Trail of Power Mess Leads to Ramos

Name of Plant :	108 MW Subic Bunker-Fired Diesel Power Plant (A13)
Name of IPP :	Enron Power Development Corporation/Subic Power Corporation
Contract Type :	Build-Operate-Transfer/Energy Conversion Agreement/Solicited
Status of Plant :	Operational
Cooperation Period :	15 years (March 1994 - March 2009)

Nature of Issue	Issue	Recommendation
Underutilization/�� Nominated Capacity	Based on the second Supplemental Agreement, SPC may nominate up to 116 MW as against the contracted capacity of 108 MW, which is the basis of NPC paymen'ts of Capacity Fees and Fixed O & M fees. For the period 1995-2001, the plant's actual energy generation is about 50% of the guaranteed energy generation, which means that the plant was not fully utilized/dispatched.	It is recommended that NPC should negotiate with Enron for a lower nominated capacity considering that the plant is not fully dispatched due to excess capacity in the grid and to reduced NPC's payrnents of fixed costs, which is about 95% of NPC total payments to Enron.

Early Transfer of Power Plant by Enron to NPC	On 10 August 2001, Enron submitted a proposal that would reduce NPC's payment obligations and enable NPC to immediately sell the Subic power plant.	At the very least, the transfer price should be based on the present value of.NPC's future Capacity Fee payments based on Contracted Capacity but should exclude O & M Fees and Energy Fees, since these fees wil no longer be incurred by Enron upon transfer of the plant to NPC.

	Enron is negotiating an Agreement with PSALM/NPC for an early transfer of the Subic power plant. Under the proposed Transfer Agreement, NPC's payment obligations with respect to Capacity Fees and O & M Fees will Capacity Fees and O & M Fees will be reduced under the BOT Agreement.	All related contracts (e.g., Ground Lease Agreement) should be reviewed by PSALM with regard to Assignment of Rights.