Subject: Pueblo
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked]
Date: Thu, 18 May 2000 04:32:00 -0700 (PDT)

I got a call from Tino Monaldo today passing on the results of Dennis 
Langley's meeting with DOE in Albuquerque.  DOE indicated that their current 
PNM rate is "5.3 cents, exclusive of the demand charge."  Tino's consultant 
claims that factoring in the demand charge yields an effective rate of 
approximately 7 cents/KWh.  Assuming we need to come in at 10% less than the 
current rate, our bogey is 6.3 cents/KWh.  This is at the high end of the 
range we hoped they'd be in.

Additionally, DOE indicated that they need "redundancy" and don't want to 
rely on PNM for back up power.  They want a multiple turbine facility--i.e., 
more smaller turbines instead of fewer large turbines.  The new pipeline will 
need to be split connected to El Paso and TW in order to access diverse 
supplies and guard against supply failure.  They have not asked for fuel oil 
backup.  

I know this is starting to look like the project that won't go away, but the 
power price number looks very promising to me.  I think its worth scrubbing 
down the model we've used to replace the generic capital cost and O&M 
assumptions with more specific assumptions related to the specific turbine 
configuration we'd be using.  

If this price is really as favorable as I think, can we make another run at 
the ENA people and Federal Solutions guys to see if they have any interest?  
DF