Dynegy Clarifies Northern Natural Gas Investment.

Business/Energy Editors

HOUSTON--(BUSINESS WIRE)--Nov. 30, 2001

Dynegy Inc. (NYSE:DYN) Executive Vice President and Chief Financial Officer Rob Doty today issued the following comments regarding the company's investment in Northern Natural Gas Co., a pipeline subsidiary of Enron

"In connection with Dynegy's merger agreement with Enron, Dynegy acquired $1.5 billion in preferred stock in Northern Natural Gas, a 16,500-mile interstate pipeline company, which extends from the Permian Basin of Texas to the Upper Midwest. Our preferred stock in Northern accrues a six percent annual dividend from the date of issue on November 9, 2001. As a result of this purchase, Northern Natural Gas cannot take certain actions, including seeking bankruptcy court protection, without the consent of Dynegy as a preferred stockholder.

"On November 9, Dynegy also acquired an option to purchase 100 percent of the equity in the entity which owns all of the common stock of Northern Natural Gas for approximately $23 million. Dynegy's right to exercise the option is not dependent on Enron's agreement to our right to terminate the merger. Dynegy exercised this option on November 28, 2001 when it terminated the merger agreement, with a closing date set for December 12, 2001. Upon closing, approximately $950 million of Northern Natural Gas debt will remain in place. The option was granted to Dynegy by an entity which cannot enter bankruptcy without the consent of an independent director.

"Northern Natural Gas, formerly part of InterNorth, which merged with Houston Natural Gas in the mid 1980s to form Enron, has been a separate subsidiary for more than 20 years and operates as a separate business, with separate FERC tariffs, offices, management and customers.

"Northern Natural Gas will be an excellent addition to our asset-backed, customer-focused energy delivery network. This network enables us to provide reliable supply, risk management and logistics to our customers, as we have done for the past 16 years. Dynegy has contacted Enron to begin a transition of the pipeline's management and expects Enron's full cooperation."