Natural Gas Exchange Inc PRMIA – May 31, 2006

1. Natural Gas Exchange IncPRMIA – May 31, 2006

2. SECTION ONE: NGX BACKGROUND

3. Introduction to NGX • Business Concept: • Electronic trading and clearing services to North American energy market participants • NGX is a service provider and therefore does not trade or take positions • Headquartered in Calgary, Alberta, Canada • Incorporated in 1993, began trading operations in Feb 1994 • Ownership History • Initial Ownership by Westcoast Energy Inc. • Acquired by OM on Jan 1, 2001 • Acquired by TSX Group March 1, 2004 • Services provided • Electronic Marketplace • Pipeline balancing instruments • Market advocacy (facilitating transactions) • Market agency (facilitating order entry) • Real-Time Price Index Generation • Clearing House • Assured performance • Trade and counterparty netting • Centralized collateral management • Centralized risk management

4. Current NGX Product Locales NGX Products & Services Physical Products Financial Products Upcoming Products ATCO NORTH STATION #2 ALBERTA POWER SWAPS TEP ALBERTA SWAPS NGX INTRA-ALBERTA EMERSON/GREAT LAKES EMPRESS IROQUOIS HUNTINGDON SUMAS SWAPS PARKWAY ST. CLAIR DAWN MALIN MICHCON SWAPS NIAGARA FALLS MALIN SWAPS CHIPPAWA CHICAGO SWAPS NBPL VENTURA PG&E CITYGATE NICOR-NGPL ROCKY MTN SWAPS PG&E CITYGATE SWAPS SOCAL GAS SOCAL GAS SWAPS FUTURES SWAPS HENRY SWING SWAPS LDS FOR GDD

5. Operational Statistics • 138 NGX Contracting Parties • “Member” firms eligible to transact through theExchange • List 102 physical and derivative products • Average in Excess of 400 Traders Online Daily • Approximately 100 View-Only Users Online Daily • 2005 Trading Statistics: • Volume = 8.8 Tcf • Transactions = 185,878 • Average Daily Deliveries in Excess of 12.0 Bcf

8. SECTION TWO : CLEARING STRUCTURE

9. How is Counterparty Risk Mitigated? • Standard Rules • Collateral Provisions • Liquidation Rights • Backstopping • Settlement Bank • Emergency Fund

10. $ $ $ or Natural Gas $ or Natural Gas Payee Clearing Structure NGX Emergency Fund ($30MM CIBC Mellon Trust) NGX Cash Reserves Deposit Agreement Deposit Agreement Defaulting Party Collateral (100% Coverage Under NGX Exposure Model) Settlement Banking Credit Facility Payer Physical Backstopping (storage)

11. Clearing Statistics • Cleared Transactions • 180,000+ transactions cleared annually • Notional value of transactions consummated is in excess of CAD60 Billion annually • Margin • Over 130 corporate margin accounts held • Margin accounts averaging CAD2.0 Billion, peaking at one point, in excess of CAD4.0 Billion in cash and LCs • Settlement • Settlement in both USD and CAD cash streams • Monthly settlement values averaging over CAD1.2 Billion (peak, CAD2 Billion) processed

12. Collateral Makeup • Collateral on deposit in excess of CAD $1.88 Billion • Approx. CAD $1.6 Billion LC’s, CAD $0.28 Billion Cash

14. SECTION THREE: RISK MANAGEMENT

15. Performance Risks • Failure to Make/Take Delivery • Failure to Pay • Failure to Provide Collateral

16. Margin Requirements • Risk Measurement • Performance risks are quantified through NGX’s margining methodology, which attempts to estimate probable worst-case portfolio value • Collateral • Accepted in the form of cash and irrevocable letter of credit from an A or higher rated bank • Collateral is held to support the Contracting Party’s traded positions and can only be used to remedy a performance failure by the Contracting Party itself • Margin Triggers • If margin requirements reach 80% of collateral deposited, NGX will request additional collateral • At 90%, NGX may restrict the Contracting Parties trading capabilities • At 95%, NGX is entitled to invoke the liquidation procedure

17. Risk Measurement • NGX uses Web Reports to monitor trading activity and counterparty positions. • Reports can be accessed from the NGX website www.ngx.com, or from the NGX Trading System. • NGX measures risk in real-time and calculates margin requirements to quantify the risk measurement. • Margin Requirements consists of • Accounts Receivable/Payable (netted) • Variation Margin (Mark-to-Market, also netted) • Initial Margin • A calculation of the probability of a movement in market prices during a two-day holding period • Initial margin coverage protects against a prolonged liquidation

18. Initial Margin Methodology • NGX utilizes a Value-at-Risk methodology • NGX’s VaR calculation measures the worst expected price change in a date range for a product over a given time interval under normal market conditions at a given confidence level • VaR, while imperfect and subject to several limitations, provides a measurement tool that has historically been an accurate measure to evaluate potential exposure in a portfolio • Calculated based on statistical analysis of historical prices. Calculations: Delta = ln (settlement price/previous day settlement price) Daily Volatility = √[{(delta1)² + (delta2)²…(deltan)²}/n] VAR = standard deviation x √(hold period/# of days) x daily volatility x last price Standard Deviation = 2.7 Hold Period = 2 or 5 days (Depending on market liquidity) Number of days = 2 years • NGX uses a half life decay rate to give higher weighting to the recent periods.

19. Reports • For a number of reasons (scalability, efficiency, ease of use, etc) NGX has made all the information required by the front, middle and back offices available through the Web • Reports readily accessible include daily trade reports, confirmations, invoices, details of settlements, deliveries, fees, user permissions etc. • Risk reports are also made available for CounterParties to check their own Margin Requirements at NGX

20. Questions and Contact Information Dan Zastawny – Vice President, Clearing & Compliance 403.974.4335 dan.zastawny@ngx.com Kenny Foo – Clearing Manager 403.974.1737 kenny.foo@ngx.com Natural Gas Exchange Inc. Suite 2330, 140 4th Avenue SW Calgary, Alberta Canada T2P 3N3 Phone 403.974.1700 Fax 403.974.1719