Subject: cogentrix
louise ,
i only spent an hour on this . however , i would pass . this would keep a lot of orig / tech / finance people employed for a while in order to manage it and then work off the pieces .
this looks like a fairly impressive private asset company - they appear to be good developers , acquirers , etc . they even say that they that restructured 8 of their ppa ' s - presumably they restructured the ones that make sense - further reduces our restructuring proposition .
to me , the qf optionality goes like this :
- if you have a high - variable cost qf that operates as a baseload facility , the math works to shut it down or convert to a peaking ppa when the market is low .
- if the market is high , you have an easy - to - develop expansion .
problem is , their assets appear to have low variable costs ( coal and new gas ) so the restructuring play does not jump out at me
. . . and we are bearish on development
at pvl 8 , this could look like a good diversified low risk business - superior to most of our regulated businesses and most of our international businesses , but i think it would be real tough to get returns > 30 % . besides , i think someone will pay more for it . over half the net mw is new 7 fa capacity - attractive to calpine and the calpine wanabees . this is actually a cheap way for an ipp to hit its mw growth targets without blowing their brains out in the spot market .
someone should pay up - not us .
question : did we form qf teams in the east and west because of the success of east coast power ? was that success largely driven by the fact that we bought it cheap ? or did we innovatively restructure the ppa ? if we brought innovative financing to the deal , isn ' t that the same as buying it cheap ? was east coast power a formal auction or was it a negotiated deal ?
i can dig into this some more if you ' d like . our internal model would be my next step . let me know .
regards ,
chris calger
503 - 464 - 3735