Chris, you are officially the king today!  With the PSCo deal this 
effectively eliminates the LM position assuming we successfully sell LV.

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 10/06/2000 
08:15 AM ---------------------------


Christopher F Calger
10/04/2000 07:16 PM
To: David W Delainey/HOU/ECT@ECT
cc:  
Subject: CA ISO Sumer Reliability Generation

Dave,

The CA ISO Board met today and approved a plan to provide capacity subsidies 
to up to 2,000 MW of new supply.  There was 71 proposals from 24 companies.  
We offered 7 proposals.  Their decision criteria is ridiculous and subject to 
change, but it looks like we won the following:

1 LM6000 - 45MW - Pleasonton - $6.9MM per year for three years -  $153/kwyear

1 LM6000 - 45MW - LODI - $6.9MM per year for three years - $153/kwyear

4 FT4's - 96MW - Southern/Palo Alto - $13.2MM per year for three years - 
$137/kwyear

Las Vegas Cogen / EPMI 225MW Palo Verde Sale $10MM per year for three years - 
$44/kwyear

In the first three deals, we have the full rights to the energy; capacity 
payments are for availability.  These payments, combined with reasonable toll 
values, terminal value and EPC costs, make the projects economic (DASH 
forthcoming).

The last deal is a bit strange and non-conforming but the ISO likes it 
because it is priced very low.  Basically, we agree to deliver power to the 
ISO at the California border next summer priced at PX Index plus $20/MWh.  CA 
ISO takes power, sells into PX and receives Index.  This is cheaper than what 
they are paying for new capacity in state.  The $20 premium is simply the 
basis between Palo and SP15.  In 2002 and 2003, LVCogen commits to sell 500 
hours to CA ISO and receive PX for its energy.  In 02 and 03, the Palo/SP 
spread collapses so an asset buyer sees this $20MM as gravy.

Lot of moving parts - I will keep you posted.  Parquet, Mcdonald and Laird 
are doing a great job.

Chris