“Hey, Matt. What’s up, buddy? It’s John.”
Machine-read from the scanned exhibit. Check the scan at FERC before quoting.
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Matt: Hello.
John: Hey, Matt. What’s up, buddy? It’s John.
Matt: Johnny! What's goin’ on?
John: Not too much, man. How you doin’?
Matt: Doin’ all right.
John: I just wanted to give you a call then.”
Matt: What’s up?
John: What's up with Enron’s stock? All the others just gettin’ beat up and I don’t understand why.
Matt: The, ah— }
John: [inaudible] understand the DOW’s gettin’ beat up? I know you and I both [inaudible]
Matt: Well you — well you saw that lawsuit, right?
John: Yeah, I’m on it, too. [laughs]
Matt: Yeah. The ~ the — the — they mentioned you guys as well. 1 think they mentioned the whole fucking crew, right?
John: Yeah, I think they mentioned us first. [laughs]
Matt: [inaudible] wow.
John: It wasn’t alphabetical.
Matt: Oh.
John: They probably just [inaudible] the volume that deliver to the PX or something like that.
Matt: Fuckin’ crazy, huh? =~
John: Ab, it’s stupid, I mean, there’s no worries about it, ‘cause there’s nothin’ we did, but —
Matt: Yeah.
John: You know, we took price risk every day.
Matt: Yeah.
John: It’s — it’s no big deal.
Matt: No, but I — you know what? | don’t know if it matters that you did nothing. I'm sure-
John: I-
Matt: —1I think the decision is done.
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John: What do you mean?
Matt: Youd - you did something.
John: Oh, yeah.
Matt: Although you did nothing illegal, still you made a lot of money —
John: Oh, yeah.
Matt: — that’s why we want some back.
John: Oh, exactly. Oh, I really don’t think [inaudible] like in SP took risk on it. You know, 1 could — it easily could have gone the other way. I see what you’re sayin’.
Matt: Yeah. No, we — IY understand, but 1—
John: [inaudible]
Matt: mean, I continue to think, you know what? We did nothing wrong, you know? We we took risk —
John: Yeah.
Matt: Um, they fucked the market up. It's their — you know, it’s their fault, it’s not ours. We didn’t do anything wrong. We weren’t going to manipulate anything.
John: But we just bought it and sold into the highest market.
Matt: But guess what? I don’t think that matters.
John: Mm hm.
Matt: Ir- honestly, you put this thing in front of a jury, they’re going to say, you guys got a lot of fuckin’ money, we don’t, fuck you.
John: Right. Aa, Idon’t know, I mean, ‘cause you know we could have done things with that power. Like you know, I'd be fearful if I were talk to a guy who had a — a unit and I would have" said, Hey, what’s your bidding curve today? Did you get accepted or anything? —
Matt: Mm hm.
John: You get accepted there? All right. I'm going to put my curve in here. Thanks, Bye.
Matt: Yeah.
John: If1 had those kind of conversations I'd be fearful.
Matt: Yeah.
John: Or if took the power and I moved it outside of California so that I can strain, like my other
positions to go higher —
Matt: Yeah.
John: Then I would have a problem.
Matt: But what a — what about the stuff you sold outside of Cali to ~ and you’re servin’ — servin’ that stuff with power out of California.
John: Oh, we didn’t move anything out of California.
Matt: Really?
John: Yeah.
Matt: See — see that’s what I don’t understand. It’s like, you know, even — even if you're movin’ power out of California, So.
John: So? Exactly, you're buyin’ it from an auction, right?
Matt: Yeah.
John: I mean, it shouldn’t matter. I agree.
Matt: [inaudible] yeah.
John: Like the only way Pm seein’ it is like, I don’t know. What we did was we bought over the counter power that could have been moved out and I should delivered it to the PX or to the pool.
Matt: Mm hm.
John: So we’re doin’ California a favor.
Matt: Yeah.
John: Imean, I know they’re not going to view it as we're doin’ them a favor.
Matt: Even if you were there — e — even bein’ there real time [inaudible].
John: Yeah, and we’re doin’ it as price takers, too. So—
Matt: Yeah.
John: But, no, it’s not like we had any control on what the, ah, prices were gonna be. We just — we're — we're pretty clean, from what I see.
Matt: Yeah.
John: So, yeah. Make my day. [laughs]
Matt: Yeah.
John: But ah —
Matt: No, I think that — I mean, I agree. I don’t think anyone did anything wrong, to be honest
with you.
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John: Right.
Matt: But, I'm not really sure, you know, this whole thing, e — e — every time I try to use reason
John: Right. You get f— fucked up, right?
Matt: Try to figure this out, I'm just like — you know, if we were using reason, we wouldn't even be having this conversation.
John: Yup. Yeah, it’s a good point. That was a very good point. I —
Matt: So, anyway.
John: What I thought was interesting though, is like the way that they listed the people and { think it’s gotta be the order they listed people on —- how many megawatts you delivered into, ah ~
Matt: Think so?
John: Yeah, ‘cause I mean, you know, we’re not somebody who's been cited as — you know, I
just ‘cause — we're still kinda somehow in people’s minds affiliated with Corp, right?
Matt: Uh huh.
John: [inaudible] especially people outside of the business put us with the Corp.
Matt: Yeah.
John: So, for them to point us out as like you know, the first person, and then like, ah who’s the second one? Dynegy, something like that?
Matt: Mm hm.
John: I think it’s on people who like float the most to the pool?.
Matt: Mm. Could be.
John: Something like that. You know, ‘cause I don’t know, like, I don’t know what — what do’ you guys think your average selling to the pool every day?
Matt: You know what? I have no idea.
John: I would guess your hours would be somewhere between like 4 and 700.
Matt: Gotcha.
John: So like, that would be, you know, for the summer time and stuff like that, Maybe —
Matt: Uh-
John: Maybe a bit higher, but, now I — I mean, people could be doing even more than that. I
don’t’ know.
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Matt: Hm. Yeah, I have absolutely no idea, to be honest.
John: Right.
Matt: Id have to look that up — and I don’t even know if I —- I mean, I could find it somehow, if I put a lot of work to it, but the —
John: Oh, yeah.
Matt: You know, I would think we'd be in the neighborhood, but I don’t — I don’t know.
John: Yeah.
Matt: Ihave no idea.
John: Who knows?
Matt: Dude, what do you think about this fuckin’ — this market is done, I think.
John: Uh huh.
Matt: We're — we're kind of fucked here.
John: He — what else do you do, I mean —
Matt: I'm fuckin’ worried.
John: Yeah.
Matt: Big time.
John: Weli like it’s like what else can you do? I mean, you know, to be honest with you, I was — I was here yesterday talkin’ to these guys and you know like all right, what are we going to trade today, it’s like well, you know, we’re gonna go buy, what — ah, ten, ah, NP 15 and or Dec and make 4 dollars?
Matt: Mm hm.
John: You khow, as it goes from 240s to, ah, 250s.
Matt: Yeah.
John: Yeah, so, I don’t know. We just went out and tried to buy some So Cal, ah, financial calls and stuff like that and —
Matt: Have any luck?
John: Yeah. We got it from you guys, actually.
Matt: Really?
John: Yeah, just stuff that we don’t trade. Just, you know, settles against gas down and stuff like that.
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Matt: Mm hm.
John: But, I mean otherwise, your upside’s pretty limited, right? Even though it’s goin’ there.
Matt: Oh, yeah.
John: Yeah.
Matt: Um—
John: I'was—
Matt: I just —man, I'm just fuckin’ trying to get flat.
John: Yeah.
Matt: Ican’t get flat.
John: Oh, it sucks.
Matt: There's no liquidity.
John: No. Anything I can help with?
Matt: Um-
John: Idon’t have much on, but I can, you know, s — call around to get your shit out if you need
it—
Matt: Yeah, I got—
John: [inaudible].
Matt: Yeah, I got some, like, Q3, ah, like spreads on California —
John: Right.
Matt: Like PV spreads. PVSP, COB, NP, all that shit, man.
John: Well — well, they're probably not movin’ much, though, right?
Matt: Yeah. i }
John: Imean, they're probably movin’ your way, or just against you a little bit or whatever, but, I mean —
Matt: Imean, but there’s no offers.
John: Yeah, it’s true.
Matt: And I'm just like, fuck, every time I see somethin’ I list it.
John: Yeah. [laughs]
Matt: There's nc offer.
John: Everyone’s, like, oh, he’s running it up. [inaudible] fuckers.
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Matt: (inaudible)
John: I wanna keep — I just wanna get out {laughs]
Matt: Yeah
John: Get me the fuck out of this position.
Matt: Yeah. Um~
John: I would think, like — and this is from a frading standpoint —
Matt: Mm hm.
John: And maybe I'm totally fucked up and totally wrong, I mean, I know all the fundamentals out there, but something will happen over the next six months that will change all this —
Matt: Mm hm. }
John: — in terms of pricing. Just go out there and start buying Q2 puts all over the board.
Matt: Yeah.
John: That's — that’s all I'm thinking about. They — in the next six months, something will get resolved.
Matt: Yeah, something's gotta happen.
John: Right. I'mean, I don’t know, it just a shitty thing to be comin’ around where you see this lawsuit and you know like fuck is this going to be some reason for another hold back bonuses, because they’re waiting, you know, for a two-year court case?
Matt: Uh huh.
John: That just pisses me off.
Matt: Yeah, I don’t think — I don’t think they will, but you never know.
John: Yeah, exactly. They put in reserves and then it’s reserve you never see, and stuff like that
Matt: Yeah.
John: Ah, but do you think that’s why you guys are gettin’ beat up?
Matt: I think so.
John: Really?
Matt: Yeah.
John: Do you think they’re attributing that much money to, like Western power?
Matt: Well, that’s [laughing] —
John: [laughs]
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Matt: — a good question. I go, looks like we’re worth about seven or eight billion dollars.
John: That’s what I’m thinking —
Matt: [laughs]
John: - like if —if you guys are down five [laughing] you know, five points vs. what your market cap is.
Matt: That’s today and we’re not talking about the 8 yesterday.
John: Yeah, exactly. So, say you're down ten points and your market cap is, what? Like 33 billion, something like that?
Matt: Yeah.
John: [laughs] They give you guys a lot of fun credit?
Matt: That’s right.
John: Shit!
Matt: We're strong up there, man?
John: [laughing] you guys are strong in the Portland office.
Matt: [laughs]
John: You guys can fuckin’ flex it [inaudible]. }
Matt: [inaudible] in Houston doing like their performance reviews and everything like that, they really like, they rank all the traders and —
John: Right.
Matt: - throughout the whole corporation.
John: Uh huh.
Matt: And, ah, I go, look at this is the perfect time for you to go down there and just sit bitch your spiel, say, listen, man we got sued and look at the fuckin’ stock got hit.
John: [laughs] Hah! We are the k — they should spin us off!
Matt: That's right.
John: [laughs] Spin off Enron, ah, Portland.
Matt: Yeah.
John: Man! Yeah, I don’t know, like I's — I see all the other guys too. Like I wanna come out here and start buying people like El Paso and yourself.
Matt: Yeah.
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John: From a stock perspective. ‘Cause I know El Paso’s making a killing out there in the gas
"side out west, like you guys are too. Cool.
Matt: Yeah. Well, h— well, here's another thing: With, ah, you know, you see, ah, case —I'm s — I’m sure you saw the Cal Alberta traded 125, 121.
John: Ah, yeah, I sold that yesterday at 115 or day before that, yeah.
Matt: Yeah (laughs)
John: 1 was like, ah, I felt like a superstar for about three minutes [laughs]
Matt: Um, anything you say, you feel like a superstar for about three minutes, but —
John: Yeah.
Matt: They, um, ah, what was I gonna say? Y — the, um, fuck what am I tryin’ to say, here?
John: Well, you —
Matt: I’m also tryin’ to — I try —
John: You converting that to US dollars compared to [inaudible]
Matt: Oh, oh, no, no, I said the — the Albert stuff it trades 128.
John: Yeah.
Matt: N - none of that stuff has hit any of Enron’s books yet.
John: Oh, you mean not even the PPA stuff, or —
Matt: No.
John: Well, the PPA, like, is, I mean, I heard like different things. I talked to the guy who’s friends with one the guys at Enron.
Matt: Uh huh,
John: And he said that they, you know, the PPA, they actually didn’t like owning it. Like they felt like they pay too much for it.
Matt: Yeah.
John: But regardless, like if, ah, if he can go out there, I mean, if all these people can race to the Cal 01 up to 140 bucks —
Matt: Mm hm.
John: You know, and he —I think his purchase price is like 60 bucks on a ten year or something like that?
Matt: Uh huh.
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John: Or fif - a 20-year term?
Matt: Yeah.
John: Imean all it’s gonna do, basically, just, you know, capture the first year, actualize it, put the curves up and you guys get paid out like a star.
Matt: Yeah.
John: I mean why wouldn’t he?
Matt: Yeah, exactly.
John: You know, so he’s out there, like — he was the one who sold us hundreds and he sold a couple hundreds. I don’t — I think he was just nervous and wanted to get some stuff off —
Matt: Yeah, no, I think that was the — ‘cause w — ‘cause I'd sold, ah, like 101s —
John: Right.
Matt: And 98s one time.
John: Oh, did you?
Matt: When — before those guys got set up.
John: Oh, really?
Matt: We were just sellin’ it all for them.
John: Oh, cool. OK.
Matt: And so it was like, yeah, let’s just have fun, man. We're long seven hundred megs for a fuckin’ 20 years.
John: Yeah, just—
Matt: [laughs]
John: — fuckin’ let — let a piecé go. What the hell do we care? Yeah, seriously.
Matt: You know, i — if we sold everything at a hundred we’re going to make a fuckin’ ton of money.
John: Yeah. Yeah, you totally are.
Matt: So sell some and then you can bid it.
John: Yeah. Right on.
Matt: You know, you sell some —
John: You’d be sellin’ it for like a position.
Matt: Yeah.
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John: Yeah, I totally agree.
Matt: Sell a few and a m — you know, and you’re —
John: Buy it back, run it up.
Matt: Yeah, who cares.
John: Yeah.
Matt: [laughs] Who cares —
John: [inaudible]
Matt: You know, it’s like cell phones, so you bid 98, you know?
John: Yeah, yeah. I totally agree.
Matt: You’re no worse off.
John: Yeah. Did you get on the way down, all right, fine. Made a couple bucks — whatever.
Matt: Yeah.
John: But yeah, I think that market’s just nuts. It’s gonna go crazy.
Matt: Um -
John: There’s a company call today if you wanna listen in.
Matt: Did you — did you see they’re putting dereg on hold?
John: Yeah, 1-1 saw that headline. I don’t know if that’s really the case though, if it’s really dereg on hold.
Matt: Oh, Ijust heard ~ I heard a headline shouted across. I didn’t see the story. I didn’t see—"
John: Yeah, the headline was basically some — it was a — cross like on your, like, ah, news on your wire pretty much.
Matt: Uh huh.
John: And all it’s saying is that the, ah — essentially what it does is it sets it up just like California. Ah, rate payers now have one more year that they can go {inaudible}at a fixed rate.
Matt: Huh.
John: See, which is great. I mean, that means that the utilities now are going to be incumbent buyers, subject to PX prices.
Matt: Yeah.
John: [laughs] Doesn’t that sound like California?
Matt: It’s all over again.
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John: Yeah. Totally.
Matt: Youdon’t want that. Well, here — here’s — hete’s — well what do you think, John? I mean we got a serious problem in the West.
John: Right.
Matt: Serious, serious problem.
John: I-1Idon’t think it’s going to get remedied soon, either, but —
Matt: How do you fix it? You, John Mortis, are put in charge of fixing it —~
John: Sure.
Matt: — What do you do?
John: Let’ssee. Ah—
Matt: And you have to — I mean, think about it, Y — you're responsible, you’re now king —
John: Sure, right.
Matt: — you're not trading any more —
John: Uh huh.
Matt: Your — your job is to fix it.
John: I guess my first thing I have to fix before 1 go out there and try to fix price or fix residential
stuff, is make sure I have a plan going forward for like what the supply situation is.
Matt: Mm hm.
John: I can go out there — I know they have a ten million dollars state reserve they're talkin’ about recently —
Matt: Mm hm.
John: Iwotild take all that, and — and that and more and give that in terms of tax credit to people who are building out there.
Matt: Uhhuh.
John: You know, I can’t really expedite the permitting process. You know, even if they say they want to.
Matt: Yeah.
John: ‘Cause you're going to have those NOX issues. You're gonna have all those issues. But give all these guys incentive — ah, incentive — incentives to go out there and to build, and then the
only way you can do that, really is tax credits.
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Matt: Uh huh.
John: What Id do, is I’d probably — I can’t ask peo — this is — now, this is a little bit bias, but I would say, like, I can’t ask PG&E to go under just yet, ‘cause I don’t know who would deliver their load — deliver to their load. Idon’t know if I’d go ahead and bail those guys out — ah, that’s what everyone would think you had to do, but I think it’s — I don’t know, think you basically extend, ah, the deregulation process.
Matt: Mm hm.
John: And that’s really what happens. You kinda go into like a little regulation game.
Matt: Yeah.
John: Instead of, like, doing your CTCs ending in 02, you pass ‘em out to 05.
Matt: Uh huh.
John: And during that time period you assume that some of the supply ~ you give a — give atax credits, credits for actually get billed. In terms of the actual cost of the market sales, I say that it’s, you know, part of the cost of deregulation, and you know, make the, ah, the rate payers whole and everything else —-
Matt: Mm hm. .
John: - and, ah, you know, probably Bell, PG&E and So Cal Edison out to like 60% --
Matt: Yeah.
John: — and then pass the rest on to the shareholders, you know, and the corp basically gets hit —
Matt: Mm hm.
John: — you know, ‘cause they — regardless of what people say, they had opportunities to buy.
Matt: Yeah, they should be hit. Co
John: Yeah.
Matt: They should be punished [inaudible].
John: They should be punished, but, like, I also agree that, you know, the market | inaudible] hedgin’ pretty much good suck —
Matt: Yeah.
John: - you know, but regardless, they weren’t in them, so, you can’t — you can’t say that they would have been better if they were in there.
Matt: Uh huh.
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John: So, I think they deserve some kind of penalty. But I also deser — think they need to be bailed out to a certain degree. Like, hit ‘em as hard as you can —
Matt: Yeah.
John: — with a — you know, still keeping them in place —
Matt: Without killin’ ‘em.
John: Yeah, exactly. Keep ‘em in place, and give them incentives so that they can recover money over the next five years. And then, ali, you know, barring that, I think you, ah, you have to, like, kinda re-regulate the market in the short term. You have to go in there and im ~ y — I mean, impose price caps? I don’tknow if that works. You ha — you do a buy back of generation? Idon’t know if that works —
Matt: don’t know.
John: You can’t — if you start to buy back generation, you've now just screwed the whole deregulation process.
Matt: Yeah.
John: Like, I think you have to go out there and give capacity payments to people who own the stuff.
Matt: Mm hm.
John: Require, like, a higher number of stuffs go MR.
Matt: Yeah.
John: And I- and 1like the FERC’s, ah, call to make everything day-ahead. You know, to roll everything — like 95% of it to go day ahead.
Matt: Oh, yeah.
John: 1 think that’s — that’s vital.
Matt: Yes. No, no, I agree.
John: Yeah. And I think more than anything else, what they need to do is [inaudible] supply, is transmission. OK, huge incentives for transmission infrastructure to be built.
Matt: How long does that stuff take?
John: Oh, it takes a long time. Like, I think most of it’s right away issues. ‘Cause no one wants a transmission wire in their back yard.
Matt: Yeah, I mean, but, you already have lines there, can’t you pop up another fuckin’ —
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John: Idon’t know.
Matt: — 500 KV line?
John: Let me ask George — George how long do think it would take to, like, build a line, like let’s say you already have — but let’s say you have like a 500 KV [break in recording] if you want to put one right next to it. About a year. Can you actually upgrade a 500 KV line [break in recording]
Matt: Make it a thousand KV, man. [laughs]
John: Gotcha. George was saying it takes probably about a year to build another line, like the, um, Devers line that would match the 500 KV line that you had there currently.
Matt: Mm hm.
John: And the only thing you could do is like put capacitor banks in, that would essentially raise the current line by ten percent.
Matt: Gotcha.
John: So, there’s not too m — the {inaudible] regulars, so, you can just transfer more energy across.
Matt: Huh.
John: So, I mean, to me, the biggest thing is — you wanna know what 1 think?
Matt: Whats that?
John: I mean, outside of all this, this is John’s like personal idea of what how he thinks he’s gonna make money.
Matt: Mm hm.
John: Just wireless transmission. Yeah, there’s tons of power around the world that’s heavy. You know, let’s talk about changing the stuff over from, ah, you know, kinetic water energy into light energy and then transfer.
Matt: Can you do that?
John: Well, yeah, but you have a high efficiency loss.
Matt: Yeah.
John: Like, if I take, you know, Hydro Northwest and want to send it to Brazil —
Matt: Mm hm,
John: And I transfer it over to like lasers let’s say - ?
Matt: Yeah.
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John: Now lasers obviously aren’t good for the environment, so I gotta think about somethin’ else, but you know, you transfer to lasers. You lose a high degree of efficiency on it—
Matt: Yeah.
John: And, yeah, you bring it — you send it up to like a satellite just like your phones and then beam it back down. To different areas. That’s the only way that I can see that you can build in areas that there are not emissions [inaudible].
Matt: Mm hm.
John: And, I don’t know, we actually utilizing the — the generation you have.
Matt: Yeah.
John: That - that’s my, like, little deal that I'm trying to figure out. So you got any ideas on that, let me know.
Matt: Yeah, I'll open up my, ah — my physics book tonight.
[they laugh]
John: What is the, ah, conversion rate of - yeah. I thought I was [inaudible] —
Matt: [inaudible] into your conversion book! }
John: Oh, yeah, how much fun was that thing? So, I don’t know — does that — those ideas sound, like, logical or —
Matt: Yeah, no, it does. I—I'm just kinda takin’ a poll of, you know, I — something — I — I mean I think we’re heading back to a period of re-regulation.
John: Yeah.
Matt: We have to.
John: Oh, yeah.
Matt: We absolutely have to. I—and I don’t — I'm really concerned. I mean, what do they do with all the long-dated, um — long dated positions people have on?
John: Yeah, I think — well, I think, you know, it’s one of these things that everyone knows this is the way they’re going to do it. Like you knew you were coming to a market that has legislative changes, you know, hourly.
Matt: Mm hm.
John: It’s your risk. It’s the same way when they tried to put that soft cap in — not soft cap — when they tried to put that cap in on the heat rate stuff —
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Matt: Mm hm.
John: Yeah, just one day out of the blue when you and I were still fuckin’ drunk from the night before.
Matt: Oh, yeah.
John: It’s like, you know, that kinda shit can happen. It’s really like a third world economy.
Matt: Huh.
‘JOHN: And th — you guys will say that’s your risk goin’ [inaudible] and building.
Matt: It’s crazy.
John: Yeah. But it’s crazy for companies to building and owning that shit, too.
Matt: Yeah.
John: You know, we have like a ton of generation potentially comin’ on out there too.
Matt: Uh huh.
John: And we're, like, I can’t believe these guys are taking this risk.
Matt: Yeah.
John: And at the same time I think these guys will actually do better though on these generators ‘cuz they’ll get like a certain capacity fee and be incentivized to actually do it. They won’t get the margins from trading, but they get money up front.
Matt: Yeah, and the — the — you know what?
John: [inaudible]
Matt: What doe — what does the stock price want?
John: Yeah, yeah.
Matt: Money guaranteed.
John: Yup.
Matt: Let’s goon.
John: Exactly. Yeah, they're always a little bit skeptical sometimes trading money anyway.
Matt: Yeah, exactly. It’s a 90. That’s why none of us here are called traders.
John: What are you guys called — hedgers?
Matt: I’m a manager
John: You're a manager?
Matt: Uh huh.
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[RO CR CR CR NN Eg 8B 8 8 RR DREBRBEBBSEZ 320 580823
John: Come on.
Matt: Yeah.
John: Really?
Matt: Yeah.
John: Oh, Jesus. Big management. I’m talking to management over here.
Matt: Yeah, you're talkin’ to management.
John: Management —
[simultaneous talking)
Matt: [inaudible]
John: I got manager on the line, let’s try to keep it down in the back.
Matt: [inaudible] yeah. So it’s, you know, that’s like the whole thing. It’s like, yeah, no one trades.
John: So what do, ah — what are you hearin’ out there? Are people sayin’ vastly different ideas from that?
Matt: Ah, no, pretty similar. Everyone seems to be some sort of a period of like re-regulation and, um, ah, you know, everyone talks about, you know, upgrading the transmission.
" JOHN: Mm hm.
Matt: Um, you know, so on and so forth. [inaudible] I think people still don’t ‘know, you know, what their — I mean, do these caps fuckin’ mean anything?
John: No. ‘Cause really what it means to me is on the soft cap issue — if I’ve got a generator. Ah, you know, I'm supposed to sell at 150 bucks ~
Matt: Yeah. )
John: And ifI don’t, well, holy cow, I gotta send, you know, the FERC a reason why I didn’t. The reason’s ‘cause I'm buying 20 dollar So Cal gas, or — I mean —
Matt: Do-do you have generation?
John: No, but ifI-
Matt: I mean, how do we — how do we get around that?
John: We can, actually. As marketers were can. In theory, we have to go out there and sell it for that price. S — huh [to someone in background) Uh hub. KK’s givin’ you a hard time over here.
[break in recording)
[5]
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John: [talking to someone in background] We could probably take off you guys at Enron, right man?
Matt: What's that?
John: [laughs] Sure. George —j— ah, [inaudible] yeah, sure, we'll do it. Cool. Yeah [laughs] I would totally take that call. My knee’s really killin’ me.
Matt: What's that?
John: Got someone who's just lookin’ to do some SP, like 01 to 03.
Matt: Oh.
John: It’s like doin’ an odd lot at 15 megs.
Matt: Oh, yeah, yeah, yeah, it’s um — I think it’s, ah — strategic energy.
John: Oh, strategic is needed?
Matt: Yeah.
John: Gotcha. Well, if you need any out there —
[laughs]
John: Actually we may have some for you. But, ah — what were we talking about last.
Matt: The, um, ah, oh, the di — the different ideas. Oh, no the ge — generation had to get around the, um — how do you get around, like, {inaudible} soft cap issue.
John: Oh, sell you ~ I think as Mark says, we can’t get around that, to be honest with you. [to someone in background] Thank you very much — cool. I don’t think we can get around that, to be honest.
Matt: Yeah.
John: Yeah, I think we have to basically sell. See you would think the over the counter market You know
Matt: They'd be getting hit.
John: Totally. That’s why I think you should [inaudible] at some point. Like, I don’t I think it’s super arrogant to think these prices will always stay up here without someone comin’ in ‘and saying, prices are gonna be fixed.
Matt: Yeah.
John: And people will still have to trade ‘cause they’ll have positions.
Matt: Yup.
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29.-20001130-100165286-10580276
John: You know, so, even though puts are expensive and they’re not really that expensive now.
Matt: Yeah.
John: Like, George and I bought some 120 puts out there —
Matt: Mm hm.
John: - for Dec Palo.
Matt: Yup.
John: 1mean, like three bucks, four bucks:
Matt: Yeah, I was actually looking at the ~ in the, ah, the Jan NP, ah, 150s.
John: Oh, OK.
Matt: Like two and a half four. Should probably fuckin’ buy all those, huh?
John: Oh, jesus, yeah [inaudible] ~
Matt: It could go there in one day.
John: Yeah, exactly, like, you know [inaudible]
Matt: It will, if it decides to go there it will go in one day.
John: Oh, easy. Easy — oh yeah —I-1 was even thinking like, you know, barter scale, like, you know, 90 dollar puts to the Cal or something like that.
Matt: Yeah.
John: Yeah, That’s sort of thing. ‘Cause if it goes down, it’ll go down fast.
Matt: Yeah, the whole thing just gonna go blaaah!
John: Yeah, [ mean, y — you may p — you know, just ending up pissing away premium before you're ahead so maybe your fiming is wrong.
Matt: Uh huh. ‘
John: But if you wanna just do the — you know, I would be a big believer in buying all that stuff, market it to zero, and it’s, you know, comin’ into next year, if you could do that, and you could somehow mark it down for yourself, you know, bleed away as you come into the beginning of the year.
Matt: Uh huh.
John: You just have this beautiful option that if it comes that way, you're just a windfall.
Matt: Yeah.
John: In the first month, you know.
LATE ET
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Matt: Oh, yeah.
John: Yeah.
Matt: That — how nice would that be?
John: Oh! It'd be beautiful, eh?
Matt: SSshhhhhhh! Caught it both ways!
John: Do you know of any, like, upcoming FERC meetings at all?
Matt: Ah, no. I haven’t heard of any.
John: I think that they — I mean, these guys sittin’ here lingering for, like, a commissioner, right?
Matt: Yeah, I think so.
John: Yeah, which is great. [laughs] Like, you know, just when [inaudible] California needs an answer you can’t even get a president.
Matt: (laughs)
John: [laughs] We're sweet.
Matt: What do you think’s gonna happen in that deal?
John: Oh...
[REDACTED]
John: Yeah, that’s why I hate payin’ attention to it. [laughs] I just wanna — god, you’re stock’s getting’ beat, dude!
Matt: What’s that?
John: It sucks. Ah, I’m — out of your stocks ~
Matt: Oh its getting killed.
John: Yeah, but I wanna buy it.
Matt: Yeah.
John: I just you know, it’s like — One of these guys it’s like, it’s catching a falling knife.
[laughs]
Matt: {inaudible} 1 got a fuckin’ ton of options like the [inaudible].
John: Do you? Don’t worry. This is fuckin’ temporary.
Matt: Aww!
John: Yeah.
Matt: Let’s just stay her till the end of the year.
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John: Yeah, exactly.
Matt: How nice would that be, right?
John: That’d be great and then you come in, you pop it at 90. Pay no taxes like [inaudible]
Matt: Oh, mine.
John: Mine, mine, mine, mine, mine, mine, mine, mine.
[REDACTED]
John: You might want to! don’t know if you have any interest in tradin’ Alberta. That’s why, like, I went up there recently.
Matt: Uh huh.
John: It seem like the only market right now that we — we can get away from the California cash cow.
Matt: know it.
John: Ah, you sh — let me give you his phone number. You may want to listen in to what this new legislation means.
Matt: Gotcha. I'm into that.
John: It'sa—
Matt: What is it?
[REDACTED]
John: And the leader is John Melby.
Matt: John —
John: [inaudible]
Matt: A - what is it?
John: Ah, Melby. M-e-I-b-y.
Matt: M-e-l-b-y — Melby. [inaudible] it’s just a listen-only conference all, right?
John: Yeah, it — basically all going to talk about is, like, you know, Ralph Klein, the p — ah, the premier up there just put that legislation down
Matt: Uh huh.
John: About, you know, those — everyone bein’ safe for the next year.
Matt: Yup.
John: Recal laws and Joan laws.
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Matt: Mm hm.
John: Which, I mean, this is the way I view all this happening is, all right — now all these guys who are going to be in this auction —
Matt: Yeah.
John: Ah, they basically have an opportunity to participate, or they can default to the incumbent municipalities which are Enmex and Epcorp the big guys up there.
Matt: Uh huh. :
John: Ah, most likely now what they’re going to say is, like, well, it’s just a fault to them, because no one wants to make a decision to fix prices if you're like a steel mill, right? So that means that Enmex and Epcorps who're already short load and were planning on buying a thousand megs, ‘cause | talked to each of ‘em —
Matt: Uh huh.
John: — and this thing which was beyond what they could buy, so they’re trying to get other people to buy it for ‘em.
Matt: Yeah. }
John: Are now gonna go out there and have more to buy, ‘cause you know, like, I don’t know, US Steel is gonna have, you know, [inaudible] are gonna be givin’ them an additional 200 megawatts of load.
Matt: OK.
John: So that means that theyre now strapped to the pool price — them being Epcorp and EnMax that buy on a daily basis. And even more important than that is, ah, so there’s that rule on who [inaudible] going to be buyirig more out of the pool each day and they just set up a regulation that said that imports and exports to the pool cannot be the marginal price for setting pool price.
Matt: OK.
John: Which normally what happened is like guys at Powerex import, like, 5 megawatts at a really high level and they just [inaudible] ‘cause they know exactly how much the pool needs.
Matt: Yup.
John: That can no longer happen, so it’s gotta come from within, which means that, really, you’re disincentivizing people to bring power in and out of the pool.
Matt: Yup.
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John: So, it — what’s going to happen is these guys are gonna have to pay a higher price and not realize it. My op — my opinion.
Matt: That’s a interesting gig. 1 didn’t really realize that — so they can pool themselves [inaudible} from outside of the —
John: Oh, yeah.
Matt: Wow! And that sets a price?
John: Yup, it’s marginal pricing, just like California.
Matt: Huh. Wow.
John: It’s, ah — it’s pretty good, ‘cause everyone up there is pretty junior. You know, like, all these guys are — ah, the guys who were supposedly good at the other companies —
Matt: Mm hm.
John: I mean, no offence to ‘em, but, like, you know the _— at TransAlta {inaudible] — they're just, to me, junior traders.
Matt: Gotcha.
John: They really — you know, like — you know, there’s this one guy over at, ah, TransAlta. He's anice enough guy, this guy Chris, and he’s on, like, all these, you know — I don’t know — groups and everything else, like, you know, constructing stuff, [inaudible] like two or three times that — I just —he’s being a ninny. You know, like, I'm trying a Q1 with him, and, you know, I sold him like 116s. The next day the market looks a little softer —it’s like 12 and 13 — he calls me direct and he’s like, you know, hey, I'm lookin’ to sell 15s. I’m like, it’s 12 or 13.
Matt: Yeah.
John: I car hear it our there. Like, you wanria do anything? Scott’s out there [inaudible] I'll just do it with you because you wanna do a trade. He s — you're done, you're done to have 13. Isaid — I'm like relax.
Matt: [laughing] [inaudible].
John: You know, like, he fells he got a, you know, big deal, but it’s like that all the time, because, I just don’t think they’re used to volatility — it’s the first time they’ve seen prices move at all.
Matt: Uh huh.
John: So.
Matt: That’s funny.
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John: Yeah.
Matt: That's like that, ah, guy at fuckin’ {inaudible] at Merrill —
John: [laughs]
Matt: Like he’ll be out there, he’ll call me up and say just like, come on, man.
John: Iknow.
Matt: [inaudible] stop it.
John: Iknow. It’s like, I know where the market is, believe me.
Matt: Now, what is your bid, you know, it’s like, what do you want to do. Let’s not fuck with
.each other.
John: Yeah, exactly. Like you’re talking to him on the phone — try not to fuck with me.
Matt: Yeah. Come on!
[both laughing]
John: I mean, like, you know, have some respect for us. [laughs]
Matt: Um, no, I won't jerk you, you don't jerk me, and let’s —
John: Yeah. I know. I don’tknow. I’m —don’t get me wrong. I am a little bit worried about this market. You know, I’m just hopin’ to get paid and say, all right, see you.
Matt: Yeah, exactly.
John: You know? Or do something.
Matt: Well, but y —- you think theyll lock you up with a bunch of, ah, stock?
John: No, no stock at all. It's all cash.
Matt: Oh, mommy.
John: Yeah.
Matt: That is so nice.
John: Like, am — I mean, well, it should be nice if it g— I mean, who knows? Like, if they say it’s, you know, this big lawsuit.
Matt: Uh huh.
John: You know, like, I’m just — just about 20 now.
Matt: Yeah.
John: And like, you know, that would be, 1 don’t know, you know, 15% basically [inaudible]
Matt: Oh!
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John: Right? Which would be great, but it’d be you paid out, you know, the first one will come in March —
Matt: Uh huh.
John: And now it’ll be up to 500 cash.
Matt: Uh huh,
John: And then the next Oc would be one half of the balance.
Matt: Wow.
John: So, it could be like one the next Oc and the following March you get the rest.
Matt: That’s huge.
John: Yeah, there’s no stopping.
Matt: And they you’re signed up for another one. Hopefully.
John: Oh, yeah, exactly. Come like, ah, you know, the next year you get the next March.
Matt: So, you're just not getting paid out of your other stuff? [inaudible]?
John: Let's see, ah, pretty much. Yup.
Matt: Nice.
John: Yeah.
Matt: So, you just got a nice little bump then, huh.
John: Yeah.
Matt: Sweet!
John: Yeah, it’s cool. Definitely cool. But now you just wanna say, like, make sure that they don’t come in the end to you, say well, we're going to hold this money in reserve, because, you know, there's law — law proceedings going on — )
Matt: Uh huh.
John: [inaudible] you know. I mean, in a way we’re not as concerned, because we’re getting paid by the PX —
Matt: Mm hm.
John: So, we feel like, all right, we’ve got our money in. That risk is gone.
Matt: Are — are you guys concerned about these, a —
John: Yeah?
Matt: Are — are you guys selling in a lot to the PX now?
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John: Um, not as much, I don’t think.
Matt: I'd be careful, because, you know, with — since the October deal, they — they’re doin’ ~ you're subject to refunds as of October 1%.
John: Oh, really?
Matt: Yeah. Or October 31%.
_ JOHN: Oh, that’s good, “cause I — I've been pretty much out for all of Novie.
Matt: Gotcha. I mean, you should —
John: [inaudible]
Matt: I mean, I don’t know y — whether you guys have a residual position that you're s — you know, taking to cash, maybe you're long OTC and you’re selling PX or something like that — whatever it is —
John: Yeah, yeah, it’s be careful of that stuff.
Matt: Be careful, I mean, if you could f— flip your trade the other way —
John: Yeah.
Matt: Where you're buying from them, because they may end up retroactively lowering everything.
John: Yeah.
Matt: And — but they can only do it to, it was like 30 day — or 60 days or 90 days after the, um, when San Diego filed with the FERC, and it ended up being either October 1% or October 30%,
John: That sounds like a, ah — oh shit and it sounds like basically like a, ah, big knee pull deal. They come out a month later, and they lower prices by like four hundred bucks —
John: - [laughs] you know.
Matt: Yeah, exactly.
John: It’s a madhouse.
Matt: That’s what — you know, imagine that happening. You’re like, what the fuck I thought I was buyin’ all OTC shit — fuckin’ —
John: [laughs] exactly.
Matt: Where the fuck is my {inaudible} on into the PX 1 got [inaudible] Yeah, what!
John: Yeah, that sucks, man.
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Matt: So, just, you know, I would keep an eye on that.
John: Yeah, I-1think we’ve been pretty chill on that stuff, ‘cause I think what we've been doing is, like, you know, ah, [lowering voice] [inaudible] doing is we're out there sellin’ [break in recording] 1 think it’s a general trade [inaudible] at the time.
Matt: Is that helpin’?
John: No, that won't help at all. Never mind. I was just sayin’ we were buying a lot out of the pool, but selling index over the counter just totry to and reduce our credit exposure with the PX for a long time.
Matt: Gotcha.
John: But that really hasn't done that much. In that it does nothing in terms of that price —
Matt: Uh huh.
John: [inaudible] didn’t trade, so — the logic screwed on my part. I don’t know. You hearin’ any good ideas out there from anyone that you're, like, now kinda pulling?
Matt: No. I mean, I mon- I mean, they’re all been about the same. I think everyone — I mean, everyone seems — there is — seems to be a general concern for our market —
John: Right.
Matt: — market health.
John: Yeah.
Matt: You know, if we’re going to be around here next year.
John: Ah, I kinda look at this as no different than the mid-west a year ago or two years ago.
Matt: Yeah.
John: You know, it’s cyclical.
Matt: Yeah. No, itis. [sit w— you know, I tell you what — they — they’re still not back to where they were, though.
John: No.
Matt: Idon’t think.
John: Ab, there’s huge problems, I mean, like, the — the gas thing — if we didn’t have this huge gas problem —
Matt: — Mm hm.
John: Power would not be doin’ much right now.
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Matt: No.
John: Probably, right?
Matt: No. Power would — you know, we — we —we’d be — I think we’d be in the hundreds or whatever, low hundreds.
John: Yeah. Well, I was — I was even tellin’ you that there's nothing more that I would have loved for [inaudible] to average sixty bucks.
Matt: Yeah.
John: Just not even for like, ah, making money for standpoint.
Matt: Uh huh.
John: Just so that you know, everyone said, OK, Q3 was an anomaly, we’re going to fix it next year.
Matt: Mm hm.
John: [inaudible] everyone walks away with their cash and you know, prices back to normal —
Matt: Life's good. Everyone’s happy.
John: Yeah. Exactly. And then, ah, blow ‘em out next year.
Matt: Go on.
John: {laughs}
Matt: But, you know what — Q3, actually the prices, you know, somewhat made sense a little bit, you know, there were days when they were high, there were days when they were lower —
John: Right.
Matt: - and — and it actually, you know, made a little bit of sense.
John: Yeah. ) ) a
Matt: This Q4 makes absolutely no fuckin’ sense whatsoever, other than the ga — I mean, the gas.
John: Issue’s gas, right.
Matt: Obviously.
John: Yeah.
Matt: Dow -w—
John: [inaudible]
Matt: We're actually givin’ a lot of peaple — were getting a lot of rumblings up here of, ah, like,
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um, some of the local muni’s and stuff like that —
John: Uh huh.
Matt: — are in a fuckin’ world of hurt, because here these guys are locked — they never bought their gas.
John: Oh, right.
Matt: They have, like, you know, gas [inaudible] gen —
John: Oh, right. i
Matt: — never bought the gas.
John: Right so now they’re like, We can’t run.
Matt: Uh huh.
John: Yeah, I didn’t think itd be this bad to the power side, to be honest with you.
Matt: Yeah.
John: I'm really surprised about how much is actually screwin’ power.
Matt: Mm hm.
John: Like in all these AES units and all that shit certainly aren’t helping any down south either.
Matt: Yeah.
John: Like, but, you know, the hydro situation is shitty out there.
Matt: Oh, it’s not good.
John: And there's nothing up there, right?
Matt: No. Well, here’s one of the things that we saw, is that, um, the, ah, the flows for Dec are up quite a bit.
John: OK, good.
Matt: And they’re - they’re going to be up by like, somethin’ like around couple grand.
John: Now is that, ah, the flows comin’ into the Coulee or —
Matt: Ah-
John: Or is that just down.
Matt: at-— at McNary.
John: Oh, at McNary, OK.
Matt: Uh huh.
John: That makes sense. Yeah, see what they’re doin’ is they’re just movin’ the water down and
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in anticipation of Powerex sending the po — water down.
Matt: Mm hm.
John: Like, I think you know, like under the Colombia River treaty, Powerex sends, like, a huge amount of water, like over the next month.
Matt: Yeah.
John: Or is supposed to.
John: So that — but you're right, it’s definitely a forced generation now. Can you hold one second, man?
Matt: Yeah.
John: {speaks on another phone] Hello this is John. Hey what’s up Toni, how you doin’? Sure.
[REDACTED]
Matt: [inaudible] Um, so yeah, I would — you know, that’s why I keep lookin’ for, um, the, ah, ah, you know, maybe some club in the northwest, little hydro action comin’ in.
John: Yeah.
Matt: And [ mean, the flow’s gonna be up, like, close to 2000 megs.
John: That’s a lot.
Matt: [inaudible]
John: That's over — that’s at McNary?
Matt: Uhhuh. Well, that’s — you know, we just do — we do like a kinda, you know what the, like, the money multiplier is, it’s like the Fed releases a little bit of funds —
John: Oh, right.
Matt: It trickles through —
John: Right.
Matt: Like it, you know, here’s the, ah — the official [inaudible] forecast —
John: OK.
Matt: — for water flows what they’re going to do over — over the next month.
John: [inaudible]
Matt: And we — there’s our like a multiplier action that you can, you know, could direct the
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flows all the way through.
John: That’s pretty cool [inaudible].
Matt: You know what I mean?
John: That’s some nice information.
Matt: Like, if it goes at this plant, it’s gonna be flowing it’s gonna be flowing here, you know—
John: I gotcha.
Matt: And you just add ‘em all up.
John: That’s a lot of generation.
Matt: So, yeah. But, here — here we are, we're sitting here and we’re fuckin’ — but you know — you know what —
John: [inaudible]
Matt: — if it comes now they're still — you know, st — they're still drafting, you know, they're drafting some of the, ah, reservoirs.
John: Right. Yeah.
Matt: So, if they don’t get any rain or anything like that, that could mean a tough QI, um —
John: Oh, yeah.
Matt: You know, Q2.
John: Yeah, that could be real tough here.
Matt: So—
John: That’s the whole think, like, I ¢ — I could be wrong, like, you know, the rainy season starts up there, if it does, and it will, I mean, there’li be some rain, don’t get me wrong —
Matt: Yeah.
John: No-— ah, if there’s a — there is a rainy season, there are people are gonna start to lean on ‘em a bit.
Matt: Mm hm.
John: But! do think it right, like, the fuel source alone for a lot of generation is just way too high.
Matt: No.
John: Yeah. Like I don’t know how high [inaudible] and stuff like that. 1know it’s not as strong as So Cal [inaudible] but it’s still, ah, sub — substantial.
Matt: Mm hm.
CW ® NN A WN
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John: I don’t know what the NOX issue is up there. I don’t think it’s as bad as it is down [inaudible] —
Matt: 1heard Cal 01 NOX rated, like, fuckin’ 30 somethin’ — 38 or 37 [laughs]
John: Really?
Matt: That’s huge.
John: Man, hah!
Matt: That's one of the biggest pro — you know, I — one of my plans for, ah, the fix of this thing is you just have to say, Listen, you gotta put this fuckin’ air pollution on hold.
John: Yeah, I agree. ‘Cause obviously what are you gonna do now? Like it makes almost more sense now to buy coal units.
Matt: Mm hm.
John: And just to pay for the high cost.
Matt: Yup.
John: Of NOX. And that’s anti- you know, the environment, really.
Matt: Yeah.
John: So-
[break in recording)
John: — 100, 115 Q4 for Alberta now.
Matt: Whoah.
John: That's still cheap [inaudible]
Matt: Hey, the, um, sh, you guys are starting to get the quarters defined pretty good, huh.
John: What's that? The trades? Quarters?
Matt: Yeah.
John: Yeah, absolutely.
Matt: Nice, I mean, I was just a [inaudible] person now the quarters are gonna be the find.
John: Yeah, we started breakin’ ‘em out and stuff like that.
Matt: Nice.
John: Yeah, I can give you a feel if you want, for quarters.
Matt: Oh (inaudible)
John: Like —
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Matt: Yeah, that’d be great.
John: Yeah, Q — ah, Q1 [inaudible] low [inaudible] it’s around 111 or so. Right now — it traded 141s yesterday.
Matt: Yeah.
John: Pretty much your guys tried to run up the Q1, thinking that’s the hammer for the whole curve — )
Matt: Mm hm. .
John: Which is probably right.
Matt: Yeah.
John: It’s, ah, 145 at 160 now.
Matt: Wow.
Jobn: Yeah, it’s pretty steep. The Q2 has been, ah, strong as well. Engage was a big buyer of that
and so is Trans Canada who are buying on load they have.
Matt: Mm bm.
John: That was tradin’ as low as 81s. Right now I think it’s a hundred bid at, like, 115.
Matt: Whew!
John: Generally the Q2 and the Q4 will trade the same prices right now.
Matt: Uh huh. Q3’s around 150?
John: No, Q3s are tradin’ around, ah, 138, 140.
Matt: 140.
John: And the interesting thing is when I first got into this thing I thought the Q3 was way undervalue, ‘cause I was trading as low as 120s.
Matt: Uh huh.
John: And, like, you know, you do the conversion to US, you get, like, you know, under a hundred bucks base [inaudible] or just around a hundred bucks.
Matt: Yeah.
John: You compare that to Mid-C, like, what the fuck?
Matt: Mm hm.
John: But there’s no load up in Alberta in Q3.
Matt: Gotcha.
0 ® 3 A BR WRN
WON NON NN NN NNN ee ee es em pm Re Re eel QO WO ® NN AA hh WN =O VW OX NN LAW ND
Ex. SNO421
John: You know, the one thing to know is just in terms of like, unit-wise —
Matt: Uh huh,
John: ~ ah, the Wild Four which is a, ah, one of the PPAs — it’s 2 750 meg gas unit.
Matt: Mm hm.
John: Um, Enmax bought that PPA.
Matt: Yeah.
John: And turns out that unit’s going to be-down. It was supposed to be down till May and they're going to try to repower — take it like another 200 megs out of it —
Matt: Uh huh. .
John: -— and it won’t be back up until, like, late August, early September.
Matt: Oh, those guys are gonna be bummin’ just a little bit, huh?
John: [inaudible] yeah — that with the additional load they're getting —
Matt: [laughing]
John: They're freakin’ out. I mean, they're goin’ nuts. But, not really, ‘cause they own PPAs too.
Matt: Oh, OK.
John: So, they can basically ride their PPAs up. That — you know, whatever they buy in the auction, they'll pass on to their customers.
Matt: Gotcha.
John: And they’ll ride the profits from the PPAs.
Matt: Gotcha.
John: So, like, 1 don’t know, you know, every time — 1 try to-do some Mid-C —I was just trying to [inaudible] some Mid-C Alberta spreads.
Matt: Uh huh.
John: And that’s just a mistake. [laughs] like, you know —
Matt: They have nothing to do with each other.
John: They have really — have very little, yeah. Yeah.
Matt: Hm.
John: Especially when Mid-C’s over that much.
Matt: Yeah. [inaudible] try to do some Palos energy.
L- J T B - WE I SN" IE I
Won om NNN ON EEE Eg 8B BEY RPV RUBNEREYESE Qa 8 = 5
John: Oh, yeah, exactly.
Matt: [laughs] I blew out on that one.
John: [laughs] That’s just, ah — that’s a suicide trip right there.
Matt: [laughs]
John: [laughing] So —
Matt: And then the Q4s, what’s that make that?
John: Yeah c — ah, same as Q2.
Matt: [inaudible]
John: [inaudible] trade lock-step, sell like a hundred at 115. So, the Cal I think traded last 130s.
John: And it’s like, 125, 135, I think.
Matt: Gotcha.
John: The buyer who’s a really stupid buyer out there is Trans Canada.
Matt: Uhhuh.
John: They just need to buy or they're just listin® offers, kind of. Engage is kinda of playin’ two ways out there. )
Matt: Does Engage have credit up there?
John: Yeah, I think so.
Matt: [inaudible]
John: Ineed to get — yeah, [inaudible] Canada.
Matt: Uh huh.
John: A lot of these guys who you trade with; I think you eould to do, ah, US counterparties if- you have problems.
Matt: Gotcha.
John: Like, ah, I've only kind of got matched up with guys we have credit with, like Trans Canada and TransAlta.
Matt: Mm hm.
John: But the other guys — like, you guys were using your North American.
Matt: Uh huh.
John: Entity, and I think, like, obviously we could use El Paso, Biggs, ah, AEP and all those
w
A -A--REE B- S E N
guys.
Matt: Oh, are those guys playin’ it? Is El Paso and, ah —
John: Yes, El Paso’s been pretty active in it, like we both got active at lower prices, and now | think we covered it and we're just kinda quiet a little bit.
John: Biggs is in there, ‘cause Biggs naturally has [inaudible] load in the area.
Matt: Oh, he does?
John: Yeah, so, he hast to be up there.
Matt: Gotcha.
John: And ah —
Matt: How's he doin’? Is he doin’ all right?
John: He’s doin’ real well. Like, I haven’t heard a lot from him, like, ah, but he’s just a bull, generally.
Matt: Mm hm.
John: You know, so he — he’s not going to really get short of market.
Matt: Yeah.
John: But he’s been pretty quiet, I guess, right?
Matt: Gotcha.
John: Yeah.
Matt: Ihaven’t—1haven’t seen him too much. I mean, I’ve seen him occasionally, but —
John: Right. So, do what do you think Q3 02 Palo is, anyway?
Matt: Ah, 140.
John: 140, yeah. I got some — I got some, like, 125 [inaudible] ah, [inaudible]calls up there —
Matt: Uh huh.
John: —but, ah, I don’t know — really know what value is like — [ mean, it’s hard for people to pay, like, you know, if I value it, I think it’s valued around 35 bucks, but I don’t think anyone’s going to pay 35 dollars a premium for it.
Matt: No. Who don’t you — why don’t you do the puts and sell the, ah, sell the underlying
John: I see what you’re saying, buy the puts and sell the underlying?
Matt: Yeah, or sell the pu— y — you're long the calls?
hI TEEN EE - LY TY
John: Right.
Matt: So, just sell the calls out and then sell the underlying. I’m sorry — sell the puts and then sell the underlying.
John: Isee what you're saying. [inaudible] puts [inaudible].
Matt: Exactly.
John: Gotcha, OK. That's a good point, actually.
Matt: That’s what — that’s what I would de, because you're right, it’s going to be tough to get someone to, ah pay 35, 40 bucks probably for that option.
John: Right.
Matt: Um, I don’t know, I'd just — I’d offer the puts out and then as soon as you saw the push [inaudible] piece of the underlying and you're done.
John: Yup. Yeah, it’s a good point. And that’s a — I wonder what that market’s gonna be back there, too.
Matt: What’s that?
John: I wonder what that market's gonna do.
Matt: Yeah. Who knows?
John: But more importantly, man, what are we doin’ with stock base this year? Like, what the hell do we buy or sell [inaudible]?
Matt: ldon’t know. I'm fuckin’ all strapped out. I'm fuckin’ —
John: Yeah.
Matt: — loaded up with Intel. I would load it up in Intel, like 39.
John: Oh, nice man.
Matt: Ah, all margined up.
John: Nice.{laughs]
Matt: And, ah, and the thing went up to, like, 46, 47 or whatever. I was just like, aw, lookin” good.
John: I’m a superstar! [laughs]
Matt: And then, boom — two days, it's gone.
John: Ugh!
Matt: [laughs]
OW 0 NN a wn ps WN oe
WwW oN OR RNN NNN ON sg 3B 3 BO ROR 2 E88 86 % 3 365% 9p = 8
Ex. SNO421
John: I’ve been in —ah, I mean, just, I mean, I’ve missed a lot of stuff, but I've been to Ca -1I sold out of Enron and PC — I thought PC2 was gonna get smoked when, you know, prices started to run up at So Cal and [inaudible].
Matt: Uh huh.
John: It didn’t move. It seems like, you know, PC2 stock is not movin’ ‘cause people [inaudible] buying it, that they’re gonna get bailed out, or don’t think any worse news could come out. Idon’t know. But I sold that — all that, and I sold my Enron a little while ago, but I want to come back in here, and start buying these energy companies back up.
Matt: Yeah. I think, I mean, I think a lot of the — you think th — the average [inaudible] public sees a suite like this —
John: What’s that?
Matt: Or is it the investing public sees a suit like this and they go, whoah!
John: Yeah, exactly.
Matt: Six million dollars?!
John: They say, Holy shi - Yeah, they're never gonna be able to see it - right.
Matt: Yeah,
John: Yeah, that’s true.
Matt: So, I mean, there’s probably, ah — you’re probably right. It is a good buy. If had any cash [inaudible] buy it.
John: Yeah. Yeah, that’s another issue — having cash [leughs] But that’s all right.
[REDACTED]
Matt: Aw, that’d be huge. Wow, that chart looks ugly!
John: Oh, your chart?
Matt: Yeah.
John: Yeah, I was looking at these huge two-step functions, right? Boom, boom!
Matt: Yeah.
John: You're goin’ back to your old loads here, it looks like, right?
Matt: Yeah, that’s crazy.
John: 1t is crazy.
Matt: [inaudible] you gotta come in and buy [inaudible] 1 think.
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Jobn: Yeah. Yours. No, just kiddin’.
Matt: Yours, yours.
John: Just kiddin’. How — I mean, what’s — this is kind of foolish [inaudible] — Is this really all of this stuff?
Matt: Uh huh.
John: I'mean, your earnings — I —- I heard one of the guys came out and said, no, no, we're not gonna get smoked like that. -
Matt: Yeah, no, earnings are gonna be fine.
John: Yeah, I thought earnings would be good, right?
Matt: Yeah
John: Except, you know, just judging from his reaction, kinda, I kinda read it as saying, Ah, they're actually pretty good, but we’ll just say they’re fine.
Matt: Mm hm.
John: You know.
Matt: Yeah, no — no, they’re gonna be fine.
John: Yeah. Let's see — 62s —
Matt: Um-—
John: I’m gonna — I'm gonna have to go buy some Enron. I can’t believe [inaudible].
Matt: Yeah. I mean, I think — I think you’ll be selling at 70 and ah —
John: Yeah.
Matt: You know, in the 70 handles, and, you know, by at least — by the end of Q4 —
- JOHN: Yeah [inaudible].
Matt: You know, as soon as they report their earnings.
John: Yep, nice, hey, when do you guys actually end up reporting?
Matt: Like, January, I think.
John: Oh, OK, so we got time on anyway.
Matt: Yeah, exactly.
John: Ah, 1 think it’s time to — well — [echoing voice in the background] 133, 125, 133 {inaudible} Alberta. This auction, so you know, is, ah, postponed till Monday and Tuesday of next week.
Matt: Oh, itis?
NO 00 3 AA BA WN
PE a nA WN = Oo
John: So, it actually will go on — 1-1 th —I saw that they’re going to run this thing up, though. They’re just gonna run it up to the OTC market and higher.
Matt: Uh huh.
John: So, we'll see what happens though.
Matt: Gotcha.
John: Cool, man, I think I’m gong to go out here buy some stocks.
Matt: Allright. Sounds good.
John: All right. Great. Good talkin’ to you.
Matt: Good talking to you, Johnny.
John: You too Mattie.
Matt: OK, bye.
John: OK, bye.