Enron Net Works Enron Online 2002 Revenue Model

Enron Net Works Enron. Online 2002 Revenue Model Presentation to Enron Global Markets October 22, 2001

Enron Net Works Enron. Online Current Cost Allocation Model The current cost allocation method used by Enron. Online does not reflect the real value of the business. Furthermore, it does not reflect the actual usage by each of Enron’s subsidiaries. Cost Allocation Method Current Methodology Shortcomings • Define Participating Business Units (i. e. EA, EIM, EEL, EGM, EBS) • Fix cost allocations do not reflect monthly changes in usage • Define fixed cost allocation based roughly on a limited set of usage factors. • Number of Transactions • Number of Market Served Page 1 • Allocations may include subjective criteria such as arbitrary weightings • Cost related to development activities are not always linked to requestor Confidential

Enron Net Works Enron. Online Usage Statistics Enron. Online usage varies widely among business units. Enron. Online Usage By Business Unit Monthly Transactions (average monthly 2001)* Product Types (created in 2001)* Active Products (YTD 2001)* Enron Americas 86, 753 26 4, 314 Enron Europe Limited 4, 972 16 549 Enron Global Markets 7, 213 80 1, 146 Enron Metals 11, 450 12 261 Enron Broadband 2 2 151 Enron Industrial Markets 35 33 242 Enron Transportation 23 4 131 * Data as of October 15, 2001 Page 2 Confidential

Enron Net Works Enron. Online 2002 – Fees Description The 2002 budget will reflect the various revenue streams from Enron. Online as though it was a stand-alone business. 2002 Revenue Streams Usage-based Fees 1. Per Transaction Fee – Number of transactions recorded during the month. – Includes internal and external transactions, but excludes auto-hedge, and “Top of Stack” – Tier pricing is used to promote system usage 2. Product Type Setup Fee – Number of Product Types added during the month to the Enron. Online database by request of customer. – Covers the costs of assembling, testing, and approving a Product Type – Includes activities by Legal, Credit, Tax, Risk, Global Contracts, PCG, Marketing, and Operations 3. Active Product Fee – Number of products with “Active” status during the month. – Includes hosting and unlimited price and volume updates. Development 4. A) Continued Infrastructure Development – Covered by Usage-based Fees – Includes performance, capacity, reliability enhancements, and minor improvements B) New Major Functionality and Applications – Charged at cost to the unit or units that request and utilize the functionality. Page 3 Confidential

Enron Net Works Enron. Online Development Schedule The Enron. Online development schedule includes both infrastructure upgrades and major functionality enhancements. Development Schedule Current Development Projects - 4 Q 2001 1. Rewrite of Administration Tools 2. Options Manager Enhancements 3. Kiodex – – Will allow remote and local users to access Product and Data Managers from the web rather than Citrix. Removes most of the restrictions inherent with Citrix (e. g. screen window size) General functionality enhancements (e. g. Price controls by Strike) Risk Reporting functionality for our customers Future Developments – 1 Q 2002 + 4. Optimization of Enron. Online Infrastructure – – – Optimization of price updates and log in process Migration to in-house TIB adapters Disaster Recovery 5. Enron. Online Phase III 6. Formula Pricing 7. Re-engineering of Stack Manager Page 4 – – – New Look and Feel Enhanced Order Management Tools New Functionality that will allow for Formula Pricing Provide live price feeds to internal traders without database connection Secure Internal TIB Traffic Confidential

Enron Net Works Enron. Online Proposed Fee Schedule (applied to 2001) The proposed fee schedule approach is simple to track and calculate. Enron. Online Proposed Fee Schedule Fee Type Unit Price per Month ($ US/Unit) YTD 2001 Count* Implied YTD Total ($ US) Implied 2001 Total ($ US) Per Transaction $10 - $20 1, 050, 675 15, 760, 125** $21, 690, 000 Product Type Setup $20, 000 173 3, 460, 000 $4, 160, 000 $250 2, 000*** 5, 000 $6, 000 $24, 220, 125 $31, 850, 000 Active Products Total * Data as of October 15, 2001 ** Using Simple Average of Proposed Fee Tiers ($15) *** Active Products Monthly Average Page 5 Confidential

Enron Net Works 2001 Exchanges’ Fees Comparison The proposed Enron. Online fees compare favorably to exchanges, brokers, and platforms with similar or lesser functionality. Comparable Exchanges’ Fees An average of 200% more than EOL’s highest proposed fee, but without any information flow to desks *Transaction size as of October 15, 2001 **Total IDs as of October 15, 2001 Page 6 Confidential

Enron Net Works Enron. Online 2002 Fee Method The proposed fee method allows Fees to be matched closely to actual usage. Example: Enron Global Markets Monthly Statement Page 7 Confidential

Enron Net Works Enron. Online 2002 Fees The 2002 trade growth drives Enron. Online Fees, which we examine here under three scenarios. Enron Global Markets: Enron. Online Estimates For 2002 Page 8 Confidential