|
|
Enron Mail |
Good Morning,
Attached, please find the latest issue of our Independent Power Weekly. <<IPW071601.pdf<< Summary: 1. IPPs Fall 1.9% Last week our IPP composite fell 1.9%, underperforming both the NASDAQ (+4.0%) and the S&P 500 (+2.1%). Calpine was the strongest performer in the group, rising 4.5%. AES was the weakest performer, falling 9.5%. 2. 4 Items to Focus On In our view, there were four items worth focusing on from last week: 1.) AES fell 10% owing to Latin American concerns. We see downside to our 2001 estimate; 2.) The FERC settlement conference adjourned on July 9. On July 12, the presiding ALJ issued a recommendation favorable to generators; 3.) On July 12, the US bankruptcy court approved Calpine's settlement with PG&E; and, 4.) On July 10, NRG Energy announced it would acquire a 2,255 MW portfolio from Indeck. 3. Latin America Pressuring AES Earnings The likelihood of downside to our 2001 EPS estimate for AES. Corp. of $1.89 has increased materially. We believe the ongoing currency weakness combined with power rationing have the potential to negatively impact 2001 EPS by $0.25-$0.30 versus prior expectations-on a stand-alone basis. While management indicated in mid-May that it could offset weakness in Brazil, the currency has materially depreciated since that time and shows no signs of improvement in the near-term. AES's second quarter earnings conference call will take place on July 26. Following the call, we will adjust our 2001 estimate accordingly, unless management indicates that it remains positioned to offset these items through upside in other parts of its business. 4. FERC ALJ Issues Report On Thursday (7/12), Curtis Wagner, the Administrative Law Judge who presided over the recent settlement conference, issued a report presenting his findings and recommendations for next steps. Overall, the report was very much consistent with our expectations. While Wagner notes that some refunds are due from the generators, he argues that the $8.9 billion demanded by the State of California "cannot be substantiated." We believe Calpine and Mirant offer the greatest downside protection from this issue. 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 This message is for the named person's use only. It may contain confidential, proprietary or legally privileged information. No confidentiality or privilege is waived or lost by any mistransmission. If you receive this message in error, please immediately delete it and all copies of it from your system, destroy any hard copies of it and notify the sender. You must not, directly or indirectly, use, disclose, distribute, print, or copy any part of this message if you are not the intended recipient. CREDIT SUISSE GROUP and each of its subsidiaries each reserve the right to monitor all e-mail communications through its networks. Any views expressed in this message are those of the individual sender, except where the message states otherwise and the sender is authorised to state them to be the views of any such entity. Unless otherwise stated, any pricing information given in this message is indicative only, is subject to change and does not constitute an offer to deal at any price quoted. Any reference to the terms of executed transactions should be treated as preliminary only and subject to our formal written confirmation. - IPW071601.pdf
|