================================================================================

      As filed with the Securities and Exchange Commission on March , 2001

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

                                    FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

                   For the fiscal year ended December 31, 2000

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

                 For the transition period from           to

                         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)

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

Securities registered pursuant to Section 12(b) of the Act:

                                                   Name of Each Exchange on
       Title of Each Class                             Which Registered

Common Stock, $.01 par value, of                   New York Stock Exchange
      NewPower Holdings, Inc.

Securities registered pursuant to Section 12(g) of the Act: None
<PAGE>

         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

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

      The aggregate market value of common equity held by non-affiliates of the
registrant as of March 26, 2001 was approximately $278,123,000 (based on the
closing sales price of $6.25 per share as reported for the New York Stock
Exchange-Composite Transactions).

         As of March 26, 2001, there were 58,150,120 shares of NewPower
Holdings, Inc. common stock, par value $.01 per share, outstanding. As of March
26, 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.

DOCUMENTS TO BE INCORPORATED BY REFERENCE

A portion of the information required by Part III of this report (Items 11 and
12) is incorporated by reference from the registrant's proxy statement to be
filed pursuant to Regulation 14A with respect to the annual meeting of
stockholders scheduled to be held on May 9, 2001.

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                             NewPower Holdings, Inc.
                                    Form 10-K
                      For the Year Ended December 31, 2001

                                                                            Page
Part I

Item 1.  Business..........................................................    4

Item 2.  Properties........................................................   20

Item 3.  Legal Proceedings.................................................   20

Item 4.  Submission of Matters to a Vote of Security Holders...............   20

Part II

Item 5.  Market for the Registrant's Common Equity and Related
         Stockholder Matters...............................................   20

Item 6.  Selected Financial Data...........................................   21

Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.............................................   22

Item 8.  Financial Statements and Supplementary Data.......................   28

Item 9.  Change in and Disagreements with Accountants on Accounting and
         Financial Disclosure..............................................   54

Part III

Item 10. Directors and Executive Officers of the Registrant................   54

Item 11. Executive Compensation............................................   57

Item 12. Security Ownership of Certain Beneficial Owners and Management....   57

Item 13. Certain Relationships and Related Transactions....................   57

Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...   57

SIGNATURES ................................................................   60

EXHIBITS ..................................................................   62


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Item 1.  Business

General

         NewPower Holdings, Inc. ("NPW") was incorporated in Delaware in
November 1999 as EMW Energy Services Corp. and in June 2000, changed its name to
TNPC, Inc. We became a public company on October 5, 2000. On January 19, 2001
TNPC, Inc. changed its name to NewPower Holdings, Inc. The mailing address for
NPW's headquarters is One Manhattanville Road, 3rd Floor, Purchase, New York
10577. NPW's website is www.newpower.com.

         We were formed by Enron Corp., the largest trader and marketer of
electricity and natural gas in North America, to target the rapidly
restructuring residential and small commercial markets for these products.

         We are the first nationally branded provider of electricity and natural
gas to residential and small commercial customers in the United States. Through
our subsidiary, The New Power Company, we are offering customers in restructured
retail energy markets competitive energy prices, flexible payment and pricing
choices, improved customer service, and other innovative products, services and
incentives. Although our initial focus will be on providing electricity and
natural gas, as we develop our business, we will offer additional products,
services and customized solutions for residential and small commercial
customers.

         We estimate that the total residential and small commercial electric
and natural gas marketplace in the United States exceeds $150 billion annually,
making it one of the largest consumer markets to undergo competitive regulatory
restructuring. As of the end of 2000, a significant portion of markets in nine
states were open to retail electric competition, and 11 states had a significant
portion of markets open to retail natural gas competition. A number of other
states had also approved pilot programs to evaluate restructuring on a test
basis, and laws or regulatory plans providing for future retail electric
competition had been adopted in several other states. In many of these
jurisdictions, final rules implementing market restructuring are not yet
finalized and effective, but we estimate that by the end of 2002, roughly 50% of
the U.S. population, or approximately 55 million households, will be in markets
where consumers can choose either their electricity or natural gas provider or
both. As was the case in the deregulation of the long-distance telephone
markets, we believe that a significant percentage of consumers will be receptive
to switching from their monopoly energy providers to competitive providers.

         Although experiences in California with respect to power supply and
wholesale pricing have received extensive media coverage, and there have been
suggestions that reregulation should occur in that state and elsewhere, we
believe that the combination of factors unique to California should not lead to
material reregulation of retail marketing of power or gas in other states with
significant markets that have restructured or are scheduled to restructure. See
discussion of "California Experience" below.

         We have acquired and plan to continue acquiring customers by two
principal means. First, we will market directly to customers and will acquire
customers on a one-by-one basis, as is typical in a number of mass-market
subscriber industries, such as telephone service. We began acquiring power
customers in this fashion in select utility markets in Pennsylvania and New
Jersey in September 2000. Following those efforts, we entered two additional
power markets in Pennsylvania at the end of 2000, as well as two markets in Ohio
at the beginning of 2001. As of December 31, 2000, we had acquired approximately
25,000 customers through our direct marketing efforts.

         In addition to direct marketing to customers, we have acquired
customers though the bulk acquisition of customer portfolios from other
companies in the industry. We acquired the residential and small commercial
retail energy business of subsidiaries of Columbia Energy Group on July 31,
2000, which included approximately

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285,000 natural gas customers and 20,000 power customers in eight states,
primarily Georgia, Ohio and Pennsylvania. We also acquired approximately 34,000
gas customers from Energy USA Retail, Inc., a subsidiary of NiSource, Inc.,
which occurred in December 2000. In October 2000, we were awarded a contract as
a Competitive Default Service Provider in the PECO Energy market in eastern
Pennsylvania, whereby we have acquired approximately 240,000 randomly selected
residential power customers. In March 2001, we entered into agreements to
acquire approximately 7,200 gas customers in the Atlanta, Georgia market from
Reliant Energy Retail, Inc.

         Currently, we are evaluating several additional markets for direct
marketing entry in 2001, which may include electric power or gas markets in
California, Connecticut, Massachusetts, Ohio, New Jersey, Pennsylvania and
Texas, among other states. Other deals for the portfolio acquisition of
customers are also currently under review or negotiation.

         For other recent business developments, see "Item 7. Management's
Discussion and Analysis" of this Form 10-K.

Business Strategy

         Our success will depend upon our ability to identify favorable
restructured energy markets and to acquire customers on a profitable basis.
Specifically, we intend to:

         Pursue Our "First Mover's" Advantage to Create a National Brand for
Retail Energy. We intend to become the first company to establish a national
brand for consumer energy and related products and services. Currently, the
retail energy industry is highly fragmented, with no single firm enjoying
significant market share on a national basis. We believe that being first to
establish a nationwide brand will distinguish us as the leader in this emerging
market. We believe that this market positioning, as well as the opportunity to
achieve scale efficiencies before our competitors, will provide important
long-term competitive advantages.

         Enter Markets Selectively. We will enter only those retail energy
markets that have rate structures, market rules, consumer demographics, energy
consumption patterns and risk management profiles that we believe will enable us
to operate profitably over time. As new markets open, we intend to evaluate the
relevant regulatory rules before entering those markets. In addition, we intend
to be active participants in the regulatory process to foster the adoption of
competitive market rules that offer benefits to consumers and opportunities for
us.

         Focus on Customer Profitability. We will focus our marketing efforts on
acquiring customers that we can serve on a profitable basis. We will analyze
market segmentation data to direct our marketing efforts to customers who we
believe can achieve meaningful savings based on their levels of energy
consumption, or who will be likely to purchase incremental services from their
energy provider.

         Capitalize on Our Risk Management and Commodity Trading Systems and
Skills. Beginning with systems and programs contributed to us from Enron (see
description of "Material Contracts - Agreements with Enron", below), we have
created an organization that trades physical and derivative commodity products
and has expertise in commodity hedging, swaps and transport. We intend to take
full advantage of our risk management systems to identify favorable margin
opportunity, to reduce our risk exposure, and to create a competitive advantage
in our operations.

         Take Advantage of Increasing Consumer Acceptance of Online Commerce. We
will capitalize on increasing consumer acceptance of the Internet and online
commerce through our website (www.newpower.com) and other online channels. In
addition to providing a low-cost means of reaching customers, we believe that we

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can greatly increase our service offerings through online channels by providing
consumers access to information about their energy consumption patterns, various
pricing and payment plans, and other services and products that we intend to
offer over time.

         Acquire and Serve Customers Through Traditional Channels. Although we
believe it is important to be able to acquire and service customers online, we
have successfully created the infrastructure necessary to acquire and serve
customers through traditional media such as direct mail, radio, print,
television and telemarketing. This will ensure that we can reach all customers,
regardless of their preferred method for doing business. We expect that these
channels will provide a majority of our consumer acquisitions through the near
future.

         Market through Strategic Alliances and Affiliations. We will seek to
partner with established consumer brand firms to offer services and benefits to
their customers, including arrangements that will allow us to offer airline
miles and other customer incentives. We currently have arrangements with
American Express, Continental Airlines, Delta Airlines, Home Depot, US Air, AT&T
and Pizza Hut. We believe that these relationships will help us acquire our
target customers in a cost effective manner.

         Leverage Our Investment in "Best In Class" Operating Systems. We
believe that the revenue management and customer care operations infrastructure
and system developed for us by IBM will offer significant advantages in
scalability of our operations and will permit us to offer superior customer
service and to maintain an attractive cost structure.

         Offer Flexible Pricing and Payment Alternative. We believe that one of
the principal benefits we will offer consumers is an ability to tailor our
product and service offerings to match their specific needs. To provide energy
savings and price certainty, we may offer various combinations of floating rate
energy pricing, fixed rate energy pricing, fixed bundled monthly energy billing,
pre-paid options, time-of-day pricing and other specialty offerings such as
"environmentally friendly" energy from renewable resources. We will also offer
our customers credit card, direct debit and other convenient payment options,
which we expect will reduce our revenue management costs.

         Cross-Sell Additional Services and Products. Our initial focus will be
on selling electricity and natural gas. However, we believe that as we develop
our business, we will have opportunities to leverage our customer relationships
by offering additional, high margin products and services. These products will
be targeted to helping consumers save money and protect assets in and around
energy usage in the home or small business.

Competitive Advantage

         Although the challenges to becoming a successful nationwide retail
energy provider are substantial, we believe we possess a unique combination of
strengths relative to potential competitors. Among these competitive advantages
are the following:

         A. Expertise in Critical Skills. Successful operations in the market
for competitive supply of power and gas commodities to residential and small
commercial business customers requires particular skills in three distinct
areas: marketing, risk management, and operations. We believe we have developed
the skills and created necessary systems and infrastructure in each of these
areas to provide a competitive advantage.

         As to marketing, we have hired management personnel with extensive
marketing experience in consumer mass markets, particularly in selling credit
card and telephone services, which require customer subscriptions as occurs in
the selling of power and gas commodities. Our marketing personnel are
knowledgeable about direct and indirect marketing techniques, including
cost-effective target marketing strategies and procedures to

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derive marketing information and research from marketing tests. Through our
entry into electric markets in Pennsylvania, New Jersey and Ohio, and our
acquisition of electric and gas customers from Columbia and NiSource, we have
acquired information as to what marketing approaches work best for customer
acquisition and retention.

         As to risk management, because of the volatility of the wholesale
energy markets, buying and selling electricity and natural gas requires an
in-depth knowledge of the marketplace and sophisticated hedging and risk
management systems and infrastructure in order to effectively manage exposure to
significant price variations. In particular, managing energy requirements
requires an ability to forecast seasonal, weather-related or other variations in
demand, both in the market in general and with respect to a given consumer base,
and an understanding of complex scheduling and distribution operations. Risk
management activities entail forecasting the aggregate commodity demand over
specific periods of time (hourly, daily, weekly, monthly, seasonally) in the
future, based on factors like the number of customers, the expected weather, and
similar factors affecting demand, and employing strategies in the commodity
trading markets (hedges, forward contracts, options, swaps) to cover or balance
out the forecasted future demands to minimize the risks of changes in the
availability and price of commodities during those future periods. As the
leading wholesale energy trader and unregulated retail energy provider in North
America, Enron is the recognized industry leader in successfully performing
these functions and we transferred systems and personnel from Enron to create
expertise at our Company to perform these vital functions (see description of
"Material Contracts - Agreements with Enron - Master Services Agreement,"
below).

         As to operations, working with our strategic partner IBM, we have
created a scalable and cost-effective set of systems for acquiring,
provisioning, and billing the customers we acquire. These back-office systems
and operations functions have been created since our formation at the beginning
of 2000 and have performed successfully in our market launches for power
customers in Pennsylvania, New Jersey and Ohio, for our portfolio acquisition of
customers from Columbia and NiSource, as well as for our acquisition of
customers in connection with the PECO Competitive Default Service contract.

      B. Enron's Noncompetition Commitment. As part of our formation, Enron
entered into a noncompetition agreement providing that for up to five years, but
not less than three years, Enron and its subsidiaries will not compete in the
business of selling energy directly to residential customers, with limited
exceptions. We believe this agreement represents an important commitment on
Enron's part to the success of our business in retail residential energy
markets. See description of "Material Contracts-Noncompetition Agreement" for
more information about this agreement.

         C. Experienced Management. We have assembled a management team with
significant experience in a broad range of matters that are critical to our
strategy and success, including:

         o   members with significant experience in consumer and small
             business marketing;

         o   veterans of telecommunications deregulation from AT&T;

         o   members with significant electric power and natural gas market
             deregulation and operations experience from Enron; and

         o   members with significant knowledge and expertise in mass
             market consumer account management, billing and service system
             infrastructure.

         For further information, see "Item 10. Directors and Executive Officers
of the Registrant" of this Form 10-K.

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         D. Strategic Relationship with IBM. In addition to our relationships
with Enron, we have entered into a ten-year revenue management and customer care
agreement with IBM Global Services, an industry leader in providing similar
customer service functions in many industries. Revenue management includes the
electronic tracking of a customer's billing information, bill preparation and
mailing, and customer payments. With respect to customer care, IBM employs,
trains and supervises the customer representatives who will perform customer
acquisition activities, including answering in-bound phone calls, as well as
customer care activities, including answering customer billing, service and
similar inquiries. IBM is also developing and hosting our website for online
commerce and billing applications. We believe these arrangements will enable us
to offer superior customer service in a cost-effective, readily scalable manner.
In addition to the revenue management and customer care agreement, IBM made an
equity investment and has agreed to purchase additional common stock during the
first year after this offering. For further information, see description of
"Material Contracts - Agreements with Other Third Parties - IBM Agreement,"
below).

         E. Customer Base. We believe that the (i) approximately 285,000 natural
gas customers and 20,000 electricity customers we acquired in the Columbia
Energy Services acquisition; (ii) approximately 240,000 customers we acquired in
connection with the PECO CDS contract; (iii) approximately 34,000 customers we
acquired from NiSource; (iv) approximately 7,200 gas customers we will acquire
from Reliant Energy in the Atlanta market; and (v) approximately 25,000
customers we have acquired through our own initial marketing efforts, already
makes us the second largest competitive marketer of electricity and gas in the
country. These customers also give us an important base for purposes of
implementing risk management strategies, deriving marketing information for
customer acquisition and retention, and achieving scale economies in operations.

         F. Available Capital. We have raised approximately $762.5 million in
equity capital since our formation in late 1999, including $543 million from our
initial public offering in October 2000. These amounts provide us an
exceptionally strong balance sheet, and will provide funds for customer
acquisitions, brand development, further expansion and completion of our
infrastructure, and for working capital. As of December 31, 2000, we had cash,
cash equivalents and investments in marketable securities of $539.4 million.

Our Market Opportunities

         The Restructuring of the Retail Electric Power Market

         Overview. The electric power industry in the United States is
undergoing a period of fundamental change. Through regulatory and legislative
initiatives, an industry of locally or regionally regulated monopolies is being
reconfigured to create an increasingly open competitive environment in which
alternative energy service providers can compete with traditional utilities.
With the experience of favorable results from the restructuring and deregulation
of other industries, such as telecommunications, many federal regulators and
state authorities have concluded that various aspects of the generation,
transmission, and distribution of electric power could be opened to competition
in ways that would benefit consumers through increased innovation, and better
pricing and service offerings.

         Regulatory restructuring first occurred in wholesale power markets in
response to initiatives by the Federal Energy Regulatory Commission, referred to
as the "FERC" in this document. Specifically, in 1996 the FERC adopted Order No.
888, which significantly advanced the opening of the wholesale market for
electricity sold in interstate commerce to competitive market forces. Enron was
a leader in capitalizing on those restructuring initiatives, and is now North
America's largest merchant trader of wholesale electricity.

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         The FERC's regulatory jurisdiction, however, is limited to transmission
and wholesale power sales in interstate commerce. For the most part, retail
power sales are regulated by state public utility commissions, and retail power
markets are therefore being opened to competition on a state-by-state basis.
Following the lead of FERC with respect to the interstate wholesale market, in
1998 California became the first state to attempt to open its retail power
markets to competition. See discussion of "California Experience," below. The
restructuring of retail power markets has now occurred in many large states and
is in the process of being adopted in many others. Restructuring activities are
primarily directed at investor-owned utilities ("IOUs"), which serve the
concentrated metropolitan markets. Cooperatives and municipal power utilities,
which serve a minority of power users nationwide, have generally been exempt.

         As a retail power market is opened to competition, customers are
permitted to switch from having their power supplied by their local utilities to
having power supplied by other energy providers. In much the same way as with
long distance telephone service restructuring in the 1980's, the local utility
continues to be responsible for maintaining and providing the distribution wires
and other infrastructure over which electricity is delivered to the end user.
The customer's selected energy service provider, or ESP, is responsible for the
generation or purchase in the wholesale markets of the customer's electric power
requirements, arranging for delivery of this power to the local utility for
distribution, determining pricing and service offerings, and otherwise serving
the customer's needs. Depending on the jurisdiction, the ESP may also provide
metering, billing, collection and customer service and response functions. In an
average monthly electricity bill for an average household, which was
approximately $71 in 1999, roughly 45% was for transmission and distribution,
and the remaining amount was for the energy commodity.

         Competitive Market Rules. Market restructuring has been and will
continue to be a complicated regulatory process, with competing interests
advanced not only by relevant utility regulators, but also by state
legislatures, incumbent utilities, consumer advocacy groups, and potential
market participants. Given this mix of competing interests, the specific market
structures adopted in different jurisdictions, and even among separate utility
markets within a specific state, may vary widely. Although there are some basic
features common to most restructuring efforts among the states, the particular
details of these rules determine whether or not a competitive marketplace will
successfully develop in that jurisdiction.

         We intend to evaluate each newly opened market carefully to determine
whether the regulatory framework adopted in that market will generate legitimate
competitive opportunities, and will only enter markets on that basis.
Specifically, we will focus on markets where the rules provide for some
threshold combination of the following:

         o   Sustainable commodity margins. The most significant aspect of
             restructured market rules and rate provisions for ESPs is the
             potential margin over the expected term of the service to the
             customer between the wholesale cost of power and the regulated
             rate that the incumbent utility is required to charge in
             connection with its bundled service. It is this margin that
             provides the opportunity for efficient ESPs to offer energy
             savings to consumers while still earning an acceptable margin
             on their wholesale commodity costs.

         o   Appropriate margin or credits for provision of customer
             service functions. It is important that market rules enable
             ESPs to provide metering, billing, collecting and customer
             service functions on a competitive basis. This can be achieved
             either by providing a commodity margin that is high enough to
             allow the ESP to cover those costs, or by the provision of a
             credit to the ESP or its customers for providing or obtaining
             those services from the ESP instead of the incumbent.

         o   Appropriate limits on the incumbent advantages of the local
             utility and its affiliates. It is also important that market
             rules are adopted to limit the anti-competitive advantages
             that could be

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             gained by unregulated affiliates of the incumbent utility
             through their relationships with the utilities and their
             captive ratepayers. For example, fair market rules should
             place limits on the affiliates' use of the utility's name and
             limit access to customer records and other information not
             available to competing ESPs.

         Our Initial Target Markets. Based on our examination of competitive
opportunities in existing open markets, we began our operations in two specific
markets in September of 2000 to test and refine our operating systems and
marketing strategies. Our two selected initial markets were:

         o        Pennsylvania-PECO. Pennsylvania was opened to competition for
                  residential electricity customers in January 1999 and includes
                  approximately 4.9 million customers, with annual electricity
                  expenditures of approximately $4.1 billion in 1998. We first
                  entered the PECO Energy Co. ("PECO") service territory, which
                  includes approximately 1.3 million customers in Eastern
                  Pennsylvania. The settlement entered into among PECO, state
                  regulators, and other interested parties provided a "shopping
                  credit" to customers who elect to buy from a provider other
                  than the regulated utility. This credit is the amount of
                  charges the customer will no longer pay to PECO upon becoming
                  our customer for the electricity commodity. The shopping
                  credit covered not only the wholesale costs of electricity,
                  but also the cost of certain customer care functions provided
                  by the utility as well as a profit margin opportunity for
                  ESPs. The customer will still pay a distribution fee to the
                  utility, but will not pay the utility fees for services that a
                  customer receives from an ESP and not from the utility.

         o        New Jersey Public Service Electric & Gas Co. ("PSE&G")-New
                  Jersey was opened to competition for residential electricity
                  customers in October 1999 and includes approximately 3.1
                  million customers with annual electricity expenditures of
                  approximately $2.6 billion in 1998. We first entered the PSE&G
                  service territory, which includes approximately 1.7 million
                  customers. As in PECO, a settlement was reached with PSE&G
                  that set shopping credits at a level designed to cover
                  wholesale commodity costs, customer care functions and a
                  margin opportunity for ESPs.

         Both Pennsylvania and New Jersey have also adopted rules which limit
incumbent advantages for the local utilities and their affiliates. Regulators in
both states are actively involved in monitoring the implementation of market
competition.

         Following our initial launch in the PECO and PSE&G markets, we entered
two additional Pennsylvania markets in late 2000, Pennsylvania Power Co. and
Duquesne Light Co., which together include approximately 600,000 customers. In
addition, in February 2001, we entered into two electric markets in Ohio,
Cincinnati Gas and Electric and Columbus Southern Power (AEP), which together
include approximately 1.1 million customers. We are also participating in the
Texas pilot program to sign up 5% of customers in residential and small
commercial categories, respectively. That pilot program commenced on February
2001, in anticipation of the full market opening to retail electric competition
at the beginning of 2002. In addition, we are evaluating several additional
markets for entry beginning in 2001, which may include markets in Connecticut,
Massachusetts, Ohio, New Jersey, Pennsylvania and Texas.

California Experience. There has been considerable media attention on the
situation with California power markets and the manner in which changes were
made to the state's regulatory regime beginning in 1998. We believe that the
problems in California are unique to California, and to the manner in which
California authorities established market rules. We believe that events in
California should not cause states containing significant power markets to
forego the advantages of properly-designed restructuring.

         In particular, we believe that the problems in California can be
attributed to (i) an ill-conceived

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"deregulation" of the wholesale market; (ii) an inconsistent approach in which
the retail market was not open to serious competition, with retail prices kept
below wholesale rates such that California's two largest IOUs are close to
bankruptcy; and (iii) an imbalance in California between sources of commodity
supply, and commodity demand at rates kept artificially low.

         As to the market structure for the wholesale market, until recent
emergency state legislation, California authorities required that all market
purchases take place in a spot market. Long-term supply contracts or hedging
were precluded, and subject to certain wholesale price caps, the wholesale price
of electricity was determined on this spot market basis. At the retail level,
California authorities did not establish shopping credits which would provide
margin for ESPs to operate profitably, and in apparent response to political
pressure, established retail price caps at levels even below wholesale prices.
Accordingly, the state's two largest IOUs, Pacific Gas and Electric and Southern
California Edison, have reportedly recently suffered as much as $10 billion in
losses between their wholesale costs and their retail rates. It has further been
reported that those IOUs have delayed certain payments and have had their credit
substantially downgraded, and are close to bankruptcy. Compounding these
regulatory rules, it has become apparent that California has not added power
plant supply to meet its growing demand for electricity over the past decade,
but relied on the importation of power from other states, which because of water
shortages affecting hydro-electric power in the Northwest, other states' own
needs for power, and inadequacies in interstate transmission facilities, has
proved insufficient to meet California's current needs for power.

         We believe that authorities in other states with substantial
residential markets for electricity, such as Ohio, Pennsylvania, New Jersey, and
Texas, have recognized that the problems in California are unique to that state,
and do not intend to reverse the process of competitive restructuring in their
respective states. Accordingly, as the process of power market restructuring
continues across the country, we believe that regulators in other states,
learning from the mistakes in California and from the promise of plans such as
those implemented for PECO in Pennsylvania, for PSE&G in New Jersey, and for
IOUs in Texas, will continue with restructuring rules to create additional
markets that will support viable competition. In that regard, we intend to stay
actively involved in the regulatory and legislative process in order to advocate
those results. We will continue to evaluate all market openings to determine
whether they provide sustainable competitive opportunities and will enter
favorable markets as they become available.

         The Restructuring of the Retail Natural Gas Market

         Overview. The restructuring of natural gas markets in the United States
began earlier than the restructuring of electric markets. Beginning in the
mid-1980s, the FERC issued the first of several orders that ultimately brought
competition and customer choice to the wholesale natural gas market. Open access
on the interstate natural gas transmission system, coupled with the formation of
marketing companies that could purchase and sell natural gas outside the
traditional regulated utility system, allowed local utilities and large
industrial customers to choose their natural gas supplier, resulting in the
development of a robust wholesale market for natural gas, as well as significant
competition to provide natural gas to large end-users.

         Recognizing the benefits available to local utilities and industrial
customers, many commercial customers began to seek competitive alternatives for
their natural gas in the late 1980s. In the early 1990s, state regulators began
to expand the benefits of market competition to residential and small commercial
natural gas customers. In 1990, California instituted a program for small
customers that permitted some residential customers choice in their natural gas
provider. In 1996, Ohio permitted some residential customers to choose their
natural gas provider. Currently, natural gas customers in several markets may
purchase natural gas from competitive providers. A number of other states are
actively attempting to provide meaningful choice for residential customers of
natural gas.

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         As with the electric industry, local distribution of natural gas in
restructured markets will continue to be a regulated service provided by the
incumbent local utilities at regulated rates. The natural gas commodity and
other competitive services will be offered by competing market participants. In
an average monthly natural gas bill for an average household, approximately $44
in 1999, roughly 70% of the monthly natural gas bill was for transportation,
storage and distribution, and the remaining amount was for the commodity.
Although we have initially focused our new customer acquisition efforts on
electricity customers, we believe that natural gas markets will present
opportunities similar to those in the electricity market to offer consumers a
broader range of pricing alternatives, products and services.

         Competitive Market Rules. The restructuring of retail natural gas
markets differs in many respects from the restructuring of the electric
industry. The terms of natural gas market restructuring has generally tended to
be developed on a utility-by-utility basis as part of the individual tariff
proceedings, rather than under statewide regulations. Although the specific
restructuring process will differ in the retail natural gas markets,
considerations similar to those pertaining to retail electricity markets will
determine our market entry decisions. Specifically, we will review each market
that opens to alternative suppliers of natural gas to determine whether the
market rules provide for a sufficient commodity margin, appropriate credits for
billing and other customer care functions, and appropriate market rules limiting
the ability of the incumbent local utility and its affiliates to engage in
anti-competitive actions. We will likewise be involved in the regulatory and
legislative processes to advocate restructuring outcomes permitting viable
competitive opportunities in the retail natural gas markets.

         Natural Gas Markets. Initially, our focus in the natural gas markets is
on servicing the natural gas customers we acquired from Columbia Energy
Services. These customers are located in several states, but are primarily
located in Ohio and Georgia. In addition to giving us a base of customers upon
which to test and refine our operating and marketing strategies in several
attractive markets, these customers will provide an opportunity for us to
cross-sell electric service in markets that have opened or are expected to open
to retail electric competition.

         o   Ohio-Columbia. Several natural gas markets in Ohio were opened
             to competitive suppliers for residential natural gas customers
             in 1996. Including customers to be transferred to us by Enron
             and acquired in the Columbia transaction, we serve
             approximately 129,000 customers on the Columbia Gas of Ohio
             system, which serves approximately 1.2 million households. We
             believe that this base of customers will give us an advantage
             in acquiring customers for electricity in this market. On the
             Columbia Gas of Ohio system, commodity margin is achieved
             through various mechanisms. First, the distribution charge has
             been separated from the commodity charge, so that customers of
             unregulated ESPs generally do not pay for services they do not
             use from the utility. Second, ESPs may contract for their own
             pipeline transportation and storage rather than being forced
             to use those of the utilities. In this way, each ESP can
             acquire its own supply of gas and utilize its own
             transportation and storage system, which matches the needs and
             capabilities of the ESP.

         o   Georgia-Atlanta Gas Light. The Georgia legislature adopted
             legislation permitting the local utility serving Atlanta,
             Atlanta Gas Light, to exit the function of providing natural
             gas to consumers. As a result, by late 1999, all natural gas
             customers in this market are served by other providers. The
             Atlanta Gas Light market includes approximately 1.4 million
             households, with annual natural gas expenditures of
             approximately $725 million in 1998. In the Columbia
             transaction, we acquired approximately 82,000 customers in the
             Atlanta Gas Light market. In the Reliant transaction, we will
             acquire approximately 7,200 customers. Because Atlanta Gas
             Light no longer sells gas, we do not compete against a
             "regulated" price that can limit the opportunity to realize a
             commodity margin. Instead, we compete against other
             unregulated ESPs who, like us, purchase gas at unregulated

                                       12
<PAGE>

             prices. All ESPs then mark-up their prices to reflect their
             wholesale acquisition costs, the costs of transporting the gas
             to market, their marketing costs and their profit. Georgia has
             also prohibited the unregulated affiliate of Atlanta Gas Light
             from using the Atlanta Gas Light name. Additionally, the
             regulators in that market have adopted a strong code of
             conduct regulating the relationship between the utility and
             its marketing affiliate.

         In addition to the above markets, we acquired smaller numbers of
natural gas customers in Indiana, Maryland, Michigan, New Jersey, Pennsylvania
and Virginia in the Columbia transaction. In 2001, we intend to begin
acquisition activities to obtain additional customers for natural gas in areas
served by Columbia Gas of Ohio and Atlanta Gas Light, and are evaluating several
additional markets for entry in 2001. We believe that favorable commodity
margins, competitive market rules and the opportunity to cross-sell natural gas
with electricity present attractive competitive opportunities in those markets.

Marketing and Customer Care

         We began marketing activities for residential electricity customers in
the PECO franchise area in Pennsylvania and the PSE&G franchise area in New
Jersey in September 2000. These markets enabled us to test our operations
systems and to refine our marketing strategies and offers.

         Our initial marketing launch in the Pennsylvania and New Jersey markets
used traditional direct acquisition techniques, as well as our www.newpower.com
website for customer sign up. For traditional acquisition channels, we have used
quantitative analysis to develop databases for direct mail, and targeted
newspaper and radio ads. We have also run a campaign through a combination of
radio and television spots in order to create consumer awareness of our company
and its brand, as well as the nature of our specific product and service offers.
Finally, we increased customer interest in our offers by offering affinity
rewards and other incentives with alliance partners.

         We offered our customers product choices, with separate price savings
guarantees depending on the length of the service contract. The offers stress
savings over the incumbent's prices, reliability of service, and our provision
of attractive products, services, and customer care experiences. Additionally,
we offered incentive programs to attract and retain customers.

         Our customer service functions are managed through the infrastructure
being established under our agreement with IBM. We are attempting to be as
customer-friendly as possible, no matter what the channel of contact. If
customers are attracted to our offers online, they are linked to our website to
learn about them, and are encouraged to sign up for service online. Customers
who are approached through more traditional channels reach an IBM-managed call
center in Charlotte, North Carolina that was created for our exclusive use. We
have also created a simple and convenient interactive voice response system for
purposes of answering questions, providing account information, and signing-up
customers.

Competition

         In general, our principal competitor in each restructured market open
to the competitive offering of electric or gas commodity is the unregulated
affiliate of the incumbent utility. Those unregulated affiliates may also
compete in service territories other than that of their affiliated incumbent
utility. We also face competition in certain markets from other ESPs that are
unaffiliated with incumbent utilities. Competitive factors in the electric power
commodity markets include price, company branding and image and the quality and
availability of service.

Material Contracts

                                       13
<PAGE>

         We have entered into a number of agreements with Enron, Enron Energy
Services, IBM and others. The following discussion summarizes the material
provisions of these agreements.

         Agreements with Enron

         Master Services Agreement. We entered into a Master Services Agreement
with Enron and Enron Energy Services pursuant to which Enron and Enron Energy
Services agreed to provide us with administrative and risk management services
over various time periods. In particular:

         o   Enron Energy Services provided us with risk management
             consulting and hedging services at no charge until January 6,
             2001. These services included evaluations and recommendations
             on potential hedging strategies based on computerized risk and
             sensitivity analyses, projections of supply availability and
             market liquidity and analyses of lowest cost transmission
             services in the event of geographic variations in spot or
             future commodity prices.

         o   Enron also agreed to provide a number of basic services of its
             government affairs department at no charge until January 6,
             2003 to handle various government regulatory and legislative
             issues and activities that we may confront, but Enron's
             government affairs department is not required to take any
             position on our behalf that Enron believes may conflict with
             Enron's own interests. These basic activities include such
             things as reports regarding regulatory or legislative hearings
             or proceedings, analyses of hearings, proceedings and bills
             and advocacy of common positions. Enron's government affairs
             department will also handle specific requests not included
             among the basic services provided under our standard service
             agreement for such fees as shall be mutually agreed.

         o   Enron and Enron Energy Services provided us with general
             corporate services such as facility maintenance, human
             resources support and other services at no charge until
             October 6, 2000.

         o   Enron and Enron Energy Services contributed the services of
             certain of their employees through July 6, 2000 to work on a
             full-time basis to handle general administrative services on
             our behalf. We agreed to reimburse Enron and Enron Energy
             Services for the costs associated with these employees.

         We have the option to discontinue any of the services provided by Enron
and Enron Energy Services upon 30 days prior written notice by us to Enron or
Enron Energy Services. Our agreement with Enron and Enron Energy Services does
not require that we contract exclusively with them and does not require that we
continue to use some or all of their services in the future.

         Commodity Supply Agreements. We entered into a Master Energy Purchase
and Sale Agreement (the "Electricity Agreement") with Enron Energy Services,
Inc. ("EESI"), a subsidiary of Enron Energy Services, which provides us the
ability to purchase up to an aggregate of 2,000,000 kWhs of electric power per
hour from EESI on either an interruptible or firm basis at wholesale prices. We
have also entered into a Master Purchase and Sales Agreement (the "Gas
Agreement") with EESI which provides us the ability to purchase up to an
aggregate of 800,000 MMBtus of natural gas per day from EESI on either an
interruptible or firm basis at wholesale prices. These quantities of electricity
and natural gas, based on expected peak energy requirements, are sufficient to
meet the peak energy requirements of approximately 1.2 million electric and 1.2
million natural gas customers respectively. These quantities are expected to be
sufficient to meet our requirements in both our initial markets and subsequent
markets until these energy requirements are exceeded. If our required volumes
exceed these amounts prior to the termination of the contract, we expect to be
able to obtain wholesale prices in the market based on

                                       14
<PAGE>

those higher requirements. Neither the Electricity Agreement nor the Gas
Agreement obligates us to purchase commodities from EESI. We have entered into
eleven third-party Master Purchase and Sale Agreements for both power and gas in
order to diversify commodity sourcing and credit requirements.

         Under both the Electricity Agreement and the Gas Agreement, we have the
option to purchase forward quantities of the applicable commodity at either
EESI's intra-day wholesale sales price or their wholesale sales price at the
close of business on the day of our purchase request based on specified indices.
This wholesale sales price will be adjusted for applicable timing and location
pricing differences and, in the case of electric power, voltage requirements,
but such adjustments do not include any premiums for small quantity, odd lot or
liquidity. Under both the Electricity Agreement and the Gas Agreement, we also
have the option to make spot purchases during any month at EESI's then current
intra-day wholesale sales price, subject to the same adjustments set forth
above.

         EESI has provided us management services, including commodity demand
forecasting, scheduling, supply and demand management services, invoicing
services and, in the case of the Gas Agreement, transportation scheduling at no
cost for a period of six months. At the end of that six month period, we may
elect to continue receiving some or all of these services at specified costs set
forth in the Electricity Agreement or the Gas Agreement, as applicable, until
the ultimate termination of that agreement.

         The Electricity Agreement and the Gas Agreement also entitle us to sell
up to an aggregate of 2,000,000 kWhs of electric power per hour and 800,000
MMBtus of natural gas per day to EESI for purposes of balancing our commodity
supply against the demand of our customers. We may sell forward quantities of
the applicable commodity at either EESI's intra-day wholesale purchase price or
the wholesale purchase price at the close of business on the day of our purchase
request based on specified indices. This wholesale purchase price will be
adjusted for applicable timing and location pricing differences and, in the case
of electric power, voltage requirements, but such adjustments do not include any
premiums for small quantity, odd lot or liquidity. Under both the Electricity
Agreement and the Gas Agreement, we also have the option to make spot sales
during any month at EESI's then current intra-day wholesale purchase price,
subject to the same adjustments set forth above.

         The Electricity Agreement and the Gas Agreement are each effective
until January 2002, but we have the option to extend the term of each agreement
until January 2004 at no additional cost.

         With respect to our commodity purchases through Enron or its
affiliates, we entered into a Master Cross-Product Netting, Setoff, and Security
Agreement with Enron, dated March 14, 2001, which is designed to support
physical and financial commodity trading. The agreement allows for netting
across Master Purchase and Sale Agreements and ISDA Agreements with multiple
Enron trading entities.

         Noncompetition Agreement. We have entered into a noncompetition
agreement with Enron and Enron Energy Services pursuant to which Enron and Enron
Energy Services have agreed not to engage in competitive activities to the
extent described below until January 6, 2005. The noncompetition agreement
specifically prohibits Enron and Enron Energy Services from:

         o   entering into contracts directly with individuals in the
             United States for the retail sale of natural gas or
             electricity for their own use or, with some exceptions,
             acquiring equity interests in an entity that has these
             contracts; or

         o   operating, managing or otherwise conducting the business of
             selling natural gas or electricity at retail directly to
             residential customers in the United States or providing any
             consulting or advisory services in connection with the
             operation or management of a business that is engaged in the
             retail

                                       15
<PAGE>

             sale of natural gas or electricity to those individuals for
             their own use.

These restrictions do not preclude Enron or Enron Energy Services from entering
into contracts or agreements for the wholesale sale of natural gas or
electricity or any derivative products or services provided in connection with
those sales. These restrictions also do not limit the ability of either Enron or
Enron Energy Services to enter into contracts or agreements with any category of
commercial or industrial customers, including small commercial customers, for
the retail sale of natural gas or electricity.

         Under the noncompetition agreement, Enron and Enron Energy Services
may, notwithstanding the above restrictions:

         o   beneficially hold a five percent or less interest in a public
             company that competes with us;

         o   acquire less than all of the equity securities of a business
             that competes with us so long as the fair market value of that
             competitor's electric or natural gas residential business
             component does not exceed $20 million, provided that following
             such acquisition Enron and Enron Energy Services conduct
             business with such competitor only at arm's length;

         o   acquire all of the capital stock or assets of a business that
             competes with us, so long as the fair market value of that
             competitor's electric or natural gas residential business
             component or the acquired assets does not exceed $20 million;

         o   acquire or invest in a public utility company that is
             regulated under state law as a public utility, whether or not
             it is a competitor of ours;

         o   acquire or invest in any entity that is controlled by a
             governmental authority, such as a municipality, municipal
             utility district or a public power authority, whether or not
             it is a competitor of ours;

         o   acquire or invest in a cooperative, whether or not it is a
             competitor of ours; and

         o   permit the activities of some subsidiaries of Enron and any
             entity in which Enron, Enron Energy Services and their
             controlled affiliates own 50% or less of the outstanding
             voting securities, even if Enron would be prohibited from
             engaging in such activity, as long as Enron and Enron Energy
             Services do not vote their stock in that entity in a manner
             that would result in any such activity unless required by
             applicable fiduciary duties.

         If Enron or Enron Energy Services makes an investment or acquires an
interest in a competitor of ours and that interest is greater than the amount
permitted under the noncompetition agreement, Enron or Enron Energy Services
must offer us the option to participate in the prohibited business or to acquire
that business transaction on terms that are economically beneficial to us. If we
choose not to participate in the transaction, Enron or Enron Energy Services
must divest itself of such interest either directly or derivatively within one
year from the consummation of the acquisition.

         The noncompetition agreement will terminate on January 6, 2005, and may
be terminated at any time between January 6, 2003 and January 6, 2005 if Enron
and its controlled affiliates (including Enron Energy Services) own less than
15% of our common stock on a fully-diluted basis and less than 15% of our
directors are affiliated with Enron or its controlled affiliates. The
noncompetition agreement will also terminate immediately in the event of a
change of control transaction relating to Enron. In addition, the noncompetition
agreement will terminate immediately as to Enron Energy Services if Enron Energy
Services is no longer a controlled affiliate of

                                       16
<PAGE>

Enron and all of our common stock held by Enron Energy Services is transferred
to Enron or one or more controlled affiliates of Enron.

         Business Opportunity Agreement. We have entered into a business
opportunity agreement with Enron under which we renounced any interest or
expectancy we may have in any business opportunity that does not consist
exclusively of the businesses permitted by our certificate of incorporation.
Subject to the terms of our noncompetition agreement with Enron and Enron Energy
Services, the business opportunity agreement also allows Enron and its
affiliates to engage in the same businesses that we currently anticipate to be
engaged in, even if those business activities cause them to compete against us.
In general, subject to the terms of the noncompetition agreement, Enron is
permitted to engage in any business whatsoever, including the retail sale of
natural gas, electricity, and other commodities, products and services (whether
or not related to natural gas or electricity) that may compete against us, and
Enron may compete in public tenders against us, so long as (A) the business is
conducted and the opportunities are identified and developed through Enron's own
assets and personnel and not through our assets and personnel, and (B) the
business opportunity did not come to the attention of Enron solely because of an
individual associated with Enron who was also serving in some capacity with us.
If a business opportunity in which our certificate of incorporation will allow
us to participate is presented to a person who is an officer or director of both
Enron and us, the business opportunity must first be offered to us, and we will
have a reasonable period of time to decide whether or not we want to participate
in that business opportunity. All provisions of the business opportunity
agreement are subject to the terms of the noncompetition agreement so long as
the noncompetition agreement is in effect. The business opportunity agreement
has no termination date.

         Limited Corporate Purpose Charter Provision. In connection with our
initial private placement, we agreed to include a limited corporate purpose
clause in our charter, in conjunction with the noncompetition agreement, to
mitigate potential conflicts of interest with Enron's activities. The purpose
clause in our certificate of incorporation limits our ability to engage in
business activities other than selling energy and other products and services to
residential and small commercial customers. Our certificate of incorporation has
permit us to engage in the businesses activities incidental to those businesses,
and such other businesses as Enron may approve in its sole discretion. We have
agreed not to amend our certificate of incorporation to expand this purpose
clause without first obtaining the approval of 80% of our issued and outstanding
common stock. The purpose limitations in our certificate of incorporation will
terminate if the noncompetition agreement terminates or if Enron's ownership of
our common stock and the number of our directors associated with Enron fall
below specified levels.

         Software Agreement. We entered into a software agreement with Enron
Energy Services whereby Enron Energy Services assigned to us a joint and equal
interest in and to proprietary risk management software and documentation,
including source code and any intellectual property rights (other than
trademark-related rights) in and to software and related documentation. This
software is used to create commodity demand projections at an aggregate level
based on a number of variables, such as number of customers, their geographic
location and forecasted weather. Until the termination of the noncompetition
agreement described above, both Enron Energy Services and NewPower Holdings,
Inc. have the right to use the software, although any modifications or updates
we create are proprietary to us. However, we cannot transfer, license, or assign
to any third party our right to use, copy, modify or process the software and
Enron Energy Services cannot transfer, license, or assign its right to use or
modify the software to any third party competitor engaged in our business. Enron
Energy Services is further prohibited from assigning any portion of the software
agreement until July 2001 to any entity engaged in our business without first
obtaining our consent. Upon the termination of the noncompetition agreement, the
foregoing restrictions in the software agreement regarding the transfer, license
and assignment of the software will terminate.

         Agreements with Other Third Parties

         IBM Agreement. We have entered into an Information Technology Services
Agreement with IBM,

                                       17
<PAGE>

pursuant to which IBM will develop and integrate our operations systems and
provide other services relating to customer acquisition, customer care and
billing over a ten-year term. The agreement provides for a combination of fixed
and variable fees. The aggregate one-time systems integration service fees are
estimated to be between $65 and $75 million. For services relating to customer
acquisition, customer care and revenue management, fees are a combination of
fixed and variable as our customer base grows. Beginning June 1, 2000, we paid
IBM a fixed fee of $1,000,000 per month for the term of the agreement until we
reach 1.8 million customers or $10 million per month in total monthly fees, plus
a variable fee based on number and type of customer. The variable fee includes
separate components for each customer that vary based on whether the customer is
served online or by mail, a separate fee for each market entered and a per
minute customer service charge. The agreement generally provides that IBM will
be the exclusive provider of most of our revenue management and customer care
services, but allows us to procure third party services under some
circumstances, including IBM achieving $1.5 billion in aggregate gross revenue
under the agreement. The agreement gives us termination rights in a number of
circumstances, some of which require us to pay IBM a termination fee of up to
$50 million.

         In addition to the Information Technology Services Agreement, we
entered into a Subscription Agreement with IBM pursuant to which IBM agreed to
purchase and we agreed to sell shares of our common stock. First, IBM purchased
1,100,400 shares of our common stock in exchange for $10 million, paid in $5
million installments on May 31, 2000 and September 29, 2000. Second, IBM
purchased 476,190 shares of NPW's common stock in exchange for $5 million, paid
on December 29, 2000. Finally, IBM agreed to purchase shares of NPW's common
stock on December 31, 2001 at the average daily closing price of NPW's common
stock on the New York Stock Exchange for the twenty trading days prior to
December 31, 2001 in exchange for $5 million, as long as such average exceeds
50% of the price per share in the IPO. For the third equity purchase
transaction, IBM has the option to pay the stated amount in cash or to credit
that amount as an offset to payments that we then owe to IBM under the
Information Technology Services Agreement.

         AOL Agreement. On November 24, 1999, we entered into an Interactive
Marketing Agreement with AOL under which AOL agreed to promote us on the America
Online(R) service, CompuServe(R) service and Digital City(R) service for a
period of six years. Under the terms of our agreement with AOL, we agreed to pay
AOL $49 million over the six-year period on a semi-annual basis. We also agreed
to issue 258,060 shares of our common stock to AOL for every 100,000 customers
that subscribe to our service through AOL, up to 1 million customers. AOL will
receive $25 per customer for every customer over 1 million that signs up for our
services through AOL. Our agreement with AOL is subject to early termination in
October 2004 if either party gives notice to the other party requesting a
re-evaluation of the economic terms of the agreement and the parties do not
reach agreement on those terms.

         AOL also agreed not to promote on the America Online(R) service,
CompuServe(R) or the Digital City(R) service offers of electricity or natural
gas (and certain related products) by other providers to residential or small
commercial customers over the course of our agreement. We also have the option
to declare an eight-month blackout period during which AOL cannot conduct
branding campaigns on behalf of any provider of energy products, including
regulated public utilities in restructured markets. The exclusivity provisions
in our agreement with AOL for a particular market can be terminated by AOL if we
choose not to market actively our services to customers in a particular
restructured market, or if our prices are not competitive in a particular
product. In addition, the exclusivity provisions in our agreement with AOL can
be terminated by AOL for either electricity or natural gas for all markets if we
are not among the top three energy service providers (excluding incumbent
utilities) in terms of markets served in the United States for that particular
product at any time.

         As part of our contract with AOL, we obtained specified rights in
connection with AOL's then-current rewards program, AOL Rewards(R). During 2000,
AOL replaced that program and announced a combined AOL/AAdvantage rewards
program. We are in discussions with AOL concerning our participation in the new

                                       18
<PAGE>

program and are currently reviewing the entirety of our relationship with AOL,
including the number of customer acquisitions derived under existing
arrangements compared to the expense.

         PECO Energy Co. Agreement. On October 18, 2000, we entered into a
Competitive Default Service Agreement with PECO Energy Company to provide
electricity service to 20 percent of PECO's residential customers who had not
selected a competitive energy services provider. These customers were selected
randomly from among PECO's residential service categories. After considering
oppositions filed by two unsuccessful bidders for the contract, the Pennsylvania
Public Utilities Commission approved the NewPower-PECO CDS Agreement on November
29, 2000. Under this Agreement, and a subsequent amendment to avoid notifying
customers during the Christmas mailing season, we began serving electricity to
approximately 240,000 former PECO residential customers in March 2001. Because
of the nature of the bid process, we will incur no costs or payments to acquire
these customers for the term of the three-year agreement, which ends with the
last meter reading date occurring prior to February 1, 2004. Depending on the
specific PECO rate category, we provide these customers discounts of 2.02% or
1.02% off of PECO's "shopping credit" for the commodity portion of the total
electric bill, over the three-year term of the agreement. PECO will provide
consolidated billing and assume any credit risk for all of these CDS customers.
Additionally, if as of October 15, 2002, the number of NewPower CDS customers is
less than 20 percent of all residential electricity customers then receiving
distribution service from PECO, we will be entitled to a "refill" to bring our
CDS customer count up to the 20 percent figure. Presently, we expect this refill
to include approximately 30,000 randomly selected PECO residential customers.
The CDS Agreement also contains a "green" energy clause, requiring NewPower to
ensure that at least 2 percent of the electricity to be supplied to our CDS
customers come from renewable resources. This "green" requirement increases to
2.5 percent in the second year of service and 3.0 percent for the last year.

         Columbia Energy Group. Upon obtaining all required regulatory
approvals, we completed the second and final closing with respect to our asset
purchase agreement with Columbia Energy Services Corporation, Columbia Energy
Retail Corporation and Columbia Energy Power Marketing Corporation (collectively
"Columbia") on January 31, 2001. This completed our acquisition from Columbia of
approximately 285,000 natural gas customers and 20,000 electricity customers.
The January 31, 2001 second closing date also marked the termination of our
services agreement with Columbia under which we serviced customers who were
subject to the second closing.

         Under the acquisition agreement we have committed to make an
"Additional Purchase Price" payment to Columbia, the amount of which depends on
how many of the acquired customers we retain as of July 31, 2001. The maximum
payment we would be required to make at that date is approximately $3.9 million.
We also have a three-year non-competition and license agreement with Columbia's
parent, Columbia Energy Group, whereby we were granted an exclusive license to
use specified trademarks, service marks, and trade names previously used by
Columbia in its retail operations in the geographic areas of service associated
with the customers we acquired. The non-competition agreement bars Columbia's
affiliates not regulated by FERC or a state public utility commission from
competing with us in the business of retail marketing to residential and small
commercial electricity and natural gas customers in Georgia, Indiana, Maryland,
Michigan, New Jersey, Ohio, Pennsylvania and Virginia.

Employees

         As of December 31, 2000 we had approximately 121 full-time employees.

                                       19
<PAGE>

Forward-Looking Statements

         Certain statements in this Form 10-K 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-K and throughout the other documents incorporated herein
by reference. The Company undertakes no 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.

Item 2.  Properties

         Our corporate headquarters is located in Purchase, New York, where we
currently occupy approximately 38,000 square feet with an option to occupy an
additional 38,000 square feet. We have an office in Houston, Texas to conduct
our commodity purchasing and risk management operations. In addition, under our
agreement with IBM, we have dedicated space at IBM's facilities in Charlotte,
North Carolina, where call center and other customer care operations are
conducted. We also occupy offices in San Francisco, California; Edison, New
Jersey; Austin, Texas; and Herndon, Virginia. All our office space is leased.
During the year ended December 31, 2000 we incurred $1.1 million of expenses
under operating leases.

Item 3.    Legal Proceedings

         From time to time, we may be involved in routine disputes and
litigation in the ordinary course of business, none of which we believe will
have a material adverse effect to our business.

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

         During the fourth quarter of 2000, no matter was submitted to a vote of
the security holders of the Company.

Part II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

Price Range of Common Stock

         The Company's Common Stock trades on the New York Stock Exchange under
the symbol "NPW." From the initial public offering of the common stock of the
Company on October 5, 2000 until December 31, 2000, the high sales prices for
the Common Stock as reported by the New York Stock Exchange was $29.00 and the
low sales price was $4.63.

                                       20
<PAGE>

As of February 28, 2001 there were approximately 70 holders of record of the
Common Stock. However, the Company believes that the number of beneficial owners
is substantially greater than the number of record holders, because a large
portion of the Common Stock is held of record in broker "street names."

Dividend Policy

         We have not declared or paid cash dividends on our capital stock since
our inception, and we do not anticipate declaring or paying any cash dividends
in the foreseeable future. Instead, we currently expect to retain our earnings,
if any, to finance our business. Our board of directors has the authority to
declare and pay dividends on the common stock, in its discretion, as long as
there are funds legally available to do so.

Item 6. Selected Financial Data

         Enron created a subsidiary, Enron Energy Services, on May 1, 1997 to
conduct retail marketing and sales of natural gas and power to residential,
commercial and industrial customers. Historically, our business was the
residential energy operating unit of Enron Energy Services. We acquired the
Columbia Energy Mass Markets Business Segment in July 2000. The following table
presents selected financial data, since inception, related to the residential
power and natural gas business of Enron Energy Services in California and Ohio
that was contributed to us in our initial private placement transaction
completed January 6, 2000, and the Columbia operations since the July 31, 2000
acquisition. Our selected financial data for the period from inception, May 1,
1997, through December 31, 1997, and as of and for each of the three years ended
December 31, 2000 set forth below have been derived from financial statements
audited by Arthur Andersen LLP, independent public accountants.

         Due to our limited operating history and our new business model, we
believe that period-to-period comparisons of our revenues and results of
operations are not meaningful. As a result, you should not rely on our revenues
or results of operations for any period as an indication of our future
performance or prospects.

                                       21
<PAGE>

<TABLE>
<CAPTION>
                                                    Years ended December 31,              May 1 to
                                          -----------------------------------------      December 31,
                                             2000            1999            1998           1997
                                          ---------        --------        --------        --------
                                            (in thousands except per share data)
<S>                                         <C>              <C>             <C>               <C>
Statement of income data:
Net revenues                                $84,082          $7,838          $7,024            $766
Cost of sales                                79,820           5,748           4,679             632
                                          ---------        --------        --------        --------
Gross margin                                  4,262           2,090           2,345             134

Operating expenses                          187,448          27,117          19,686          19,503
                                          ---------        --------        --------        --------
Operating Loss                            ($183,186)       ($25,027)       ($17,341)       ($19,369)
Interest (Income) Expense                   (13,352)             --              --              --
                                          ---------        --------        --------        --------
Net loss                                  ($169,834)       ($25,027)       ($17,341)       ($19,369)
                                          =========        ========        ========        ========
Pro forma basic and diluted net loss
   per common share                          ($5.53)       ($125.14)
                                         ==========         =======
Shares used in computing pro forma
   net loss per common share             30,725,566         200,000
                                         ==========         =======
</TABLE>

<TABLE>
<CAPTION>
                                                             As of December 31,
                                       ------------------------------------------------------------
                                            2000            1999            1998          1997
                                            ----            ----            ----          ----
<S>                                    <C>             <C>             <C>             <C>
Balance sheet data:
Cash and cash equivalents              $    179,885    $         --    $         --    $         --
Working capital                        $    431,906    $     93,306    $      1,421    $        111
Total assets                           $    712,342    $    113,115    $      3,673    $        428
Total stockholders' equity             $    606,602    $    101,239    $      1,421    $        111
</TABLE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Overview

         In November of 1999, NPW was formed by Enron Corp. 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 power
and natural gas to residential and small commercial customers in the United
States.

         We were capitalized through the contribution of certain assets by Enron
Energy Services 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, Enron Energy Services 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, Enron
Energy Services agreed to contribute and assign to us, the economic value of
approximately 24,000 residential customer contracts. As of the date hereof, such
contracts are still to be assigned to us. We are currently working with EES
regarding transfer of the customers. We expect resolution during 2001. 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,
negotiated the acquisition of customers from Columbia Energy Group and
identified other target markets. In

                                       22
<PAGE>

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.
Systems integration service fees have aggregated approximately $68 million, all
but approximately $10 million of which were expensed as incurred during the year
ended December 31, 2000. For services relating to customer acquisition, customer
care and revenue management, fees are a combination of fixed and variable as our
customer base grows. Effective June 1, 2000, we began paying IBM a fixed fee of
$1 million per month for the term of the agreement, until the total monthly fees
reach specified thresholds, plus a variable fee based on number and type of
customer. The variable fee includes separate components for each customer that
are based on whether the customer is served online or by mail and a per minute
customer service charge. Variable costs incurred under this agreement
approximated $8 million for the year ended December 31, 2000.

         Through December 31, 2000, we had acquired approximately 25,000
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.

         On July 31, 2000, we acquired the residential and small commercial
retail energy business of Columbia Energy Group and some of its affiliates,
which included approximately 20,000 power customers and 285,000 natural gas
customers, primarily in Georgia, Ohio and Pennsylvania. The purchase price
consisted of a cash payment of $11.7 million and the issuance of 602,200 shares
of our common stock, valued at $6.4 million. Also, in connection with the
acquisition, we purchased natural gas inventory and customer accounts receivable
for approximately $32.8 million. The customers acquired from Columbia included
committed contracts to provide future services to customers that had a negative
value of $4.5 million as of the acquisition date. This loss was considered in
the purchase price. The loss was estimated based on factors including the
remaining term of the committed contracts, the contracted sales price to the
customers, projected customer demand patterns and the then current costs to
acquire and deliver the commodity to the customers in the contracted future
periods. Up to an additional $3.9 million of cash consideration can be earned by
Columbia if specified levels of customer retention are maintained over the
one-year period from the closing of the acquisition. The contingent
consideration will be accrued in the period in which it becomes probable and can
be reasonably estimated. The accrual of contingent consideration will increase
the value of intangible assets acquired and the related amortization subsequent
to the settlement of the contingent liability. The results of operations of the
Columbia portfolio are included in our operating results since the July 31, 2000
acquisition date.

         In October 2000, we reached an agreement with PECO to supply service to
20 percent of 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 operating subsidiary, The New Power
Company, 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. Under the agreement with PECO, The New Power Company 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. Following customer notifications and the results of opt-out
selections, we began servicing approximately 240,000 customers on March 1, 2001,
pursuant to this agreement. 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, we acquired the residential and small commercial
retail energy business of Energy USA ("EUSA"), which was an operating unit of
NiSource, Inc. ("NiSource"). The acquired portfolio consists of approximately
34,000 gas customers in Ohio and Indiana. The purchase price consisted of one
dollar and our assumption of contracts to provide services to the customers,
which had a negative value of $9.5 million as of the

                                       23
<PAGE>

acquisition date. Also, in connection with the acquisition, we acquired natural
gas inventory for $4.7 million and financial contract settlements valued at $8.5
million. The loss position of the contracts we acquired was estimated based on
factors including the remaining term of the committed contracts, the contracted
sales price to the customers, projected customer demand patterns and the then
current costs to acquire and deliver the commodity to the customers in the
contracted future periods. The results of operations of the EUSA portfolio are
included in our operating results since December 2000.

         As of December 31, 2000, 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.

         In March 2001 NPW entered into an agreement to acquire approximately
7,200 residential and small commercial natural gas customers in the Atlanta,
Georgia market from Reliant Energy Retail, Inc. ("Reliant"). The acquisition
will be 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.

         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. 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 derived from the sale and delivery of power and
natural gas to retail customers in the United States. For the years ended
December 31, 2000, 1999 and 1998, respectively, revenues were $84.1 million,
$7.8 million and $7.0 million. The increase in revenues is attributable to the
acquisition of Columbia as of July 31, 2000.

         Our cost of sales represents the direct costs of acquiring and
delivering the power and natural gas to our customers. For the years ended
December 31, 2000, 1999 and 1998, respectively, cost of sales, as a percentage
of revenues, totaled 95%, 73% and 67%. The increase in cost of sales is
primarily attributable to the acquisition of Columbia as of July 31, 2000.

         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
years ended December 31, 2000, 1999 and 1998, respectively, operating expenses
were $187.4 million, $27.1 million and $19.7 million. The increase in operating
expenses for the year ended December 31, 2000 over prior years relates primarily
to significantly increasing our staff and infrastructure beginning in April 2000
to execute our business plan. As a result, operating expenses for 2000 included
$108 million for systems development and other professional services, $15.8
million for direct marketing, and $12.5 million for billing and customer care.
Also, compensation expenses recorded during 2000 include costs for the
recruitment of certain executives, which resulted in $12.5 million of deferred
compensation expense. Our operating expenses also include certain allocated
operating expenses from Enron Energy Services and Enron. Such allocations and
charges are 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. For the years ended December 31, 2000, 1999 and
1998,

                                       24
<PAGE>

respectively, approximately $2.9 million, $13.2 million and $7.5 million of
operating expenses were allocated to us from Enron and Enron Energy Services.

Liquidity and Capital Resources

         We have financed our activities through private placements of our
common stock, warrants to purchase our common stock and an initial public
offering of our common stock. In our initial private placement, on January 6,
2000, we received proceeds of $100 million in exchange for shares of our common
stock and warrants. In May 2000, we sold common stock to IBM for proceeds of $15
million which was paid in $5 million increments in May, September and December
2000. In July 2000 we completed our second private placement, in which investors
paid approximately $104 million to purchase common stock and warrants. We sold
24,000,000 shares of our common stock in our IPO, which closed on October 11,
2000, and an additional 3,600,000 shares on October 13, 2000. The proceeds from
the offering, after deducting the underwriting discount and expenses, were
approximately $543.1 million.

         Net cash used in operating activities of $173.9 million, $16.6 million
and $18.7 million for the years ended December 31, 2000, 1999 and 1998,
respectively, resulted primarily from net losses of $169.8 million, $25.0
million and $17.3 million for each respective period. In July 2000, we used
existing cash reserves to pay the $11.7 million Columbia purchase price and
$32.8 million to purchase natural gas inventory and customer accounts receivable
acquired from Columbia.

         Our operating expenses increased substantially in 2000 because of our
commencing substantial marketing and customer acquisition activities together
with increased selling, general and administrative expenses. We are also
committed to make significant payments under our agreement with IBM.

         As of December 31, 2000, we had cash, cash equivalents and investment
securities of approximately $539.4 million invested 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
financings and revenue from operations, will be sufficient to fund all our
working capital, capital expenditures and liquidity requirements for at least
the next 24 months, 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, currently
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 adverse changes 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.

Recent Accounting Pronouncements

         In June 2000, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities", an

                                       25
<PAGE>

amendment to SFAS No. 133 "Accounting for Derivative Instruments and Hedging
Activities". SFAS No. 133 established accounting and reporting standards
requiring that every derivative instrument (including certain derivative
instruments embedded in other contracts) be recorded on the balance sheet as
either an asset or liability measured at its fair value. The statement requires
that changes in the derivative's fair value be recognized currently in earnings
unless specific hedge accounting criteria are met. Special accounting for
qualifying hedges allows a derivative's gain and losses to offset related
results on the hedged item in the income statement, and requires that a company
must formally document, designate and assess the effectiveness of transactions
that receive hedge accounting.

         NPW adopted SFAS No. 133 (as amended by SFAS 138) on January 1, 2001.
We estimate that adoption will require a one-time adjustment of approximately
$56 million which will be recorded as an increase to other comprehensive income.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 provides guidance on the recognition, presentation and disclosure
of revenues in financial statements. NPW's revenue recognition procedures are in
compliance with the requirements of SAB 101.

Quantitative and Qualitative Disclosure About Market Risk

         At December 31, 2000, we held no financial instruments or investments
which could be subject to interest rate or equity price risk. Therefore, we were
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. 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 natural gas to be provided to our customers as part of fixed price contracts.
The purpose of the hedging strategy is to achieve a more predictable cash flow,
as well as to reduce our exposure to adverse price fluctuations of natural gas.
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 used are swaps and are placed with counterparties that we believe
are minimal credit risks. We account for these transactions as hedging
activities and, accordingly, gains or losses are included in the cost of natural
gas in the period the hedged purchase occurs.

                                       26
<PAGE>

         See Note 11 to the Consolidated Financial Statements, "Hedging and
Derivative Financial Instruments", for additional information on our derivative
instruments.

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.

                                       27
<PAGE>

Item 8.  Financial Statements and Supplementary Data

INDEX

                                                                            Page
Report of Independent Public Accountants.................................... 29
Consolidated Balance Sheets................................................. 30
Consolidated Statements of Income........................................... 31
Consolidated Statements of Changes in Owners' and Stockholders' Equity...... 32
Consolidated Statements of Cash Flows....................................... 33
Notes to Financial Statements............................................... 34
Schedule II - Valuation and Qualifying Accounts ............................ 53

                                       28
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of NewPower Holdings, Inc.:

         We have audited the accompanying consolidated balance sheets of
NewPower Holdings, Inc., and subsidiaries, successor to an operating unit of
Enron Energy Services, LLC (EES) as of December 31, 2000 and 1999, and the
consolidated statements of income, changes in owners' and stockholders' equity,
and cash flows for each of the three years ended December 31, 2000 (see Note 1).
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of NewPower Holdings,
Inc., and subsidiaries, as of December 31, 2000 and 1999, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2000 in conformity with accounting principles generally
accepted in the United States.

         Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 14 is the
responsibility of the Company's management and is presented for the purpose of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

                               ARTHUR ANDERSEN LLP

NEW YORK, NEW YORK
FEBRUARY 12, 2001

                                       29
<PAGE>
                           NewPower Holdings, Inc.
                         Consolidated Balance Sheets
               (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                       ----------------------------
                                                                          2000                1999
                                                                       ---------           ---------
<S>                                                                    <C>                 <C>
ASSETS

Current Assets

   Cash and Cash Equivalents                                           $ 179,885           $       -
   Accounts Receivable, net of allowance of $1,250 and $67                47,885               2,880
   Stock Subscription Receivable                                               -             100,000
   Investments in Marketable Securities                                  257,189                   -
   Inventory and Imbalances                                               44,663                   -
   Prepaid Expenses                                                        8,024               2,302
                                                                       ---------           ---------

     Total Current Assets                                                537,646             105,182
                                                                       ---------           ---------

   Fixed Assets                                                           12,835                 235
   Less:   Accumulated Depreciation                                       (1,461)                  -
                                                                       ---------           ---------
     Net Fixed Assets                                                     11,374                 235
                                                                       ---------           ---------

   Investments in Marketable Securities                                  102,373                   -
   Other Assets                                                           28,954               7,698
   Intangible Assets, net                                                 31,995                   -
                                                                       ---------           ---------
Total Assets                                                           $ 712,342           $ 113,115
                                                                       =========           =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

   Accounts Payable                                                     $ 39,278             $ 1,616
   Accrued Liabilities                                                    27,112                 215
   Due to Affiliated Entities                                             29,960              10,045
   Deferred Compensation                                                   9,390                   -
                                                                       ---------           ---------
     Total Current Liabilities                                           105,740              11,876
                                                                       ---------           ---------

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;              581                 200
   58,054,882 and 200,000 shares issued; 0 and 19,800,000
      shares subscribed; and 58,054,882 and 200,000 shares outstanding
   Paid-in Capital                                                       777,437             101,039
   Deferred Compensation                                                  (2,917)                  -
   Other Comprehensive Income                                              1,335                   -
   Accumulated Deficit                                                  (169,834)                  -
                                                                       ---------           ---------

     Total Stockholders' Equity                                          606,602             101,239
                                                                       ---------           ---------

Total Liabilities and Stockholders' Equity                             $ 712,342           $ 113,115
                                                                       =========           =========
</TABLE>

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

                                       30
<PAGE>

                            NewPower Holdings, Inc.
                       Consolidated Statements of Income
           For the Three Years Ended December 31, 2000, 1999 and 1998
                (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                          Years Ended December 31,
                                                --------------------------------------------
                                                    2000            1999            1998
                                                ------------    ------------    ------------
<S>                                             <C>             <C>             <C>
Net Revenues                                    $     84,082    $      7,838    $      7,024

Cost of Sales                                         79,820           5,748           4,679
                                                ------------    ------------    ------------

Gross Margin                                           4,262           2,090           2,345

Operating Expenses                                   187,448          27,117          19,686
                                                ------------    ------------    ------------

Operating Income (Loss)                             (183,186)        (25,027)        (17,341)

Interest (Income) Expense                            (13,352)             --              --
                                                ------------    ------------    ------------

Income (Loss) Before Income Taxes                   (169,834)        (25,027)        (17,341)

Provision for Income Taxes                                --              --              --
                                                ------------    ------------    ------------

Net Income (Loss)                               $   (169,834)   $    (25,027)   $    (17,341)
                                                ============    ============    ============

Basic and diluted net loss per common share           ($5.53)       ($125.14)

Weighted average shares used to compute basic
   and diluted net loss per common share          30,725,566         200,000
</TABLE>

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

                                       31
<PAGE>

                             NewPower Holdings, Inc.
     Consolidated Statements of Changes in Owners' and Stockholders' Equity
                  (Dollars in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                                            Owners'        Total
                                                                                                 Other     Equity and   Owners' and
                                                  Common Stock        Paid in      Deferred  Comprehensive Accumulated Stockholders'
                                               Shares      Amount     Capital    Compensation    Income      Deficit       Equity
                                             ----------  ----------  ----------   ----------   ----------   ----------   ----------
<S>                                          <C>         <C>         <C>          <C>          <C>          <C>          <C>
Owners' Equity, December 31, 1997                    --  $       --  $       --   $       --   $       --   $      111   $      111
     Capital Contribution - EES                      --          --          --           --           --       18,651       18,651
     Net Loss                                        --          --          --           --           --      (17,341)     (17,341)
                                             ----------  ----------  ----------   ----------   ----------   ----------   ----------
Owners' Equity, December 31, 1998                    --  $       --  $       --   $       --   $       --   $    1,421   $    1,421
     Capital Contribution - EES                      --          --          --           --           --       16,610       16,610
     Net Loss                                        --          --          --           --           --      (25,027)     (25,027)
     Issuance of Common Stock in
       Connection with Incorporation            200,000           2      (6,998)          --           --        6,996           --
     Common Stock and Warrants Subscribed
        in Connection with Capitalization    19,800,000         198     108,037           --           --           --      108,235
                                             ----------  ----------  ----------   ----------   ----------   ----------   ----------
Stockholders' Equity, December 31, 1999      20,000,000  $      200  $  101,039   $       --   $       --   $       --   $  101,239
     Issuances of common stock for services   2,076,305          21         (21)          --           --           --           --
     Sale of common stock and warrants       29,815,590         298     662,217           --           --           --      662,515
     Common stock issued for acquisitions       602,200           6       6,394           --           --           --        6,400
     Conversion of warrants to common stock   5,560,787          56         (56)          --           --           --           --
     Unearned compensation related to
       restricted stock grants                       --          --       5,000       (2,917)          --           --        2,083
     Unrealized gain on investments                  --          --          --           --        1,335           --        1,335
     Capital Contribution - EES                      --          --       2,864           --           --           --        2,864
     Net Loss                                        --          --          --           --           --     (169,834)    (169,834)
                                             ----------  ----------  ----------   ----------   ----------   ----------   ----------
Stockholders' Equity, December 31, 2000      58,054,882  $      581  $  777,437   $   (2,917)  $    1,335   $ (169,834)  $  606,602
                                             ==========  ==========  ==========   ==========   ==========   ==========   ==========
</TABLE>

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

                                       32
<PAGE>
                             NewPower Holdings, Inc.
                      Consolidated Statements of Cash Flows
                (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                               Years Ended Decmber 31,
                                                                                   --------------------------------------------
                                                                                       2000            1999           1998
                                                                                   ------------    ------------    ------------
<S>                                                                                <C>             <C>             <C>
Cash Flows From Operating Activities

Reconciliation of net loss to net cash used by operating activities
           Net loss                                                                $   (169,834)   $    (25,027)   $    (17,341)
           Depreciation and amortization                                                  3,815              --              --
           Deferred compensation                                                         12,474           8,000              --
           Provision for doubtful accounts                                                1,250              --              --
Changes in assets and liabilities
           (Increase) decrease in accounts receivable                                   (44,255)            793          (3,245)
           Increase in inventory and imbalances                                         (11,437)             --              --
           Increase in prepaid expenses                                                  (5,722)             --              --
           Increase (decrease) in accounts payable and accrued liabilities               42,120            (286)          1,997
           Increase (decrease) in due to affiliate                                       19,915           9,910             (62)
           Decrease in deferred compensation payable                                     (1,000)             --              --
           Increase in other assets                                                     (21,255)        (10,000)             --
                                                                                   ------------    ------------    ------------
     Net Cash Used in Operating Activities                                             (173,929)        (16,610)        (18,651)
                                                                                   ------------    ------------    ------------

Cash Flows From Investing Activities
           Cash issued to purchase businesses, net of cash received                     (40,737)             --              --
           Capital expenditures                                                         (12,600)             --              --
           Purchases of investment securities                                          (358,227)             --              --
                                                                                   ------------    ------------    ------------
     Net Cash Used in Investing Activities                                             (411,564)             --              --
                                                                                   ------------    ------------    ------------

Cash Flows From Financing Activities
           Proceeds from sale of common stock & warrants                                762,514              --              --
           Contributions from EES                                                         2,864          16,610          18,651
                                                                                   ------------    ------------    ------------
     Net Cash Provided from Financing Activities                                        765,378          16,610          18,651
                                                                                   ------------    ------------    ------------

Increase in Cash and Cash Equivalents                                                   179,885              --              --

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

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

                                       33
<PAGE>

NEWPOWER HOLDINGS, INC. NOTES TO FINANCIAL STATEMENTS

Note 1-Organization and Formation

         NewPower Holdings, Inc. ("NPW"), 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 customers in nine states:
Ohio, Indiana, Georgia, Maryland, Pennsylvania, Michigan, New Jersey, Virginia
and California. 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 to residential and small
commercial customers as additional markets continue to be opened to the
competitive retail sale of energy.

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.

         Historically, NPW financed its activities through contributions from
EES and, after January 6, 2000, through private placements of its common stock
and warrants to purchase 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 through the year 2002. However, 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.

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 (the "Capitalization") through the contribution of certain assets by
EES and a private placement to outside investors, pursuant to an agreement
executed on December 23, 1999, in which NPW received the following:

                                       34
<PAGE>

Description                                                           Amount
                                                                    (in $000's)
                                                                    ----------
Subscriptions to Purchase Common Stock                                $100,000
Economic Value from EES Residential Customer Base                            -
EES Risk Management Software                                               235
Other EES Agreements (Note 10)                                               -
                                                                    ----------
   Total                                                              $100,235
                                                                    ----------

         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.

         For contributing its residential customer base, certain risk management
systems and regulatory, risk management, commodity service, and other agreements
to NPW (see Note 10), EES subscribed to receive 14,800,000 shares of NPW voting
common stock and Class A warrants to purchase 45,000,000 shares of non-voting
NPW common stock. EES contributed 5,000,000 of its shares of NPW's common stock
to an affiliated limited liability company ("LLC"). The LLC is owned by EES and
a limited partner, whose general partner is an executive of Enron.

         For their agreement to contribute $100 million of cash to NPW, other
investors subscribed to receive 5,000,000 shares of NPW common stock and Class A
warrants to purchase 15,000,000 shares of non-voting NPW common stock and Class
B warrants to purchase 10,322,800 shares of non-voting NPW common stock.

         Also in connection with services performed related to the initial
private placement, an executive of EES was granted the right to receive
2,064,400 shares of non-voting NPW common stock. The shares issuable under this
agreement were valued at $8.0 million based on their fair market value as of the
date of grant. Operating expenses in 1999 include an $8.0 million expense
attributable to the granting of these shares and the fair value of the shares is
reflected at December 31, 1999 as a component of additional paid-in capital.

         Funding of the private placement was completed on January 6, 2000 and
all of the subscribed shares and subscribed Class A and Class B warrants were
issued.

         In May 2000, NPW entered into a subscription agreement with IBM
pursuant to which IBM purchased shares of NPW's common stock. First, IBM
purchased 1,100,400 shares of NPW's common stock in exchange for $10 million,
payable in equal installments on May 31, 2000 and September 29, 2000. Second,
IBM purchased 476,190 shares of NPW's common stock in exchange for $5 million,
paid on December 29, 2000. Finally, IBM agreed to purchase shares of NPW's
common stock on December 31, 2001 at the average daily closing price of NPW's
common stock on the New York Stock Exchange for the twenty trading days prior to
December 31, 2001 in exchange for $5 million, as long as such average exceeds
50% of the price per share in the IPO.

         In June 2000, EMW Energy Services Corp. changed its name to TNPC, Inc.,
a Delaware corporation. In January 2001, TNPC, Inc. changed its name to NewPower
Holdings, Inc., a Delaware corporation.

         In July 2000, NPW sold 9,070,800 Class A warrants to purchase the
non-voting common stock of NPW and 639,000 shares of non-voting common stock of
NPW to a group of investors for $104.4 million in cash. A limited partnership,
whose general partner is an executive of Enron, subscribed to purchase 4,651,600
of the Class A Warrants sold in the second private placement for $50 million in
cash.

                                       35
<PAGE>

         NPW sold 24 million shares of its common stock in an initial public
offering ("IPO"), which closed on October 11, 2000. The public offering price
was $21.00 per share of common stock and the underwriting discount was $1.21 per
share of common stock. On October 11, 2000, the underwriters for the offering
exercised the over-allotment option granted to them by NPW in connection with
the offering for an additional 3.6 million shares of common stock at a price of
$21.00 per share, which closed on October 13, 2000. Net proceeds from the
offering, after deducting the underwriting discount and offering expenses, were
approximately $543 million.

         In connection with the effectiveness of the registration statement on
October 4, 2000, all of the outstanding Class B warrants automatically converted
into a total of 5,560,787 shares of common stock via a cashless conversion
feature.

Note 2-Summary of Significant Accounting Policies

Basis of Presentation

         For the year ended December 31, 2000, the financial statements present
the balance sheets, statements of operations, statements of changes in
stockholders' equity and cash flows applicable to operations related to the
residential customers contributed by EES and the customers acquired through
acquisitions (see Note 10) and NPW marketing efforts during 2000. For all
periods prior to January 2000, the financial statements present the balance
sheets, statements of operations, statements of changes in owners' equity and
cash flows applicable to operations related to the residential customers
contributed by EES. The underlying data for the financial statements for those
periods have been derived from the books and records of EES.

         Prior to the Capitalization, NPW did not maintain corporate treasury,
accounting, tax, purchasing and other similar corporate support functions. For
purposes of preparing the accompanying financial statements, certain EES
corporate costs were allocated to NPW using the allocation method described in
Note 10.

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 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 resulting from deliveries of gas to local
distribution companies in excess of actual usage to its realizable market value.
The carrying value of any inventory or imbalances deemed to be not realizable
are charged to earnings.

                                       36
<PAGE>

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 as follows:

<TABLE>
<CAPTION>
                                                                Gross          Gross
                                              Amortized      Unrealized      Unrealized
                                                 Cost           Gains          Losses        Fair Value
--------------------------------------------------------------------------------------------------------
                                                                      (in $000)
<S>                                            <C>             <C>              <C>           <C>
US Government notes and bonds                  $ 50,488          $430             $ -         $ 50,918
US Government Agency notes and bonds
                                                 55,222           433                           55,655
Foreign Government notes and bonds                2,043            20                            2,063
Certificates of deposit                          10,012             8                           10,020
Corporate notes and bonds                        47,606           432            (10)           48,028
Corporate commercial paper                      190,215            22                          190,237
Money market accounts                             2,641                                          2,641
--------------------------------------------------------------------------------------------------------
Total                                          $358,227        $1,345           $(10)         $359,562
========================================================================================================

Reported as:
Short-term Investments in
    marketable securities                                                                     $257,189
Long-term Investments in
    marketable securities                                                                      102,373
--------------------------------------------------------------------------------------------------------
Total                                                                                         $359,562
========================================================================================================
</TABLE>

Income Taxes

         Prior to the Capitalization, NPW was not a separate taxable entity for
federal, state or local income tax purposes. Its results of operations were
included in Enron's consolidated federal and state returns. If NPW's separately
stated tax provision had been prepared in accordance with Statements of
Financial Accounting Standards ("SFAS") No. 109-"Accounting for Income Taxes,"
no tax benefit for NPW's net operating losses would have been recognized. These
statements reflect the separate return basis approach for all years and periods
prior to the Capitalization.

         For years and periods subsequent to the Capitalization, NPW is no
longer a part of a consolidated tax return and will file a separate tax return.

         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.

                                       37
<PAGE>

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.

Hedging Contracts

         Subsequent to NPW's acquisition of customers from Columbia Energy Group
(see Note 3), the Company began utilizing derivative commodity instruments to
hedge natural gas commodity and basis exposure risk associated with its fixed
price contracts to provide natural gas to customers. NPW's hedging strategies
meet the criteria for hedge accounting treatment under SFAS No. 80, "Accounting
for Futures Contracts". Accordingly, gains and losses on these instruments are
recognized concurrently with the recognition of the related physical
transactions.

         NPW regularly assesses the relationship between natural gas commodity
prices in "cash" and futures markets. The correlation between prices in these
markets has been within a range generally deemed to be acceptable. If the
correlation were not to remain in an acceptable range, NPW would account for the
financial instrument positions as trading activities. Such trading activities
would be 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 energy trading contracts would be
recorded as assets and liabilities in the consolidated balance sheet and changes
in the values would be reflected through the statement of income as a component
of cost of sales.

Recently Issued Accounting Pronouncements

         In June 2000, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities", an amendment to SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
established accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded on the balance sheet as either an asset or liability
measured at its fair value. The statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a

                                       38
<PAGE>

company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting.

         NPW adopted SFAS No. 133 (as amended by SFAS 138) on January 1, 2001.
We estimate that adoption will require a one-time adjustment of approximately
$56 million, which will be recorded as an increase to other comprehensive
income.

         In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 provides guidance on the recognition, presentation and disclosure
of revenues in financial statements. NPW's revenue recognition procedures are in
compliance with the requirements of SAB 101.

Comprehensive Income

          Comprehensive income is reported in the consolidated statements of
changes in stockholders' equity. For the year ended December 31, 2000,
comprehensive income of $1.3 million relates to 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 for the year ended December 31, 2000 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 equivalent shares at December 31, 2000 included 69,070,800 Class
A warrants. Common equivalent shares attributable to the Class A warrants at
December 31, 2000 computed on the treasury stock method would have been
approximately 68,800,764 shares.

         NPW was not a separate legal entity for periods prior to the
Capitalization and has no historical capital structure. Therefore, historical
earnings per share prior to 1999 have not been presented in the financial
statements. Net loss per common share for the year ended December 31, 1999 was
determined by dividing net loss by the common shares, of which 200,000 shares
were fully paid and outstanding at December 31, 1999. Common equivalent shares
related to stock subscriptions, 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 equivalent shares at December 31, 1999,
consisted of 2,064,400 common shares issuable to an executive of EES and the
Class A warrants subscribed in the December 1999 private placement.

         Common equivalent shares attributable to the Class A warrants at
December 31, 1999 computed on the treasury stock method would have been
approximately 59,300,000 shares.

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. At
December 31, 2000 and 1999 the allowance for doubtful accounts was $1.25 million
and $67,000, respectively.

         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

                                       39
<PAGE>

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 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 has been
accounted for as a purchase. Total purchase consideration included $11.7 million
in cash and 602,200 shares of common stock of NPW with an estimated value of
$6.4 million. Also, in connection with the acquisition, NPW purchased natural
gas inventory and customer accounts receivable for approximately $32.8 million.
The customers acquired from Columbia included committed contracts to provide
future services to customers that had a negative value of a $4.5 million as of
the acquisition date. This loss was considered in the purchase price. The loss
was estimated based on factors including the remaining term of the committed
contracts, the contracted sales price to the customers, projected customer
demand patterns and the then current costs to acquire and deliver the commodity
to the customers in the contracted future periods. Up to an additional $3.9
million of cash consideration can be earned by Columbia if specified levels of
customer retention are maintained over the one-year period from the closing of
the acquisition. The contingent consideration will be accrued in the period in
which it becomes probable and can be reasonably estimated. The accrual of
contingent consideration will increase the value of intangible assets acquired
and the related amortization subsequent to the settlement of the contingent
liability. The results of operations of the Columbia portfolio are included in
NPW's operating results since the July 31, 2000 acquisition date.

         As a part of NPW's asset purchase agreement with Columbia, NPW assumed
Columbia's rights and obligations under a January 1, 2000 Gas Purchase Agreement
between Enron North America Corp. and Columbia. The agreement identifies term
gas volume commitments that Columbia agreed to purchase from Enron North
America. Pursuant to the assumption, NPW will purchase gas from Enron North
America in the amounts and at the negotiated market based indexed rates and
terms contained in the agreement. This agreement will expire on March 31, 2001.
NPW also assumed Columbia's rights and obligations under two master agreements
between Enron North America and Columbia. Physical hedge transactions and
financial derivative transactions subject to these agreements and related to
Columbia's retail operations were assigned to and assumed by NPW as part of this
transaction.

         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. ("NiSource"). The acquisition has been accounted for as a
purchase. The purchase price consisted of one dollar and NPW's assumption of
contracts to provide services to the customers which have a negative value of
$9.5 million as of the acquisition date. Also, in connection with the
acquisition, NPW acquired natural gas inventory for $4.7 million and financial
contract settlements valued at $8.5 million. The loss position of the contracts
acquired by NPW was estimated based on factors including the remaining term of
the committed contracts, the contracted sales price to the customers, projected
customer demand patterns and the then current costs to acquire and deliver the
commodity to the customers in the contracted future periods. The results of
operations of the EUSA portfolio are included in NPW's operating results since
December 2000.

         The preliminary allocation of the purchase price to acquire the
Columbia and NiSource businesses is as follows (in $000's):

                                       40
<PAGE>

                                                          Amount

           Cash                                           $ 3,757
           Accounts Receivable                              2,000
           Storage Inventory                               33,227
           Non-Competition Agreement                        5,000
           Use of Brands and Trademarks                     5,000
           Customer Lists                                  24,349
           Financial Contract Settlements                 (8,467)
           Accrued Contract Losses                       (13,972)
                                                         --------
           Net Assets Acquired                           $ 50,894
                                                         ========

         The non-competition agreement and the use of brands and trademarks are
being amortized on a straight-line basis over 3 years. The customer lists are
being amortized on a straight-line basis over 5-7 years. The accrued contract
losses are being amortized through operating results, as a reduction of cost of
sales, over the remaining service period of the acquired customer contracts as
of the acquisition date.

         The following unaudited pro forma condensed financial information for
the years ended December 31, 2000 and 1999 is presented to show the results of
NPW as if the acquisitions of Columbia and EUSA occurred at the beginning of the
periods presented. The pro forma results include certain adjustments, including
increased amortization related to intangibles, and are not necessarily
indicative of what the results would have been had the transaction actually
occurred on the aforementioned dates.

                                                 Year Ended         Year Ended
                                                 December 31,       December 31,
                                                     2000               1999
                                                     ----               ----
                                                      (Unaudited, in $000's)
Revenues                                           $187,815           $127,657
Net Loss                                          $(179,320)          $(81,014)
Basic and Diluted Loss Per Share                     $(5.77)          $(100.99)

Acquisition of PECO Customers

        In October 2000, NPW reached an agreement with PECO Energy Company
("PECO") to supply service to 20 percent of 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's
operating subsidiary, The New Power Company, 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. Under the
agreement with PECO, The New Power Company 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 New Power
Company will begin servicing approximately 240,000 customers on March 1, 2001,
pursuant to this agreement. 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.

Note 4-Fixed Assets

                                       41
<PAGE>

         Fixed assets consist of the following as of December 31, 2000 and 1999
(in $000's):

                                                       2000          1999
                                                       ----          ----
         Computer software and licenses               $10,409          $235
         Computer hardware                                339             -
         Office furniture and fixtures                    889             -
         Leasehold improvements                         1,198             -
                                               -------------- -------------
                                                       12,835           235
         Less:  Accumulated depreciation              (1,461)             -
                                               -------------- -------------
                                                      $11,374          $235
                                                      =======          ====

Note 5-Other Assets

         Other long term assets consist of the following as of December 31, 2000
and 1999 (in $000's):

                                                      2000          1999
                                                      ----          ----
         Collateral and prepayments                   $24,977        $7,698
         Employee notes receivable                      3,977             -
                                               -------------- -------------
                                                      $28,954        $7,698
                                                      =======        ======

Interactive Marketing Agreement

         In November 1999, NPW entered into a marketing agreement with America
Online ("AOL") which gives NPW exclusive rights to market energy products
directly to consumers through AOL's online system. The agreement is for a term
of six years ending November 2005 and requires variable semi-annual payments
aggregating $49 million. EES paid $10 million related to this agreement on
behalf of NPW during 1999. Such amount, which was repaid in January 2000, is
reflected in the accompanying balance sheet as other assets and amount due to
affiliate at December 31, 1999. NPW paid $5.8 million under the agreement to AOL
during 2000. NPW will record all payments made under the agreement to other
assets and expense them, on a straight-line basis, over the period access is
provided to AOL's online system. Access to AOL's online system commenced in
September 2000. Future payments will be expensed over the period in which access
is provided to AOL's online system. NPW will be required to issue up to
approximately 2,580,600 shares of its common stock to AOL if certain levels of
customer acquisition are achieved. As the shares are earned by AOL, NPW will
record an operating expense equal to the fair value of the shares earned during
a specific period. No shares have been earned or issued as of December 31, 2000.
Additionally, if total customer acquisition from the agreement exceeds a
pre-determined threshold, NPW will pay AOL a cash payment based on the excess
number of customers over the specified threshold at a pre-determined rate per
customer. As of December 31, 2000, the customer acquisition threshold had not
been achieved. As part of its contract with AOL, NPW obtained specified rights
in connection with AOL's then-current rewards program, AOL Rewards(R). During
2000, AOL replaced that program and announced a combined AOL/AAdvantage program.
Management is in discussions with AOL concerning NPW's participation in the new
program and is currently reviewing the entirety of NPW's relationship with AOL,
including the number of customer acquisitions derived under existing
arrangements compared to the expense.

                                       42
<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 purchased surety bonds requiring cash collateral of $13.0
million as of December 31, 2000. These surety bonds will terminate and the
collateral will revert to NPW's control upon successful completion by NPW of
specified commitments.

Employee Loans

         Notes receivable from employees relates to housing assistance loans
provided to certain members of management pursuant to relocation needs.

Note 6- Intangible Assets

         Intangible assets consist of the following as of December 31, 2000 (in
$000's):

                                                       2000
                                                       ----
         Customer lists                               $24,350
         Non-competition agreement                      5,000
         Brands and trademarks                          5,000
                                                    ---------
                                                       34,350
         Less: Accumulated amortization                (2,355)
                                                    ---------
                                                      $31,995
                                                      =======

Note 7-Accrued Liabilities

Accrued liabilities consist of the following as of December 31, 2000 and 1999
(in $000's):

                                                     2000            1999
                                                     ----            ----
         Acquired Contract Losses                     $10,972        $    -
         Financial Contract Settlements                 8,467
         Compensation                                   6,360             -
         Other                                          1,313           215
                                                      -------          ----
                                                      $27,112          $215
                                                      =======          ====

         See discussion of accrued contract losses in Note 3.

Note 8-Deferred Compensation

Make-Whole Payments

         During 2000 NPW made provisions for certain executives to be
compensated to make them whole for equity interests in their former employer
that they forfeited to join NPW. Awards totaling $19.3 million were granted
pursuant to make-whole provisions during the year ended December 31, 2000. The
awards vest over varying periods ranging from immediate through June 2003. NPW
will accrue all amounts granted as compensation expense and deferred
compensation payable ratably over the applicable vesting period. Additionally,

                                       43
<PAGE>

estimated earnings for the non-funded portion of amounts vested by employees
will be accrued as compensation expense and deferred compensation payable.
During the year ended December 31, 2000, charges totaling $10.4 million were
recorded to operating expenses and deferred compensation payable related to
arrangements under the make-whole provisions. During the year ended December 31,
2000, payments of $1 million were made to fund amounts due under the make-whole
provisions.

Restricted Stock Grants

         In connection with the initial public offering of NPW stock in October
2000, NPW granted 238,097 shares of restricted stock valued at $5 million to two
executives. The employees vest in the shares over varying periods through
December 2003. On the date of the grant, NPW recorded the entire $5 million
value to additional-paid in capital with a corresponding amount recorded to the
deferred compensation component of stockholders' equity. As the executives vest
in the shares over their respective service periods NPW will record compensation
expense and relieve the deferred compensation component of stockholders' equity.
During the year ended December 31, 2000 compensation expense totaling $2.1
million was recorded pursuant to vesting of the restricted stock grants and
11,905 shares of restricted stock was issued to one of the executives.

Note 9-Owners' and Stockholders' Equity

         Prior to the Capitalization, owners' equity represents the cumulative
net investment of EES in the operations of NPW. Upon Capitalization, the EES
cumulative net investment at December 31, 1999 was reclassified into paid-in
capital.

         As of December 31, 2000 NPW had authorized (a) 400,000,000 shares of
voting Common Stock, $.01 par value, of which 58,054,882 were issued and
outstanding, (b) 100,000,000 shares of non-voting common stock, of which none
were issued and outstanding and (c) 50,000,000 shares of Preferred Stock, $.01
par value, of which none were issued or outstanding.

         In connection with the IPO, 2,703,400 shares of non-voting common stock
were automatically converted to voting common stock.

         NPW also issued Class A and Class B warrants to purchase the common
stock of NPW in connection with the Capitalization and the second private
placement. The Class A warrants allow the purchase of 69,070,800 shares of
non-voting common stock of NPW at an exercise price of $0.05 per share,
exercisable over a five-year period beginning December 31, 2000. The Class B
warrants have been converted into 5,560,787 shares of common stock in connection
with the initial public offering as described in Note 1. Also in connection with
the IPO, terms of the Class A warrents to purchase 69,070,800 shares of
non-voting Common Stock of NPW were automatically revised to allow the purchase
of voting Common Stock of NPW.

Stock Split

         In September 2000, NPW's board of directors elected to amend NPW's
Certificate of Incorporation to increase the number of authorized common shares
from 2,000,000 to 500,000,000 and effected a 200 for 1 split of its common
stock. All share and per share information herein has been retroactively
restated as if the split occurred as of the earliest date presented.

Note 10-Related Party Transactions

Master Services Agreement

         In connection with the Capitalization, NPW entered into a Master
Services Agreement ("MSA") with

                                       44
<PAGE>

Enron and EES pursuant to which Enron and EES agreed to provide NPW with certain
administrative and risk management services over various time periods. Enron
also agreed to provide certain basic services of its Government Affairs
department at no charge until January 6, 2003 to handle various government
regulatory and legislative issues and activities. Enron's Government Affairs
department will also handle specific requests not included among the basic
services provided under NPW's standard service agreement for such fees as shall
be mutually agreed. Enron and EES also agreed to provide NPW with general
corporate services such as facility maintenance and human resources support at
no charge through October 6, 2000. Finally, Enron and EES contributed the
services of certain of their employees until July 6, 2000 who worked on a
full-time basis to handle general administrative services, on NPW's behalf. NPW
has reimbursed Enron and EES for their costs associated with these employees. As
part of the Capitalization, Enron agreed to continue to service, on NPW's
behalf, the natural gas and power customers to be transferred to NPW when NPW
receives necessary regulatory permits. Prior to that time, the economic benefits
and burdens of these contracts are being transferred to NPW.

         NPW has the option to discontinue any of the services provided by Enron
and EES upon thirty days prior written notice. The MSA does not require that NPW
contract exclusively with Enron and EES and does not require that NPW continue
to use some or all of the services in the future.

Commodity Supply Agreements

         NPW entered into a Master Energy Purchase and Sale Agreement (the
"Power Agreement") effective as of January 6, 2000 with Enron Energy Services,
Inc. ("EESI"), a subsidiary of EES, which provides NPW the ability to purchase
up to an aggregate of 2,000,000 kWs of electric power per hour from EESI on
either an interruptible or firm basis. NPW has also entered into a Master
Purchase and Sales Agreement (the "Gas Agreement") effective as of January 6,
2000 with EESI which provides NPW the ability to purchase up to an aggregate of
800,000 MMBtus of natural gas per day from EESI on either an interruptible or
firm basis. Neither the Power Agreement nor the Gas Agreement obligates NPW to
purchase commodities from EESI.

         The Power Agreement and the Gas Agreement are each effective until
January 2002, but NPW has the option to extend the term of each agreement until
January 2004.

Allocated Costs

         As discussed in Note 1, the financial statements of NPW reflect certain
allocated operating expenses from EES and Enron. Such allocations and charges
are 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. For the years ended December 31, 2000, 1999 and 1998,
approximately $2.9 million, $13.2 million and $7.5 million, respectively, of
general and administrative costs were allocated to NPW. These costs relate to
general corporate support such as accounting and treasury and certain costs
incurred under the MSA and Gas and Power agreements for which EES and Enron will
not be reimbursed by NPW. These costs have been recorded as operating expenses
by NPW and reflected in the statement of owners' and stockholders' equity as
paid-in capital from EES.

         Management believes that the allocation methods used are reasonable and
reflective of NPW's proportionate share of such expenses and are not materially
different from those that would have been incurred on a stand-alone basis.

Purchases

         EES provided NPW with all of its natural gas and power supply for each
period prior to 2000. The purchases were priced at an index price adjusted to
reflect the point of delivery of the commodity.

                                       45
<PAGE>

         NPW made purchases of natural gas and power from affiliates Enron and
EES, during the year ended December 31, 2000, totaling $62.8 million and $9.2
million, respectively.

Non-Competition Agreement

         NPW has entered into a non-competition agreement with Enron and EES
pursuant to which Enron and EES have agreed not to engage in certain activities
related to the retail sale of natural gas or power to residential customers
until January 6, 2005. The non-competition agreement may be terminated at any
time between January 6, 2003 and January 6, 2005 if Enron and its controlled
affiliates (including EES) own less than 15% of NPW's common stock on a
fully-diluted basis and less than 15% of NPW's directors are affiliated with
Enron or its controlled affiliates. The non-competition agreement will also
terminate immediately in the event of specified change of control transactions
relating to Enron. In addition, the non-competition agreement will terminate
immediately as to EES if EES is no longer a controlled affiliate of Enron and
all of NPW's common stock held by EES is transferred to Enron or one or more
controlled affiliates of Enron.

Business Opportunity Agreement

         NPW has entered into a business opportunity agreement with Enron
pursuant to which NPW renounced any interest or expectancy NPW may have in any
business opportunity that does not consist exclusively of the businesses
permitted by its certificate of incorporation. Subject to the terms of NPW's
non-competition agreement with Enron and EES, the business opportunity agreement
also allows Enron and its affiliates to engage in the same businesses that NPW
currently anticipates to be engaged in, even if those business activities cause
them to compete against NPW.

Software Agreement

         As part of the Capitalization, NPW entered into a software agreement
with EES whereby EES assigned to NPW a joint and equal interest in and to
specified risk management software and documentation, including source code and
any intellectual property rights (other than trademark-related rights) in and to
software and related documentation.

Note 11-Hedging and Derivative Financial Instruments

         Subsequent to NPW's acquisition of customers from Columbia Energy
Group, the Company began utilizing swap instruments to hedge commodity 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.
The results of the swap transactions are included in cost of sales when the
related purchase of commodity occurs and generally result in a realized margin
represented by the difference between the fixed sales price and the fixed swap
price.

         The following table sets forth selected financial data associated with
the Company's derivative financial instruments that were outstanding at December
31, 2000:

                                       46
<PAGE>

<TABLE>
<CAPTION>
                                                             Weighted              Weighted
                                                              Average               Average
                            Year            Volume          Fixed Price          Current Price           Fair
Type of Contract         of Maturity         (dth)            Per dth               Per dth              Value
----------------         -----------         -----            -------               -------              -----
                                                                                                       (in $000)
<S>                       <C>              <C>                 <C>                   <C>                <C>
Commodity-Swaps           2001-2003        19,857,476          $4.18                 $6.91              $54,200
Basis-Swaps               2001-2006        22,416,424          $0.37                 $0.45               $1,800
</TABLE>

         The fair values shown in the above table represent the net amounts the
Company would have received or paid if it had closed the derivative positions on
December 31, 2000.

Note 12-Incentive Plans

         During 2000 NPW adopted the 2000 Stock Plan (the "Plan"). The Plan
allows NPW, through the compensation committee, which consists of two
non-employee members of NPW's board of directors, to grant non qualified stock
options and restricted stock to employees, board members and non-employee
service providers.

         NPW applies the provisions of Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees", and related
interpretations in accounting for the Plan and the disclosure provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123). Accordingly, no compensation cost has been
recognized for the Plan. Had compensation cost for the Plan been determined
consistent with the provisions of SFAS No. 123, our net earnings, earnings per
common share and earnings per common share-assuming dilution would have been
reduced to the pro forma amounts indicated below:

                                         2000            1999            1998
                                         ----            ----            ----
                                        (in $000's, except per share data)
Net Loss
   As reported                        ($169,834)       ($25,027)       ($17,341)
   Pro forma                          ($212,734)       ($25,027)       ($17,341)

Net Loss per Common Share
   As reported                           ($5.53)       ($125.14)            N/A
   Pro forma                             ($6.92)       ($125.14)            N/A

Net Loss per Common Share --
Assuming Dilution
   As reported                           ($5.53)       ($125.14)            N/A
   Pro forma                             ($6.92)       ($125.14)            N/A

         The effect on 2000, 1999 and 1998 pro forma net earnings, earnings per
common share and earnings per common share - assuming dilution of expensing the
estimated fair value of stock options is not necessarily representative of the
effect on reported earnings for future years due to the vesting period of stock
options and the potential for issuance of stock options in future years.

         Under the Plan, employees, directors and non-employee service providers
may be granted options to purchase NPW common stock. The option price is a
minimum of the market price of the stock at the date of grant. Options granted
under the Plan may be subject to vesting conditions, including holding periods.

                                       47
<PAGE>

         For purposes of the pro forma disclosure above the fair value of each
option grant has been estimated on the date of the grant using the Black-Scholes
option pricing model with the following weighted-average assumptions used for
grants in 2000:

                                              2000       1999      1998
                                              ----       ----      ----
         Risk-Free Interest Rate             5.11%       N/A       N/A
         Price Volatility                    30.75%      N/A       N/A
         Dividend Yield                        0%        N/A       N/A
         Expected Term in Years               9.14       N/A       N/A

         Price volatility was calculated based on a peer group of nine publicly
traded companies. The volatility was determined using the average volatility for
a one, three, five and seven-year period ended November 2000.

         A summary of the status of the Plan as of December 31, 2000 and changes
during the year then ended is presented below:

                                                                 Weighted
                                                                  Average
                                                                 Exercise
                                                 Options           Price
                                                 -------           -----
         Outstanding at December 31, 1999              -            -
            Granted                               12,042,000      $17.30
            Forfeited                               (27,600)      $21.00
                                                  ----------

         Outstanding at December 31, 2000         12,014,400      $17.29
                                                  ==========

         The following table summarizes information about stock options
outstanding at December 31, 2000:

<TABLE>
<CAPTION>

                                                                 Weighted
                                                                  Average          Weighted
                                                Options       Remaining Life       Average
         Range of Exercise Prices             Outstanding        in Years       Exercise Price
         ---------------------------------- ----------------- ---------------- -----------------
         <S>                                   <C>                 <C>              <C>
         $ 3.88 - $8.75                        1,557,600           7.558            $4.34
         $9.38 - $9.69                         1,507,000           8.824            $9.67
         $14.94 - $18.06                        321,000            9.835            $16.05
         $21.00                                8,628,800           9.452            $21.00
</TABLE>

         None of the outstanding stock options were exercisable at December 31,
2000.

                                       48
<PAGE>

         The following table summarizes the activity of all restricted stock
grants for the year ended December 31, 2000:

                                                             Shares
                                                            --------
          Outstanding at December 31, 1999                      -
             Granted                                         238,097
             Issued                                          (11,905)
                                                            --------
          Outstanding at December 31, 2000                   226,192
                                                            ========

         At December 31, 2000, a total of 6,166,903 shares were available for
grant under the NPW 2000 Stock Plan. These shares remain available for the
granting of non-qualified stock options and restricted stock as of December 31,
2000. The compensation cost that has been charged to earnings for the Plan was
$2.1 million for the year ended December 31, 2000.

Note 13-Federal Income Taxes

         NPW incurred losses for tax purposes from inception through the
Capitalization that were reported and included in the consolidated Enron group.
The tax losses incurred prior to the Capitalization do not carry over to NPW. No
provision for income taxes has been recorded to reflect any benefits received
resulting from the utilization of the prior losses. As a result, only losses
incurred from the Capitalization are available to NPW as a net operating loss
carryforward to reduce taxes payable on future income. The Company's tax
provision has been prepared in accordance with Statements of Financial
Accounting Standards (SFAS) No. 109 - "Accounting for Income Taxes".

Deferred Income Taxes

         The principal components of NPW's deferred income tax liability at
December 31, 2000 reflect the net tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax reporting. The principal components of NPW's
net deferred income taxes at December 31, 2000 are as follows (in $000's):

                                                                   2000
                                                                   ----
          Deferred tax liabilities
            Amortization                                            ($412)
            Accelerated depreciation                                  (11)
          Deferred tax assets
            Tax loss carryforward - federal                         54,277
            Tax loss carryforward - state                            7,951
            Deferred compensation                                    2,816
            Restricted stock grants                                    623
            Allowance for bad debts                                    425
            Other                                                        2
                                                                   -------
                                                                    65,671
          Deferred Tax Asset Valuation Allowance                   (65,671)
                                                                   -------

          Net Deferred Tax Asset                                   $     -
                                                                   =======

                                       49
<PAGE>

         The 2000 provision for income taxes is as follows (in $000's):

                                                    2000
                                                    ----
         Current:
           Federal                                ($57,720)
           State                                    (7,951)
                                                  --------
         Total Current                            ($65,671)

         Deferred:
           Federal                                  57,720
           State                                     7,951
                                                  --------
         Total Deferred                             65,671
                                                  --------

         Provision for Income Taxes                 $    -
                                                  ========

         Differences between NPW's effective income tax rate and the statutory
federal rate for the year ended December 31, 2000 are as follows (in $000's):

                                                                      2000
                                                                      ----
         Provision at the statutory federal rate                    ($57,744)
         Permanent differences                                            24
         State income taxes, net of federal income tax benefit        (7,951)
         Increase in valuation allowance                              65,671
                                                                     -------

         Total Tax Provision                                          $    -
                                                                     =======

         As of December 31, 2000, NPW had a federal net operating loss
carryforward for income tax purposes of approximately $159.6 million that may be
available to offset future taxable income. The federal net operating loss
carryforward will begin to expire in 2016. NPW has recorded a valuation
allowance against all deferred tax assets due to the uncertainty of future
taxable income.

Note 14-Commitments and Contingencies

Outsourcing Agreement

         NPW entered into a services agreement with International Business
Machines Corporation ("IBM"), pursuant to which IBM will provide NPW with
certain systems integration services and other services relating to customer
acquisition, customer care and revenue management over a ten-year term. The
agreement provides for a combination of fixed and variable fees. The aggregate
systems integration services are estimated to be between $65 and $75 million.
For services relating to customer acquisition, customer care and revenue
management, fees are a combination of fixed and variable as our customer base
grows. Effective June 1, 2000, NPW began paying IBM a fixed fee of $1 million
per month for the term of the agreement until the total monthly fees reach
specified thresholds, plus a variable fee based on number and type of customer.
The variable fee includes separate components for each customer that vary based
on whether the customer is served online or by mail, a separate fee for each
market entered and a per minute customer service charge. NPW has capitalized $10
million pertaining to

                                       50
<PAGE>

software license fees paid to IBM for the use of software relating to customer
acquisition, customer care, and revenue management. The license fees are being
amortized over the shorter of the license periods or the estimated useful lives
on a straight-line basis. The agreement generally provides that IBM will be the
exclusive provider of most of NPW's revenue management and customer care
services, but allows NPW to procure third party services under certain
circumstances.

Commodity Purchase Commitments

         As of December 31, 2000, NPW, under certain fixed rate commodity
contracts, had commitments for net purchases of 4,478,000 megawatt hours of
electricity at prices ranging from $19.03 - $150.00 per megawatt hour through
December , 2003.

         As of December 31, 2000, NPW had commitments to purchase, at market
prices, approximately 6,724,000 dth of natural gas in January 2001.

Leases

         NPW leases office space under operating leases. Rental expenses under
operating leases were $1.1 million in 2000. The Company did not incur rental
expenses under operating leases in 1999 or 1998. Future minimum operating lease
payments under these leases as of December 31, 2000 are shown below (in $000's):

         Years Ending December 31,                 Amount
         -------------------------                 ------
         2001                                      $ 1,441
         2002                                        1,109
         2003                                        1,129
         2004                                        1,186
         2005                                        1,186
         2006 and thereafter                         7,578
                                                  --------
                                                  $ 13,629
                                                  ========

Litigation

         At December 31, 2000, 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.

Note 15-Quarterly Financial Data (unaudited)

        The following data summarizes certain operating results for each of the
quarters of 2000 and 1999 (in $000's):

                                       51
<PAGE>

<TABLE>
<CAPTION>
                                                                  2000 Quarters Ended
                                          March 31            June 30            Sept. 30            Dec. 31
                                          --------            -------            --------            -------
<S>                                        <C>                <C>                <C>                 <C>
Net Revenues                               $2,126             $2,631             $14,597             $64,727
Cost of Sales                              $1,784             $2,248             $13,289             $62,499
Net Loss                                  ($7,415)           ($35,007)          ($69,916)           ($57,496)
Basic and Diluted Loss Per Common
Share                                      ($0.34)            ($1.57)            ($2.96)             ($1.02)
</TABLE>

<TABLE>
<CAPTION>
                                                                  1999 Quarters Ended
                                          March 31            June 30            Sept. 30            Dec. 31
                                          --------            -------            --------            -------
<S>                                        <C>                <C>                 <C>                <C>
Net Revenues                               $2,164             $1,643              $1,895             $2,137
Cost of Sales                              $1,514             $1,003              $1,584             $1,648
Net Loss                                  ($3,436)           ($3,290)            ($5,883)           ($12,418)
</TABLE>

        The summation of each quarter's earnings per share during 2000 does not
equal earnings per share calculated for the full year ended December 31, 2000
due to the significance and timing of the IPO completed at the beginning of the
fourth quarter of 2000.

Note 16-Subsequent Events (Unaudited) -

        In March 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 will be
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.

                                       52
<PAGE>

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                             NEWPOWER HOLDINGS, INC.
                                December 31, 2000
                                 (in thousands)

<TABLE>
<CAPTION>
                                             Balance     Charged       Charged                     Balance
                                          at Beginning   to Costs      to Other                    at End
        Description                        of Period   and Expenses    Accounts     Deductions    of Period
        -----------                        ---------   ------------    --------     ----------    ---------
<S>                                         <C>           <C>           <C>           <C>           <C>
Year Ended December 31, 2000:
Allowance for doubtful accounts             $    67       $ 1,250                     $ 67 (1)      $ 1,250
Deferred tax valuation allowance                 --        65,671                                    65,671
                                          ------------------------------------------------        ---------
                           Total            $    67       $66,921       $    --       $ 67          $66,921
                                          ================================================        =========
Year Ended December 31, 1999:
Allowance for doubtful accounts             $    75                                   $ 8 (1)       $    67
Deferred tax valuation allowance                 --                                                      --
                                          ------------------------------------------------        ---------
                           Total            $    75       $    --       $    --       $ 8           $    67
                                          ================================================        =========
Year Ended December 31, 1998:
Allowance for doubtful accounts             $    --       $    75                                   $    75
Deferred tax valuation allowance                 --                                                      --
                                          ------------------------------------------------        ---------
                           Total            $    --       $    75       $    --       $ --          $    75
                                          ================================================        =========
</TABLE>

(1)  Uncollectible accounts written off

                                       53
<PAGE>

Item 9. Change in and Disagreements with Accountants on Accounting and Financial
        Disclosure

         None

Part III

Item 10.  Directors and Executive Officers of the Registrant

Executive Officers and Directors

         The executive officers and directors of NewPower Holdings, Inc. are as
follows:

<TABLE>
<CAPTION>
                Name                             Age                            Position
         <S>                                      <C>        <C>
         H. Eugene Lockhart                       51         President, Chief Executive Officer and Director
         William I Jacobs                         59         Managing Director, Chief Financial Officer and Director
         Nicholas A. Utton                        44         Managing Director, Chief Marketing Officer
         Marc E. Manly                            49         Managing Director, Law and Governmental Affairs
         A.S.A. Wyatt                             51         Managing Director, Operations and Technology
         William J. Cronin                        38         Managing Director, Risk Control
         John Henderson                           36         Managing Director, Risk Management
         Kathryn A. Johnson                       43         Vice President, Human Resources and Communications
         Lou L. Pai                               53         Chairman and Director
         Linda G. Alvarado (2)(3)                 48         Director
         Richard A. Causey                        41         Director
         James V. Derrick, Jr.                    56         Director
         Peter T. Grauer (1)(3)                   55         Director
         Ray J. Groves (2)(3)                     65         Director
         Kenneth L. Lay                           58         Director
         Eugene B. Shanks, Jr. (1)(2)(3)          53         Director
</TABLE>

         (1) Member of the Compensation Committee
         (2) Member of the Audit and Risk Management Committee
         (3) Member of the Business Review Committee

                                       54
<PAGE>

         H. Eugene Lockhart joined NPW in February 2000 and serves as President
and Chief Executive Officer. Mr. Lockhart has been a director since April 2000.
Prior to joining NPW, from February 1999 to February 2000, Mr. Lockhart was the
President of AT&T Consumer Services at AT&T Corp. From May 1997 to October 1998,
Mr. Lockhart served as President of BankAmerica Corporation's Global Retail
Bank. From January 1994 to May 1997, Mr. Lockhart was President and Chief
Executive Officer of MasterCard International. Mr. Lockhart serves on the boards
of directors of Nabisco Group Holdings, First Republic Bank, IMS Health Inc. and
SYNAVANT Inc. Mr. Lockhart is also a trustee of the Alumni Board of the
University of Virginia and the Darden Graduate School of Business at the
University of Virginia.

         William I Jacobs serves as Managing Director and Chief Financial
Officer, a position he has held since joining NPW in June 2000. Mr. Jacobs has
been a director since July 2000. Prior to joining NPW, from January 1999 to June
2000, Mr. Jacobs served as Senior Executive Vice President, Strategic Ventures
for MasterCard International, Inc. From January 1995 to December 1999, Mr.
Jacobs was Executive Vice President, Global Resources for MasterCard
International. Prior to Mr. Jacobs' employment at MasterCard International, he
was the Executive Vice President, Chief Operating Officer of Financial Security
Assurance, Inc., which he co-founded in 1984. Mr. Jacobs serves on the boards of
directors of Investment Technology Group, Inc., Global Payments, Inc., and
Blackboard, Inc. and is the Chairman of the Board of Trustees of American
University.

         Nicholas A. Utton serves as Managing Director and Chief Marketing
Officer, a position he has held since joining NPW in October 2000. From 1996 to
October 2000, Mr. Utton served as Chief Marketing Officer of MasterCard
International. Prior to his employment at MasterCard, Mr. Utton was Senior Vice
President, International Marketing at Revlon International. Mr. Utton has also
held various marketing and product management positions at Cadbury Schweppes,
Bristol-Meyers Squibb Company, Richardson Vicks and Unilever.

         Marc E. Manly serves as Managing Director, Law and Government Affairs,
a position he has held since joining NPW in April 2000. From October 1996 to
April 2000, Mr. Manly was Vice President and Chief Counsel to AT&T Consumer
Services. From December 1994 to October 1996, Mr. Manly served as the Solicitor
General of AT&T Corp. Prior to that time, he was a partner with the law firm of
Sidley & Austin.

         A.S.A. Wyatt serves as Managing Director, Operations and Technology, a
position he has held since joining NPW in May 2000. From October 1999 to April
2000, Mr. Wyatt served as Vice President of Operations, Technology and Planning
at AT&T Corp. From June 1993 to September 1999, Mr. Wyatt served as Director of
Group Development at Guardian Royal Exchange plc, one of the largest composite
insurers in the United Kingdom. Prior to that time, Mr. Wyatt held a variety of
positions at Midland Bank plc in the United Kingdom.

         William J. Cronin serves as Managing Director, Risk Control, a position
he has held since joining NPW in March 2001. From April 1999 to February 2001,
Mr. Cronin served as Chief Financial Officer and Head of Business Development at
Phibro, Inc., a subsidiary of Citigroup, Inc. From November 1992 to March 1999,
Mr. Cronin served as Treasurer and Chief Credit Officer of Phibro. Prior to his
employment at Phibro, Mr. Cronin served as a Futures Credit Analyst with Thomson
McKinnon Securities and E.F. Hutton.

         John Henderson serves as Managing Director, Risk Management, a position
he has held since joining NPW in April 2000. From August 1996 to March 2000, Mr.
Henderson served as Vice President of Retail Risk Management at Enron Energy
Services. From July 1994 to July 1996, Mr. Henderson served as Director of
European Gas and Power Trading at Enron Europe Liquids Processing. Prior to his
employment with Enron, Mr. Henderson held various positions at Drexel Burnham
Lambert, and consulted for Bloomberg Financial Markets.

         Kathryn A. Johnson serves as Vice President, Human Resources,
Communications, and Administrative Operations, a position she has held since
joining NPW in April 2000. From February 1999 to April 2000, Ms. Johnson was
Executive Director, Consumer Services Management at AT&T Corp. From November
1996 to February 1999, Ms. Johnson served as Brand Management Director at AT&T.
From March 1995 to November 1996, Ms. Johnson served as Vice President, Human
Resources and Account Services at Jetson Direct Mail Services, a privately-owned
direct mail

                                       55
<PAGE>

production company. Prior to that time, Ms. Johnson held a number of consumer
marketing and administrative operations positions in AT&T.

         Lou L. Pai is Chairman and has been a director since November 1999. He
is Chairman and Chief Executive Officer of Enron Xcelerator, a position he has
held since February 2001. From March 1997 to February 2001, Mr. Pai served as
Chairman and Chief Executive Officer of Enron Energy Services. From August 1995
to February 1997, Mr. Pai served as President and Chief Operating Officer of
Enron Capital & Trade Resources Corp., a subsidiary of Enron now known as Enron
North America Corp., and from September 1994 to July 1995, Mr. Pai served as a
Managing Director of Enron Capital & Trade. Mr. Pai has served as a member of
the board of directors of the Woodward Governor Company since July 1999.

         Linda G. Alvarado has been a director since October 2000. She has been
President and Chief Executive Officer of Alvarado Construction, Inc. since 1976.
Ms. Alvarado is also a co-owner of The Colorado Rockies Baseball Club. Ms.
Alvarado serves on the boards of directors of 3M, Qwest Communications, Inc.,
The Pepsi Bottling Group, Inc., Pitney Bowes Inc. and Lennox International Inc.

         Richard A. Causey has been a director since September 2000. He is
Executive Vice President and Chief Accounting Officer of Enron Corp., a position
he has held since July 1999. From July 1997 to July 1999, Mr. Causey served as
Senior Vice President of Enron Corp. and its Chief Accounting Officer, and from
July 1992 to July 1997 served in various capacities at Enron Capital & Trade
Resources Corp., a subsidiary of Enron Corp. now known as Enron North America
Corp. Prior to joining Enron in 1992, Mr. Causey was a Senior Manager with
Arthur Andersen & Co. in Houston, Texas.

         James V. Derrick, Jr. has been a director since January 2000. He is
Executive Vice President and General Counsel of Enron Corp., a position he has
held since June 1991. Prior to joining Enron in 1991, Mr. Derrick was a partner
at the law firm of Vinson & Elkins L.L.P.

         Peter T. Grauer has been a director since June 2000. He has been a
Managing Director of DLJ Merchant Banking, Inc., since September 1992. From
April 1989 to September 1992, he was a Co-Chairman of Grauer & Wheat, Inc., an
investment firm specializing in leveraged buyouts. Mr. Grauer is the Chairman of
the Board of Bloomberg Inc. and serves on the boards of directors of Doane Pet
Care Products Company, Total Renal Care Holdings, Inc., Formica Corporation and
Thermadyne Holdings, Inc.

         Ray J. Groves has been a director since October 2000. He has been
Chairman of Legg Mason Merchant Banking, Inc. since February 1995. Mr. Groves
retired as Chairman and Chief Executive Officer of Ernst & Young in September
1994, which position he had held since 1977. Mr. Groves serves on the boards of
directors of Allegheny Technologies Incorporated, American Water Works Company,
Inc., Boston Scientific Corporation, Electronic Data Systems Corporation and
Marsh & McLennan Companies, Inc.

         Kenneth L. Lay has been a director since January 2000. He had been
Chairman of the Board and Chief Executive Officer of Enron Corp. for over
fourteen years. In February 2001, Mr. Lay resigned as Chief Executive Officer of
Enron Corp., but continues to serve as Chairman of the Board. Mr. Lay has been a
member of the board of directors of Enron Corp. since 1985. Mr. Lay also serves
on the boards of directors of Eli Lilly and Company, Compaq Computer
Corporation, Azurix Corp., EOTT Energy Corp. (the general partner of EOTT Energy
Partners, L.P.), Questia Media, Inc., Trust Company of the West, and i2
Technologies, Inc.

         Eugene B. Shanks, Jr. has been a director since November 2000. He is
President and Chief Executive Officer of NetRisk, Inc., a risk management
software and advisory services company that he founded in 1997. From 1980 to
1995, Mr. Shanks was employed at Bankers Trust and had a series of management
roles leading up to his appointment as President in 1992. Mr. Shanks is a
Trustee of Vanderbilt University and a member of its Executive Committee, and
also serves on the board of directors of The Posse Foundation.

                                       56
<PAGE>

Item 11.  Executive Compensation

         The information required by this Item is incorporated herein by
reference to the applicable information in the 2001 Proxy Statement, including
the information set forth under the captions "Executive Compensation" and
"Compensation Committee Interlocks and Insider Participation".

Item 12.   Security Ownership of Certain Beneficial Owners and Management

         The information required by this Item is incorporated by reference to
the applicable information in the 2001 Proxy Statement, including the
information set forth under the captions "Security Ownership".

Item 13.  Certain Relationships and Related Transactions

         The information required by this Item is included in "Item 1, Business
- Material Contracts" and in the Consolidated Financial Statements under "Note
10-Related Party Transactions".

Part IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1) Financial Statements

         The information required by this item is included in Item 8 of Part II
of this Form 10-K.

(a)(2) Financial Statement Schedule

         The information required by this item is included in Item 8 of Part II
of this Form 10-K.

(a)(3) Exhibits

         See Item 14(c) below.

(b) Reports on Form 8-K

         None.

(c)  Exhibits:

3.1*     - Second Amended and Restated Certificate of Incorporation (Exhibit 3.1
           to the registrant's registration statement on Form S-1, File No.
           333-41412)
3.2*     - Amended and Restated Bylaws (Exhibit 3.2 to the Registrant's
           Registration Statement on Form S-1, File No. 333-41412)
10.1*    - Contribution and Subscription Agreement dated as of December 23,
           1999 by and among DLJMB Funding II, Inc., DLJ Merchant Banking
           Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ
           Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ
           Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ First
           ESC L.P., DLJ Offshore Partners II, C.V, DLJ EAB Partners, L.P., DLJ
           ESC II, L.P., GE Capital Equity Investments, Inc., California Public
           Employees' Retirement System, Ontario Teachers' Pension Plan Board,
           Enron Energy Services, LLC, Cortez Energy Services, LLC and EMW
           Energy Services Corp. (Exhibit 10.1 to the Registrant's Registration
           Statement on Form S-1, File No. 333-41412)

                                       57
<PAGE>

10.2*    - Business Opportunity Agreement dated as of January 6, 2000 between
           Enron Corp. and NewPower Holdings, Inc. (Exhibit 10.2 to the
           Registrant's Registration Statement on Form S-1, File No. 333-41412)
10.3*    - Noncompetition Agreement dated as of January 6, 2000 among Enron
           Corp., Enron Energy Services, LLC and NewPower Holdings, Inc.
           (Exhibit 10.3 to the Registrant's Registration Statement on Form S-1,
           File No. 333-41412)
10.4*    - Master Services Agreement dated as of January 6, 2000 among Enron
           Corp., Enron Energy Services, LLC and NewPower Holdings, Inc.
           (Exhibit 10.4 to the Registrant's Registration Statement on Form S-1,
           File No. 333-41412)
10.5*    - Software Agreement dated as of January 6, 2000 between Enron Energy
           Services, LLC and NewPower Holdings, Inc. (Exhibit 10.5 to the
           Registrant's Registration Statement on Form S-1, File No. 333-41412)
10.6*    - Master Energy Purchase & Sale Agreement dated as of January 6, 2000
           between Enron Energy Services, Inc. and NewPower Holdings, Inc.
           (Exhibit 10.6 to the Registrant's Registration Statement on Form S-1,
           File No. 333-41412)
10.7*    - Master Purchase & Sale Agreement dated as of January 6, 2000
           between Enron Energy Services, Inc. and NewPower Holdings, Inc.
           (Exhibit 10.7 to the Registrant's Registration Statement on Form S-1,
           File No. 333-41412)
10.8*+   - Interactive Marketing Agreement dated as of November 24, 1999
           between America Online, Inc. and NewPower Holdings, Inc. (Exhibit
           10.8 to the Registrant's Registration Statement on Form S-1, File No.
           333-41412)
10.9*    - Subscription Agreement dated as of January 6, 2000 among America
           Online, Inc., Enron Energy Services, LLC and NewPower Holdings, Inc.
           (Exhibit 10.9 to the Registrant's Registration Statement on Form S-1,
           File No. 333-41412)
10.10*+  - Information Technology Services Agreement dated May 12, 2000
           between NewPower Holdings, Inc. and International Business Machines
           Corporation (Exhibit 10.10 to the Registrant's Registration s
           Statement on Form S-1, File No. 333-41412)
10.11*   - Subscription Agreement dated as of May 15, 2000 among International
           Business Machines Corporation, NewPower Holdings, Inc. and Enron
           Energy Services, LLC (Exhibit 10.11 to the Registrant's Registration
           Statement on Form S-1, File No. 333-41412)
10.12*   - Subscription Agreement dated as of July 10, 2000 among DLJMB
           Funding II, Inc., DLJ Merchant Banking Partners II, L.P., DLJ
           Merchant Banking Partners II-A, L.P., DLJ Diversified Partners, L.P.,
           DLJ Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ
           Millennium Partners-A, L.P., DLJ First ESC L.P., DLJ Offshore
           Partners II, C.V., DLJ EAB Partners, L.P., DLJ ESC II, L.P., GE
           Capital Equity Investments, Inc., NewPower Holdings, Inc., California
           Public Employees' Retirement System, Ontario Teachers' Pension Plan
           Board, and LJM2-TNPC, LLC (Exhibit 10.12 to the Registrant's
           Registration Statement on Form S-1, File No. 333-41412)
10.13*   - Form of Subscription Agreement between NewPower Holdings, Inc. and
           certain officers of NewPower Holdings, Inc. (Exhibit 10.13 to the
           Registrant's Registration Statement on Form S-1, File No. 333-41412)
10.14*   - Form of employment agreement between NewPower Holdings, Inc. and
           certain executive officers of NewPower Holdings, Inc. (Exhibit 10.14
           to the Registrant's Registration Statement on Form S-1, File No.
           333-41412)
10.15*   - NewPower Holdings, Inc. 2000 Stock Plan (Exhibit 10.15 to the
           Registrant's Registration Statement on Form S-1, File No. 333-41412)
10.16*   - NewPower Holdings, Inc. Deferred Compensation Plan (Exhibit 10.16
           to the Registrant's Registration Statement on Form S-1, File No.
           333-41412)

                                       58
<PAGE>

10.17*   - Stockholders Agreement dated as of January 6, 2000 between DLJMB
           Funding II, Inc., DLJ Merchant Banking Partners II, L.P., DLJ
           Merchant Banking Partners II-A, L.P., DLJ Diversified Partners, L.P.,
           DLJ Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ
           Millennium Partners-A, L.P., DLJ First ESC L.P., DLJ Offshore
           Partners II, C.V., DLJ EAB Partners, L.P., DLJ ESC II, L.P., NewPower
           Holdings, Inc., California Public Employees' Retirement System,
           Ontario Teachers' Pension Plan Board, LJM2-TNPC, LLC, GE Capital
           Equity Investments, Inc., Enron Energy Services, LLC and Cortez
           Energy Services, LLC, as amended by Amendment No. 1 to the
           Stockholders Agreement dated June 30, 2000 and Amendment No. 2 to the
           Stockholders Agreement dated July 10, 2000 (Exhibit 10.17 to the
           Registrant's Registration Statement on Form S-1, File No. 333-41412)
10.18*   - Asset Purchase Agreement dated as of June 29, 2000 by and among
           Columbia Energy Services Corporation, Columbia Energy Retail
           Corporation, Columbia Energy Power Marketing Corporation, The New
           Power Company and NewPower Holdings, Inc. (Exhibit 10.18 to the
           Registrant's Registration Statement on Form S-1, File No. 333-41412)
10.19*   - Noncompetition and License Agreement dated as of July 31, 2000
           between Columbia Energy Group and The New Power Company (Exhibit
           10.19 to the Registrant's Registration Statement on Form S-1, File
           No. 333-41412)
10.20*   - Subscription Agreement dated as of July 31, 2000 by and among
           Columbia Energy Services Corporation, NewPower Holdings, Inc. and
           Enron Energy Services, LLC (Exhibit 10.20 to the Registrant's
           Registration Statement on Form S-1, File No. 333-41412)
10.21*   - Services Agreement dated as of July 31, 2000 between The New Power
           Company and Columbia Energy Services Corporation (Exhibit 10.21 to
           the Registrant's Registration Statement on Form S-1, File No.
           333-41412)
10.22*   - Subscription Agreement dated as of July 12, 2000 between NewPower
           Holdings, Inc. and Lou L. Pai (Exhibit 10.22 to the Registrant's
           Registration Statement on Form S-1, File No. 333-41412)
10.23*   - Stockholders Agreement entered into and effective as of January 6,
           2000 between NewPower Holdings, Inc. and Lou L. Pai (Exhibit 10.23 to
           the Registrant's Registration Statement on Form S-1, File No.
           333-41412)
10.24*   - Competitive Default Services Agreement dated as of October 18, 2000
           by and between PECO Energy Company and The New Power Company (Exhibit
           10.24 to the Registrant's Quarterly Report on Form 10-Q for the
           fiscal quarter ending September 30, 2000)
21.1*    - List of subsidiaries of the Company
23.1     - Consent of Arthur Andersen LLP
24.1     - Power of Attorney
99.1*    - Certificate of ownership and merger dated January 19, 2001 merging
           NewPower Holdings, Inc. with and into TNPC, Inc. (Exhibit 99.1 to the
           Registrant's Current Report on Form 8-K filed January 25, 2001).

-----------
*    Indicates exhibit incorporated by reference.

+    The Securities and Exchange Commission has granted confidential treatment
     to certain provisions of these exhibits. Omitted material for which
     confidential treatment has been granted has been filed separately with the
     Securities and Exchange Commission.

                                       59
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this Report has been signed on behalf of the Registrant by
the undersigned, thereunto duly authorized, in the City of Purchase, State of
New York, on the 30th day of March, 2001.

                           NEWPOWER HOLDINGS, INC.


                           By: /s/ H. Eugene Lockhart

                               H. Eugene Lockhart
                               President, Chief Executive Officer and Director
                               (Principal Executive Officer)

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this registration statement has been signed by the following persons in the
capacities and on the 30th day of March, 2001.

<TABLE>
<CAPTION>
Signature                    Title                                                      Date
---------                    -----                                                      ----
<S>                          <C>                                                        <C>
/s/ LOU L. PAI
--------------------------
    Lou L. Pai               Chairman and Director                                      March 30, 2001

/s/ H. EUGENE LOCKHART
--------------------------
    H. Eugene Lockhart       President, Chief Executive Officer and Director            March 30, 2001

/s/ WILLIAM I JACOBS
--------------------------   Managing Director, Chief Financial Officer and Director
    William I Jacobs         (Principal Financial Officer)                              March 30, 2001

/s/ STEPHEN NOLAN
--------------------------
    Stephen Nolan            Controller (Principal Accounting Officer)                  March 30, 2001

/s/ LINDA G. ALVARADO
--------------------------
    Linda G. Alvarado        Director                                                   March 30, 2001

/s/ RICHARD A. CAUSEY
--------------------------
    Richard A. Causey        Director                                                   March 30, 2001

                                       60
<PAGE>

/s/ JAMES V. DERRICK, JR.
--------------------------
    James V. Derrick, Jr.    Director                                                   March 30, 2001

/s/ PETER T. GRAUER
--------------------------
    Peter T. Grauer          Director                                                   March 30, 2001

/s/ RAY J. GROVES
--------------------------
    Ray J. Groves            Director                                                   March 30, 2001

/s/ KENNETH L. LAY
--------------------------
    Kenneth L. Lay           Director                                                   March 30, 2001

/s/ EUGENE B. SHANKS, JR.
--------------------------
    Eugene B. Shanks, Jr.    Director                                                   March 30, 2001
</TABLE>

                                       61