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July 2000

July 2000. Confidential & Proprietary. Draft 7/12/00. Internal Presentation NewCo Overview. Table of Contents. 1. Executive Summary 2. Transaction Overview 3. Existing Asset Profile 4. Development Pipeline 5. Organization 6. Financial Summary 7. Summary 8. Next Steps.

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July 2000

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  1. July 2000 Confidential & Proprietary Draft 7/12/00 Internal Presentation NewCo Overview

  2. Table of Contents 1. Executive Summary 2. Transaction Overview 3. Existing Asset Profile 4. Development Pipeline 5. Organization 6. Financial Summary 7. Summary 8. Next Steps

  3. 1. Executive Summary

  4. Executive Summary Mission Statement • To establish the premier North American energy company involved in the businesses of: • Development, acquisition, ownership, and operation of electric power generation facilities • Optimization of generation portfolio through active risk management of assets and commodity positions

  5. Executive Summary Business Model • Combine physical and intellectual assets from FPL Energy (“FPLE”) and Enron North America (“ENA”) • Grow through the greenfield and brownfield development of generating facilities • Optimize portfolio through active risk management of assets and commodity positions • Supplement core growth by pursuing strategic acquisitions • Retain, attract, manage and grow intellectual capital • Leverage expertise from FPL and Enron to supplement NewCo resources

  6. Executive Summary Growth Strategy • Achieve a five year EPS compounded annual growth rate of 25-30% by: • Developing new power generation facilities with existing GE 7FA queue positions • Expanding dominant wind generation position • Pursuing strategic acquisitions • Funding capital requirements from a combination of internally generated cash and debt and equity offering proceeds • Focusing on asset optimization to enhance portfolio value

  7. Executive Summary Strong Parent Company Sponsorship • Enron: • Unparalleled capabilities in power and gas marketing and risk management • Most Innovative Company - five years in a row (Fortune Magazine) • FPL Energy: • World class operator of generation facilities • Competitive development infrastructure that includes commercial talent, identified sites and secured equipment

  8. Executive Summary Benefits to Sponsors • Mutual Benefits • Realization of value in unregulated generation businesses • Accelerate the attainment of critical mass • Diversify generation portfolio mix • Complement existing competencies • Provide significant capital to parent companies • Enron North America • Manage investment in generation assets • Tolling arrangement • FPL Energy • New investor base • Independence from regulated side

  9. Executive Summary NewCo’s Growth Story 45% 50% 46% 38% CAGR

  10. Executive Summary Risk Management & Trading • Trading and risk management to be designed by Enron • Enron to contribute key trading and marketing personnel • NewCo will utilize Enron’s back office system and risk management capabilities (services agreement) • Risk management and trading to focus on asset optimization, not speculative trading

  11. Executive Summary Domestic Portfolio Comparables

  12. 2. Transaction Overview

  13. Transaction Overview ENRON FPL Peakers, Development Projects & Turbines (Total 4,817 MWs) Sites, People, 3-year toll Assets, Development Projects & Turbines (Total 15,534 MWs) Sites, People $/Note/Equity Services Agreements $/Note/Equity Services Agreements NEWCO (20,000+ MWs) $ Shares LENDERS, DEBT HOLDERS INVESTORS $ Notes

  14. 3. Existing Asset Profile

  15. Existing Asset Profile Company Profile • National generation company that initially has: • 6,975 MWs of net operating capacity in all nine NERC regions • 5,328 MWs in the latter stages of development (2001-2003) • 7,750 MWs in turbines queue spots (2003-2004) • 20,053 MWs of total capacity (by 2005) • NewCo embodies • ENA’s trading and marketing expertise; • FPL Energy’s development, operational and asset management expertise

  16. Maine Assets: Hydro Units (373) Yarmouth (654) Wiscasset (101) Fort Fairfield (31) Total = 1,159 MWs MAPP NPCC MAAC WSCC MAIN ECAR SPP PJM Assets: Sayreville, NJ (150) Delaware Co, PA (50) CA Assets: Harper Lake, CA (80) Altamont Pass, CA (161) Tehachapi, CA (180) Total = 421 MW SERC ERCOT Existing Asset Profile NewCo’s Existing Assets (6,975 Net Operating MW) Helix, OR (25) Lake Benton, MN (104) Clear Lake, IA (42) Bellingham, MA (150) Manhattan, IL (656) Ashland, VA (665) Wheatland, IN (508) Gleason, TN (536) Gaffney, SC (50) Brownsville, TN (494) New Albany, MS (396) Paris, TX (990) Caledonia, MS (504) McCamey, TX (75) NewCo Fuels Natural Gas (62%) Wind (7%) Oil (23%) Hydro (6%) Wood (1%) Solar (1%)

  17. Existing Asset Profile NewCo’s Existing Assets

  18. Existing Asset Profile Portfolio Breakdown IPO 2003

  19. Existing Asset Profile Portfolio Breakdown IPO 2003

  20. 4. Development Pipeline

  21. Development Pipeline Development Assets • Major Equipment Secured • 47 GE 7FA and up to 6 LM 6000 combustion turbines (11,750 MW combined cycle capacity) • GE 7FA ship dates: 2001 (9), 2002 (14), 2003 (12), and 2004 (12) • LM 6000 ship dates: • FPLE to contribute executed master steam turbine agreement; HRSG agreement is executed • Substantial Development Talent • Forty five (45) (30-FPLE/15-ENA) developers working in all NERC regions • ENA and FPLE possess complementary regional staffing • Parent company to commit technical expertise

  22. Development Pipeline Development Pipeline • Advanced Development Projects (5,328 MW) • ENA controls three projects totaling 1,423 MW in operation by 2003 • FPLE controls ten projects totaling 3,905 MW in operation by 2003 • Very high probability of success • Thirty four (34) Greenfield Sites • ENA controls 24 sites • FPLE controls 10 sites • Development Acquisition (15,000 MW) • FPLE actively pursuing acquiring third party development rights

  23. MAPP NPCC MAAC WSCC MAIN ECAR SPP PJM Assets: Marcus Hook, PA (750) Philadelphia, PA (750) Total = 1,700 MW’s SERC ERCOT Development Pipeline Development Asset Location Everett, WA (500) Bellingham, MA (500) Sarnia, ON (320) Providence, RI (500) Ashland, VA (170) Pastoria, CA (750) Las Vegas, NV (270) Bastrop, TX (250) Greenfield Sites SERC - 7 Sites ECAR - 2 Sites Development Assets (MW) SPP - 6 Sites In Operation: 976 MW (2001)* MAIN - 3 Sites In Operation: 2,520 MW (2002)* WSCC - 9 Sites Nepool - 2 Sites In Operation: 1,498 MW (2003)* PJM - 3 Sites * 485 MW in Wind Assets to come on line in 2001.* Additional 1,700 MW in queue spots for 2002.* Additional 6,000 MW in queue spots for 2003 & 2004. ERCOT - 2 Sites

  24. 5. Organization

  25. Organization Organizational Philosophy • To utilize intellectual resources from both sponsors to staff a fully functional world class generation company • Sponsors to make candidates available for senior management positions • FPL Energy to provide majority of personnel • Enron to contribute personnel to supplement the organization • Support services agreements to be used to contract for services that are more effectively provided by the sponsor companies • Establish policies and incentives to attract, retain, manage and grow intellectual capital

  26. Organization Capability Sources ENA FPLE New Hires Outsource Development AA B - Power/Gas Trading and Marketing A B C - Asset Management - A B - Operations B A B C Finance A A B - Technical Support C A - B Construction Management A A B B Legal B B B A Information Management B B B A Human Resources B B A A Note: Primary Source = A, Secondary Source = B, Tertiary Source = C

  27. Organization Contracted Support Services • FPLE • Construction Management - Develop the internal resources to provide owner’s engineer services, supplement with resources contracted from FPL • Operations - plant operations staff to be NewCo resources, contract with FPL to provide support services (e.g. fleet team, inventory sharing, etc.) • Human Resources - FPL to temporarily provide services until people, processes and systems are in place • Information Management - FPL to provide support

  28. Organization Contracted Support Services • Enron • Trading and Risk Management Systems - NewCo will contract with Enron to provide key services including electronic trading, marketing, invoicing, accounting and daily P&L • Information Management - Enron to provide support • QF Restructuring - Enron will act as NewCo’s agent in restructuring the QF portfolio. NewCo will benefit from Enron’s QF restructuring track record

  29. Organization Attract and Retain Intellectual Capital • Compensation & Benefits - to be set to attract, motivate and retain best people • Enron model to be the basis of compensation system (e.g. use of stock options and performance review process) • Review the viability of retaining the FPL pension plan • Other benefits such as 401k, and medical and dental insurance and other benefits appear to be similar between the organizations

  30. 6. Financial Summary

  31. Financial Summary Valuation Summary

  32. Financial Summary Five Year Proforma ($ in Millions)

  33. Financial Summary (Debt Assumptions)

  34. Financial Summary • Funding for Development Projects • ($ in Millions)2001 2002 2003 2004 2005 • Capital Expenditures (193) (1,524) (2,488) (1,650) (1,650) • Cash Flow from Operations 160 219 322 535 615 • Debt Proceeds* 116 861 1,493 990 990 • IPO Proceeds 500 • Net Capital Sources/Uses: 583 (444) (673) (125) (45) • Cumulative Capital 583 139 (533) (658) (703) • * Debt Financing

  35. 7. Summary

  36. Strong sponsors providing complementary skills and resources National Genco with significant long term growth Active risk management with asset optimization Substantial, diverse asset base provides significant cash flow and net income Combustion turbine backlog, experienced development team and strong development pipeline to provide significant growth through greenfield development Summary Transaction Rationale

  37. Capabilities Enron FPL NewCo National Power/Gas Trading and Marketing   Technology Infrastructure   Construction and development backlog    Existing asset base    Management/lead sponsorship   Operations   Summary Keys to Success World class GENCO + ENRON FPL

  38. 8. Next Steps

  39. Next Steps Issues • Non-compete on Development • ROFR on Fuel/Power • Valuation Methodology - Pros/Cons for NewCo and Sponsors • Support Services Agreement • Negotiation, documentation and due diligence • Investment Bank Selection • Use of Proceeds • Include or not include Non-core Assets • Story with Wind Assets • FERC Filing Schedule • Historical Operating and Financial Information • Transaction Schedule • Location of NewCo • Target Debt Rating

  40. Next Steps Schedule

  41. Unused Slides

  42. NewCo Strengths • Sites: • NewCo will have over 2 dozen sites in various stages of the permitting and siting processes • Regional Diversification: • NewCo will have assets in the WSCC, SERC, ECAR, MAIN and Nepool regions • Marketing and Trading: • Risk Management

  43. Enron Sites: SERC: 5 sites ECAR: 2 sites SPP: 6 sites MAIN: 3 sites NEPOOL: 1 site FPL Energy Sites: NewCo’s Development Sites

  44. Organization FPL Energy Organization Chart

  45. Organization Shared Services Currently Provided by FPL

  46. Organization Trading and Marketing Org. Chart

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