Good Morning,

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

 <<IPW060401.doc>>

Summary:
1. IPPs Fall 4.0%   Last week our IPP composite fell 4.0%, underperforming
both the NASDAQ (+2.4%) and the S&P 500 (-1.1%).  Reflecting strong first
quarter earnings results, International Power was the best performer in the
group, rising 3.4%.  Calpine was the weakest performer, declining 10.3%.

2. New Issuance, Soft Power Prices and Political Questions Dampen Price
Performance   In our view, the group's recent lackluster stock price
performance reflects the following: 1) Pressure Resulting from Equity New
Issuance Activity; 2) Concern Over "Soft" Spot and Forward Power Prices;
and, 3) Lingering Uncertainty Surrounding the Power Shift in the US Senate.

3. Outlook Unchanged; Time to Focus on Valuation!   Despite the various
political and power market concerns, we believe the fundamental investment
outlook for the group remains strong.  While fixating on the various
political and power market concerns, we believe the market has not focused
enough on increasingly attractive current valuations.  We believe the
uncertainties surrounding re-regulation and political backlash are already
embedded in the stock prices.  While the pure play US IPP share prices have
increased 3.1% on average, our 2001 and 2002 EPS estimates have increased
nearly 25% and 24%.  Consequently, over the period the average P/E multiple
has declined by 17% and 20%, based on 2001 and 2002 EPS, respectively.
4. Embedded Expectations are Low   We draw 2 conclusions from the  above
data: 1. Stock prices reflect normalized power market conditions  2.
Re-regulation and backlash uncertainty are already reflected in stock
prices.
5. WSJ Article Questions CPN's Lack of Reserves   On June 1, 2001, an
article appeared in the Wall Street Journal highlighting the fact that CPN
has not taken reserves against nearly $267 million of receivables from PG&E.
In our view, CPN's rationale for not reserving against its PG&E receivables
is valid.  Versus the other major IPPs, CPN's PG&E exposure is unique in
that all of its current receivables have resulted from direct power sales to
PG&E under long-term contracts.  Regardless, it is important to put this
issue into perspective.  Even assuming a worst case scenario under which CPN
is unable to recover any of its PG&E receivables (highly unlikely), the
investment merits of the CPN story would be unaffected.  Failure to recover
would have no impact on CPN's future earnings power or growth rate.

Regards,

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



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 - IPW060401.doc