Retail Short update ,
 Thomas,

Ben and I had a meeting with Don on Tuesday. Please see below for the summary 
of meeting:

ENA would sell to an IPP (AES or Calpine) a combination of EES short position 
and peaking turbines.

ENA would generate profit from;
 1. spread between buying power from the IPP and selling it to EES at premium 
- will be very thin
 2. having a call option on the peaking plant for the portion of excess 
capacity of the plant
 3. fees from EES or/and IPP for providing/arranging capacity/off-taker
 4. better project financing by leveraging up more and having lower debt 
cost, which would be possible by having off-taker (EES) - Not quite sure yet.

Next steps/Assumptions;
 1. Assume equity IRR of 12% after tax
 2. Match assets to EES load curve
 3. Dispatch assets into market when not to meet load @ENA curve ("RevenueM")
 4. Calculate transfer price to meet load ("RevenueL") to meet equity return 
objectives of 12%
 5. Compare "RevenueL" to EES's market position
 6. Find Scaler value (option value from volatility)
 7. Calculate book earning for bid package
 --> We try to have work of 1 to 4 done by Thursday (2/24). Next meeting with 
Don is scheduled on Thursday.

Regarding our starting point of NY East, EES has short position ranging from 
0 MW to 126 MW in NY East region for next 11 years. I attached Excel file 
which shows an analysis of NY East including load graph.

To read EES data correctly, see the below definition.
 - WD: weekdays, WE: weekends.
 - Each 4 hour block number shows average load for 4 hour block, so actual 
peak load is higher than that.

Idea of sharing data with East Coast Power: Don does not mind if we 
distribute EES data internally within Enron, but he does not want data to go 
to Elpaso. He does not know Brad Alford.

Jinsung
(Ext: 37330)
thomas.suffield@enron.com