RE: TW Station 1 Heat Recovery

Will come and talk to you tomorrow and we might need to pull in Ron Matthews and David Roensch for their expertise.

DS

-----Original Message-----
From: Millar, John
Sent: Tuesday, August 21, 2001 4:31 PM
To: Schoolcraft, Darrell
Subject: TW Station 1 Heat Recovery

Daryl, I thought it may be more efficient to compose my question in an e-mail.

I am developing a project at this station in which the exhaust from the new LM 2500 gas turbine could be used to generate up to 15 megawatts of electricity. After several weeks of engineering and financial analysis, I am now beginning to market the project to prospective counter-parties including local utilities and cooperatives.

One issue that will certainly be discussed is the risk of the LM 2500 not producing enough exhaust to generate the contracted amounts of electricity. This could occur because of either mechanical failure or loss of throughput in Transwestern's pipeline. In the latter case, Transwestern could choose several alternatives to transport reduced volumes of gas to the CA border including reducing the horsepower in some or all stations uniformly or shutting down and bypassing some stations while others run at normal speed. If I did this deal, naturally, I would want Station 1 to run as much as possible so I would have the exhaust needed to generate the electricity I've sold. Otherwise I pay penalties.

My question to you is... if volumes through TW were to decline, say 25% or so below design rate, would it be possible to keep Station 1 going at 100% and cut other stations back or does that just not make any sense?

Come by when you're ready and we'll discuss.

Thanks,

John