SACRAMENTO, Calif., Oct 14, 2003 -- Henwood Energy announced the release of the Power Generation BlueBook Advisory Service that offers the first comprehensive independent view of the valuation of U.S. electricity generating plants.
"There is a great deal of financial restructuring going on in the electric power business today. The Power Generation BlueBook focuses on whether it will be sufficient to return the asset fleet to profitability and when," said Mark Henwood, president and CEO of Henwood Energy. "We provide a cost-effective independent benchmark on changing asset values and the probability that a plant will be able to service its debt and make a return over the next fifteen years. This is especially important given the large merchant exposure in today's market and the increasing movement toward asset-backed trading," he added.
Power Generation BlueBook Advisory Service findings include:
-- Nationally, more than $25 billion of value has been lost on new combined cycle generation built since 1999 from an initial $90 billion investment.
-- The West is the relative winner for combined cycle plant valuations due to a faster than expected recovery from the current overbuilt position and a wholesale electricity market supported by high gas prices. California and the Pacific Northwest, Florida, and Texas are regions with the best relative asset valuations.
-- The regions suffering the lowest asset valuations have the largest overbuild which will require time to absorb, and include the Southeastern US including the Entergy, Southern and SPP markets, Illinois (MAIN), and New England.
-- In a significant part of the US the 15-year expected values for combined cycle units are below 70 percent of new build costs, suggesting that on current values many could have difficulty making full debt repayments before 2018.
"The Power Generation BlueBook enables Henwood to provide owners, lenders, and credit managers a clearer picture of plant and portfolio asset values and their current leverage against debt because we incorporate commodity price volatility and volume risks that provide a clearer understanding of the true asset value," Henwood said.
The Power Generation BlueBook covers 4,350 electric power units, 828 GW of plant production with an estimated $462 billion in value. The Advisory Service is both a report on the current worth of generation assets and a regularly updated database providing the detail behind the changing asset valuation that will be updated each year in the Fall and the Spring. The Power Generation BlueBook is the latest in a new class of products from Henwood leveraging its RISKSYM simulation software, Power Market Advisory Service Market Outlook and Price Forecast, and Henwood's market leading EnerPrise databases to create value-added insight into the changing electric power industry future.
Henwood Energy's methodology is consistent with the Committee of Chief Risk Officers' recommendations on asset valuation in illiquid markets and is widely used throughout the industry as a standard for asset valuation. The Power Generation BlueBook takes a fundamental view of the intrinsic value of electric power asset valuation, incorporating the physical characteristics and market volatility as it affects the operation of power plants. These are combined using cash-flow-at-risk (CFaR) to produce plant-by-plant detail, probabilistic output and a range of valuation and risk parameters for each plant evaluated.
For a white paper summarizing Power Generation BlueBook key findings and product information go to www.henwoodenergy.com/bluebook or call 916-609-7754.
About Henwood Energy
Henwood Energy is a provider of enterprise software, data and strategic consulting services to energy companies and energy investors. Since 1985, Henwood Energy has helped customers assess power market fundamentals, develop integrated resource plans and manage their complex electric power business risk. Henwood is a wholly owned subsidiary of Global Energy Decisions, LLC, an integrated data, software and analytics company that brings together innovative businesses and people to provide a new standard in energy information.