fw : csfb independent power weekly - issue # 32 - - - - - original message - - - - -
from : " sifert , bryan " @ enron [ mailto : imceanotes - + 22 sifert + 2 c + 20 bryan + 22 + 20 + 3 cbryan + 2 esifert + 40 csfb + 2 ecom + 3 e + 40 enron @ enron . com ] on behalf of " stein , neil "
sent : monday , june 25 , 2001 6 : 34 am
to : undisclosed - recipients : ; @ enron
subject : csfb independent power weekly - issue # 32
good morning ,
attached , please find the latest issue of our independent power weekly .
> >
summary :
1 . ipps fall 10 . 4 % last week our ipp composite fell 10 . 4 % , underperforming
both the nasdaq ( + 0 . 3 % ) and the s & p 500 ( + 0 . 9 % ) . international power was
the strongest performer in the group , rising 1 . 7 % . shaw group was the
weakest performer , falling 18 . 1 % .
2 . same old story - - politics last week ' s lackluster stock price performance
reflected lingering political and regulatory uncertainties . these concerns
were heightened by the ferc ' s latest order issued on monday ( 6 / 18 ) , calling
for expanded price controls in the western markets . in addition , the
subject of retroactive refunds received renewed attention .
3 the litmus test : impact on forward earnings , returns and growth rates in
our view , the market ' s litmus test for evaluating these stories must focus
on whether any event has taken place that negatively impacts forward
earnings , returns or growth rates for the sector . our analysis of recent
events points to an unchanged forward earnings profile for the sector . on
that basis , we regard the recent stock price activity as irrational .
4 . significant roic possible under ferc plan under a best case scenario ,
assuming power prices remain at their maximum allowable levels under a power
emergency , we estimate that a new combined cycle natural gas - fired power
plant can earn up to a 68 % roic . under a more likely scenario , assuming
average power prices approximate 60 % of the maximum allowable level , such a
plant could earn a 25 % roic . importantly , 2 - 3 years ago , power plant
developers were predicating their investment decisions on a targeted 12 %
roic . we have attached a spreadsheet containing our analysis .
5 . ferc settlement conference begins today today a ferc hosted settlement
conference will begin , bringing together california power generators and
utilities . the goal will be to get the parties to arrive at an agreement on
this issue of refunds and the repayment of past receivables . while the
possibility of retroactive refunds presents some uncertainties for the
ipp ' s , we believe closure on this issue could be imminent . the settlement
conference may bring some resolution to the situation . regardless , if no
agreement is reached , ferc will issue a final decision on this matter .
6 . rri analyst meeting on tuesday on tuesday ( 6 / 26 ) , reliant resources
will host its first major analyst meeting since its april 2001 ipo . at the
meeting we expect management to clarify its longer - term exposure to ferc ' s
expanded price controls .
7 . csfb hosting lunch with uk chief regulator on friday on friday ( 6 / 29 )
at noon , csfb will be hosting a luncheon with callum mccarthy , chief
executive of the uk office of gas and electricity markets ( ofgem ) . in his
position , mccarthy serves as the chief power and gas regulator in the uk .
the luncheon will take place at our offices at 11 madison avenue on the 27 th
floor . please contact us if you would like to attend .
regards ,
neil stein 212 / 325 - 4217
bryan sifert 212 / 325 - 3906
this message is for the named person ' s use only . it may contain
confidential , proprietary or legally privileged information . no
confidentiality or privilege is waived or lost by any mistransmission .
if you receive this message in error , please immediately delete it and all
copies of it from your system , destroy any hard copies of it and notify the
sender . you must not , directly or indirectly , use , disclose , distribute ,
print , or copy any part of this message if you are not the intended
recipient . credit suisse group and each of its subsidiaries each reserve
the right to monitor all e - mail communications through its networks . any
views expressed in this message are those of the individual sender , except
where the message states otherwise and the sender is authorised to state
them to be the views of any such entity .
unless otherwise stated , any pricing information given in this message is
indicative only , is subject to change and does not constitute an offer to
deal at any price quoted .
any reference to the terms of executed transactions should be treated as
preliminary only and subject to our formal written confirmation .
- ipwo 62501 a . pdf
- roic _ under _ ferc . xls