UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 2001 or

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                         Commission File Number 1-16157

                             NewPower Holdings, Inc.
             (Exact name of registrant as specified in its charter)

                Delaware                                     52-2208601
    (State or other jurisdiction of                       (I.R.S. Employer
     incorporation or organization)                       Identification No.)

        One Manhattanville Road
           Purchase, New York                                   10577
(Address of principal executive offices)                     (Zip Code)

                                 (914) 697-2100
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. |X| Yes  |_| No

As of May 9, 2001, there were 58,150,120 shares of NewPower Holdings, Inc.
common stock, par value $.01 per share, outstanding. As of May 9, 2001, there
were Class A warrants outstanding to purchase 69,070,800 shares of NewPower
Holdings, Inc. common stock at an exercise price of $0.05 per share.

<PAGE>

                             NewPower Holdings, Inc.
                                    Form 10-Q
                    For the Three Months Ended March 31, 2001

                                                                            Page
                                                                            ----

Part I - Financial Information

   Item 1.Financial Statements

     Consolidated Balance Sheets
        March 31, 2001 and December 31, 2000                                   3

     Consolidated Statements of Income
        Three Months Ended March 31, 2001 and 2000                             4

     Consolidated Statements of Cash Flows
        Three Months Ended March 31, 2001 and 2000                             5

     Notes to Financial Statements                                             6

   Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operations                               14

   Item 3. Quantitative and Qualitative Disclosure About Market Risk          19

Part II - Other Information

   Item 1. Legal Proceedings                                                  21

   Item 2. Changes in Securities and Use of Proceeds                          21

   Item 3. Defaults Upon Senior Securities                                    21

   Item 4. Submission of Matters to a Vote of Security Holders                21

   Item 5. Other Information                                                  21

   Item 6. Exhibits and Reports on Form 8-K                                   21

SIGNATURES                                                                    22


                                       2
<PAGE>

                            Part I. FINANCIAL INFORMATION
                             Item 1. Financial Statements

                               NewPower Holdings, Inc.
                             Consolidated Balance Sheets
                   (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                             March 31,    December 31,
                                                                               2001           2000
                                                                           -----------    -----------
                                                                           (Unaudited)
<S>                                                                        <C>             <C>
ASSETS
Current Assets
    Cash and Cash Equivalents                                              $  68,830       $ 179,885
    Accounts Receivable, net of allowance of $2,280 and $1,250                69,584          47,885
    Investments in Marketable Securities                                     247,363         257,189
    Assets from Price Risk Management Activities                              17,821              --
    Inventory and Imbalances                                                   4,514          44,663
    Prepaid Expenses                                                           9,107           8,024
                                                                           ---------       ---------
     Total Current Assets                                                    417,219         537,646
                                                                           ---------       ---------
    Fixed Assets                                                              15,941          12,835
    Less: Accumulated Depreciation                                            (2,539)         (1,461)
    Net Fixed Assets                                                       ---------       ---------
                                                                              13,402          11,374
                                                                           ---------       ---------
    Investments in Marketable Securities                                     106,591         102,373
    Other Assets                                                              92,212          28,954
    Intangible Assets, net                                                    35,070          31,995
                                                                           ---------       ---------
Total Assets                                                               $ 664,494       $ 712,342
                                                                           =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

    Accounts Payable                                                       $  43,975       $  39,278
    Accrued Liabilities                                                        8,590          27,112
    Due to Affiliated Entities                                                30,959          29,960
    Deferred Compensation                                                      9,571           9,390
                                                                           ---------       ---------
    Total Current Liabilities                                                 93,095         105,740
                                                                           ---------       ---------
    Liabilities from Price Risk Management Activities, net of current          1,157              --

Commitments and Contingencies

Stockholders' Equity

    Preferred Stock, $.01 par value, 50,000,000 shares authorized;                --              --
       0 shares issued and outstanding
    Common Stock, $.01 par value, 500,000,000 shares authorized;                 582             581
    58,150,120 and 58,054,882 shares issued and outstanding
    Paid-in Capital                                                          777,436         777,437
    Deferred Compensation                                                     (2,354)         (2,917)
    Accumulated Other Comprehensive Income                                    14,631           1,335
    Accumulated Deficit                                                     (220,053)       (169,834)
                                                                           ---------       ---------
     Total Stockholders' Equity                                              570,242         606,602
                                                                           ---------       ---------
                                                                           ---------       ---------
Total Liabilities and Stockholders' Equity                                 $ 664,494       $ 712,342
                                                                           =========       =========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                   statements


                                       3
<PAGE>
                             NewPower Holdings, Inc.
                  Consolidated Statements of Income (Unaudited)
                (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                     Three Months Ended March 31,
                                                   -------------------------------
                                                        2001               2000
                                                   ------------       ------------

<S>                                                <C>                <C>
Net Revenues                                       $    126,016       $      2,126
Cost of Sales                                           117,376              1,784
                                                   ------------       ------------
Gross Margin                                              8,640                342

Operating Expenses                                       67,603              8,956
                                                   ------------       ------------
Operating Income (Loss)                                 (58,963)            (8,614)

Interest (Income) Expense                                (8,744)            (1,199)
                                                   ------------       ------------
Income (Loss) Before Income Taxes                       (50,219)            (7,415)

Provision for Income Taxes                                   --                 --
                                                   ------------       ------------
Net Income (Loss)                                  $    (50,219)      $     (7,415)
                                                   ============       ============

Basic and diluted net loss per common share        $      (0.86)      $      (0.34)

Weighted average shares used to compute basic
   and diluted net loss per common share             58,117,316         22,064,400
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                   statements


                                       4

<PAGE>

                             NewPower Holdings, Inc.
                Consolidated Statements of Cash Flows (Unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                           Three Months Ended March 31,
                                                                           ----------------------------
                                                                              2001            2000
                                                                           ---------       ---------
<S>                                                                        <C>             <C>
Cash Flows From Operating Activities

Reconciliation of net loss to net cash used by operating activities

      Net loss                                                             $ (50,219)      $  (7,415)
      Depreciation and amortization                                            2,896              --
      Deferred compensation                                                    1,852           4,000
      Provision for doubtful accounts                                          1,030              --
      Net gains from price risk management activities                         (4,674)             --
Changes in assets and liabilities
      (Increase) decrease in accounts receivable                             (22,729)            633
      Decrease in inventory and imbalances                                    41,538              --
      Increase in prepaid expenses                                            (1,083)             --
      Increase (decrease) in accounts payable and accrued liabilities        (13,823)            338
      Increase (decrease) in due to affiliates                                   999         (10,664)
      Payments of deferred compensation                                       (1,109)             --
      Increase in other assets and intangibles                                (1,344)             --
                                                                           ---------       ---------
     Net Cash Used in Operating Activities                                   (46,666)        (13,108)
                                                                           ---------       ---------

Cash Flows From Investing Activities

      Cash issued to purchase a business, net of cash received                (6,435)             --
      Capital expenditures                                                    (3,107)             --
      Net sales of investment securities                                       6,914              --
                                                                           ---------       ---------
     Net Cash Used in Investing Activities                                    (2,628)             --
                                                                           ---------       ---------

Cash Flows From Financing Activities

      Increase in surety bonds and deposits                                  (61,761)             --
      Proceeds from sale of common stock & warrants                               --         100,000
      Contributions from EES                                                      --           2,812
                                                                           ---------       ---------
     Net Cash Provided from Financing Activities                             (61,761)        102,812
                                                                           ---------       ---------

Increase (Decrease) in Cash and Cash Equivalents                            (111,055)         89,704

Cash and Cash Equivalents, Beginning of Period                               179,885              --
                                                                           ---------       ---------
Cash and Cash Equivalents, End of Period                                   $  68,830       $  89,704
                                                                           =========       =========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                   statements


                                       5
<PAGE>

NEWPOWER HOLDINGS, INC. NOTES TO FINANCIAL STATEMENTS

Note 1-Organization and Formation

      NewPower Holdings, Inc. ("NPW" or the "Company"), formerly TNPC, Inc. and
EMW Energy Services Corp., is the successor to an operating unit of Enron Energy
Services, LLC ("EES") which is a subsidiary of Enron Corp. ("Enron"). NPW,
generally through its subsidiary The New Power Company, provides retail
marketing and retail sales of natural gas and power to residential and small
commercial customers in ten states: Ohio, Indiana, Georgia, Maryland,
Pennsylvania, Michigan, New Jersey, Virginia, California and Texas. NPW is
focusing substantially all of its resources on expanding its current marketing
efforts from servicing various isolated markets to being recognized as a
national retail provider of energy solutions to residential and small commercial
customers as additional markets continue to be opened.

Nature of Operations

      NPW is a new company with a limited operating history in the new and
rapidly evolving restructured retail energy markets. The development of NPW's
operations will depend upon, among other things, favorable markets opening under
viable competitive rules, NPW's ability to expand its customer base in initial
markets and the ability to enter new markets in a timely manner at reasonable
costs.

      NPW has incurred net losses since inception and management expects to
continue to incur losses for a period of time. NPW has increased operating
expenses significantly to develop its business. NPW's ability to become
profitable will depend on, among other things, it's ability to attract and
retain a critical mass of customers at a reasonable cost, to further develop
internal corporate organization and systems, and to manage effectively its
energy requirements and sell its products at a sufficient margin.

      Since January 6, 2000, NPW has financed its activities through private
placements of its common stock, warrants to purchase its common stock and a
public offering of its common stock. As discussed below, NPW was capitalized in
an initial private placement valued at $100 million and funding was completed on
January 6, 2000. Further private placements of NPW common stock and warrants
were made in May 2000 and July 2000 valued at $15 million and $104.4 million,
respectively. Also, NPW completed the initial public offering of its common
stock in October 2000 from which the Company received net proceeds of $543
million. NPW management believes it has adequate funding to sustain its
operating needs at least through the end of 2002, absent a significant
acquisition or other extraordinary transaction, which are not currently
contemplated. If NPW's cash requirements prove to be greater than expected, NPW
will need to obtain additional funding. NPW cannot be certain that additional
financing can be obtained. NPW's financial condition and business may be
materially adversely affected if additional capital is needed and cannot be
raised on acceptable terms.


                                       6
<PAGE>

Capitalization

      NPW was incorporated on November 17, 1999 in the state of Delaware at
which time 200,000 shares of common stock were issued to EES. NPW was
capitalized through the contribution of certain assets by EES and a private
placement to outside investors, pursuant to an agreement executed on December
23, 1999.

      The transfer of assets from EES has been accounted for at historical costs
as a reorganization of companies under common control in a manner similar to a
pooling-of-interests. Accordingly, all assets contributed by EES have been
recorded at their historical basis to EES. There was no historical recorded
basis related to EES' residential customer base or the other agreements it
contributed to NPW.

Note 2-Summary of Significant Accounting Policies

Basis of Presentation

      The financial statements present the balance sheets, statements of
operations and statements of cash flows applicable to operations related to the
residential customers contributed by EES, the customers acquired through
acquisitions of businesses in 2000 and 2001, as described in Note 3, and
customers obtained through the marketing efforts of NPW since August 2000. The
underlying data for the prior period comparative financial statements has been
derived from the books and records of EES. In the opinion of NPW, the
accompanying unaudited financial statements contain all adjustments necessary to
present fairly the financial position of NPW as of March 31, 2001, and the
results of its operations and cash flows for the three months ended March 31,
2001 and 2000. Income from interim periods may not be indicative of future
results. Other than as noted, adjustments were of a normal, recurring nature.

Use of Estimates

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions in determining NPW's assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.

Cash and Cash Equivalents

      NPW considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. The recorded carrying amounts of
NPW's cash and cash equivalents approximate their fair market value.

Inventory and Imbalances

      Inventories represent natural gas in storage, and are stated at the lower
of weighted average cost or market. In addition, the Company delivers natural
gas to the local distribution companies for further delivery to the Company's
customers. Actual usage by the Company's customers will differ from the amount
of natural gas delivered to the local distribution companies. This difference is


                                       7
<PAGE>

referred to as an "imbalance" and is stated at the lower of cost or market. The
Company periodically compares the carrying value of natural gas in inventory and
imbalances to its realizable market value. The carrying value of any inventory
or imbalances deemed to be not realizable are charged to earnings.

Investments in Marketable Securities

      NPW's short term investments are classified as available for sale under
the provisions of Statement of Financial Accounting Standards No. 115 -
"Accounting for Certain Debt and Equity Securities".

      NPW has invested excess proceeds from the IPO and private placements in
marketable securities to preserve capital and provide required liquidity. These
investments consist primarily of high grade short-term bonds and commercial
paper and the recorded carrying value equals their fair market value.

Income Taxes

      Deferred taxes result from differences arising between the financial and
tax bases of NPW's assets and liabilities and are adjusted for changes in tax
rates and tax laws when changes are enacted. Valuation allowances are recorded
to reduce deferred tax assets when it is more likely than not that a tax benefit
will not be realized by NPW.

Fixed Assets

      Fixed assets are stated at cost. NPW provides for depreciation on fixed
assets on the straight-line basis over their estimated useful lives, as follows:

            Office furniture and fixtures                  3 years
            Computer software and licenses                 3 years
            Computer hardware                              3 years
            Leasehold improvements                      Life of Lease

Revenue Recognition

      NPW recognizes revenue for the sale of power or natural gas once the
commodity has been delivered to a customer. Unbilled power and natural gas sales
are estimated and recorded each period. NPW's bills to customers may also
include charges relating to the transmission and distribution of the commodity,
for which the utility is ultimately responsible. These amounts are excluded from
NPW's net revenues. As a result, neither NPW's revenues nor costs include the
transmission and distribution charges included in customers' bills.


                                       8
<PAGE>

Collateral

      State regulations, as well as certain of NPW's counterparties, require
collateral to ensure fulfillment of NPW's commitments. To meet these
commitments, NPW has provided cash collateral of $77.9 million as of March 31,
2001. The collateral will revert to NPW's control upon successful completion by
NPW of specified commitments.

Comprehensive Income

      Comprehensive income is reported as a component of stockholders' equity.
As of March 31, 2001, comprehensive income of $14.6 million relates to the fair
market value of the Company's risk management assets and liabilities plus the
unrealized gains on available for sale securities included in the balance sheet
as investments in marketable securities.

Net Loss Per Common Share

      Net loss per common share was determined by dividing net loss by the
weighted average common shares outstanding. Common equivalent shares related to
stock options and warrants are excluded from the calculation as their effect is
antidilutive. Accordingly, basic and diluted loss per common share are
equivalent.

      Common equivalents at March 31, 2001 and 2000 included 69,070,800 and
60,000,000 Class A warrants, respectively. Common stock equivalent shares
attributable to the Class A warrants at March 31, 2001 and 2000 computed on the
treasury stock method would have been approximately 68,635,954 and 59,226,804
shares, respectively.

Certain Risks and Concentrations

      NPW sells its energy services to residential and small commercial
customers in the United States. Reserves are maintained for credit losses.

      NPW's business is subject to many risks and uncertainties including
dependence on favorable regulatory developments, dependence on services provided
by third parties, potential conflicts of interest with principal stockholders,
substantial fluctuations in energy commodity prices, growth and commercial
acceptance of the Internet, activities of competitors, dependence on key
personnel and limited operating history.

Note 3-Acquisitions

      In the first quarter of 2001, NPW completed the acquisition of
approximately 7,200 residential and small commercial natural gas customers in
the Atlanta, Georgia market from Reliant Energy Retail, Inc. ("Reliant"). The
acquisition was accounted for as a purchase. Based on the mix of customers
acquired from Reliant and the average consumption of small commercial customers
in the Atlanta market, NPW estimates that the acquired portfolio equates to
approximately 40,000 residential customers. The total purchase consideration
included $4.5 million in cash. Also, in connection with the acquisition, NPW
purchased natural gas inventory


                                       9
<PAGE>

for approximately $1.9 million. The results of operations from the Reliant
portfolio are included in operating results since February 2001 when the Company
assumed operational control of the Reliant portfolio.

      The New Power Company began servicing approximately 237,000 customers in
March 2001, pursuant to an agreement with PECO Energy Company ("PECO"). In
October 2000, NPW reached an agreement with PECO to supply service to up to 20
percent of PECO's residential power customers who had not selected a competitive
energy services provider. PECO provides electric delivery service in
southeastern Pennsylvania, which is one of NPW's initial target markets.
Pursuant to requirements in the 1998 settlement of PECO's electric restructuring
case, PECO issued a request for proposal for a third party to supply Competitive
Default Service to 20% of its residential customers for a three-year term
beginning January 1, 2001. PECO selected NPW in this process, and the two
parties reached a definitive agreement on October 18, 2000, which was
subsequently approved by the Pennsylvania Public Utility Commission on November
29, 2000. Under the agreement with PECO, NPW is committed to provide power at a
discount to PECO's current rates for residential customers who participate in
this program. The customers were selected on a random basis. The agreement
includes provisions for NPW to receive additional customers from PECO up to a
maximum of 20 percent of all residential electricity customers then receiving
distribution service from PECO.

      In December 2000, NPW acquired the residential and small commercial retail
energy business of Energy USA ("EUSA"), which was an operating unit of NiSource,
Inc.. The acquisition was accounted for as a purchase. NPW acquired
approximately 34,000 gas customers from EUSA. The results of operations of the
EUSA portfolio are included in NPW's operating results since December 2000.

      In July 2000, NPW acquired the residential and small commercial retail
energy business of the Columbia Energy Mass Markets Business Segment
("Columbia"), a retail provider of power and natural gas to residential and
small commercial customers in the United States. The acquisition was accounted
for as a purchase. NPW acquired approximately 285,000 gas customers and
approximately 20,000 power customers from Columbia. The results of operations of
the Columbia portfolio are included in NPW's operating results since the July
31, 2000 acquisition date.

Note 4-Related Party Transactions

Purchases

      NPW made purchases of natural gas and power from affiliates Enron and EES,
during the three months ended March 31, 2001 and 2000, totaling $81.5 million
and $1.8 million, respectively.

Note 5-Price Risk Management Activities

      Effective January 1, 2001, NPW adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended. SFAS No. 133
required that each derivative instrument be recorded as an asset or liability
measured at its fair


                                       10
<PAGE>

value and that changes in the fair value of derivative instruments be recognized
currently in earnings unless specific hedge accounting criteria are met.

      The purpose of NPW's hedging strategy is to reduce the Company's risk
profile for delivering energy to the consumer as well as achieve a more
predictable cash flow, while reducing the Company's exposure to adverse price
fluctuations of commodities. The hedging instruments used are swaps and forward
contracts for physical commodity purchases.

      Subsequent to NPW's acquisition of customers from Columbia Energy Group,
the Company began utilizing swap instruments to hedge commodity price and basis
exposure risk associated with its fixed price natural gas contracts. In these
swap instruments the Company pays the counter-parties the amount by which the
floating variable price (settlement price) is below the fixed swap price and
receives the amount by which the settlement price exceeds the fixed swap price.
In accordance with SFAS 133, NPW accounts for the financial swap transactions as
cash flow hedges. In periods prior to the occurrence of the hedged transaction,
the value of the hedges are recorded in the consolidated balance sheet as assets
and liabilities from price risk management activities with the resulting
unrealized gains or losses deferred and reflected as a component of the equity
account other comprehensive income (OCI). In the periods the hedged purchases
occur, the financial swaps are cash settled and deferred gains or losses
pursuant to the hedges are removed from the balance sheet and included in the
cost of the commodity purchased. Because of the high degree of effectiveness
between the hedging instruments and the underlying exposures being hedged,
fluctuations in the value of the derivative instruments are generally offset by
changes in the value or cash flows of the underlying exposures being hedged. The
financial instruments that are used in hedging transactions are assessed both at
inception and at least quarterly thereafter to insure they are effective in
offsetting changes in either the fair value or cash flows of the related
underlying exposures.

      Adoption of SFAS No. 133 required a one-time adjustment to NPW's balance
sheet of approximately $56 million, which was recorded as a net asset (from
price risk management activities) and as an increase to the stockholders' equity
account accumulated other comprehensive income. The following table presents the
activity in the accumulated other comprehensive income account from December 31,
2000 through March 31, 2001, (in $000's):

<TABLE>
<CAPTION>
                                                       Cumulative
                                                       Unrealized                            Total Other
                                                        Gains on         Accumulated        Comprehensive
                                                       Investments    Derivative Gains         Income
                                                     ----------------------------------------------------
<S>                                                     <C>                 <C>                <C>
Other Comprehensive Income, December 31, 2000           $  1,335            $      0           $  1,335
Cumulative effect of change in accounting for SFAS
       No. 133 on January 1, 2001                             --              56,000             56,000
   Unrealized gains on investments                         1,307                  --              1,307
   Net change in value of cash flow hedges                    --             (22,169)           (22,169)
   Derivative gains reclassified to earnings -
      Settled financial swaps                                 --             (21,842)           (21,842)
                                                        --------            --------           --------


Other Comprehensive Income, March 31, 2001              $  2,642            $ 11,989           $ 14,631
                                                        ========            ========           ========
</TABLE>


                                       11
<PAGE>

      As of March 31, 2001, NPW has financial swaps in place to hedge certain
expected future cash flows through October 2006. NPW expects that approximately
$13.1 million of net derivative gains, currently reflected in accumulated other
comprehensive income, will be reclassified to earnings during the next 12 month
period, pursuant to settlements of financial swaps.

      NPW's forward contracts for the physical purchase of commodities are
generally entered into for delivery of the commodities to meet the requirements
of the Company's residential and small commercial customers in future periods.
To the extent the forward contracts relate to forecasted customer demand, at the
inception of the contracts, NPW accounts for these contracts as normal purchases
and sales under SFAS 133. As such, these contracts are not reflected in the
Company's financial statements until the month of actual purchase or sale of the
commodity. Any forward commodity purchase contracts that are not entered into
for the expected delivery to NPW customers are accounted for as trading
activities. NPW periodically compares the committed volumes of its forward
purchase contracts to its forecasted customer demand volume. When the volumes
pursuant to NPW's forward purchase contracts exceed the probable volumes NPW
expects to deliver to its customers, the Company treats the excess positions as
trading activities and any gains or losses are reflected through current
earnings.

      The accounting for certain contracts deemed "normal purchases and sales"
by NPW is currently being evaluated by the Financial Accounting Standards Board
(FASB). Further guidance from the FASB may change the Company's conclusions
regarding these contracts and require them to be accounted for as derivatives.

      Any forward energy contracts that NPW enters into that are not in
contemplation of providing commodity to the Company's residential and small
commercial customers, at the inception of the contracts, are considered energy
trading activities. All of NPW's energy trading activities are accounted for
using mark to market accounting under Emerging Issues Task Force (EITF) Issue
No. 98-10, "Accounting for Energy Trading and Risk Management Activities". The
value of the forward energy trading contracts are recorded as assets and
liabilities from price risk management activities in the consolidated balance
sheet and changes in the values are reflected through the statement of income as
a component of cost of sales. Net unrealized appreciation of trading risk
management assets and liabilities totaled $4.7 million during the three months
ended March 31, 2001 and is recorded as a reduction of cost of sales.

Note 6-Commitments and Contingencies

Commodity Purchase Commitments

      As of March 31, 2001, NPW, under certain fixed rate commodity contracts,
had commitments for net purchases of 8,869,424 megawatt hours of electricity at
prices ranging from $19.10 - $160.00 per megawatt hour through December, 2003.

      As of March 31, 2001, NPW had commitments to purchase, at market prices,
approximately 9,458,750 dth of natural gas at prices ranging from $3.53 - $6.785
per dth through December, 2003.


                                       12
<PAGE>

Litigation

     At March 31, 2001, NPW was engaged in routine disputes and litigation
arising in the ordinary course of business. In the opinion of management, the
ultimate liability thereunder, if any, will not have a material adverse effect
on the financial position or results of NPW.


                                       13
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Overview

      The following section should be read in conjunction with the unaudited
financial statements and the notes thereto included elsewhere in this Quarterly
Report on Form 10-Q. In November of 1999, we were formed by Enron to target the
rapidly restructuring residential and small commercial markets for power and
natural gas. We intend to become the first nationally branded provider of energy
solutions to residential and small commercial customers in the United States.

      We were capitalized through the contribution of certain assets by EES and
a private placement to outside investors, pursuant to an agreement executed on
December 23, 1999. On January 6, 2000, we completed our initial private
placement of common stock and two classes of warrants in exchange for an
aggregate of $100 million in cash. In exchange for its ownership, EES agreed to
contribute the economic value of its residential power and natural gas customers
in California and Ohio to us and entered into a number of agreements with us
which we believe will offer us competitive advantages as we grow our business.

      Pursuant to the contribution and subscription agreement executed by us and
our investors as part of our initial private placement transaction, EES agreed
to contribute and assign to us, the economic value of approximately 24,000
residential customer contracts. We are currently in discussions with EES
regarding the transfer of the customers. The results of operations of servicing
this portfolio of customers is included in our statements of operations for all
periods presented.

      Following our initial private placement, we focused our efforts on hiring
our management team, refined our plans for the initial launch of our services in
Pennsylvania and New Jersey, developed our operating infrastructure and
identified other target markets. In conjunction with these activities, in May
2000, we entered into an agreement with IBM to provide us with systems
integration and other services relating to customer acquisition, customer care
and revenue management over a ten-year term.

      Through March 31, 2001, we had acquired approximately 55,000 customers
through our direct marketing efforts in our initial target markets. We acquired
these customers on a one-by-one basis, as is typical in a number of mass-market
subscriber industries, such as telephone service.

      In July 2000, we acquired the residential and small commercial retail
energy business of Columbia. The acquisition was accounted for as a purchase. We
acquired approximately 285,000 gas customers and approximately 20,000 power
customers from Columbia. The results of operations of the Columbia portfolio are
included in our operating results since the July 31, 2000 acquisition date.

      In December 2000, we acquired the residential and small commercial retail
energy business of EUSA. The acquisition was accounted for as a purchase. We
acquired approximately 34,000 gas customers from EUSA. The results of operations
of the EUSA portfolio are included in our operating results since December 2000.


                                       14
<PAGE>

      In the first quarter of 2001 we completed the acquisition of approximately
7,200 residential and small commercial natural gas customers in the Atlanta,
Georgia market from Reliant. The acquisition was accounted for as a purchase.
Based on the mix of customers acquired from Reliant and the average consumption
of small commercial customers in the Atlanta market, we estimate that the
acquired portfolio equates to approximately 40,000 residential customers. The
total purchase consideration included $4.5 million in cash. Also, in connection
with the acquisition, we purchased natural gas inventory for approximately $1.9
million. For accounting purposes, the closing has been reflected in February
2001.

      We began servicing approximately 237,000 customers during March 2001,
pursuant to an agreement with PECO. In October 2000, we reached an agreement
with PECO to supply service to up to 20 percent of PECO's residential power
customers who had not selected a competitive energy services provider. PECO
provides electric delivery service in southeastern Pennsylvania, which is one of
our initial target markets. Pursuant to requirements in the 1998 settlement of
PECO's electric restructuring case, PECO issued a request for proposal for a
third party to supply Competitive Default Service to 20% of its residential
customers for a three-year term beginning January 1, 2001. PECO selected our
proposal, and we reached a definitive agreement with PECO on October 18, 2000,
which was subsequently approved by the Pennsylvania Public Utility Commission on
November 29, 2000. Under the agreement with PECO, we are committed to provide
power at a discount to PECO's current rates for residential customers who
participate in this program. The customers were selected on a random basis. The
agreement includes provisions for us to receive additional customers from PECO
up to a maximum of 20 percent of all residential electricity customers then
receiving distribution service from PECO.

      Currently all load serving entities are subject to installed capacity
(ICAP) requirements in certain markets where they provide electricity to retail
customers, including the markets that contain those customers we acquired from
PECO. These requirements are satisfied for those entities that are "in-balance"
between owned generation and load served. Load serving entities that have more
load service demand than generation supply must purchase their ICAP requirements
in a spot or forward market, or are subject to penalty assessments. We believe
that these provisions, and the governance procedures by which they are derived,
are flawed and act as a detriment to creating a competitive marketplace. We are
part of a group that is aggressively working towards restructuring the ICAP
requirements applicable to PECO and other markets within Pennsylvania, New
Jersey and Maryland. We are also considering filing a complaint with the Federal
Energy Regulatory Commission. If we are unsuccessful in our efforts, ICAP
penalties will adversely affect our profitability in certain electricity
markets.

      As of March 31, 2001, we had obtained licenses to act as an electricity
marketer in California, Maine, Massachusetts, New Jersey, Ohio, Pennsylvania and
Texas. Also, we had obtained licenses to act as a natural gas marketer in
Georgia, New Jersey, Pennsylvania and Virginia. We are continuing our efforts to
obtain licenses, where required, within all of our target markets.

      We recognize revenue for the sale of power or natural gas once the
commodity has been delivered to the customer. Our bills to customers may also
include charges relating to the transmission and distribution of the commodity,
for which the utility is ultimately responsible.


                                       15
<PAGE>

These amounts are excluded from our net revenues. As a result, neither our
revenues nor our costs include the transmission and distribution charges
included in our customers' bills. Additionally, we fully expense in the period
incurred the marketing and operations costs associated with customer
acquisition.

Results of Operations

      Our revenues are currently derived from the sale and delivery of power and
natural gas to retail customers in the United States. For the three months ended
March 31, 2001 and 2000, respectively, revenues were $126.0 million and $2.1
million. The increase in revenues is attributable to the growth of our portfolio
of customers through organic marketing and portfolio deals in 2001 as compared
to the prior year period.

      Our cost of sales represents the direct costs of acquiring and delivering
power and natural gas to our customers. For the three months ended March 31,
2001 and 2000, respectively, cost of sales, as a percentage of revenues, totaled
93% and 84%. The increase in cost of sales is primarily attributable to costs of
providing energy to an increased customer base as compared to the prior year
period. Our cost of sales also includes the net impact of our energy trading
activities. During the three months ended March 31, 2001 and 2000, such
activities resulted in gains of $4.7 million and $0, respectively.

      Our operating expenses include costs incurred related to acquiring and
supporting residential and small commercial customers that were not part of the
direct process of delivering power and natural gas to our customers. For the
three months ended March 31, 2001 and 2000, respectively, operating expenses
were $67.6 million and $9.0 million. The increase in operating expenses for the
three months ended March 31, 2001 over prior year's comparative period relates
primarily to significantly increasing our staff and infrastructure beginning in
April 2000 to execute our business plan. Also, our customer count increased
significantly over prior year, from approximately 24,000 to approximately
630,000, due to the positive results of our marketing efforts and acquisitions
of customer portfolios. As a result, operating expenses for the three months
ended March 31, 2001 included $33.2 million for systems development and other
professional services, $5.1 million for direct marketing, and $8.4 million for
billing and customer care. Also, compensation expenses recorded during the three
months ended March 31, 2001 included costs for the recruitment of certain
executives, which resulted in $1.9 million of deferred compensation expense.

      Our operating expenses in the three month period ended March 31, 2000
included $2.8 million of operating expenses allocated from EES and Enron. Such
allocations and charges were based on a percentage of total operating expenses
for the services provided, based on factors such as headcount or the specific
level of activity directly related to such costs. We incurred no such allocated
expenses during 2001.

Liquidity and Capital Resources

      Net cash used in operating activities of $46.7 million and $13.1 million
for the three months ended March 31, 2001 and 2000, respectively, resulted
primarily from net losses of $50.2 million


                                       16
<PAGE>

and $7.4 million for each respective period. On March 1, 2001, we used existing
cash reserves to pay the $4.5 million Reliant purchase price and $1.9 million to
purchase natural gas inventory from Reliant. We also used approximately $61.7
million of cash to purchase surety bonds and credit deposits, including $50
million related to servicing the customers acquired from PECO. Our cash
collateral will be returned, incrementally, upon successful completion of each
year of the three-year term of the PECO contract.

      As of March 31, 2001, we had cash, cash equivalents and investment
securities (including $77.9 million of collateral deposits) of approximately
$500.7 million invested primarily in government securities, high-grade domestic
commercial paper and intermediate corporate securities. A significant portion of
our portfolio matures in less than one year in order to meet our working capital
requirements. We currently expect that the net proceeds from the IPO, together
with the proceeds from our prior rounds of private financing and revenue from
operations, will be sufficient to fund all our working capital, capital
expenditures and liquidity requirements at least through the end of 2002, absent
a significant acquisition or other extraordinary transaction, which we do not
currently contemplate. If our efforts to obtain customer scale during the next
two years are successful and we are not adversely affected in a significant
manner, we do not expect to need to raise additional funds. Forecasting our cash
needs long-term, however, is subject to numerous uncertainties, and we may need
to raise additional funds. We cannot be certain that we will be able to obtain
additional financing on favorable terms or at all. If we need additional capital
and cannot raise it on acceptable terms, our financial condition and business
may be materially adversely affected.

      We have no debt outstanding. Accordingly, we have not been exposed to near
term adverse changes in interest rates. We are, however, continually exploring
the possibility of establishing credit lines or other debt instruments to assist
us in providing necessary letters of credit and to fund part of our working
capital requirements on a cost effective basis. If we incur debt in the future
we may experience increased volatility as a result of changes in interest rates.
Additionally, we do not expect inflation to have a material effect on our
results of operations. We have no foreign currency exposure and therefore, are
not affected by changes in foreign exchange rates.

Seasonality

      Our revenues are impacted by seasonality in that power sales generally
increase during the warmer summer months, whereas natural gas sales have a
reverse seasonality and increase during the colder winter months. These factors
will cause our financial results to vary from quarter to quarter.

Forward-Looking Statements

      Certain statements in this Form 10-Q are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A
of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of
1934. The words "estimate," "project," "intend," "expect," "believe" and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are found at various places throughout this Form 10-Q
and throughout the other documents incorporated herein by reference. The Company
undertakes no


                                       17
<PAGE>

obligation to publicly release any revisions to these forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. Although we believe that our expectations
are based on reasonable assumptions, we can give no assurance that our goals
will be achieved. Important factors that could cause actual results to differ
from estimates or projections contained in the forward-looking statements
include our limited operating history; delays or changes in the rules for the
restructuring of the electric and natural gas markets; our ability to attract
and retain customers; our ability to manage our energy requirements and sell
energy at a sufficient margin given the volatility in prices for electricity and
natural gas; and our dependence on third parties to provide critical functions
to us and to our customers.


                                       18
<PAGE>

Item 3. Quantitative and Qualitative Disclosure About Market Risk

      We are exposed primarily to counterparty risks and risks related to
commodity price changes in the power and natural gas markets. We conduct
business solely in the United States and are not subject to foreign operations
risk.

      Counterparty risk relates to the risk of loss that we would incur as a
result of nonperformance by counterparties pursuant to the terms of their
contractual obligations. We have established counterparty limits for each
trading partner.

      Commodity price risk is the risk of loss arising from adverse movements in
commodity prices. We have established a risk control group that monitors
commodity price risk to ensure compliance with our stated risk management
policies. Our current risk management policies and procedures are to use
physical and financial products to manage our commodity price risk and maintain
a balanced commodity portfolio within specified limits. Our risk management
policies and procedures are modeled after Enron's risk management policies and
procedures, adapted for a retail customer business. Our policies and procedures
cover, among others, areas of (1) general authorization of transaction activity
by designated individuals and significant limits, (2) classification of risks
into identifiable portfolios, (3) responsibilities, segregation of duties, and
functions to be performed by commodity procurement, credit, legal/contract
management, risk controls groups, and the chief risk officer, and (4)
performance and exposure reporting and notification requirements.

      We utilize derivative commodity instruments to hedge future purchases of
commodities to be provided to our customers. The purpose of our hedging strategy
is to achieve a more predictable cash flow, as well as to reduce our exposure to
adverse price fluctuations of commodities. While the use of these hedging
arrangements limits the downside risk of adverse price movements, they may limit
future revenues from favorable price movements. The use of hedging transactions
also involves the risk that the counterparties will be unable to meet the
financial terms of such transactions. The hedging instruments we use are swaps
and forward contracts for physical commodity purchases. These contracts are
placed with counterparties that we believe are minimal credit risks.

      We account for the financial swap transactions as cash flow hedges. In
periods prior to the occurrence of the hedged transaction, the value of the
hedges are recorded in the consolidated balance sheet as assets and liabilities
with the resulting unrealized gains or losses deferred and reflected as a
component of the equity account other comprehensive income (OCI). In the periods
the hedged purchases occur, the financial swaps are cash settled and deferred
gains or losses pursuant to the hedges are removed from the balance sheet and
included in the cost of the commodity purchased.

      Our forward contracts for the physical purchase of commodities are
generally entered into for delivery to our residential and small commercial
customers in future periods. To the extent the forward contracts relate to
forecasted customer demand, at the inception of the contracts, we account for
these contracts as normal purchases and sales in accordance with SFAS 133. As
such, these contracts are not reflected in our financial statements until the
month of actual purchase of the commodity. Any forward commodity purchase
contracts that are not entered


                                       19
<PAGE>

into for the expected delivery to our customers are accounted for as trading
activities. We periodically compare the committed volumes of our forward
contracts to our forecasted customer demand volume. When the volumes pursuant to
our forward contracts exceed the probable volumes we expect to deliver to our
customers, we treat the excess positions as trading activities and any hedge
gains or losses previously deferred as a component of OCI are reflected through
current earnings. All of our trading activities are accounted for using mark to
market accounting under Emerging Issues Task Force (EITF) Issue No. 98-10,
"Accounting for Energy Trading and Risk Management Activities". The value of the
forward energy trading contracts are recorded as assets and liabilities in the
consolidated balance sheet and changes in the values are reflected through the
statement of income as a component of cost of sales.

      See "Note 5 - Price Risk Management Activities", to the unaudited
consolidated financial statements, for additional information on our risk
management activities.


                                       20
<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Porceedings

        See "Note 6 - Commitments and Contingencies" to the unaudited
consolidated financial statements.

Item 2. Changes in Securities and Use of Proceeds

        None

Item 3. Defaults Upon Senior Securities

        None

Item 4. Submission of Matters to a Vote of Security Holders

        None

Item 5. Other Information

        None

Item 6. Exhibits and Reports on Form 8-K

  (a)   Exhibits

        None

  (b)   Reports on Form 8-K

        During the quarter ended March 31, 2001, the Company filed one current
        report on Form 8-K dated January 19, 2001, reporting its name change
        from TNPC, Inc. to NewPower Holdings, Inc. There were no financial
        statements filed as part of this current report.


                                       21
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          NEWPOWER HOLDINGS, INC.


   Date:  May 14, 2001                 By:  /s/  William I Jacobs
                                          ------------------------------------

                                                 William I Jacobs
                                                 Managing Director,
                                                 Chief Financial
                                                 Officer and Director


   Date:  May 14, 2001                 By: /s/  Stephen Nolan
                                          -----------------------------------

                                                Stephen Nolan
                                                Controller


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