FYI. As you know, we're attempting to find a solution to the "reasonable review" morrass that's impeding utility forward contracting. For that effort, we've worked with the Portland desk to pull together some educational materials to use with a subset of California stakeholders that's trying to devise a solution to California's melt down. The attached graphs show 3 scenarios for the state as a whole. 1) "do nothing" 2) for 60% of IOU short position, split the amount 50-50 and 1cover half the amount with 10-year fixed priced power and the other half with 5-year fixed priced power. 3) create a portfolio with a) 25% of short position covered by 10-year fixed priced power, b) 20% of short position covered by 5-year fixed price power, c) 15% covered by 1-year fixed price power, d) 20% covered by May-Sept fixed-price power, and e) 15% from the PX. The term of each scenario is 5 years. Because each is priced off our our curves, the average price is roughly equivalent for each of the three portfolios. However, the graph shows (as one would expect) that exposure to price volatility is significantly higher under scenario 1 compared to 2 and 3. The goal is to use the illustrative scenarios to persuade the industry that in the short run (i.e., immediately) the utilities should be permitted to buy a modest amount of power under 5 and 10 terms, and those purchases (if undertaken using a "DealBench-like" tool) ought to be "per se" reasonable.
Answer: Illustrative Portfolios
Attached please find a spreadsheet that describes the prepays we completed this week. In summary, we bought power supplies through December 31 from Allegheny, AEP, Avista, Idacorp, and PNM and delivered to over 15 in the money contracts. The power cost approximately $3.3MM and will generate a post-petition receivable in excess of $12MM. Next week we will identify the January schedule and recommended purchases/deliveries. Apologies for any wiring firedrills. Regards,
Answer: West Power Prepays
Finally we're forging ahead. We plan on publishing our much-delayed and much-changed Aspen special issue in two weeks. We're really excited. We're focusing now on the issue of globalization in the post-September 11 world. All of your contributions in Aspen aided us immensely. The issue is going to be an unusual print-online package. In addition to articles in the magazine that relate in various ways to the Aspen meeting, we will be posting significant additional material online. For those of you who answered our three questions prior to the meeting, we will be publishing all of those--in full--on Fortune.com. But we also want to hear from you
Answer: The issue nears
On the list for 6/6/00, NRG Energy Inc. was previously not approved for physical power trading and we are not opening them up at this time. Per my discussions with Credit, they are coming thru as an amendment to open them up for US power and emissions. This counterparty is not showing up on the FERC approved marketers list, and Leslie Hansen is contacting the counterparty to determine what records they have, if any, that show they have been approved by the FERC to trade power. Until we are provided that info, we cannot open them up for power. US emissions has been opened. P.S. If Utilicorp. need to be approved when I am out Monday and Tuesday, talk to Carol St. Clair, the attorney working on the ISDA Master, or Susan Bailey, the paralegal working on the contract.
Answer:
Counterparty Approvals for 6/6/00 and 6/7/00