Message-ID: <32069953.1075857695243.JavaMail.evans@thyme> Date: Mon, 19 Feb 2001 07:57:34 -0800 (PST) From: lavorato@enron.com To: greg.whalley@enron.com Subject: FW: PGE Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Lavorato, John X-To: Whalley, Greg X-cc: X-bcc: X-Folder: \jlavora\Sent Items X-Origin: Lavorado-J X-FileName: jlavora.pst Greg How about you being the Portland General risk manager. My plate is full. Lavo -----Original Message----- From: Gorny, Vladimir Sent: Friday, February 16, 2001 3:05 PM To: Lavorato, John Subject: PGE FYI ---------------------- Forwarded by Vladimir Gorny/HOU/ECT on 02/16/2001 03:03 PM --------------------------- From: Vladimir Gorny 02/12/2001 05:12 PM To: Ted Murphy/LON/ECT@ECT, William S Bradford/HOU/ECT@ECT cc: Subject: PGE Enron has negotiated a sale of PGE to Sierra Pacific Resources for $2.07 B that has to take place by May 5th, 2001. Sierra Pacific owns and operates power and gas utilities and pipelines in the Western United States. Sierra Pacific (SPR) has a market cap of $0.92 B, trading at $11.85, down about 40% off the high of $19.44 in September of 2000. Sierra Pacific has earnings-per-share of <$0.85> and pays dividends of $1.00 per share. Sierra owns generation assets and serves load in Oregon and Nevada. Additionally, the Company serves a small load in Reno, CA (~40,000 customers), which makes it subject to the regulations coming out of CA crisis. In order to pay Enron for PGE, the company has to sell its existing generation assets, subject to regulatory approval from the respective state PUCs. Given Sierra's financial situation and CA regulation precluding load-serving entities from selling their generation assets, there is a possibility that the transaction will not take place by 5/5/01. Enron Development Group is the most optimistic in thinking that the sale might still happen by 5/5/01. Enron Gov. Affairs experts expect the transaction to be postponed by 6-12 months. PGE CFO and Head of Marketing speculate that the sale may not happen for a long time or ever. In the meantime, CA crisis has generally slowed down the deregulation process in the state of Oregon. The earlier expectation that certain PGE customers may be able to shop for alternate suppliers of electricity, effective 10/1//01 is in question. This uncertainty makes it difficult to estimate PGE's load going forward. As of 2/9/01, PGE positions and risk (including generation capacity, load and marketing positions) are as follows: Power VaR of $19.3 MM 2001: Long 1,934,031 Mwhs 2002: Short 540,122 Mwhs Gas VaR of $0.8 MM 2001: Short 1.4 Bcf 2002: Short 7.4 Bcf Total VaR of $19.2 MM. Next Steps - continue to assess the possibility of transaction falling through or the potential transaction date - communicate to Enron Treasury the possibility of not collecting the proceeds on sale this year - monitor PGE positions weekly (VaR and positions) - periodically assess the definitions of PGE load and generation availability - any other thoughts Vlady.