<<IPW070201.doc>>
Good Morning,

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


Summary:
1. IPPs Rise 3.7%   Last week the Independent Power Producers posted their
strongest stock price performance since mid-May.  Our composite was up 3.7%,
outperforming the S&P 500 (+0.0%), but underperforming the NASDAQ (6.6%).
Mirant was the strongest performer in the group, rising 10.9%.  Reliant
Resources was the weakest, falling 2.3%.  While the IPPs show some signs of
renewed strength last week, we believe "technical" end-of-the-quarter
selling pressure combined with lingering political concerns prevented a more
significant rally from taking place.

2. Refund Issue Dominates Investor Attention  The most visible political
concern revolves around the issue of potential retroactive refunds for power
generators. We believe closure on this matter could be forthcoming over the
next month, most likely in the form of a FERC order.  In our view, Strong
Buy rated Calpine offers the best downside protection, given that the bulk
of its sales in California have taken place outside the spot market.  We
would also cite Buy rated Mirant, which has taken sizable reserves against
its California earnings.  For the whole group, we believe any resolution
will have a positive impact on market psychology and, valuations which have
compressed 29%, year to date.

3. Windfall Profits Tax   On July 9, the California Assembly Revenue and
Taxation Committee will consider SB 1X-the power generator windfall profits
tax bill.  This hearing was originally scheduled to take place on July 2.
Our contacts in Sacramento indicate that the bill does not have broad
support and expect the bill to "die" at some point in the legislative
process.

4. Q2 EPS Preview   The bulk of the IPPs will report second quarter earnings
during the weeks of July 23 and July 30.  Below we review our estimates and
expectations for the industry.  Generally, we expect solid growth across the
sector driven by recent acquisition and development activity.  In
particular, we believe Calpine and Black Hills offer the greatest potential
for upside EPS surprises.

5. CSFB Power Generation Supply Chain Conference   On September 10 and 11,
CSFB will host a Power Generation Supply Chain Conference at the Plaza Hotel
in New York City.  This event is designed to provide investors with a
wholistic perspective on all aspects of the sector-from coal and natural gas
companies, to equipment and construction service providers, to the power
producers themselves.  Please contact us if you would like additional
information.

Regards,

Neil Stein   212/325-4217
Bryan Sifert   212/325-3906

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 - IPW070201.doc