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Enron Mail |
Cc: cooper.richey@enron.com, alan.comnes@enron.com, paul.kaufman@enron.com,
tim.belden@enron.com, richard.shapiro@enron.com, jeff.dasovich@enron.com, susan.mara@enron.com, sandra.mccubbin@enron.com, david.parquet@enron.com, mary.hain@enron.com, joe.hartsoe@enron.com, james.steffes@enron.com, sarah.novosel@enron.com, peggy.mahoney@enron.com, mary.hain@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: cooper.richey@enron.com, alan.comnes@enron.com, paul.kaufman@enron.com, tim.belden@enron.com, richard.shapiro@enron.com, jeff.dasovich@enron.com, susan.mara@enron.com, sandra.mccubbin@enron.com, david.parquet@enron.com, mary.hain@enron.com, joe.hartsoe@enron.com, james.steffes@enron.com, sarah.novosel@enron.com, peggy.mahoney@enron.com, mary.hain@enron.com X-From: Alan Comnes X-To: Steven J Kean, DWatkiss@bracepatt.com X-cc: Cooper Richey, Alan Comnes, Paul Kaufman, Tim Belden, Richard Shapiro, Jeff Dasovich, Susan J Mara, Sandra McCubbin, David Parquet, Mary Hain, Joe Hartsoe, James D Steffes, Sarah Novosel, Peggy Mahoney, Mary Hain X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf Steve, Dan W. et al: (Dan, can you make sure these charts get to Steve?) Attached are some updated charts that are more accurate with respect to Enron's current estimated cost of peakers in California. Costs are up and, to the extent you use these types of charts, you should use these updated ones. If you do not, this information will get attached somehow to our November 22 comments. In general, the higher the cost to build, the worse a price cap looks in terms of disincentives to pursue a project. Background on the Change: Our origination people (Chris Calger) inform us that building a peaker plant in California is now more expensive than Enron estimated back in August. These "August" numbers were circulated in a presentation by Tim Belden and were filed with the FERC. The peaker charts to reflect a 25% increase in capital costs. An increase in costs is due to things such as: longer development time (Cal ISO has dragged out the schedule) local permitting constraints (sound abatement, strict construction schedules) labor costs in California emission offset credit costs are higher than previously expected These higher costs, along with the uncertainty created by price caps, has caused Enron to stop pursuing certain peaker, including Pleasanton. Although price caps increases uncertainty and increases the cost of capital, I have not updated the charts to reflect a higher cost of capital as a conservatism. Alan Comnes
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