Sounds promising - keep it moving.

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 06/26/2000 
02:26 PM ---------------------------


Don Miller
06/26/2000 08:47 AM
To: David W Delainey/HOU/ECT@ECT, Jeff Donahue/HOU/ECT@ECT
cc: Mike J Miller/HOU/ECT@ECT 
Subject: FPL Update

We spent three days meeting with the FPL guys last week.  The meetings were 
productive, and we are making progress.  Lew has instructed these guys to get 
down into a lot of detail on the business plan/core competencies, which we 
did!

They also floated the valuation of their existing assets - $3.1B for 3947 MWs 
or $789/kW.  We walked them through our peaker valuation as well.  We didn't 
debate the valuations, but rather we decided to go ahead and have Clement and 
Jinsung try to pull together a consolidated model for NewCo.  That is being 
done, and should be ready Monday/Tuesday. 

It is apparent from these meetings that they are looking for ENRON to provide 
several key pieces to NewCo (other than peakers and dev. projects):

1. Enron culture and emphasis on intellectual capital (including HR approach).
2. Trading and marketing expertise.
3. Enron style finance.
4. Select management spots.
5. Supplement development team.

The interesting debate is how we get compensated for the significant impact 
that the Enron "halo" is going to have on NewCo's IPO ( particularly if we 
deliver the items listed above).  I raised this incremental value issue with 
them.

FPL's key pieces include:

1. Core "operating" competencies and asset management techniques.
2. Construction management techniques.
3.  Select management spots.
4.  National development team.

The FPL risk in this whole exercise is if Lew is unsuccessful in convincing 
Broadhead that owning some % of NewCo is not a better value proposition that 
owning 100% on FPLE; and/or the decision to wait until Florida deregulates 
before spinning out FPLE.  Glenn Smith stopped by last week and he 
highlighted these issues as well.

We have a lot of work to do this week including a need to determine Trading & 
Marketing model; develop potential services agreements (QF, back office); 
refine our financial model and expand to include new projects, turbine capx, 
etc.; expand development framework;  pull pitch together to float NewCo by 
investment bank, etc.....

I am happy to expand on exactly where we stand with FPL.  I guess we also 
need to think about staffing if both Cinergy and FPL move forward (let's just 
sell the peakers to Cinergy for $1.25B and let them do their own IPO).

Regards,

Don