Good Morning,

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

 <<IPW051401.pdf>>

Summary:
1. IPPs Fall 0.5%   Last week our IPP composite traded off 0.5%,
outperforming both the NASDAQ (-3.8%) and the S&P 500 (-1.7%).  Mirant was
the strongest performer, rising 7.8%.  AES was the weakest, falling 8.7%.

2. Investors Focus on Calif. Windfall Profits Tax Proposal   On Monday
evening (5/7), the California State Senate passed windfall profits tax bill,
calling for a 100% tax on power sales over $80 per Mwh.  We believe the
proposal should be seen as a negotiating tactic to force generators to lower
prices.  Should the bill get passed in its current form, we believe CPN, MIR
and NRG's exposure is limited by their power sales contracts.  Regardless,
the bill presents interesting federal/state jurisdictional issues, which
could form the basis for a legal challenge.

3. AES: Time for Investors to Take "Another Look"   On Friday, AES hosted a
conference call to address investor concerns regarding Latin America.  On
the call, management reaffirmed its prior guidance for 2001 of $1.75 -
$1.90.    While we acknowledge the risks presented by the Brazilian
situation and the potential for additional negative catalysts, in our view,
given current price levels, now is an ideal time for investors to take
"another look" at AES.  The stock is trading close to its 52 week valuation
trough.  Indeed, we believe it is safe to assume that the market has already
priced-in an earnings disappointment.  AES's 52 week median 2001 P/E is
27.8x.  If we regard this level as AES's normalized valuation, the market is
implying that it will earn about $1.59 in 2001-16% below our base case
estimate and 6% below the bottom-end of management's range of guidance.  See
our FC note issued today for more details.
4. Looking Ahead: Mirant Hosting Analyst Meeting on 5/14 and 5/15   MIR will
host its first major analyst seminar on May 14 and 15 in Atlanta.  We
believe the meeting will be an important catalyst for the stock.  MIR is
currently trading at 22.2 times our 2001 EPS estimate, representing a 17%
discount to the group average.  Since the beginning of the year, earnings
expectations for Mirant have increased by 73%.  We believe MIR's relative
valuation discount reflects investor confusion surrounding the drivers of
the recent upside as well as skepticism surrounding the sustainability of
earnings growth over the next few years.  We believe management will address
these issues at the analyst meeting, which should help close some of the
valuation gap between MIR and its peers.
Regards,

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





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 - IPW051401.pdf