west power orig update las vegas :
allegheny ' s bid was strong but required a financing out for 45 days - unacceptable . black hills ' bid has a clean purchase and sale markup with a bid that implies a $ 35 mm gain for ena ( $ 10 mm has to go to calpers since they are an investor in lv 1 ) . they are going to their board thursday and want to execute by early next week and close aug 31 . we will try to get a higher bid from northland this week ( $ 40 mm gain ) . they will require a two - week financing out which they will secure with a $ 10 mm non - refundable deposit . if we sign with northland , they can close in july .
in either case , accounting may require us to recognize this income this quarter because las vegas is a fair market value investment . rac requires a dash to sell an asset of this size - we will circulate on wednesday or thursday .
one long shot deal we are proposing to allegheny : tear up the existing 15 year toll backed by the las vegas project . enter into a 15 year firm energy sale from epmi at palo verde . the value of that deal may be in excess of $ 100 mm since the market has fallen so much . if we did that , we would have a merchant asset that would have to be sold at or near cost - this is achievable . this would be significantly riskier than our current plan and would probably require board approval , but the value makes it worth exploring .
amps :
we continue to push geneva steel and oregon steel for permitting info . west power markets have fallen further so the economics are marginal at best . friday ' s curves suggested a value of $ 10 mm vs a cost of $ 17 mm . an imperfect put swaption would cost $ 4 mm , further eroding the value . i spoke to brett wiggs on friday and forwarded him technical specs and reviewed different deal structures that might work .
dwr :
they announced thursday that they have signed more definitive long term deals that they will honor ( approx 6 , 500 mw long term ) . the non - binding " agreements in principle " will be renegotiated because prices have fallen so much . dwr signed our master agreement for short term deals but tim does not want to execute it because of litigation risk . we will not do anything with them at this time .
generator tolls : interest has fallen off due to rapid drop in power prices . we are still talking with 6 - 7 parties , but i dont think anything will get done soon .
munis : mcdonald got a small term sale done at np - 15 with city of lassen . approx $ 600 k of orig .
new marketing initiatives :
negotiating 3 generator service agreements . mostly small plants coming on line this year . the entrepreneurs behind these deals are shell shocked by the low prices , but many have already committed capital .
montana : - state forced divestiture of generation . retail load is short starting july 1 , 2002 . governor ' s office has asked us to bring a 700 mw 10 year " solution " . they are willing to issue a $ 500 mm bond to prepay and buydown part of the energy . the basic play is to swap an epmi mid - c position for an in - state position from ppl , package that up with some renewables and sell to the state under a prepaid ppa . long shot but interesting .
ca industrials : a group of industrials want to buy up to 800 mw np - 15 delivered for 5 + years as part of a negotiated settlement with ca . gov affairs is working on a core / non - core structure with the state that would potentially lead to open access for all industrial load if they pay a big exit fee to cover the stranded costs incurred during the past 12 months .
west power orig update
las vegas :
allegheny ' s bid was strong but required a financing out for 45 days - unacceptable . black hills ' bid has a clean purchase and sale markup with a bid that implies a $ 35 mm gain for ena ( $ 10 mm has to go to calpers since they are an investor in lv 1 ) . they are going to their board thursday and want to execute by early next week and close aug 31 . we will try to get a higher bid from northland this week ( $ 40 mm gain ) . they will require a two - week financing out which they will secure with a $ 10 mm non - refundable deposit . if we sign with northland , they can close in july .
in either case , accounting may require us to recognize this income this quarter because las vegas is a fair market value investment . rac requires a dash to sell an asset of this size - we will circulate on wednesday or thursday .
one long shot deal we are proposing to allegheny : tear up the existing 15 year toll backed by the las vegas project . enter into a 15 year firm energy sale from epmi at palo verde . the value of that deal may be in excess of $ 100 mm since the market has fallen so much . if we did that , we would have a merchant asset that would have to be sold at or near cost - this is achievable . this would be significantly riskier than our current plan and would probably require board approval , but the value makes it worth exploring .
amps :
we continue to push geneva steel and oregon steel for permitting info . west power markets have fallen further so the economics are marginal at best . friday ' s curves suggested a value of $ 10 mm vs a cost of $ 17 mm . an imperfect put swaption would cost $ 4 mm , further eroding the value . i spoke to brett wiggs on friday and forwarded him technical specs and reviewed different deal structures that might work .
dwr :
they announced thursday that they have signed more definitive long term deals that they will honor ( approx 6 , 500 mw long term ) . the non - binding " agreements in principle " will be renegotiated because prices have fallen so much . dwr signed our master agreement for short term deals but tim does not want to execute it because of litigation risk . we will not do anything with them at this time .
generator tolls : interest has fallen off due to rapid drop in power prices . we are still talking with 6 - 7 parties , but i dont think anything will get done soon .
munis : mcdonald got a small term sale done at np - 15 with city of lassen . approx $ 600 k of orig .
new marketing initiatives :
negotiating 3 generator service agreements . mostly small plants coming on line this year . the entrepreneurs behind these deals are shell shocked by the low prices , but many have already committed capital .
montana : - state forced divestiture of generation . retail load is short starting july 1 , 2002 . governor ' s office has asked us to bring a 700 mw 10 year " solution " . they are willing to issue a $ 500 mm bond to prepay and buydown part of the energy . the basic play is to swap an epmi mid - c position for an in - state position from ppl , package that up with some renewables and sell to the state under a prepaid ppa . long shot but interesting .
ca industrials : a group of industrials want to buy up to 800 mw np - 15 delivered for 5 + years as part of a negotiated settlement with ca . gov affairs is working on a core / non - core structure with the state that would potentially lead to open access for all industrial load if they pay a big exit fee to cover the stranded costs incurred during the past 12 months .