Re: EPE Dispatch

Could you attempt to get Lucio to respond?

Thanks

Rob
---------------------- Forwarded by Rob G Gay/NA/Enron on 12/20/2000 04:54 PM
---------------------------

Rob G Gay
12/19/2000 09:49 AM
To: Jose Lucio Reis/SA/Enron@Enron
cc: Tracee Bersani/HOU/ECT@ECT, Richard A Lammers/SA/Enron@Enron

Subject: Re: EPE Dispatch

Could you please take a moment to rspond on the attached. Thanks You
---------------------- Forwarded by Rob G Gay/NA/Enron on 12/19/2000 09:21 AM
---------------------------

Christiaan Huizer@ENRON_DEVELOPMENT
12/19/2000 06:20 AM
To: Rob G Gay/NA/Enron@ENRON
cc: Laine A Powell/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Richard A
Lammers/SA/Enron@Enron, Tracee Bersani/HOU/ECT@ECT@ENRON, Felipe
Ospina/NA/Enron@ENRON

Subject: Re: EPE Dispatch

Rob,

Regarding items 1 and 2, please contact Lucio Reis in Sao Paulo office and he
can explain.

Item 3 is incorrect. The 300 MW would be generated by the two gas turbines at
about 100 MW each and the remaining 100 MW coming from the steam turbine. The
steam turbine receives its energy from the exit gases from the gas turbines
and they both contribute equally to the resulting steam turbine output
(theoretically at least, in practice depending on optimization of machines)

Again, please talk with Lucio.

Regards,

Christiaan

Rob G Gay@ENRON
12/18/2000 04:41 PM
To: Laine A Powell/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Christiaan
Huizer/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Richard A Lammers/SA/Enron@Enron
cc: Tracee Bersani/HOU/ECT@ECT
Subject: EPE Dispatch

Here is what we have concluded based on discussions this morning:

1) We believe that Furnas has agreed to contract and pay for 300 MW on oil to
meet regulatory requirements concerning required capacity and reserve
margin. We do not believe that they intend for us to be dispatrched above
220 MW. (Do we have any document which could substantiate this?)

2) Although dispatch on a merit order basis would suggest that EPE runs full
time (with 300 MW available), there are practical constraints in the
transmission system which will prohibit this from actually occuring. [ Please
describe these constraints using some official sounding jargon but minimal
detail and in particular indicate what is involved to de-bottleneck and how
long this will take. I presume that Furnas is solely responsible for the
corrective measures.]

3) Based on our analysis, the optimal operating approach would be to generate
220MW with one turbine and 91 MW with the other for a total of 311 if
dipatched above 220 MW.

If we can prove that 1) & 2) are correct or convince the lenders that they
are, then I think we can suggest that fuel oil exposure is negligibe if gas
is ready by April 01. We will have to see how it looks when we add the Sue
Garvin flex months.

Therefore, a merit order analysis is only necessary if i) our supposition
about Furnas' motivations are incorrect and/or ii) the transmission problem
is cleared. If this happens it would be nice to be able to predict reduced
fuel utilization due to a) reduced dispatch during daily off-peak hours or
seasonal impacts, b) due to scheduled outages, and c) due to managing our
availabilty in such a way as to reduce fuel consumption operating losses.
Any data you can provide will be helpful.

Have I successfully connected the dots here?

If you have previously sent these materials to Felipe or Tracee please simply
grumble to yourself if you have to do an extra e-mail to me. Remember, you
don't have to be nice to a short timer unless you need them to get something
done.

Regards,

Rob