Calpine is in complete disarray right now, and the entire future of their company hinges on CA honoring their long term above market contracts.   Calpine's non-CA portfolio is getting killed and I don't think they have hedged effectively in the non-CA locations.
 
Given these circumstances, the word "below market" is an "f" word, particulary with the legal concerns they also have.   I would place a low probability on getting to a value proposition that makes sense for both parties at Dighton, particularly with the legal issues.

-----Original Message-----
From: Llodra, John 
Sent: Tuesday, June 12, 2001 5:25 PM
To: Presto, Kevin M.; Duran, W. David
Subject: Status on Calpine Dighton


I wanted to give you a quick update on this.  After reviewing the various angles on this with structuring, it was evident that the best real prospect for doing something with them was for us to receive a below mkt position from Calpine off of Dighton (so as to force Coenergy (gas supplier) to make as large a termination pmt to Calpine as possible).  In return, we would provide some other form of value (e.g., low cost capital to facilitate re-financing of Dighton once gas agreement terminated, we sell them a below mkt position in another region, etc.).   I floated this proposal verbally to Paul Barnett about a 1-1.5 weeks ago, and his reaction was sort of "that sounds interesting" but he didn't show a great deal of genuine interest.  I indicated to him that I would work up a more specific written proposal.   However, after discussing with our legal dept, they had some real angst of me making a formal written proposal to them in this regard (concerns centering around tortious interference, etc.).  Based on that, I called Barnett back saying I was unable to make a formal written proposal along the lines of my verbal proposal to him, but that we would still be interested and indicated that the ball is in his court if he wants to pursue that angle.  As yet I have not heard back from him, and i do not hold a lot of hope that they want to pursue this.   Kevin - please let me know if you think trying to chase this more makes sense based on your discussions with Paul P. a few weeks back.
 
John