Re: DWR Stranded costs: $21 billion

Anyone in the market for a $400 hammer?

Alan:

I'd like to use the info ( i.e., "we think the contracts are $XX billion out
of the money") in the context of the negotiations that I'm in and I'd also
like to tell Hertzberg---it will provide a powerful and compelling case to do
something about the contracts in order to 1) save the State's rear end and 2)
ensure that the core/noncore structure remains alive. I wouldn't hand out any
paper showing any analysis. How long would it take to refine?

Best,
Jeff

Alan Comnes/ENRON@enronXgate
06/19/2001 07:01 PM

To: James D Steffes/NA/Enron@Enron, Jennifer Thome/NA/Enron@Enron, Ban
Sharma/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jeff Dasovich/NA/Enron@Enron
cc: Tim Belden/ENRON@enronXgate
Subject: DWR Stranded costs: $21 billion

I pulled the recent forward curves (confidential; not for external release
without approval from West Power) and computed the stranded costs associated
with the DWR contracts. Assuming SP15 on peak (which is conservative since
many of the contracts had off peak energy in them) the total overmarket is
$21 billion, or $13 billion discounted at 12%. The former number is most
comparable to the $40+ billion DWR expenditure commitement number.

If we want to use this for any sort of external message I would like to
refine further.

Alan