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Dave, we need to get this moving before the coal group starts occupying the
space. Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 01/19/2001 09:32 AM --------------------------- David W Delainey 01/19/2001 09:28 AM To: Doug Leach/HOU/ECT@ECT, Randal Maffett/HOU/ECT@ECT, Michael J Beyer/HOU/ECT@ECT, George McClellan/HOU/ECT@ECT, Jeffrey A Shankman/HOU/ECT@ECT, W David Duran/HOU/ECT@ECT cc: Subject: Re: coal plants Guys, I am in complete agreement on the strategy. This has been discussed for some time, Dave Duran and his group have distinct goals to move this strategy forward in 2001. Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 01/19/2001 09:30 AM --------------------------- From: Doug Leach 01/19/2001 08:19 AM To: David W Delainey/HOU/ECT@ECT cc: Subject: Re: coal plants fyi--see attached ---------------------- Forwarded by Doug Leach/HOU/ECT on 01/19/2001 08:23 AM --------------------------- From: Doug Leach 01/16/2001 05:26 PM To: Michael J Beyer/HOU/ECT@ECT cc: Randal Maffett/HOU/ECT@ECT, Tom Briggs/NA/Enron@Enron Subject: Re: coal plants Since Randy knows alot about power by wire I guess I under estimated the costs/feasibility of my mine mouth strategy. Still seems to make sense to promote clean buring coal plants to reduce America's dependence on foreign oil or straining a maxed out natural gas system. Is this something we should have Tom Briggs in the Enron Washington, DC office push? ---------------------- Forwarded by Doug Leach/HOU/ECT on 01/16/2001 05:22 PM --------------------------- Randal Maffett 01/16/2001 04:58 PM To: Doug Leach/HOU/ECT@ECT cc: Subject: Re: coal plants B'fast Friday looks fine, it's on the calendar! Re: the coal strategy, you're exactly right. There is however one major impediment. While locating the plant near/at the source (i.e., mine-mouth) will ease transport costs for coal, there aren't many major coal mines located in the prime market zones for power. The transmission (wires) grid was not built to accomodate wholesale bulk trading/transport the way gas does and the impediments to expanding the grid are enormous (infinitely more so than building new plants). For example, the average lead time to permit (not built, just permit) a high-voltage power line is 5-7 years! As a result, a medium sized line (345kv, 200 miles) can cost upwards of $1-2 billion! That was the most frustrating part of the 18 months I chased this stuff. While the basic solutions appear to be so logical, the business (the utilities), regulatory and environmental regimes are so backwardated in their thinking that breaking in was basically impossible. Unless we're willing to put a billion $ at risk for 5-7 years on a merchant basis! (NOT!) Hell, you can't even get $100 million for your refinery deal! Solving the power supply shortage is only part of the equation and your coal idea is legitimate as new technology can burn coal almost as clean as gas. But until the FERC and state PUCs force the issue of expanding the grid to become a more "fungible" and integrated transmission system, the utilities will continue to operate in their vacuum as these transmission barriers are the only things protecting their turfs. Even though some have given the appearance of forming RTO's/ISO's (regional transmission organizations or independent system operators) this is simply a facade of utilities banding together to cover each other's asses. The assets are still owned by the utilities themselves and the RTO/ISO has no authority to mandate expansion or anything requiring capital investment, other than routine maintenance, etc... That's the whole genesis of what I was trying to preach to FERC, various utilities who "appeared" to be more forward thinking about dereg, etc... Basically, you'd be trading one evil (transport for fuel) for another (transport for electrons) and I'm afraid the latter is infinitely more complex (engineering wise) and costly. See ya' Friday! From: Doug Leach 01/16/2001 04:22 PM To: Randal Maffett/HOU/ECT@ECT cc: Subject: Re: coal plants is this something Enron should revisit and not be so shortsighted? Beth scheduled us for breakfast on Friday morning at the Doubletree. Does that work for you? ---------------------- Forwarded by Doug Leach/HOU/ECT on 01/16/2001 04:21 PM --------------------------- To: Doug Leach/HOU/ECT@ECT cc: Jeffrey A Shankman/HOU/ECT@ECT, Marc De La Roche/HOU/ECT@ECT, Michael J Beyer/HOU/ECT@ECT Subject: Re: coal plants Doug -Mike Beyer worked on this idea last summer. The problem we had was our need to focus on shorter term opportunities - and the bodies that would be required to do a good job. I know that ENA is / was looking at some brownfield opportunities - but I haven't heard of any developments. Thanks, George From: Doug Leach 01/16/2001 04:10 PM To: George McClellan/HOU/ECT@ECT cc: Jeffrey A Shankman/HOU/ECT@ECT, Marc De La Roche/HOU/ECT@ECT Subject: coal plants George, I'm sure I am way over simplifying this, but in light of current natural gas prices and the past success ENA had building six natural gas power plants wouldn't the same template work for building coal fired power plants in the US? I'm sure the choosing of potential sites and the overall permitting process is far more severe than the natural gas process, but it would seem Enron could and should be a leader in proposing new coal plants. Wouldn't it make sense to build a state of the art coal power plant closer to the actual coal supply, whereby we avoid the ever increasing transportation costs and then supply power by wire to surrounding states. States rich in coal reserves are always looking for more jobs which a new power plant would create and therefore may speed the permitting process along. Building the power transmission infrastructure across state lines may be cost prohibitive, but has this approach been analyzed by the coal group? Regards, Doug
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