Explanation for decrease in Canadian sales volumes

Susan

As per our phone conversation, I am dropping you a note to explain why there was a decrease in the sales volumes for Canada
from the first to second quarter 2001.

There are two reasons for the decline in sales volumes:

1. Last year EOL offered a fixed rate product that produced minimal margins but a large volume of transactions.
It was decided that this product would not be offered in the year of 2001, but because there were winter deals
that continued through to March 2001, we did not see a decline in volumes until April 2001.

2. Enron Canada was involved in ligitation with NGX, with respect to their publication of the Aeco index. ECC did
not have any confidence in the index because the EOL deals were not included in determining the Aeco monthly index
and we felt the index could easily be manipulated. As a result, ECC was hesistant to enter into Aeco Monthly index
deals with counterparties thus reducing our volume of sales.

I hope this helps!

Cheryl