Calpine reduced their purchase price because the turbine contract for Pastoria was overpriced by $9.9MM, the amount of the Catalytica credit.  

A brief confusing history as I understand it...ENA East and West jointly owned the Catalytica equity account in 1999.  It was written up based on expectations of an IPO value.  At 12/99 it transferred to West Power because Catalytica entered into an agreement with Pastoria to provide the Project with its Zonon technology.  This agreement included a commitment from GE to do research/work in order to use the Catalytica technology on GE turbines.  The cost of this ($9.9MM) was added to the Pastoria turbine contract.  

In Feb 2000,  when I arrived in Portland, I had the Catalytica account transferred to the Portfolio because I thought it was overvalued with little synergies with ENA West Power.  In mid-2000 the agreement was restructured in order to "clean up" Catalytica so it could IPO.  At that time, Enron was credited back the $9.9MM from Catalytica and it was decided by Delainey that that amount should be split 2/3-Pastoria and 1/3Catalytica Equity, with the 2/3 going to ENA West Power upon the sale of Pastoria.  Pastoria did not get the full $9.9MM back because we benefited somewhat from favourable publicity and some interest savings.   

At this time, since there is no funds transfer, I believe it simply becomes an internal income transfer from the Merchant Portfolio to ENA West Power.  






Louise Kitchen
03/22/2001 08:33 AM
To:	Christopher F Calger/PDX/ECT@ECT
cc:	 
Subject:	out of interest

what happens under the Pastoria deal to the Catalytica credit - did it go to Calpine or are you using it in the other turbine purchases?