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Enron Mail |
-----Original Message-----
From: Tribolet, Michael Sent: Saturday, April 28, 2001 1:23 PM To: 'jwilson@saybrook.net' Subject: Comments on MOU/SCE memo of April 20, 2001 As we discussed, here are my comments/questions on the presentation. 1. On page 17, in 2003-4, the DWR purchases $4.7B in power. The MOU states that SCE would be obligated for purchased power beginning in 2003. 2. On page 17, the debt service figure did not tie to the footnotes. Using both the $2.7B and $1.5B DWR note issuances, the annual debt service is approximately $430 mln per year on a mortgage type amortization and about $500 million per year on a straight-line amortization. The table indicates approximately $750 mln per year in debt service. Was the $3B SCE issue's debt service accidentally captured in these figures? 3. The SCE day one pre-tax sources appear to be : Bond issuance by SCE $3,000 mln Payment by parent $ 400 mln (at least) Sale of transmission $2,760 mln Total SCE inflows $6,160 mln What is needed is the model that shows that the original 4.9 cents covers cost of service and QF's, plus debt service, after these inflows reduce the current debt and past due vendors amounts. We have no way to test the sufficiency of these amount versus a pro-forma debt structure. 4. The MOU states that SCE shall securitize its full net undercollected amount (approx. $3.5 billion), yet the presentation shows a $3B financing. What is the difference? 5. We need the economic assumptions on the DWR power purchases (volume, tenor, cost, etc.) 6. Is the total consumption figure listed prior to the 3% buydown or after giving effect for it (pages 27 to 29)? 7. The transmission sale to the State of California's SPV does not appear to finance itself at the current rates of return. If the current pretax, pre interest return is approximately 13%, the return after giving effect for the 2.3x purchase price is only about 5.5%. This does not appear to be sufficient to service the associated debt. Regards, Michael A. Tribolet
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