIONAL PARTNERSHIP MODEL E0004392283 EXH005-02457 ============= Page 10 of 31 ============= 2000 Enron Strategic Goals Overall O 2000 Enron Strategic Goals Status 2000 Enron Strategic Goals Overall Goal: Complete sale (and total risk transfer) of merchant assets so that total merchant investments are $200 million or less by year end. Status: In Progress • Merchant assets decreased from $1.1 billion at year end 1999 to $500 million at year end 2000. • Balance includes assets that management considers advantageous to retain at this time. • Monetisation program is on-going. $2.1 billion of assets were sold during 2000. 2000 Enron Strategic Goals Overall (Continued) Enron's total return to shareholder for 2000 year to date has significantly exceeded most comparative indexes. Total Return 2000 (YTD through 12106) Enron Corp. 63.2% S&P 500 (7.0%) Dow Jones Industrials (5.3%) NASDAQ (31.1%) Peer Group - Energy 70.5% Peer Group - Broadband (66.5%) Goal: Achieve earnings and funds flow targets included in the 2000 Plan. Status: Complete All items are currently forecast to exceed Plan. Plan Forecast Net Income S 1,144 million S 1,224 million Earnings per sham $1.35 S 1.42 Funds Flow $ 2,300 million S 2,640 million 2000 Enron Strategic Goals Overall Goal: Maintain premium valuation multiples for Enron. Achieve total return to Enron's shareholders in excess of its peer group and the S&P 500 index. Status: Complete Enron's relative valuation versus the market and peer group improved significantly, as follows: PE Multiple' PIE Multiple 12131199 12106100 Enron Corp. 31x 51x Peer Group 16x 24x S&P 500 26x 23x ' Bath on moo EP.S. estenaha 2000 Enron Strategic Goals Overall Goal: Improve return on book equity to at least 13.5%. Status: Not Complete • Return on book equity is currently forecast to be 11.5% for 2000. • Impacted by delay of asset sales until 1 a quarter 2001. • The return on equity for 2000 would have been 13.7% if the delayed sales had occurred and $5 billion of proceeds from the sales of assets were used to reduce equity. E0004392284 1 EXH005-02458 ============= Page 11 of 31 ============= Wholesale Operations 2000 Goals 2000 Enron Strategic Goals Enron Americas Goal: Achieve a 20% growth in total energy volumes. Status: Complete • Physical natural gas volumes have increased 74% September YTD 1999 to September YTD 2000. • Physical power volumes have increased 42% September YTD 1999 to September YTD 2000. • Maintained position as t1 merchant of power and gas in North America. 2000 Enron Strategic Goals Enron Americas Goal: Clearly establish recurring, profitable merchant business in South America as evidenced by $25 million of earnings in 2000 with a goal of $50 million in 2001. Status: Complete • Wholesale, Direct Sales and Argentina had $25 million of earnings in 2000. • 2001 plan has $50 million earnings goal. 2000 Enron Strategic Goals Wholesale Operations Goal: Execute more commodity intermediation business via EnronOnline than through traditional means. Status: Complete Over 450,000 North America transactions with a notional value greater than $240 billion have been executed through November 2000. Currently, EnronOnline is generating - • 05% of total transactions for North America natural gas • 50% of total transactions for North America electricity power • 52% of total transactions for European commodities. 2000 Enron Strategic Goals Enron Americas Goal: Complete 3 significant utility outsourcing transactions. Status: In Progress Closed 3 significant utility outsourcing transactions during 2000 - • Atlanta Gas Light I Virginia Natural Gas - gas outsourcing - 2yearterm - 30 BCF per year sales • NSTAR (BECO)-power outsourcing - 6 month term - Standard offer • PSEG - gas outsourcing - MOU pending - 60 BCF per year sales 2000 Enron Strategic Goals Enron Europe Goal: Generate at least $200 minion of gross margin outside of the U.K. Status: Complete $240 million of gross margin was generated in areas other than UK gas and power businesses. Goal: Decrease Eastern exposure by $250 million. Status: Not Complete • Working with TXU Europe Group PLC to obtain increased guarantees with additional covenants to cleanly hedge Enron's claim. • Will be finalized in 1+ quarter 2001. E0004392285 2 EXH005-02459 ============= Page 12 of 31 ============= 2000 Enron Strategic Goals Enron Europe Goal: Financially close and monetize three significant Infrastructure projects. Status: Complete Financially closed and monetized four significant projects - • Sutton Bridge - $270 million • National Power - $760 million • Poland, Turkey and Italy Powerstation Balance Sheet Restructure - $125 million • ETOL FAS 125 - $100 million in cash and notes of $105 million. 2000 Enron Strategic Goals Enron Global Markets (CALME) Goal: Financially close and begin construction of the Venezuela LNG project Status: Not Complete • Minority rights agreement with PDVSA is substantially complete and other agreements were finalized in October 2000. • Construction contract with Enron Engineering & Construction substantially complete. • Secured Elba Island storage capacity to provide anchor market for Venezuela LNG and merchant trade. • Optionality for additional markets in Puerto Rico and Dominican Republic. 2000 Enron Strategic Goals Enron Global Assets (South America) Goal: Decrease capital exposure through a profitable sale of certain South American assets. Status: Not complete • Asset monetization strategy is in place- s Significant sales anticipated in 1• quarter 2001. 2000 Enron Strategic Goals Enron Europe (APACHI) Goal: Establish Japanese business as evidenced by aggregation of at least 5,000 megawatts of generation and an active merchant business with 500 mmcfelday of energy transactions. Status: Not Complete • Opened Enron Japan office and launched EnronOnline and Coal trading in Japan. • Pace of regulation changes impacted ability to aggregate generation and develop an active merchant business. 2000 Enron Strategic Goals Enron Global Markets (CALME) Goal: Financially close and begin construction of Dolphin. (Mideast effort) Status: Not Complete • Executed detailed Project Development Agreement among UAE offsets group. TotalFinaEff and Enron to develop the project • Advanced the technical design of facilitiesiselected pipeline routes. • Advanced negotiations with downstream buyers and with Qatar for supplies of 2 - $ bcflday. • Upstream term sheet execution expected in January 2001. • Key commercial agreements targeted for execution by mid-2001. 2000 Enron Strategic Goals Enron Global Assets (India) Goal: Financially close Metgas pipeline transaction and sell 2 Tcf (1.6 MT) of gas along the pipeline. Status: Not Complete • Contracts signed to sell 1.2 MM tons of gas. • Financial close was postponed until the 2•• quarter 2001 to allow additional gas sales. • Currently evaluating degree of Enron equity participation. E0004392286 3 EXH005-02460 ============= Page 13 of 31 ============= 2000 Enron Strategic Goals Enron Global Assets (APACHI) Goal: Leverage value of SK/Enron 20% profitability growth in Korea beyond current venture. Status: Complete • Achieved 100% profitability growth in Korea on SK.Enron joint venture. • Increased SK-Enron's net income from $23 million in 1999 to $4$ million in 2000. 2000 Enron Strategic Goals Enron Net Works Goal: Be the largest and leading a-commerce player. Execute cbusiness plan, which includes starting 5 new businesses and attempting to monetize 3 of them. Status: Complete • EnronOnline has executed over 450,000 transactions with a notional value greater than $240 billion through November 2000. • Several new businesses have been created- - DealBench - Clickpaper.com - Commodity Logic - e-Market Services • Acquired MG Metals in July 2000. Transmission & Distribution 2000 Goals 2000 Enron Strategic Goals Enron Global Assets (APACHI) Goal: Resolve Hainan Island, Vietnam and Mozambique issues. Status: Complete • Concluded sale of Hainan PPC Termination Agreement for $152 million. Receipt of $78 million cash in 2000 with $74 million to be received in 1- quarter 2001. • Successfully completed the sell-down of the Mozambique Project to SASOL for $30 million. • Settlement of Miga Claim on East Java, Indonesia - 515 million. • Vietnam issues resolved with minimum impact to bottom line. 2000 Enron Strategic Goals Enron Net Works Goal: Create $100 million of value for business units that is not in the 2000 Plan. Status: Complete • Significant value added by EnronOnline. • Created a partnership with outside parties to focus on the pulp & paper and steel industries which generated $75 million of earnings in 2000. 2000 Enron Strategic Goals Enron Transportation Services Goal: Continue Florida Gas expansion by completing Phase IV construction, obtaining favorable Preliminary Determination and Environmental Impact Statement on Phase V and receiving market support for Phase Vi. Status: Complete • Obtained FERC certificate on Phase IV, completed construction on the west leg extension and made initial deliveries to Florida Power and Light on October 1. • Received a favorable Preliminary Determination on Phase V. • The Phase V Environmental Impact Statement will be issued early spring 2001. Construction will begin on time by the 2^• quarter 2001. • Strong market support for Phase VI expansion at 150 MMBtWday. E0004392287 4 EXH005-02461 ============= Page 14 of 31 ============= 2000 Enron Strategic Goals Enron Transportation Services Goal: Obtain final FERC certificate for Northern Border's Project 2000 and place in service Transwestem's Gallup Expansion by the 2- quarter. Status: Complete • Obtained FERC certificate for Northern Border's Project 2000 in 1" quarter 2000. • Transwestam's Gallup Expansion was placed into service 2•• quarter 2000. The 140 MMBtulday expansion is fully subscribed with 5-year contracts, resulting in $9 million per year of added revenue. 2000 Enron Strategic Goals Enron Transportation Services Goal: Divest Enron's Clean Fuels business. Status: Not Complete • Several deals were analyzed. • Only nominal offers were made. All offers would have resulted in a substantial write-off for Enron. • Currently evaluating options. Enron Energy Services 2000 Goals 2000 Enron Strategic Goals Enron Transportation Services Goal: Close accretive acquisitions of $100 million and $150 million respectively for EOTT and Northern Border. Status: Change in Business Strategy/Complete • Acquisitions for EOTT have not been pursued due to cost of capital and focus on existing assets. • Northern Border acquired assets for $30 million from various third parties and gathering systems from Enron for $205 million. 2000 Enron Strategic Goals Portland General Goal: Successfully close the sale of PGE to Sierra Pacific Resources. Status: In Progress • Obtained state PUC and FERC approval. • Waiting on SEC approval - meeting set for January 4, 2001. Goal: Meet Trojan decommissioning objectives and successfully manage the Trojan cost recovery. Status: Complete • Decommissioning on track. • Obtained state PUC approval, resolving recovery from customers issue. 2000 Enron Strategic Goals Enron Energy Services Goal: Execute transactions totaling $16 billion of total contract value. Status: Complete Estimated total contract value of $16.6 billion for 2000. Goal: Maintain customer satisfaction overall score ratings between 42 and 5.0. (excellent -4; outstanding -5) Status: Complete Achieved overall customer satisfaction ratings per survey results YTD (through November 2000) of 4.2. E0004392288 5 EXH005-02462 ============= Page 15 of 31 ============= 2000 Enron Strategic Goals Enron Energy Services Goal: Expand commercial operations in Europe and sign agreements representing $2 billion of total contract value while building service delivery capability. Status: Complete • 2000 estimated total contract value of $2 billion. • Installed execution capacity to deliver on outsourcing commitments. • Significant outsourcing deal in UK Trilium, to be signed December 16, 2000. 2000 Enron Strategic Goals Engineering & Construction Goal: Grow the third party customer business by becoming the third largest power contractor in the US. Status: Complete Built NEPCO to third largest power contractor in U.S. with current backlog nearing $2 billion. Goal: Increase cash flow from operations to $100 million Status: Not Complete Projected $60 million in cash flow in 2000 increasing to $83 million in 2001. Enron Broadband Services 2000 Goals 2000 Enron Strategic Goals Enron Energy Services Goal: Establish industrial business with $100 million of gross margin and execute energy outsourcing transactions with a total contract value of $2 billion. Status: Complete • Completed transactions with TCV of $1 billion in 2000. • Investment in Heartland Industrial provides opportunity for TCV of $1 - $2 billion. Formation of Enron Industrial Markets to focus on etommerce and industry specific market-making. EIM has achieved gross margin of $113 million. 2000 Enron Strategic Goals Engineering & Construction Goal: Improve the technical review and due diligence process for construction risk throughout the company. Status: Complete • implemented procedures with RAC to provide sign off on technical aspects of proposed projects during the DASH process. • Market and credit risk books operational January 1, 2001. • Implemented procedures with RAC to DASH 3rd party projects. 2000 Enron Strategic Goals Enron Broadband Services Goal: Achieve scheduled rollout of the Enron Intelligent Network as evidenced by 15,000 fiber miles. 1,500 servers and 13 pooling points. Status: Complete • 16,446 fiber miles haw been constructed. • 20 pooling points have been completed in the US and 1 completed in Europe. • Converted to a significantly more powerful server fleet and deployed 350 servers, which exceeded the targeted content delivery. E0004392289 6 EXH005-02463 ============= Page 16 of 31 ============= 2000 Enron Strategic Goals Enron Broadband Services Goal: Achieve volumetric targets for broadband intermediation (5,000 DS-3 months) and bandwidth services ($200 million of total contract value). Status: Complete • Closed transactions representing 5.700 DS-3 months. • Signed services contracts significantly in excess of $200 million. 2000 Enron Strategic Goals Enron Broadband Services Goal: Develop a platform for a communications business in India by executing a software joint venture and having a data center in operation by the end of 2000. Status: In Progress • Mumbai data center under construction - will be operational in late December 2000. • Joint venture finalized with MSEB and Global Telesystems to develop fiber optical network along MSEB ROW. All operative documents completed. Awaiting internal EBS approvals. 2000 Enron Strategic Goals Exploration & Production Goal: Achieve J.V. operating and management committee approval for Tapti expansion project. Status: Complete, pending strategic decision • Operating Committee approved early funding of preliminary activities. • Technical Committee approved project reserves and infrastructure scope. • Director General office on behalf of government of India endorsed proposed Tapti expansion in November 2000. • Formal Operating and Management Committee approvals are pending EOGIL sale process. 2000 Enron Strategic Goals Enron Broadband Services Goal: Complete a full outsourcing of bandwidth management for two significant customers. Status: complete • Blockbuster -a 20-year exclusive with $900 million in ultimate contract value. • i2, a global provider of a commerce services. Enron Global Exploration & Production 2000 Goals 2000 Enron Strategic Goals Exploration & Production Goal: Resort the significant outstanding commercial issues with all parties associated with our Indian operations. Status: In Progress • Centre for Public Interest Litigation (CPIL) lawsuit was resolved in Enron's favor in October 2000. • Remainder of other issues are scheduled for arbitration. Goal: Close at least one new project Status: Complete • Closed projects in Turkey & US. • Due to intent to exit E&P in 2001, negotiated exit strategies for opportunities captured in 2000 in Korea, UK/North Sea and Chile. E0004392290 7 EXH005-02464 ============= Page 17 of 31 ============= 2000 Enron Strategic Goals Exploration & Production Goal: Work out an acceptable solution for our China Sichuan investment/operations with minimal financial impact Status: Complete • Established sustainable gas production on block. Negotiated 2-year extension with minimal financial commitment (less than $2 million). • Marketing effort underway with expectation of closing in early 2001 with neutral financial impact 2000 Enron Strategic Goals Enron Wind Goal: Complete the Spanish assembly plant and produce 100 TZ750 wind turbine generators. Status: Complete Completed in July 2000 and will produce 100 turbines in 2000. Goal: Deploy a new generation TZ 1.5 wind turbine with a cost of energy equivalent of 3.5 cents/kwh or less. Status: Complete • The 1.5 Mw turbine is now being assembled in Enron Wind's Tehachapi facility. • Continued engineering improvements and component cost reductions have reduced the cost of energy equivalent to approximately 3.5 cents/kwh. 2000 Enron Strategic Goals Finance Goal: Outperform the BBB- Bond Index. Status: Complete Enron has out performed the BBB+ Bond Index the entire year at all maturities by an average of 15 basis points Enron Wind 2000 Goals Enron Global & Staff Functions 2000 Goals 2000 Enron Strategic Goals Finance Goal: Create merchant Investment hedging vehicle to reduce downside earnings exposure. Status: Complete Project Raptor • Provided hedging mechanism for over $1.5 billion of notional public and private equity positions. • Mitigated $460 million of equity losses. • Supplied funds flow of $300 million. E0004392291 8 EXH005-02465 ============= Page 18 of 31 ============= 2000 Enron Strategic Goals Finance Goal: Provide platform(s) for increased capital velocity to achieve return on equity target Status: Complete Established numerous vehicles to stimulate capital markets and reduce use of Enron equity - • Raptor • Hawaii125 • Osprey • Others 2000 Enron Strategic Goals Risk Assessment and Control Goal: Total foreign exchange exposure quantified and communicated to the Board of Directors. Status: Complete • Project completed with final results reported to Finance Committee on December 11. • The notional exposure has been quantified and reported to the Board of Directors. • A template and process has been established to be able to easily report changes in the future. 2000 Enron Strategic Goals Risk Assessment and Control Goal: Solidify the global risk management policy beyond Houston and London. Status: Complete • Project Doorstep inspected every office within Enron to determine if trading was taking place and if controls were being adhered to. • A system was developed to routinely prompt surprise inspections and monitor if the recommendations am being adhered to. 2000 Enron Strategic Goals Strategic Sourcing Goal: Implement strategic sourcing initiative resulting in $100 million of global savings and a-commerce capabilities to market services to third parties. Status: Complete • Negotiated savings of approximately $120 million. $60 million were realized in 2000. • Completed pre-feasibility of offering *Procurement services to third parties and determined that such a service was inconsistent with Enron's view of future market development and eCommerce. 2000 Enron Strategic Goals Risk Assessment and Control Goal: Establish risk and trading control process for risks unique to EES. Status: Complete • Systems have been established and monitoring controls are in place. • A study of the DSM business has been completed and the results presented to the Finance Committee. • A task force has been put in place and has established a work plan. Significant progress has been made against these recommendations. • Tests have highlighted focus areas to determine where the capital dollars are best employed. 2000 Enron Strategic Goals Accounting Goal: Successfully complete implementation of SAP. Status: Complete • SAP was successfully implemented on time and within budget • Favorable opinion from AA on internal controls. 9 E0004392292 =XH 005-02466 ============= Page 19 of 31 ============= 2000 Enron Strategic Goals Investor Relations Goal: Continue delivery of a coordinated and targeted global investor communication, generating premium valuations for Wholesale Energy, Retail Energy and Broadband Services. Status: Complete ' Coordinated and targeted investor communications was aggressively carried out which contributed to total returns and increased valuation levels. • Meetings with investors were held in 37 cities worldwide, at over 26 industry conferences, resulting in over 450 one-on-one meetings. 2000 Enron Strategic Goals Human Resources Goal: Develop an Enron measure for return on human capital. Status: Complete • In the Financial Reviews this year, the following were reviewed: - Number of MDs d VPs - Ratio of Commercial to Non-commercial FTEs -the average is 1:4, with the best ratios of 1:2 in both EEL and ENA. The target is 1:1. • Overall turnover was reviewed as was turnover at specific performance levels. • Each business unit reviewed revenue and net income per employee. 2000 Enron Strategic Goals Public Affairs Goal: Significant, measurable improvement in Enron's reputation (familiarity and favorability) through the successful launch of the brand campaign, establishment of a "21• Century Company" reputation with key international organizations and continued active media relations to produce favorable earned media. Status: Complete • Enron is covered as a leading company in the media, notjust an energy company. Coverage has moved from the trade press and occasional mentions in major business publications to feature coverage in the major business publication and mainstream press. ' Enron has successfully launched a new brand campaign built around the themes of innovation and questioning the status quo. • Enron also successfully launched a corporate responsibility program to manage reputation risk with the NGO community. 2000 Enron Strategic Goals Human Resources Goal: Improve the efficiency of the HR organization by decreasing costs 20%. Status: Complete • Corporate HR costs have been reduced from 2000 plan to 2001 plan by $11 million or 46%. • Overall, Enron HR cost have been reduced by $12 million (19%) from 2000 plan to 2001 plan. ' Costs per employee have been reduced in the 2001 plan to $2,545 from $4,004 in the 2000 plan. 2000 Enron Strategic Goals Public Affairs Goal: Expansion of influence in standard setting process for wholesale and retail energy markets. Status: Complete • Launched a "Coalition for Uniform Business Rules" with industry and public policy representatives. • Scope has been expanded to include both gas and power market rules. 2000 Enron Strategic Goals Diversity -Visions & Values Goal: Be named by Fortune Magazine as one of the top 10 "100 Best Companies to Work for in America". Status: Unknown Results will not be available until mid-December. Indications are that Enron may have moved from 24 to the top 10. A photo shoot has been scheduled, which historically has only been done for the top 10 companies. E0004392293 10 =XH005-02467 ============= Page 20 of 31 ============= 2000 Enron Strategic Goals Scorecard Summary Number Percent Complete 42 72% In Progress 6 10% Not Complete 9 16% Change in Business Strategy 1 2% Total Goals 58 100% 0 D 2000 Enron Strategic Goals E0004392294 11 EXH005-02468 ============= Page 21 of 31 ============= ti~ O 2001 -2003 Operating & Strategic Plan Net Income ($ in millions) 28% Growth 37%Growth $1,224 $957 $698 1998 1999 2000 Actual Actual Forecast 2001 Plan Earnings Before Interest & Taxes Wholesale (S In millions) $1 0W -Power ntarkNS continue to d.regolat. """r"' ~ f9a2 -Gas and power pries remain volatile gyp :Continent .-minus to d.r.qulab E- f330 :Build on syn.rgi.. --td horn Metals E- - flag •Dsnas- capital Intensity ....e. 9270 •Dahboi phase N construction complt.d 7s :Significant liquids trading growth • rr..r. 9110  _ :Expanding LNG markets r.•.mr Ae r fsa awl •incr....d Pulp & Paper and Stool trading •FJ.ctronic platforms to grow market sh.- $102 •L.vaag. off of .listing .LCtronic platforms 9175 nn.we ~ 9200 Our • 9116-2 •Incr.as.d mon.tiaation activity a'141 Recurring Diluted EPS 20% Growth 20% Grovrth t3% Grow h $1.71 $1.42 $1,18 $1.00 1998 1999 2000 2001 Actual Actual Forecast Plan *' 0 Earnings Before Interest & Taxes Transmission & Distribution (S in millions) $390 S391 9329 ;T Pt- N In s.rvica lay 2001 :V.1- a 90% of capacity ;E sold March 31, 2001 f 100 S1- tM~ Enron Transportation S.-ice. ]000 2001 Portland G.rrral GI-111A E0004392295 1 1 1 24% Growth 1 1$1,515 EXH005-02469 ============= Page 22 of 31 ============= Earnings Before Interest & Taxes Enron Energy Services (S in nu lons) :Growth of bundled and consnodity business More value from existing contracts •Expand scalable products & asrvics 1511Gtnci~aw.: 2000 2001 F=t Pl.n Enron Recurring EPS 02.46 Earnings Before Interest & Taxes Enron Broadband Services (S In millions) 2000 2001 Forecast Plan •TCV S300MM in 2001. •Int.mationaI .xpanon •Sliprif cant development of int m..dlation busin.u S(05) Enron Recurring EPS By Quarter so. $0.4! Enron Proceeds from Planned Assets Sales 2001 Plan (S in millions) Related Proceeds Debt 01.ktro $2 .000 S 60 Portland General Electric 1.600 1.020 North American Power Plants 616 - Enron Renewable Energy Corp 700 40 India E&P Asset. 600 South American Gas LDCs 470 - Hai an Power Plant 152 - Copal hwastrnent 135 Tr.-,.d" 70 - M.tGas Pipeline 69 - Sichuan Jialin0 Pow.r Plant 67 230 India Data Canter 67 - All Other 202 Total $6.950 L11 !g O E0004392296 2 EXH005-02470 1.t Otr 2nd Qtr 3rd CM 4th CM  2000 2001 2000 2001 2002 2003 For..rt Prw. Pr.n Plw. ============= Page 23 of 31 ============= Enron Debt & Debt to Capital $9,700 0 o.., 1t,.0400, ) -~- O.M V CyiN Pre F. w. $7,050 - - - - - - - - - - - - - - - - - 39.T% 63.600 39.0% 19.0% 2000 2001 2001 Forecast PI.. Pro Forma Enron Change in Balance Sheet Debt (S in millions) q. Vin/ U awt Not.: Do.. rot k,ckrd. stock b.o. ,a. and other non. Fin] ..x t>' ~.zn a4:- ..>w lift 2000 2001 ~'Pp Actu.t F.r.ce1 P1.. Energy Services Capital Deployed & ROE xeoo (S In millions) 2w1 ES EUCC 0 :F !1,662 oo..x s2.195 l..o% t O.Ox 11JY 0 OA% S ~ 1999 2000 2001 Actwt F...W Pt- 'y9 0 2001 -2003 Operating & Strategic Plan E0004392298 4 =XH005-02472 ============= Page 25 of 31 ============= y~o Enron North America Board Presentation • Financial Review - Third Quarter/Year to Date Snapshot Capital Deployed (S millions) ,YJ,M 1LJ1M 7,{N 62,U3 62,371 tad.d..e.r u..a tut. O1 Sdrd N..f. tiMt 71M fl]a MI/f ,f.. 1~1 Oa-S r 61,053 6666 ION 6716 ~~ w. I f MIND 175,0. 1Nl10 11010 17!!10 173100 Mntha1 me-0- Antis /seas Anti. Board Presentation • Financial Review • 2000 Accomplishments • Market Snapshot • Regulatory Challenges Growth Continues, Driven by Commodity Services EBrr t..ฎ... 1.143 fff M IN W 12 21 sM .3 413" xf 55 2 w 350 7f. IN 62 Enron's Leading Market Position Third Quarter 2000 (TBtue/d) ED Power 47.6 -G- +1669 Sb d.h r 13A 13.3 m c,e. roข - o,. W wry. ra sw... red SP... 6.v. ha E0004392299 EXH005-02473 nv 055. anr..wr ilfl* 7 FwaA 0 1 FW Yo 1 ~ ============= Page 26 of 31 ============= Physical Electricity Sales Volumes (Million MWh) 390 Rapidly Increasing Utilization of EnronOnline (North America Gas and Power Transactions) o Traditional  EnronOnline 100% 100% 100% 100% 01 02 03 04 Board Presentation • Financial Review • 2000 Accomplishments Natural Gas Physical Volumes (Bcf/d) 0 Canada  us 23.1 25.2 qy 13.3 13.9 +92% 74% 3099 3000 YTD3Q99 YTD3000 n fY 113 avras.$v p..0 C oc m 1. i`en bra La.P•W. T 1 .. Pr.. t,l. 1 Pr.. lrs laarrraa..h..r >c rM _ id Lrr. t 2000 Accomplishments Significant expansion in our Canadian power business Transactions: British Energy - 3 year PPA upon Ontario Market Opening (by 04 2001) - 500 MW Fem RTC - U.5.6261MWh • NUG Contract Management - Awarded RFP to assume role of Contract Manager for the Ontario NUO's on behest of OEFC (Ontario Electricity Feuncial Corp.) - 1,700 MW,, 94 IPP's - 3 year term conenencing with Ontario market opening • ENERconnect ESA (Electricity Services Agreement) - Exclusive provider of back office servceslpordolio m.lagement to 64 MEU's - Represents over 1MM -turners, & 3,000 MW load - 3 years upon Ontario market opening, C612MM gross resenu• • Alberta PPA's - 700 MW Acquisition - Coal fired PPA, 20 year term- 70% of full build in M ' ry (637/MWh n f47lM1M1 x116% Role Board Presentation • Financial Review • 2000 Accomplishments • Market Snapshot - Power market • Key Fundamentals Pricing - Gas market • Key Fundamentals • Storage situation • Pricing 2000 Accomplishments Significant expansion of our Mexican business lele St] IM1 Notlom/ Vales 11.7 for Gas Cross-Border (Tex Mex) 21100 %b- 63 3 MM 5l+/ses set% 6203 MM NoaM1a Vale 1,406% Industrial Generation (Vitro) 2a] MW bcMty I 3 PPA'. Met 54tH IrM.fMs 0002002 300 MW IM IC ae bleu... EDT A Mexico 13 Year .112 M W PPA Met D .A- 5.405 11 2000 Accomplishments Completed the monetization of Wind River/Powder River assets • ENA acquired interest in 3 strategic gathering systems in Wyoming from 1999 .1999 • Northam Border recognized potential strategic value to their operations in 1999 and discussions ensued • Q3 2000 Sale of Wind r i River/Powder River Assets to Northern Border 1 - 6204 MM sales price - $76 MM gain on sale 1 • ENA captures future value / in both basins with 1 _ - Risk Man.gen ent ay - Commodity, services ~.. - Oulsoarcbg services undamental E Power Market • Significant year on year core demand growth (5%) - Economic expansion - Intemetrtechnology explosion • Warmer than normal summer in the west - cooler than normal summer In the east • Significant decrease In hydra generation in the West • Minimal capacity additions In the West • Significant increase in new gas fired capacity in the East • Resulting price volatility E0004392301 EXH005-02475 ============= Page 28 of 31 ============= U.S. Power Price Volatility Cinergy Prices Nepool Prices (aver.g. daily per) (average daily tk) n,m I li r' 1 r • v Y_ ~ /~~ r Jr Y• IaI Y Lr Ma Jan Yr M+I N Yy avr Mrl MrY Jul. Sp l/eu JI. aY 11rY JM 4• liar faN f.M -mil ~- 1M. ~ BIM Ifarlrol ILa, Key Fundamental Events Gas Market • US natural gas supply has been relatively flat over past 24 months • Canadian natural gas supply growth has stalled recently despite significant pipeline expansions • Virtually all power demand growth has been met with natural gas • Summer 2000 was very warm In California leading to storage falling below historical levels • Overall storage levels in the US are currently 23% behind last year • Early cold weather brings concerns over late winter deliverability (particularly in California) California Storage Levels -socr 2000 -soc.i 1!ป - -- - - - - - - - - - - - - Current U.S. Gas Inventory Levels sect) 0 V rAverag. 1ปB -2000 WEEK r . a . o . . e Gas Price Volatility SoCal Prices vs HH Prices tse socr I i10 oK,. a,M E0004392302 EXH005-02476 famw ara... M1nw rrn.r nua... ,.a,:... SMMBtu ============= Page 29 of 31 ============= Board Presentation • Financial Review • 2000 Accomplishments • Market Snapshot • Regulatory Challenges Enron North America Regulatory Challenges • California Power Market Crisis - Price cap for parties selling into Cal ISO and Cal PX - FERC Order on Market Reforms - Class Action Lawsuit • FERC Order 2000 RTO Implementation - Scheduled completion Dec. 2001 • Delays In Market Openings - Ontario Market still not committed to "date certain" - Significant Public Policy questions related to continued opening E00043923O3 EXH005-02477 ============= Page 30 of 31 ============= Corporate Responsibility Emerging Trends rha amag.nce of business standards - critical developments In corporate governance and I standards for global operations P. ctist E eo'. ...• Can.9tbn C0,. 0. .e'........••. •5000lY Ch.h. Coesern.y IrnO0t f, ข 70'• Emmh.-. human rights, ibinhdd r S 6a ..- COMUn.r. Ma.erต N.. ^~ Lb.. Codas 6 Compliann: w.pn a Voluntary standards - 5i" voluntary codes / regulation - intamal business principls- czstn N el audit-compliance-public i En..,oing P5 .0.. 1,0 strd.,d. L ]rwpa..ncy Sorec.: Prin- e/ Waks 80.1n- a L..d•n Fenue •t, Why is This Important for Enron? Social and Environmental Issues Present Risks and Opportunities What is Corporate Responsibility? • Corporate responsibility integrates social and environmental considerations into business strategy, market development and decision-making • Sustainable Development - "Meeting the needs of the present, without compromising the ability of future generations to meet their own needs... " (World Commission on Environment and Development, 1987) Emerging Trends and Practices • Shareholder, market, customer and employee interest in non-financial performance and services: - Salomon Smith Barney - Polaroid, Starwood - University of Chicago - Friends of the Earth • Market-based solutions: - Demand for environmentally/socially superior products - Provision of goods and services to address sustainability concerns Benefits of a Strategic Approach • Improve ability to recruit and retain employees • Create new markets • Develop new products and services • Mitigate prod uctlse rvice/ope rations risk • Strengthen brandlreputation • Maintain and improve competitive position E0004392304 1 =XH 005-02478 ============= Page 31 of 31 ============= Progress to Date • Defined mission: "To establish Enron as a leading 21. century company - best in class" • Benchmarked leaders • Established Corporate Responsibility Task Force • Published first Annual EHS Report • Developed Human Rights Policy Proposed Next Steps Expand Board Committee responsibilities - structure - scope Establish external Advisory Committee - high level, internationally-recognized experts - provide insight and information on issues and trends - comment on corporate goals, plans, strategies Goals for 2001 • Work with business units to Identify new products, services, markets and opportunities Integrate social and environmental considerations Into existing business unit strategies and management systems (due diligence, risk management, stakeholder engagement, training, performance incentives, auditing) • Benchmark, measure and continuously improve Enron's social and environmental performance (previous performance, customer and Investor expectations, competitors) • Confirm and communicate "lessons learned' • Identify opportunities to Improve efficiency, reduce environmental impacts and procure 'green products', while saving money • Publish second Annual Report on social and environmental performance Corporate Responsibility E0004392305 2 :XH005-02479