Subject: UFTO NOTE — Conf. on Buying and Selling Generation Assets
Date: Tue, 18 Mar 1997
From: Ed Beardsworth

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| ** UFTO ** Edward Beardsworth ** Consultant
| 951 Lincoln Ave. tel 415-328-5670
| Palo Alto CA 94301-3041 fax 415-328-5675
| http://www.ufto.com edbeards@ufto.com
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This is a follow up to a note I sent you several weeks ago. The conference location has been changed from NYC to San Francisco (I’m told there wasn’t a hotel available in NY!)

NOTE Special arrangement–UFTO Members Discount.
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TO: Clients and Colleagues of Ed Beardsworth
FROM: Jim Naphas, Conference Manager, Infocast, Inc.
DATE: March 18, 1997

RE: Special 25% discount invitation FOR UFTO MEMEBERS
to attend an upcoming Infocast conference
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BUYING AND SELLING UTILITY GENERATION ASSETS

San Francisco Marriott, San Francisco, California, April 14-15, 1997

The era of deregulation brings with it much uncertainty, and one of the leading questions is the status of generation. A wave of generating asset transfers on an unprecedented scale is expected in the near future as a result of industry restructuring. This shuffling is creating a potentially monumental opportunity for today’s power industry players to buy, sell, or spin-off generation assets to improve competitiveness, or to enter this highly competitive market.

Infocast has assembled a group of experts from across the nation to address future market conditions, estimation of the value of generation assets in the new competitive era, the ever-changing regulatory waters, and financing of these deals. Enclosed is a descriptive brochure on this informative program for your review.

By special arrangement, Infocast is extending this special invitation allowing UFTO Member company personnel to register for this program at a 25% discount off the regular tuition. (Please note: if you are a government employee you qualify for the government discount of 40% only.) To receive the reduced tuition, just mention this email offer to the registrar when enrolling.

If you have any questions about the conferences, please feel free to contact Jim at (818) 902-5400.

We look forward to seeing you this spring!
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Buying and Selling UTILITY GENERATION ASSETS
An Up-to-the-Minute Review of Today’s Hottest Issues in Generation Portfolio Management with Practical Discussion Based on Today’s Transactions

The Future of Generation Portfolios in a Deregulated Market

Determining the Value of Your Company’s

Understanding Critical Accounting and Financing Issues

Regulatory Issues in Asset Transfer

State-of-the-Art Marketing Strategies for Generating Assets

Sponsored by INFOCAST
Official Publication: COMPETITIVE UTILITY

APRIL 14-15, 1997
SAN FRANCISCO
SAN FRANCISCO MARRIOTT

As a result of the ongoing restructuring of the U.S. power industry, we are seeing the beginning of a wave of generating asset transfers. It seems clear that this trend will continue on an unprecedented scale. This titanic shuffling of assets is creating a critical opportunity for today’s power industry players to buy/sell/spin-off generation assets in order to meet their goals-whether those goals are growth, rationalization of a generating portfolio to improve competitiveness, or even to seize the opportunity to enter or exit this highly competitive market. As large as the opportunities are, however, this will not be an easy game to play. Players must deal with great uncertainty about future market conditions, estimate the value of generation assets under those market conditions, navigate uncharted regulatory waters, arrange financing and/or obtain the approval of their debt and equity investors while negotiating the best possible deals. Only those who are aware of the latest approaches and industry thinking on these subjects will be able to emerge from the process with their winnings in hand.
Infocast has brought together a group of experts from Wall Street to Washington to provide a briefing on the critical issues in generating asset management. Case studies will serve as a practical example providing helpful do’s and don’ts when negotiating your own deal. Register today and learn how to seize the opportunity to improve your company’s generation portfolio.

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Agenda
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Monday April 14, 1997

Welcome and Introduction from Conference Chairman
Jeffrey C. Bodington, President, Bodington & Co.

Generation Portfolios and the New Environment
FERC POLICIES ON MARKET POWER AND ASSET SALES
Why divestiture makes sense in some cases
– Reduced regional market power, both vertical and horizontal
– Handling stranded costs
– Making assets more efficient, inside or outside the electric industry
– Why purchases make sense in other cases
– More efficient operation means lower prices, higher profits
– The value of national generating companies
– Consolidating niche markets and functions
– FERC market power policies and their impact on asset transfers
Charles Whitmore, Senior Economist,
Assistant Director of Economic Policy, Federal Energy Regulatory Commission

STATE RESTRUCTURING INITIATIVES-HERE’S WHAT WE WANT THE INDUSTRY TO LOOK LIKE
Regulator’s policy objectives
Linkage between federal and state authority
Decisions regulators must make
Practical issues affecting schedules for divestiture
Forecast of what will happen and when
P. Gregory Conlon, President, California Public Utilities Commission

NAVIGATING THE REGULATORY PROCESS FOR APPROVING ASSET SALES
Understanding the regulatory framework
Understanding the commercial process
Understanding stockholder interests
Reconciling regulatory, commercial and stakeholder interests
Finding a regulatory strategy that works
Joseph M. Malkin, Partner, O’Melveny & Myers LLP; outside counsel to Pacific Gas & Electric

NRC POLICIES ON TRANSFERS OF NUCLEAR ASSETS
NRC policies and regulations on asset transfers prior to the emergence of restructuring
NRC policy questions raised by restructuring
Integrating NRC policy on restructuring with policies of other agencies (FERC, SEC, State Commissions) ~ Impact on asset transfers of current NRC initiatives
George A. Avery, Partner, Shaw, Pittman, Potts & Trowbridge

STRANDED COST RECOVERY AND ITS IMPACT ON GENERATION PORTFOLIO DECISIONS
Dimensions of stranded costs: size, timing and rate of payment
Generation divestiture and stranded cost recovery
Asset sales as a method for estimating stranded costs
Risks and risk allocation measures
– for vertically integrated utilities
– between Gencos and regulated companies
– between regulated companies and customers
Theresa Flaim, Ph.D., Vice President, Corporate Strategic Planning, Niagara Mohawk Power Corp.

PORTFOLIO AND CORPORATE STRATEGIES FORTHE NEW ERA
The best of times, the worst of times-opportunities and threats in the restructured wholesale and retail power markets
New wine in old skins-reconfiguring existing portfolios to take advantage of new strategies
Historic relics-dealing with assets and arrangements “inherited” from the regulated monopoly era
To hedge or not to hedge-role of risk management strategies in meeting new challenges of operating a “genco” in an unbundled marketplace
Calpine’s rationale for pursuing a merchant power strategy
Rod Boucher, President, Calpine Power Services Co.

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Group Luncheon & Address

“FUTURE DIRECTION OF RESTRUCTURED POWER MARKETS IN CALIFORNIA AND NEW ENGLAND AND THE IMPACT ON GENERATION ASSET VALUES”
Edward J. Walsh, Group President, Power & Government Americas & India, Stone & Webster

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Valuation of Generation Portfolios

CHANGING FUEL PRICE CONSIDERATION IN POWER PLANT VALUATION
Critical new fuel issues
Evaluating fuel issues for merchant plants ‘ Predicting future fuel markets ‘ Understanding the future link between fuel and power markets ~ Fuel management for a competitive market
Jeffrey P. Price, President, Resource Dynamics Corp.

TRENDS IN WHOLESALE ENERGY AND CAPACITY PRICES
Forecasts of demand
Existing and future sources of supply
Fuel price uncertainties
Balancing supply and demand
Charles Mann, Director, Fieldstone Co.

PRICE PREMIUMS FOR “STRATEGICALLY LOCATED” PLANTS
Valuing plants within transmission constrained areas
Getting paid for providing system support and ancillary services
Understanding reliability contracts with the independent system operator
Assessing competitors’ barriers to entry
Glen Davis, Vice President, AES Transpower

OPERATING COSTS AND COMPETENCIES-WHO SHOULD BE IN THE GENERATION BUSINESS
The goal…to promote the most efficient operations
Defining the efficiency/competency curve for operators
Looking at the variability among operators
Meeting the need to have the most efficient operators
Craig A. Mataczynski, Vice President, US Business Development, NRG Energy, Inc.

SALES, LEASES, SPIN-OFFS AND OTHER OPTIONS: WHAT’S RIGHT FOR YOU?
Describing each option’s structure
‘ Summarizing each options key benefits and costs
The roles of regulators
What has been done to date and why?
New structures to consider
Alan Levande, Vice President, Goldman Sachs & Company

PANEL DISCUSSION: MAKING DECISIONS IN THE FACE OF UNCERTAINTY
Glen Davis, AES Transpower
Alan Levande, Goldman Sachs & Company
Charles Mann, Fieldstone Co.
Craig A. Mataczynski, NRG Energy, Inc.
Jeffrey P. Price, Resource Dynamics Corp.
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Cocktail Reception: There will be a cocktail reception at the conclusion of day one giving you an opportunity to meet speakers and your fellow attendees.

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Tuesday April 15. 1997
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Welcome and Introduction from Conference Chair
Jeffrey C. Bodington, President, Bodington & Co.
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Financing Issues
IDENTIFYING KEY CREDIT ISSUES
Bond indentures
Rating the pieces of a once-integrated utility
Merchant plant risks
Peter N. Rigby, Director, Project Finance Ratings, Standard & Poor’s

EVALUATING MARKET RISK IN FINANCING ASSET PURCHASES
Market “price” risk: impact of supply and demand
Market “access” risk: market infrastructure and business risk in being able to dispose of power output
Increased use of commodity and financial hedging instruments
Effectiveness of risk allocation and mitigation strategies
How much risk will the financial markets be willing to accept: profile of an acceptable financing package for generating assets
Lewis J. Hart, Jr., Managing Director, CIBC Wood Gundy Securities Corp.

Requirements for Transferring Assets
UNDERSTANDING CORPORATE GOVERNANCE ISSUES
Examining the auction process in terms of legal due diligence, regulatory and contract issues
Fraudulent conveyance issues
Using indenture provisions to maximize the available consideration
Balancing the interests of the various parties involved
J. Michael Parish, Senior Partner, Reid & Priest, LLP

BOND INDENTURE ISSUES
The spirit vs. the letter of indenture
Refinancing and defeasance strategies – Stranded costs securitization issues
Inter-company transfers and property release funding options
David P. Falck, Partner, Winthrop, Stimson, Putnam & Roberts

ACCOUNTING MATTERS TO CONSIDER IN CONNECTION WITH UTILITY GENERATING PLANT SALES
Types of sales structures
Financial reporting and the accounting issues involved
Regulatory matters and its impact on accounting
David Etheridge, Partner, Arthur Andersen

DEALING WITH ENVIRONMENTAL LIABILITIES
How can different project acquisition structures affect environmental liabilities?
Types and methods of due diligence necessary to identify environmental liabilities
Anticipating changes that affect project permitting and raise compliance costs
Andrew A. Gracie, Esq., Partner, Chadbourne & Parke

BUYING AND SELLING INDIVIDUAL GENERATING UTILITY ASSETS
Utility plants that have already sold and their valuation
Key factors determining value
Timing for new sales
Regulatory issues
Assessing closing risk
Jeffrey C. Bodington, President, Bodington & Co.

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Marketing Generation Assets
HOW TO MARKET ASSETS; HOW TO GET THE HIGHEST PRICE BIDDING STRATEGIES FOR ASSET ACQUISITION
The positioning of assets
Approaching the market-auction v. negotiation
Calculating fair value in a deregulated market
Identifying a qualified buyer
Categorizing types of buyers-financial v. strategic, public v. private
Jeff Miller, Partner, The Beacon Group

CASE STUDIES
ARRANGING THE SALE OF GENERATION ASSETS OUT OF THE BANKRUPT CAJUN ELECTRIC COOPERATIVE
Obtaining bid protections to lessen the risks for the lead bidder
Maintaining flexibility to ensure the leading bid remains viable
Strategies used by the non-lead bidders to come from behind and successfully acquire assets
Ronald L. Rencher, Partner, LeBouef, Lamb, Greene & MacRae

PREPARING TO SELL AN OWNERSHIP INTEREST IN NUCLEAR POWER: SALUDA RIVER’S REP PROCESS Market assessment and market interest in nuclear power
Strategy for marketing of nuclear power
Data requirements for assessment of nuclear power acquisition
Financial considerations and economic analysis
Anis D. Sherali, P.E., Vice President Power Supply, Economic, Regulatory and Financial Planning, Southern Engineering Co.
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FOUR WAYS TO REGISTER:
Telephone: (818) 902-5400
Fax form to: (818) 902-5401
Mail form to: Infocast, Inc.
13715 Burbank Blvd.
Sherman Oaks, CA 91401

E-mail form to: infocast@westworld.com
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REGISTRATION INFORMATION
Tuition: $995.00 The full tuition is payable in advance and includes program instruction, continental breakfasts, luncheon and reception, complete conference documentation and refreshments. * 40% Discount for U.S. Federal, State and Local Government Employees: $597.00
Program Schedule: Registration will take place from 7:00 a.m. to 8:00 a.m. on Monday, April 14. The conference will take place from 8:00 a.m. to 5:00 p.m., followed by a cocktail reception from 5:00 p.m. to 6:30 p.m. The conference will resume on Tuesday, April 15 at 8:00 a.m. and adjourn at 3:15 p.m.
Accommodations: Infocast has secured a limited number of rooms at the San Francisco Marriott, which will be held at a special rate of $177.00 until March 14,1997. To receive the special rate, call the hotel directly at (415) 442-6755 and mention that you are an Infocast registrant. The hotel is located at 55 Fourth Street, San Francisco, CA 94103.
Air Transportation: For discounted airline fares, please call Uniglobe Executive Travel at (800) 676-3932 and mention your participation in the Infocast conference.
Cancellation, Refund & Credit: If your written cancellation is received prior to March 31, 1997, a full refund will be made. Written cancellations received on or after March 31,1997, will create a credit of the tuition good toward any other Infocast conference or publication. In the event that a program is canceled, Infocast does not assume responsibility for any expense other than the tuition fee.
MCLE Credits: Infocast certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 13 hours.

Registration Form:
Enclosed is a check payable to “Infocast” to register the following individual in:

Buying and Selling Utility Generation Assets
San Francisco Marriott – San Francisco, CA
April 14-15, 1997 (415) 442-6755

Name __________________________________________________

Position _________________________________________________

Organization _____________________________________________

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City __________________________ State ____ Zip __________

Telephone _____________________ Fax _____________________

Person Authorizing Training ______________________________

Credit Card Information:

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