RE: Phoenix Q3 P&L Impacts

I have both days on my calender. I'll get TJ to resolve.

Thanks.

-----Original Message-----
From: Herndon, Rogers
Sent: Tuesday, September 04, 2001 6:19 PM
To: Presto, Kevin M.
Subject: RE: Phoenix Q3 P&L Impacts

I believe so. Is it Wed or Thurs? I have it as Thurs this week.

RH

-----Original Message-----
From: Presto, Kevin M.
Sent: Tuesday, September 04, 2001 5:55 PM
To: Herndon, Rogers
Subject: RE: Phoenix Q3 P&L Impacts

Rogers,

Are we are discussing the Phoenix project at this Wednesday's meeting? Is Terry going to be there?

-----Original Message-----
From: Herndon, Rogers
Sent: Tuesday, September 04, 2001 4:08 PM
To: Donovan, Terry W.; Black, Don; Richter, Jeff
Cc: Aucoin, Berney C.
Subject: RE: Phoenix Q3 P&L Impacts

Terry -

I think you need to copy Mary Lynn Ruffer, Wes Colwell, Wade Stubblefield, Presto, Belden, Lavo, Berney on these updates please. Jeff, Don - any others.

I am not sure I agree with Starwood. If we are going to write down the option (currently at $6MM) to $2.5 MM then I will take it in my book at greater value based on what you described. I think the negative impact should be no greater than $2MM. Let me know if something new has come up that would change my outlook.

As for TYCO, I think the verdict is still out on this as well. Some of the outstanding issues could reduce this negative somewhat. We should have a better feel by Thurs.

Overall, I want to reflect fair value on the re-books, not extreme conservatism. For example, on TYCO, I will not use NY Zone A for revenue purposes if the contract is unclear and does not force us to do this. We need to recognize any "issues" like this but I do not intend to write down any deal to worst case economics.

Terry - you may want to give a range of reasonableness on these forecasts.

Thanks,
Rogers

-----Original Message-----
From: Donovan, Terry W.
Sent: Tuesday, September 04, 2001 3:53 PM
To: Herndon, Rogers; Black, Don; Richter, Jeff
Subject: Phoenix Q3 P&L Impacts

I am currently building a spreadsheet to manage this information but know that it is important to get this out ASAP. This is obviously very sensitive information, who should be copied?

These are the potential P&L impacts from Project Phoenix rebookings by the end of Q3:

Gas Power Option Total

Starwood -4.5 -4.5MM

Chase -20.0 +7.0 -13.0MM

Springs +1.0 -12.0 -11.0MM

Tyco TBD -8.0 -8.0MM

Total +1.0MM -40.0MM +2.5MM -36.5MM

You have each received the summary of issues with Starwood and Tyco. A conversation regarding Springs is scheduled for this week. Chase is a few days away but the magnitude of the impact is large enough that I wanted to highlight it now. These are based upon best estimates to this point, I am attempting to establish the confidence interval on Chase and Springs power positions.

Hopefully we will be able to finalize rebookings of these transactions by the end of the quarter, along with MFG, Quebecor and Owens Illinois.

Please let me know if there are any questions.

Terry