Subject: CSFB Independent Power Weekly-Issue #42
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked]
Date: Mon, 10 Sep 2001 04:58:26 -0700 (PDT)

<<IPW091001.doc>> 
Good Morning,

Attached, please find the latest issue of our Independent Power Weekly.

Also note that today and tomorrow (9/10 and 9/11), CSFB will host a Power
Generation Supply Chain Conference at the Plaza Hotel in New York City.
This event is designed to provide investors with a wholistic perspective on
all aspects of the sector-from coal and natural gas companies, to equipment
and service providers, to the power producers themselves.  

The major power generators are scheduled to speak on Tuesday morning (9/11).
Between 9.25 am - 11.50 am presentations will be given by the following
companies: Aquila, Calpine, Mirant, NRG Energy, Orion Power, Reliant
Resources and TECO Energy.  
In addition, at 8 am on Tuesday there will be a panel discussion focusing on
the state of the generation market. 
Finally, at 12 pm on Tuesday Judah Rose a power market consultant with ICF
Consulting will offer his perspectives on the outlook for the sector during
a luncheon presentation.

Summary:
1. IPPs Fall 3.7%   Last week our IPP composite declined 3.7%, outperforming
both the NASDAQ (-6.5%) and the S&P 500 (-4.2%).  Shaw Group, which was up
14.4%, was the strongest performer in the group.  AES Corp was the weakest
performer, falling 10.7%.

2. Awaiting a Bottom   We attribute last week's stock price performance to
broader market concerns regarding the health of the macro economy and its
ability to recover by the end of 2001.  Our sense is that investors
recognize that IPP valuations are extremely attractive.  However, prior to
moving aggressively back into the sector, they await some indication that
stock prices have stabilized and a bottom has indeed been achieved.   

3. Shell Terminates Contract with CPN; Concerns Unwarranted   Following its
exit from the retail marketing business, Shell terminated a 5 year 3,000 MW
requirements contract with Calpine.  We believe some investors concluded
that this announcement had negative implication for CPN's earnings outlook
and its overall hedging strategy.  In our view these concerns are
unwarranted for 4 reasons: 1. The Shell contract was unusual; 2. There is no
earnings impact; 3. Remarketing the output will not be an issue; and, 4. The
status of CPN's hedging objectives is unaffected.

4. Legal and Administrative Issues Remain for California Windfall Profits
Tax Bills   Recently, two bills that would impose a windfall profits tax on
California generators have been advancing through the California legislature
and will likely by heard on the floor of the Assembly this week.  The
current legislative session will end this Friday (9/14), requiring any
pending bills to be passed by that time.  In our view these bills are best
understood as a negotiating tactic by Governor Gray Davis and Democrats in
the legislature designed to extract additional concession from the FERC and
the state's power generators.  While we expect at least one or both of these
bills to advance through the legislative process, full implementation is
likely to be prevented by a number of legal and administrative impediments.

Regards,

Neil Stein 212/325-4217

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