Wade --

Attached are some additions.  Looks fine.  Mary Lynne Ruffer has the most recent Negative CTC numbers (my understanding is $405MM for PG&E and $100MM for SCE as of today).

Jim

 

 -----Original Message-----
From: 	Stubblefield, Wade  
Sent:	Thursday, October 25, 2001 10:22 AM
To:	Steffes, James D.; Leff, Dan; Dietrich, Janet; Delainey, David
Subject:	Draft Answers to Questions

Here is my draft answer to the questions posed by one of the banks.  I am still chasing down some data, but wanted the group editing with me.  Would you please review ASAP so I can get up to Wes.  Keep in mind, these are the responses to Jeff M., not necessarily what they should or will share with the bank.  I think we should give them all the data points and let them judge what is disclosed.



1.  What effect of global slow down?  We believe that the current economic environment provides a good opportunity for RES given customers' desires to reduce/fix their exposure to commodity price volatility and meet budget and liquidity needs.

2.  How much of new business is tied to customer capital investment? To be sure we address the intent of this question we have three types of capital investment (i) Expenditures by customers - no new origination activity is contingent on customer capital expenditures (ii) RES internal capital expenditures - the only internal capital expenditures are approximately $10-15MM in Q4 2001 and $60MM in 2002 in IT capital expenditures (iii) We have, as part of our PRM Liability, forecasted expenditures for equipment at existing customer locations as part of our Demand Side Management (DSM) business.  For the next six months these expenditures total $______.   If not spent on schedule we would "lose" PRM asset value of approximately $____MM from loss of savings to be generated from these investments.

3.  What effect on business of CA decision to terminate retail access? Although unable to initiate new contracts within California, we believe that the renewal of existing contracts within Califonia will offset any losses experienced in that market and with the anticipated market openings across North America (especially Texas and Ontario in early 2002) there will be no negative impact to RES' growth.  Excluding California, approximately 26% of the retail electric market is open representing a total market size of approximately $56.1 billion.

4.  What is impact if order made retroactive? None, all contracts put in place have change of law provisions with liquidated damage language to protect RES' exposures.

5. What effect does slowing electric deregulation have? The pace of deregulation across the United States is uneven, however planned openings in 2001-2003 are adequate to meet RES near-term goals.  The California crises has increased customers' urgency in the marketplace and has reduced RES' customer acquisition costs.  Continued deregulation is important to our long-term strategy.  To counter the effect of the slowdown we have increased our product offering of Demand Side Management activities which bring value to RES and our customers in regulated environments.  

6.  What is credit exposure to utilities, PX, ISO - if still can't get numbers is exposure changing, what about Retail direct access credit receivables.  What of ENE's $580 in receivables is "Allowable" - how much is contested?  We currently have approximately $_____ MM in "PX" receivable from utilities ($____ MM from PG&E and $_____ MM from SCE).  EPMI has a $____MM receivable from the California ISO.  PG&E is contesting $_____MM of our recorded receivable and SCE is contesting $____MM.  We have a total reserve of $_____MM established for these items.