Industry publication, December 2001

NYC 9/11 Public Portal Document

I

vided nearly $50 billion of con- profitability because such cost may increase for electricity already weakened economy struction or bridge financing increases uniformly affect the transmission systems, which into recession, particularly if J. to the generation industry, in industry. Similarly, property by their nature are quite vul- consumer confidence does the hope that the capital mar- insurance costs will likely nerable to sabotage. Even not rebound. Any recession

! I kets will be ready and able to replace bank loans with per- increase, but they will also in- though transmission will like- crease for the industry at large, ly remain a regulated, cost-of- will hurt overall credit quality in the competitive U.S. power manent financing. A recession The bigger issue for credit is service business, someone will generation sector. could find many banks hold- that many new and ________ have to absorb the Lower power prices and ing on to debt longer than renewed policies additional securi- weakening electricity demand 1 I they anticipated, especially if will likely ex- y LOWCK ty costs. Insofar have already be^n to erode I power prices and electricity elude acts of / as generation credit strength. If government- f demand cannot comfortably support investment-grade terrorism / as a basis / power prices picks up part of the directed stimulus programs backfire, economic recovery ! bonds. The bank loans that for claims. and weakening \ tab, plants could stall for some time. If Sundard & Poor’s has already As a result, I sited clos- that happens, credit quality evaluated—particularly loans lenders demandhave 1 er to load will fall for all but the most e£B- to merchant power projects— will have / centers cient and competitive produc- bear this out. Even if the capi- to assume \ already begun to f will pay less ers. Standard & Poor’s expects tai markets are deep enough force majeure \ than those those who have relied too I for such an amount, they will risk, some- erode credit ** sited more heavily upon debt financing not be interested in less than thing that will , remotely; loca- may be some of the first casu- investment-grade debt. definitely lower . tion will make a allies. Those that can diversify The events of Sept. 11 may credit quality for sin- — competitive differ- their generation portfolios directly affect existing genera- gle-asset, project-financed ence. geographically and keep costs tion credit in ways never con- powerplants. In short, the economy and down will fare the best. Ik templated. The cost of provid- For generation companies, the markets are still sorting Peter is a director of ing security at plant sites will diversity in location will out the implications of the Standard&Poor’sinNew York. likely increase, but probably become more important than Sept 11 attacks. Nonetheless, S&P, ENR and Power are all not enough to materially affect it already is. Security costs also those events may push an units of the McGraw-Hill Cos.

I

Precision Tube Alignment Alignment. Pipe Alignment

No guessing! Just get it right

F > the first time by using Walhonde s innovative tube & pipe alignment tools for welding. ! In all you will increase productivity by 50% to 300%; improve quality control and Walhonde Wallbanger tm enhance safety. Saving time and money. Walhonde Pipefitter tm

IdeaTfor: Advantages: Waterwall tubes Quickly & accurately align Economizer tubes stressed pipe Reheat tubes Align pipe to pipe or Crossovers Walhonde Tools, Inc. pipe to elbow TUBE & PIPE ALIGNMENT TOOLS Light weight, easy to use II [ 1299 Childress Road, South Charleston, West Virginia 2530911 -800-TUBE FIT / www.walhonde.com / All tools made in the USA

86*Powerplant Construction

NYC-\/\/TC_000142030