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Enron Mail |
Interesting idea! Hopefully we can find a simpler approach, but I don't see
any inherent problem with something like that if it seems to make the most financial sense. Thanks. df From: Mary Kay Miller 02/18/2000 07:18 AM To: Drew Fossum/ET&S/Enron@ENRON cc: Subject: Re: Pueblo How about doing something along the lines of what we did with UCU on NBPL in phanthom equity stock? or something like that-- Mike worked on that deal and I'm not sure who else- MK From: Drew Fossum 02/17/2000 05:50 PM To: Steven Harris/ET&S/Enron@Enron, Kevin Hyatt/ET&S/Enron@Enron, Lorraine Lindberg/ET&S/Enron@ENRON cc: Mary Kay Miller/ET&S/Enron@ENRON, Susan Scott/ET&S/Enron@ENRON, Maria Pavlou/ET&S/Enron@ENRON Subject: Pueblo I heard from Tino this afternoon and here's what's going on: 1. Tino has been focused exclusively on right of way issues. He's been flying around in helicopters, etc. and not worrying about much else. They've got environmental people already doing non-field work on possible routes, like checking for available turtle studies and cultural resource stuff. Dennis has been focused on the political angles (apparently) and has purportedly gained some additional intelligence about PNM's effort to get DOE to re-up their contract for a new two year term. Tino says DOE told PNM to pound sand and will continue to take service under month-to-month rollover of the existing PNM-DOE contract until some alternative (i.e., Dennis) comes along. 2. Tino wants to get deeper into talking to us about possible deal structures very soon. This topic includes at least three things: (1) how to structure the ownership of the pipeline to maximize Enron and Dennis finincial upside; (2) how to structure ownership of the power plant and related facilities to maximize Enron and Dennis financial upside, while satisfying DOE on Indian ownership, and (3) how to streamline the regulatory approval process. An example of the concerns Tino and Dennis are focused on is "if the pipeline has a regulated rate of return, but the power plant has to share profit with the Tribe ownership entity, where do we put the bulk of the return???" Also of concern is how we cut Dennis in on a slice of upside--stock in Enron? Profit sharing on the power plant or pipeline ownership entity? Something else? 3. What do the economics look like? This is obviously a threshold question that we ought to be moving toward an answer on for ourselves, even if we aren't in a position yet to share the information. Specifically, given what we know about the likely cost of the pipeline, and the likely capital cost and heat rates of the turbines ENA has available, and what we know about forward gas curves, and what we know about how much power PNM supplies to DOE and at what rate (from the document Tino gave us in KC and PNM's tariff), do we think we can build this thing and beat PNM's current price to DOE? Can we beat it by 10%? Can we beat it by 10% and have enough $$$ to sweeten the deal for the Tribe (partly because that would make it more attractive to DOE)? I suggested to Tino that he ought to put together a list of the issues that they are working on and that they think we should be working on and what the critical path issues and decisions are. If we do the same, then we'd be in a position to get another meeting together and have a productive agenda and find out if this project has real potential or not. Bottom line, I think if our analysis of question 3 is that we can hit decent RAROC numbers and still undercut PNM's existing DOE contract and cut the Tribe in on a decent share of the power plant upside, we ought to move forward aggressively. DF
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