Message-ID: <14567624.1075862288062.JavaMail.evans@thyme> Date: Fri, 26 Oct 2001 12:09:03 -0700 (PDT) From: steve.gilbert@enron.com To: rod.hayslett@enron.com Subject: NNG Revenues/Margins for 2003 and 2004 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Gilbert, Steve X-To: Hayslett, Rod X-cc: X-bcc: X-Folder: \RHAYSLE (Non-Privileged)\Hayslett, Rod\Inbox X-Origin: Hayslett-R X-FileName: RHAYSLE (Non-Privileged).pst Per your request, Attached is the slide we reviewed with Danny today. It shows the value of contract terminations for NNG for the contract year of 1101/03 to 11/01/04 to be $145 million. It also shows that the estimated market value is $95 million. I think for planning purposes however, we would assume that we would contract for the full value of $145 million either through better pricing analytics, new business development projects and/ or Rate Case reallocation to captive customers. The biggest risk would be the South end TFF of $12 million which we would have a hard time replacing at a $3 million level. So, depending on your assumptions, 2003 and 2004 could be flat to 2002 margin of $439.1 million - or, if you take into account the TFF deterioration, it could be below by $8 to 10 million. However, this deterioration will be offset by some of the new power plant projects - in particular "Pleasant Hill" which will bring an incremental $6 million in 2004. I think you also have to assume that other business development projects will come in to help offset the downsides. Sorry if I rambled a bit too much. My view is that NNG will have margin targets for planning purposes flat with 2002. Call me if you wish to discuss.