CPN has been recognizing income using the mark to market accounting to recognize income on past projects.
With 2.8 Billion of equity, 14.7 Billion in liabilities and 9.7 Billion of commitments for ordered turbines, CPN is by far the weakest player in a dynamic and rapidity changing environment. (that a nice way of saying I don't see how they can survive)
For the three and nine months ended September 30, 2001, $767.9 million or 26.3%, and $1,329.8 million or 22.7%, of the Company's revenue was with Enron subsidiaries, primarily Enron Power Marketing, Inc. ("EPMI") and Enron North America Corp. ("ENA"). The Company, primarily CES, purchases significant amounts of fuel and power from ENA and EPMI, giving rise to current accounts payable and open contract fair value positions. These purchases must be included in an overall understanding of the Company's Enron exposure. For the three months ended September 30, 2001, CES had fuel and power purchases from ENA and EMPI of $905.3 million. For the nine months ended September 30, 2001, CES had fuel and power purchases from ENA and EMPI of $1,358.7 million. The sales to and purchases from various Enron subsidiaries are mostly hedging and optimization transactions, and in most cases the purchases and sales are not related and should not be netted to try to gauge the profitability of transactions with Enron subsidiaries.
The Company will continue to evaluate the Enron risk in the same manner as discussed above. The Company will adjust its threshold for Enron exposure based on factors discussed above and will continue to monitor the exposure on a daily basis. (risk.....if ENE or any other contracts are not honored, past income from mark to market accounting of income will need to be revised accordingly)
Capital Expenditures -- During the third quarter of 2001, the Company entered into commitments for 12 steam turbine generators from Siemens Westinghouse, one steam turbine generator from Fuji and three combustion turbine generators from Siemens Westinghouse. The above brought the total number of combustion and steam turbines on order to 320 with an approximate value of $9.7 billion, which includes turbines delivered to projects under construction.
The Company also had an accounts receivable balance of $107.2 million at September 30, 2001 from the California Department of Water Resources. As of November 12, 2001, the California Department of Water Resources is paying currently and the Company accordingly has determined that there is no reserve needed.
PG&E receivables at September 30, 2001, April 6, 2001 (the date of PG&E's bankruptcy filing), and December 31, 2000, were as follows (in thousands):
PG&E. $ 292,055 $ 265,588 $ 204,448
Of the $292.1 million PG&E receivable balance at September 30, 2001, the pre-petition balance of $265.6 million remains unreserved and is classified as a long-term receivable. Through September 30, 2001, as a result of PG&E's decision to assume its QF contracts with Calpine, the Company has recorded $6.0 million of interest income which is included in the long-term receivable balance. PG&E has paid and continues to pay currently for energy deliveries made after April 6, 2001. |
