RAB Graph

---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 08/22/2000
09:35 AM ---------------------------

Michael Anderson @ AZURIX
08/22/2000 08:36 AM

To: Vince J Kaminski/HOU/ECT@ECT
cc:
Subject: RAB Graph

I believe this will be helpful in your analysis.

---------------------- Forwarded by Michael Anderson/HOU/AZURIX on 08/22/2000
08:35 AM ---------------------------
From: Keith Harris/WSX/AZURIX@Exchange on 08/03/2000 01:40 PM GDT
To: Michael Anderson/HOU/AZURIX@AZURIX
cc: Colin Skellett/WSX/AZURIX@Exchange

Subject: FW: Amended Index Graph

Michael

I have got CSFB working on the amendment you asked for.

In the meantime we have produced a graph which shows, as indices, market
values of the water companies and the RAB of the industry since
privatisation. The following points come out
1 Market values overtime have been 1.1x RAB
2 The result is significantly skewed by the period between Mid 1997 and end
1998 when the ratio was c1.5x.
3 The premium to RAB is only found at a time when political uncertainty has
been removed the companies are able to outperform the regulatory deal
significantly. Those days are gone - a fact witnessed by the decline in
share prices in the last year

Just to note that the graph we have produced here is a weighted average of
water companies - whereas the figures we did yesterday on the RAB market
value ratio is a straight average. Obviously that influences the numbers a
little.

On CustomerCo. CSFB have contacted around 7 energy companies. The result
has been positive and they are prepared to enter our journal exercise. I
await a revised fee proposal but CSFB have been advised that it should be
more modest than the last one !

Keith

-----Original Message-----
From: David Kitchener
Sent: 03 August 2000 13:27
To: Keith Harris
Subject: Amended Index Graph