Message-ID: <13749233.1075840812932.JavaMail.evans@thyme> Date: Wed, 27 Jun 2001 11:24:00 -0700 (PDT) From: john.lavorato@enron.com To: louise.kitchen@enron.com Subject: FW: Enron Canada Update - 06/25/01 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: John J Lavorato X-To: Louise Kitchen X-cc: X-bcc: X-Folder: \ExMerge - Kitchen, Louise\'Americas\Canada X-Origin: KITCHEN-L X-FileName: louise kitchen 2-7-02.pst fyi -----Original Message----- From: Milnthorp, Rob Sent: Monday, June 25, 2001 3:18 PM To: Lavorato, John Subject: FW: Enron Canada Update - 06/25/01 John, no significant transactions completed since last update. For quarter-end: Looking for the cdn hunter heat rate swap to close and the british energy paper to be signed. New Developments: Project Banana Split - Very good meeting w/Minister Murrary Smith (Alberta Govt - Energy) and has agreed (verbally) to splitting our PPA. Letter to that effect forthcoming. Alberta government very pleased with our announcement into the retail market and plan to send press release to that effect. Press Conference is scheduled for Tuesday, June 26th. -----Original Message----- From: Milnthorp, Rob Sent: Monday, June 11, 2001 6:49 PM To: Lavorato, John Subject: Enron Canada Update - 06/11/01 Deals Done: Sunoco (Gas): 5 year synthetic transport ab/east - C$1MM orig Atlantic Packaging (East Power): British Energy Hedge - 3yr 40MW @ C$47.50MWh - C$1.5MM orig (conditional on market opening) Ivaco (East Power): Dispatch Management Services Agreement - 3yr 50 MW - 15% of upside over contract price ($47/MWh) Enerconnect (East Power): Board Approved Extension (Removal of July '01 drop dead date and removal of non-competes) - C$8MM (conditional on market opening) Deals Pending (2nd Quarter): Blue Range Final Dividend payment - C$2MM orig Cdn Hunter 9 yr-10MW heat rate swap - C$3MM British Energy - Amended paper with Dec 31, 2002 drop dead date to be signed by end of this week N1 Turbine Sale - 2 counterparties are close - C$1MM orig Moore Site - Calpine has shown bid, attempting to move it up - will seek your approval before hitting it - C$3MM Domtar - British Energy Hedge - 3yr 40 MW @ 47.50MWh + dispatch rights + settlement services - C$2MM (conditional on market opening) Deals Pending (3rd Quarter): Project TargetCo - purchase of Canenerco NOL's - CA sent friday - C$5MM orig NUG Contract Mgmt - Definitive agreement to be signed by mid July - Services to commence August 1, 2001 - C$1MM orig Project Periscope - Purchase of TCGS' aggregator pool - will need to discuss with you further but I think this deal looks probable and fits well - C$5MM PowerEx - 10 year fixed price - Alberta Pool - C$5MM Highvale Bypass - Signed CA with TransAlta - 1 yr exclusivity - Bypass Alberta Grid and direct connect Sundance to coal mine - C$5MM Project Goliath - Pre-qualified to bid on OPG's disposition of the Lakeview and Lennox Generating Plants - Non-binding bids due July 19th. STS Resolution - AEUB Hearing on paying owner's freight on MW's>target availability - C$30MM British Energy Hedge Summary: Sunoco 3 yr, 36MW @ $43.50 TCPL 2yr, 100MW @ $45.50 Atlantic 3yr, 30 MW @47.50 Ivaco 3yr, 50 MW @47.00 Domtar 3yr, 40MW @47.50 (verbal confirmation, paper will be signed by end of qtr) Total 256 MW -----Original Message----- From: Lavorato, John Sent: Monday, June 11, 2001 11:20 AM To: Milnthorp, Rob Subject: FW: West Power Orig Update Milly Can you send me something like this every Monday morning so I will know what might close and when. -----Original Message----- From: Calger, Christopher F. Sent: Monday, June 11, 2001 10:58 AM To: Lavorato, John; Kitchen, Louise Cc: Hillis, Kimberly; Schoppe, Tammie Subject: West Power Orig Update Las Vegas: Allegheny's bid was strong but required a financing out for 45 days - unacceptable. Black Hills' bid has a clean purchase and sale markup with a bid that implies a $35MM gain for ENA ($10MM has to go to Calpers since they are an investor in LV 1). They are going to their board Thursday and want to execute by early next week and close Aug 31. We will try to get a higher bid from Northland this week ($40MM gain). They will require a two-week financing out which they will secure with a $10MM non-refundable deposit. If we sign with Northland, they can close in July. In either case, accounting may require us to recognize this income this quarter because Las Vegas is a fair market value investment. RAC requires a DASH to sell an asset of this size - we will circulate on Wednesday or Thursday. One long shot deal we are proposing to Allegheny: Tear up the existing 15 year toll backed by the Las Vegas project. Enter into a 15 year firm energy sale from EPMI at Palo Verde. The value of that deal may be in excess of $100MM since the market has fallen so much. If we did that, we would have a merchant asset that would have to be sold at or near cost - this is achievable. This would be significantly riskier than our current plan and would probably require board approval, but the value makes it worth exploring. AMPS: We continue to push Geneva Steel and Oregon Steel for permitting info. West power markets have fallen further so the economics are marginal at best. Friday's curves suggested a value of $10MM vs a cost of $17MM. An imperfect put swaption would cost $4MM, further eroding the value. I spoke to Brett Wiggs on Friday and forwarded him technical specs and reviewed different deal structures that might work. DWR: They announced Thursday that they have signed more definitive long term deals that they will honor (approx 6,500MW long term). The non-binding "agreements in principle" will be renegotiated because prices have fallen so much. DWR signed our Master Agreement for short term deals but Tim does not want to execute it because of litigation risk. We will not do anything with them at this time. Generator Tolls: Interest has fallen off due to rapid drop in power prices. We are still talking with 6-7 parties, but I dont think anything will get done soon. Munis: Mcdonald got a small term sale done at NP-15 with city of Lassen. Approx $600K of orig. New Marketing Initiatives: Negotiating 3 generator service agreements. Mostly small plants coming on line this year. The entrepreneurs behind these deals are shell shocked by the low prices , but many have already committed capital. Montana: - State forced divestiture of generation. Retail load is short starting July 1, 2002. Governor's office has asked us to bring a 700MW 10 year "solution". They are willing to issue a $500MM bond to prepay and buydown part of the energy. The basic play is to swap an EPMI Mid-C position for an in-state position from PPL, package that up with some renewables and sell to the state under a prepaid PPA. Long shot but interesting. CA Industrials: A group of industrials want to buy up to 800MW NP-15 delivered for 5+ years as part of a negotiated settlement with CA. Gov Affairs is working on a Core/Non-Core structure with the state that would potentially lead to open access for all industrial load if they pay a big exit fee to cover the stranded costs incurred during the past 12 months.