-----Original Message-----
From: 	Zufferli, John  
Sent:	Tuesday, July 03, 2001 12:04 PM
To:	Lavorato, John
Subject:	Alberta Power vs MID-C

I sent you an update of the Hedge Summary for July 3, 2001.

In that I mentioned that I bought 125 MW of Cal02 at 10 HR flat.  I am long over 500 MW at this heat rate.  The biggest risk in this position is a large hydro year that
tanks the Mid-C (i.e. uncorrelated event with gas).  Mid-C off-peak is $47 USD, Nymex fixed price for Cal02 is $3.79 USD and Sumas basis is $0.16 for Cal02.  This implies a heat rate of close to 
11.9 for the off-peak Mid-C.

I am thinking about buying back some AECO gas hedge for Cal02, then selling Mid-C off-peak to replace the gas hedge.  Perhaps as winter blow-out protection, buy some Jan-Feb Sumas basis.  

The trade for a 25 MW long Alberta flat position would be:
			a) sell 25 MW of Mid-C off-peak
			b) buy 0.25 contracts /day of AECO fixed price Cal02 gas (i.e. to unwind the off-peak Alberta portion of the the gas hedge)
			c) buy 0.25 contracts/day of Sumas Jan-Feb basis

See what you think??