-----Original Message-----
From: Stein, Neil [mailto:neil.stein@csfb.com]
Sent: Monday, October 22, 2001 7:38 AM
To: undisclosed-recipients
Subject: CSFB Independent Power Weekly--Issue #48; IPPs Rose
0.6%;Califor nia Contracts Get Some Attention; Major Earnings Week Ahead


 <<IPW102201.pdf>> 
Good Morning,

Attached, please find the latest issue of our Independent Power Weekly.

Summary:
1. IPPs Rise 0.6%   Last week our IPP composite rose 0.6%, outperforming
both the S&P 500 (-1.7%) and the NASDAQ (-1.9%).  Mirant, which was up 5.2%,
was the strongest generator in the group.  International Power was the
weakest performer, declining 5.8%.

2. Generation Oriented Utilities Fall 0.8%   Our universe of generation
oriented utilities declined 0.8%, outperforming both the S&P 500 and NASDAQ,
while underperforming the UTY (+0.6%).  Constellation Energy, which was up
3.3%, was the strongest performer in the group.  Black Hills was the weakest
performer, declining 5.6%.

3. California Contracts Dominate Investor Attention   Last week there was
some renewed concern among investors that the State of California would
attempt to renegotiate its 53 power sales contracts with various power
generators and marketers.  Over the long-term we see minimal risk for the
generators.  We believe California has few legal options with respect to
these agreements.  Further, the signing of these contracts played a key role
in reigning in spot power prices in the state.  Finally, Governor Davis
apparently does not support a massive contract renegotiation effort.  

4. Some Headline Risk Remains   The only issue we see involves headline
risk.  While the Governor and his administration appear to be taking a
restrained approach with regard to the contracts, political pressure to
renegotiate continues to grow from the CPUC and the state Attorney General's
office.  While we ultimately expect such efforts to be unsuccessful, in the
near term this issue will continue to attract media attention.  

5. Earnings Season Upon Us   This week the bulk of the IPP's and generation
oriented utilities are scheduled to report earnings.  In the IPP group,
results are expected from: AES, CPN and RRI.  In the generation oriented
utility group, results are expected from: CNL, DPL, ETR, FPL, PPL and XEL.
We expect capital discipline to be a recurring theme emphasized by companies
on their upcoming conference calls.  In response to stock prices which are
trading below private market asset values, we expect management teams across
the sector to de-emphasize growth and begin using stricter hurdle rates when
evaluating new investment opportunities.


Regards,

Neil Stein   212/325-4217

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