Message-ID: <23634205.1075857205870.JavaMail.evans@thyme> Date: Tue, 26 Sep 2000 05:23:00 -0700 (PDT) From: ron.coker@enron.com To: louis.iaconetti@csfb.com Subject: Responses to PG&E Questions on Pastoria Cc: andrew.kelemen@enron.com, benjamin.rogers@enron.com, don.miller@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: andrew.kelemen@enron.com, benjamin.rogers@enron.com, don.miller@enron.com X-From: Ron Coker X-To: louis.iaconetti@csfb.com X-cc: Andrew Kelemen, Benjamin Rogers, don.miller@enron.com X-bcc: X-Folder: \Benjamin_Rogers_Dec2000_2\Notes Folders\Discussion threads X-Origin: Rogers-B X-FileName: brogers.nsf I am working with Don Miller and will be responsible for receiving and processing all due diligence requests for Pastoria. Below are our responses to PG&E's questions: QUESTION:Is the major maintenance reserve estimate based on a negotiated Long Term Services Agreement (LTSA)? If so, will it be in place and transfer with PEF? RESPONSE: We have not negotiated an LTSA with anyone at this time, and we do not expect to have one in place to transfer with PEF. The maintenance reserve is our estimate based on industry data and information from GE. QUESTION: Are spare parts for the first major overhaul included anywhere in the capital cost estimate or are they assumed to be purchased through the maintenance reserve estimate (i.e. the LTSA) charge? RESPONSE: The maintenance reserve is intended to include parts and labor for the overhaul. QUESTION: What is Enron's intent re: continuing involvement? PG&E is concerned about any potential requirements that they might be required to either purchase fuel from Enron or engage Enron as the power marketer. RESPONSE: Enron is very flexible re continuing involvement: scheduling coordination, fuel supply, power marketing, etc. We are also flexible re the time period and the terms of the continuing involvement. Whatever arrangement is developed would be mutually beneficial. QUESTION: What is status of EPC negotiations. Will they be required to engage NEPCO as the EPC contractor? Does the EPC contractor have control over the turbines? RESPONSE: o EPC negotiations are complete with NEPCO. Contract has not been executed, but has been "put on the shelf" awaiting decision on successful bidder for the purchase of the Pastoria project from ENA. Successful bidder and NEPCO will each have the option of executing the EPC agreement. o The successful bidder will be under no obligation to engage NEPCO. o Pastoria has control of the turbines. QUESTION: They also questioned whether there would be any "agricultural restrictions"? RESPONSE: The project site is presently under a Williamson Act contract to maintain agricultural use in exchange for lower taxes. Last week, the Kern County Board of Supervisors voted to cancel the Williamson Act contract to allow for industrial use, which started a 180-day public comment period. However, the Governor has on his desk a bill for signature that would reduce the public comment period for the cancellation to the same time frame as the request for rehearing period for the CEC Final Decision. (The Governor has until 9/30 sign the bill and is expected to do so because of the overwhelming support of the bill in the Assembly and the Senate.) The cancellation will be contingent upon a successful CEC decision and a payment of a Williamson Act cancellation fee. QUESTION: I received a call from Tom Favinger at PG&E today. He would like to get a breakout of the $10.25 million item in the Pastoria capital budget labeled Pre-Commercial Operations Costs. RESPONSE: The breakdown (in $MM) is as follows: Project management during construction $1.000 Start-up and acceptance 2.900 Insurance and performance bond 1.846 Owner's Engineer 1.500 County Chief Building Officer/Engineer/Consultant 3.000 TOTAL $10.246 Should you have any questions, please call me at 713.345.8992.