Message-ID: <15396237.1075840890589.JavaMail.evans@thyme> Date: Thu, 12 Apr 2001 19:46:00 -0700 (PDT) From: christopher.calger@enron.com To: louise.kitchen@enron.com Subject: Re: Update Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Christopher F Calger <Christopher F Calger/PDX/ECT@ECT> X-To: Louise Kitchen <Louise Kitchen/HOU/ECT@ECT> X-cc: X-bcc: X-Folder: \ExMerge - Kitchen, Louise\'Americas\Portland X-Origin: KITCHEN-L X-FileName: louise kitchen 2-7-02.pst I am comfortable with the Allegheny credit - my understanding is that they are getting a sweetheart deal on the assets being transferred from their regulated utility so they will be in a buying mode for quite some time - in fact they are a good candidate for buying this but I did not want to disrupt the negotiations by bringing up the equity sale. Regarding Turbopark, this project on its own could go into Turbopark (we are using their form of EPC), but because this is linked to a Fair Market Value QF, accounting is not comfortable using it (it risks our favourable Arthur Anderson treatment on all of our FMV assets) We have assumed in our economics that the bridge loan is priced at 15%. The Allegheny toll, and all development contracts are a CP to this deal - this needs to be perfectly nailed down prior to pulling the trigger! Louise Kitchen 04/12/2001 12:59 PM To: Christopher F Calger/PDX/ECT@ECT cc: Subject: Re: Update Have a good time ski-ing. If you catch this before you go - are we happy with the Allegheny credit? I take it that you just don't meet the terms of Turbopark - what is the cost of the bridge loan? I assume Allengheny toll is a CP on going forward with this deal. Louise Christopher F Calger 04/12/2001 01:57 PM To: Louise Kitchen/HOU/ECT@ECT cc: Subject: Update Turbine Swap: We are providing the final definitive agreement to Delta today. We have received and incorporated their comments. Based on this, they are supposed to fund on April 20. The lawyers are planning to meet early next week to review any final/new comments and closing process. I am talking with Dean Vanech on a different matter so I will nudge him along as well. I am out tomorrow - skiing Las Vegas: The development of the expansion is being pulled together and the tolling agreement with Allegheny is nearly complete. We expect everything to be done later this month. We would like approval to construct this project subject to everything being fialized. As such, we are hoping to review this with you and John Monday, execute a DASH later in the week and seek Executive Committee/Board approval on April 30/May 1 for up to $200MM. We will have a detailed presentation/DASH for your review Monday (RAC, finance, accounting and legal have seen the DASH and are aware of timing). In general... - Location: North Las Vegas, adjacent to existing LM6000 QF facility - Description: $195MM, 225MW combined cycle LM6000, 7,800 heat rate, COD of September 1, 2002 - Interconnect: Nevada Power - Gas Supply: Southwest Power - Permits: Done - EPC Contractor: Modern Continental with Fixed Price turnkey with A-Rated bonding (a second tier, but financeable contract) - Tolling terms: 15 year, Allegheny delivers fuel to plant, and takes power from plant, $12.15/kwmonth plus variable charges = $29MM / year - Returns are > 15% when we believe the asset market needs 10%-12% - Based on Fountain Valley comparables (discount rates and terminal value assumptions) I think we can make $25MM - $30MM selling this project this year. - Interested bidders include Black Hills, Northland Power, TransCanada, Delta Power, Calpine - Turbopark can not be used so Joe and I have agreed to a 120 day bridge loan from Enron until project financing can be secured Wind: My Wind guys are talking with ENE Wind. They are concerned that ENE Wind may sell to a BPA RFP at a price below EPMI's bid. They also want to option a couple of ENE Wind's sites in order to quickly capture opportunities - in general we believe that ENE Wind has some good sites, but does not have the resources to get them done, so we would like to control the site and bring together companies that want to partner with us (Equity-Cinergy, EPC/O&M-Enexco). We believe that we can pull a deal together that could result in ENE Wind selling more turbines and ENA generating strong marketing premiums without either one of us putting any significant capital at risk. Mark Metz suggested that anything that can help ENE Wid sell more turbines is a good thing. I will talk with him and Adam Umanoff. <Embedded StdOleLink>