Re: CAP no MAE

Just to keep you posted on some of the ongoing discussions

LM
---------------------- Forwarded by Luiz Maurer/SA/Enron on 05/21/2001 06:43
PM ---------------------------

David M Rosenberg
05/21/2001 10:20 AM
To: Luiz Maurer/SA/Enron@Enron
cc: Joao Carlos Albuquerque/SA/Enron@Enron, Orlando Gonzalez/SA/Enron@Enron,
Sergio Assad/SA/Enron@Enron, Fred Sampaio/SA/Enron@Enron, Britaldo
Soares/SA/Enron@Enron, Brett R Wiggs/SA/Enron@Enron, Remi
Collonges/SA/Enron@Enron

Subject: Re: CAP no MAE

Luiz,

Thanks again for maintaining a voice of sanity.

In my not so humble opinion, it is commercial suicide for us to even give the
appearance of supporting price caps. I can't think of any other situation
anywhere in the world where Enron has supported price caps in a market. To
the contrary, we are almost always public in our opposition to such
market-killing sophistry.

Consensus is a noble objective, but sometimes it is just better to let people
know your true opinion.

--DMR

Luiz Maurer
20/05/2001 23:16
To: Joao Carlos Albuquerque/SA/Enron@Enron
cc: Orlando Gonzalez/SA/Enron@Enron, Sergio Assad/SA/Enron@Enron, Fred
Sampaio/SA/Enron@Enron, Britaldo Soares/SA/Enron@Enron, Brett R
Wiggs/SA/Enron@Enron, Remi Collonges/SA/Enron@Enron, David M
Rosenberg/SA/Enron@Enron
Subject: Re: CAP no MAE

I strongly disagree

"If it is impossible to reach an agreement within ABRADEE",, then we should
be loud an clear in expressing our own view, to all levels of government
including a position paper to Pedro Parente asap. Caps at this point in
time may jeopardize the rationing plan per se. We had a victory in anchoring
the penalties to the MAE price. Why surrender it now?

Why do we have to abide by ABRADEE's desires?

This is not a religious issue only. There are a few US$ million left on the
table.

How many US$ million are on the table for Enron?

- Ballpark, possibly US$20f or Elektro's long position (60 in EBITDA *
(680-460)/680)
- A lot, lot more for Eletrobolt (perhaps to the point of killing the
project, as Joao Albuquerque stated)

Are we being consistent? About a week ago, we submitted our views to ANEEL,
on Public Hearing 02/2001, advocating for an increase in the cost of defict
to US$ 2350/MWh. The trading group (Remi, David) were adamant about this
position submitted by Regulatory Affairs (I think they are right)

Are we acting to the best interest of our shareholders?

LM

Joao Carlos Albuquerque
05/20/2001 11:40 AM
To: jmazon@elektro.com.br, Orlando Gonzalez/SA/Enron@Enron, Sergio
Assad/SA/Enron@Enron, Luiz Maurer/SA/Enron@Enron, Fred Sampaio/SA/Enron@Enron
cc: Britaldo Soares/SA/Enron@Enron, Brett R Wiggs/SA/Enron@Enron

Subject: CAP no MAE

Algumas empresas de distribui??o short em 02 e 03 est?o defendendo fortememte
CAP no MAE, bem abaixo do custo do d,ficit ( cerca de R$ 680). ( CERJ,
Cataguases, LIght est? em cima do muro, etc...)

Se for inevit?vel, nossa posi??o deve ser:

- N?O PODE SER INFERIOR AO PRE_O PRATICADO NO PRE-RACIONAMENTO ( R$ 460,00 )
- N?O PODE SER INFERIOR ? MAIOR TARIFA COBRADA DOS CONSUMIDORES ( TROS
VEZES A TARIFA RESIDENCIAL ATUAL - 200% SOBRE A MESMA, PARA CONSUMOS ACIMA
DE 500 KWh POR MOS) .

Mazzon, calcule a ordem de grandeza deste valor. _ importante termos isto em
mente quando formos falar com as autoridades amanh? e, em especial com Mauro
Arce.

Lembrar, ainda, que um CAP baixo, sem FLOOR, pode matar ELETROBOLT, uma vez
que as receitas que esta auferiria em 2002 n?o compensariam o decr,scimo das
mesmas de 2003 em diante, quando, com a redu??o de mercado devido ao
racionamento e o aumento de entrada de novas fontes de gera??o, tamb,m
incentivada pelo racionamento, poder? derrubar fortemente os pre?os do MAE.
N?o devemos nos esquecer que o per?odo de amortiza??o de ELETROBOLT , de
cinco anos.

Jo?o Carlos