Subject: Re: DWR Stranded costs: $21 billion
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked]
Date: Tue, 19 Jun 2001 12:24:00 -0700 (PDT)

Anyone in the market for a $400 hammer?

Alan:

I'd like to use the info ( i.e., "we think the contracts are $XX billion out 
of the money") in the context of the negotiations that I'm in and I'd also 
like to tell Hertzberg---it will provide a powerful and compelling case to do 
something about the contracts in order to 1) save the State's rear end and 2) 
ensure that the core/noncore structure remains alive. I wouldn't hand out any 
paper showing any analysis.  How long would it take to refine?

Best,
Jeff

	Alan Comnes/ENRON@enronXgate
	06/19/2001 07:01 PM
		 
		 To: James D Steffes/NA/Enron@Enron, Jennifer Thome/NA/Enron@Enron, Ban 
Sharma/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeff Dasovich/NA/Enron@Enron
		 cc: Tim Belden/ENRON@enronXgate
		 Subject: DWR Stranded costs: $21 billion

I pulled the recent forward curves (confidential; not for external release 
without approval from West Power) and computed the stranded costs associated 
with the DWR contracts.  Assuming SP15 on peak (which is conservative since 
many of the contracts had off peak energy in them) the total overmarket is 
$21 billion, or $13 billion discounted at 12%.  The former number is most 
comparable to the $40+ billion DWR expenditure commitement number.

If we want to use this for any sort of external message I would like to 
refine further.

Alan