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