SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 23, 1995
CALIFORNIA ENERGY COMPANY, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-9874 4-2213782
(State of Incorporation) (Commission File No.) (IRS Employer
Identification
No.)
302 South 36th Street, Suite 400, Omaha, Nebraska 68131
(Address of principal executive offices, including zip code)
(402) 341-4500
(Registrant's telephone number, including area code)
No Change
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
In connection with the proposed issuance of certain debt
securities, which are non-recourse to California Energy
Company, Inc. (the "Company"), by a special purpose funding
corporation which is a subsidiary of the Company, the
Independent Engineer's Report, dated June 1995, which is
attached to this report as Exhibit 23.1 (the "Independent
Engineer's Report"), was prepared by Stone & Webster
Engineering Corporation and furnished to prospective
investors.
The Independent Engineer's Report contains cash flow
projections prepared by Stone & Webster and a discussion of
the many assumptions utilized in preparing these
projections.
All projections of future operations and the economic
results thereof included in the Independent Engineer's
Report have been prepared by Stone & Webster. Deloitte &
Touche LLP and Coopers & Lybrand L.L.P., the independent
auditors for the Company and certain of its subsidiaries,
have neither examined nor compiled the projections and,
accordingly, do not express an opinion or any other form of
assurance with respect thereto. None of the Company, any of
its subsidiaries, Stone & Webster or any other Person has
any obligation to, nor do they intend to, provide any
updated reports or revised projections.
For purposes of preparing the projections, certain
assumptions were made, of necessity, with respect to general
business and economic conditions, the revenues the
subsidiaries owning interests in the referenced Salton Sea
projects will earn in their respective businesses, the
"Avoided Cost of Energy" in the future and several other
material contingencies and other matters that are not within
the control of the Company, its subsidiaries or Stone &
Webster and the outcome of which cannot be predicted by the
Company, its subsidiaries, Stone & Webster or any other
Person with any certainty of accuracy. These assumptions
and the other assumptions used in the projections are
inherently subject to significant uncertainties and actual
results may differ, perhaps materially, from those
projected. None of the Company, its subsidiaries, Stone &
Webster or any other Person assumes any responsibility for
the accuracy of such projections. Therefore, no
representation is made or intended, nor should any be
inferred with respect to the likely existence of any
particular future set of facts or circumstances. If actual
results are less favorable than those shown or if the
assumptions used in formulating the projections prove to be
incorrect, the Company or its subsidiaries could be
adversely affected.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) Exhibits
23.1 Independent Engineer's Consent, dated
June 23, 1995.
99.1 Independent Engineer's Report Prepared for Salton
Sea Funding Corporation by Stone & Webster
Engineering Corporation as of June 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
CALIFORNIA ENERGY COMPANY, INC.
By: /s/ John G. Sylvia
Name: John G. Sylvia
Title: Senior Vice President
and Chief Financial Officer
Dated: June 23, 1995
EXHIBIT INDEX
Exhibit
Number (Description) Page
- ------ ------------------------------------------------- ----
23.1 Independent Engineer's Consent, dated June 23, 1995.
99.1 Independent Engineer's Report Prepared for Salton
Sea Funding Corporation by Stone & Webster
Engineering Corporation as of June 1995.
INDEPENDENT ENGINEER'S CONSENT
We consent to the inclusion of our report dated June 1995 of our
analysis of the Salton Sea Project and Partnership Project facilities in the
Report on Form 8-K, dated June 23, 1995, filed by California Energy Company,
Inc. and to the reference to our name therein.
/s/ Theodore Critikos
By: Theodore Critikos
Title: Vice President
STONE & WEBSTER ENGINEERING CORPORATION
Denver, Colorado
June 23, 1995
<PAGE>
INDEPENDENT ENGINEER'S REPORT
ANALYSIS OF SALTON SEA GUARANTORS, PARTNERSHIP GUARANTORS
AND ROYALTY GUARANTORS
PREPARED FOR
SALTON SEA FUNDING CORPORATION
JUNE 1995
COPYRIGHT 1995
STONE & WEBSTER ENGINEERING CORPORATION
DENVER, COLORADO
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION TITLE PAGE
- ----------- ----- --------
<S> <C> <C>
1.0 Executive Summary and Conclusions .......................... B-1
1.1 Executive Summary .......................................... B-1
1.2 Scope of Work .............................................. B-4
1.3 Conclusions ................................................ B-4
2.0 Project Overview ........................................... B-5
2.1 General Description of Magma Projects and Processes ....... B-5
2.2 Management and Organization ................................ B-6
2.3 Salton Sea Projects ........................................ B-6
2.4 Partnership Projects ....................................... B-7
2.5 Royalty Projects ........................................... B-8
3.0 Salton Sea Expansion ....................................... B-9
3.1 Capacity Expansion ......................................... B-9
3.2 pH Modification Process .................................... B-9
3.3 Engineering Services Agreement ............................. B-10
3.4 Schedule ................................................... B-11
3.5 Cost Estimate .............................................. B-11
4.0 Project Operations ......................................... B-12
4.1 Salton Sea Projects ........................................ B-13
4.2 Partnership Projects ....................................... B-14
5.0 Project Contracts .......................................... B-16
5.1 Power Purchase Agreements and Related Agreements .......... B-16
5.2 Geothermal Sales Contracts ................................. B-21
5.3 Solids Disposal Agreements ................................. B-22
5.4 Operating and Maintenance and Administration Agreements ... B-22
5.5 Support Services Agreement ................................. B-23
6.0 Funding Corporation Affiliates and Participants ........... B-24
6.1 California Energy Company, Inc. (California Energy) ....... B-24
6.2 Magma Power Company (Magma) ................................ B-24
6.3 Dow Engineering Company (Dow) .............................. B-24
6.4 Southern California Edison (SCE) ........................... B-24
7.0 Permitting and Environmental ............................... B-25
7.1 Operating Plants ........................................... B-25
7.2 Salton Sea Expansion ....................................... B-25
8.0 Assessment of Financial Projections ........................ B-25
8.1 Base Case Assumptions ...................................... B-25
8.2 Base Case Financial Projections ............................ B-26
8.3 Sensitivity Analysis ....................................... B-29
</TABLE>
i
<PAGE>
ATTACHMENTS
<TABLE>
<CAPTION>
NO. TITLE
- ------- -------
<S> <C>
1 Assumptions and Documents Reviewed
2 Financial Projections
</TABLE>
ii
<PAGE>
SECTION 1.0
EXECUTIVE SUMMARY AND CONCLUSIONS
1.1 EXECUTIVE SUMMARY
Presented herein are the review and analyses (the Report) by Stone &
Webster Engineering Corporation (Stone & Webster) for the proposed issuance
of securities by Salton Sea Funding Corporation (Funding Corporation). Magma
Power Company (Magma), a wholly owned subsidiary of California Energy
Company, Inc. (California Energy), has established Funding Corporation to
issue notes and bonds to investors guaranteed by, and to make loans to, each
of the Salton Sea Guarantors, the Partnership Guarantors, and the Royalty
Guarantor (Guarantors) secured by assets relating to eight operating power
plants and one plant under construction consisting of the following:
o The Salton Sea Units I, II, III and IV (Salton Sea Projects), including
steam production (pH Modification) and a planned capacity increase
(collectively, the Salton Sea Expansion).
o Partnership interests in the Vulcan, Del Ranch, Elmore, and Leathers
Projects (the Partnership Projects), and
o Royalty and other payments received through Magma, Vulcan Power
Company, and California Energy Operating Company (CEOC) from the Vulcan, Del
Ranch, Elmore, Leathers, and East Mesa Projects (the Royalty Projects). The
Salton Sea Projects, Partnership Projects and the Royalty Projects are
collectively referred to herein as the Projects.
The Salton Sea Units I, II and III are owned by Salton Sea Power
Generation L.P. (SSPG) and purchase geothermal brine and steam from Salton
Sea Brine Processing L.P. (SSBP). SSPG and Fish Lake Power Company (FLPC) are
owners of the Salton Sea Unit IV Project. SSPG, SSBP and FLPC are referred to
collectively as the "Salton Sea Guarantors." Magma owns a 99 percent limited
partnership interest in SSBP and the Salton Sea Power Company (SSPC) owns a
one percent general partnership interest in each of SSBP and SSPG. SSBP owns
a 99 percent limited partnership interest in SSPG.
The Partnership Guarantors are Vulcan Power Company and CEOC. Vulcan Power
Company is 99 percent owned by Magma and 1 percent owned by the Funding
Corporation and owns a 50 percent partnership interest in Vulcan/BN
Geothermal Power Company (the Vulcan Project). The remaining 50 percent is
owned by BNG, a subsidiary of Mission Energy Company. CEOC, 99 percent owned
by Magma and 1 percent owned by the Funding Corporation, owns a 40 percent
general partnership in each of Leathers, L.P. (the Leathers Project), Del
Ranch, L.P. (the Del Ranch Project) and Elmore, L.P. (the Elmore Project).
Magma owns a 10 percent limited partnership interest in each of the Leathers,
Del Ranch, and Elmore Projects. The remaining 50 percent ownership interest
in the Leathers, Del Ranch and Elmore Projects is owned indirectly by Mission
Energy Company.
Salton Sea Royalty Company, the Royalty Guarantor, is 99 percent owned by
Magma and 1 percent owned by the Funding Corporation. The Royalty Guarantor
will receive royalties and other payments from each of the Royalty Projects,
except Vulcan.
Funding Corporation intends to issue $475 million of senior secured notes
and bonds (Securities). The net proceeds of the Securities will be used to
(i) refinance a portion of the debt incurred by California Energy to acquire
Magma, (ii) refinance certain project level debt at the Salton Sea Projects,
and (iii) finance the Salton Sea Expansion.
The Salton Sea Projects and the Partnership Projects are located in
Imperial County, California in the Salton Sea area and sell power to Southern
California Edison Company (SCE) in accordance with power purchase contracts
and related agreements for transmission system interconnection (see Project
Contracts). A map showing the location of the Salton Sea and Partnership
Projects is provided in Figure 1-1 and an overview of the Projects is
presented in Table 1-1. The steam modification plan (pH Modification), which
is to be completed as part of the Salton Sea Expansion, should enable Magma
to reduce operating and maintenance costs and increase unit availability at
the Salton Sea Projects. Dow Engineering
B-1
<PAGE>
Company (Dow) is the engineering, procurement, and construction management
contractor for the Salton Sea Expansion. As of mid-June 1995, the Salton Sea
Expansion was approximately 30 percent complete. Construction progress to
date is on schedule and overall completion of the Salton Sea Expansion is
currently expected in mid-year 1996. The Salton Sea Projects and Partnership
Projects are operated by CEOC and have been in commercial operation for
several years using brine purchased in accordance with certain geothermal
sales contracts. The Salton Sea Projects were originally developed, owned,
and operated by Union Oil Company of California (Unocal) and were
commissioned in 1982, 1990, and 1989 respectively.
The Salton Sea Expansion will include the construction of a new Salton Sea
Unit IV which will enable Magma to sell an additional 39.6 MW of power to SCE
under a 30 year power purchase agreement (Salton Sea Unit IV PPA).
The commercial operation dates for the Partnership Projects range from
1986 to 1990. The Partnership Projects pay royalties to third parties that
own interests in the geothermal resources for the Partnership Projects and to
Magma. Magma also receives royalty revenues from the East Mesa Project.
Royalty payments are based on each Project's revenues.
TABLE 1-1
OVERVIEW OF THE PROJECTS
<TABLE>
<CAPTION>
FACILITY NET
NET OWNERSHIP YEARS OF
CAPACITY INTEREST COMMERCIAL CONTRACT CONTRACT POWER
(IN MW) (IN MW) OPERATION EXPIRATION TYPE PURCHASER
---------- ----------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
SALTON SEA PROJECTS
Salton Sea I ........ 10 10 8 6/2017 Negotiated SCE
Salton Sea II ....... 20 20 5 4/2020 SO4 SCE
Salton Sea III ...... 49.8 49.8 6 2/2019 SO4 SCE
Salton Sea IV ....... 39.6 39.6 -- CO+30(1) Negotiated SCE
---------- -----------
Subtotal ......... 119.4 119.4
PARTNERSHIP PROJECTS
Elmore .............. 38 19 6 12/2018 SO4 SCE
Del Ranch ........... 38 19 6 12/2018 SO4 SCE
Leathers ............ 38 19 5 12/2019 SO4 SCE
Vulcan .............. 34 17 9 2/2016 SO4 SCE
---------- -----------
Subtotal ......... 148 74
THIRD PARTY ROYALTY
PROJECT
East Mesa ........... 37 0 6 CO+30 SO4 SCE
---------- -----------
Total ............... 304.4 193.4
========== ===========
<FN>
- ---------------
(1) Expected commercial operation ("CO") mid-year 1996.
</TABLE>
B-2
<PAGE>
FIGURE 1-1
PLANT LOCATION MAP
B-3
<PAGE>
1.2 SCOPE OF WORK
Stone & Webster, as Independent Engineer, has reviewed certain technical,
environmental and economic aspects of the Projects as listed below:
o Status of environmental permitting and compliance
o Plant design
o Plant performance
o Operations and maintenance
o Financial projections
o Plant management
o Contracts
o Capital costs associated with Salton Sea Expansion program
o Salton Sea Expansion construction progress to date
Stone & Webster conducted this analysis and prepared this report utilizing
reasonable care and skill in applying methods of analysis consistent with
normal industry practice. In the preparation of this report and the opinions
expressed, Stone & Webster has made certain assumptions with respect to
conditions which may exist or events which may occur in the future.
Assumptions and documentation relied upon by Stone & Webster in the
preparation of this report are provided in Attachment 1.
1.3 CONCLUSIONS
Based on our review, we have reached the following conclusions:
Operations and Performance
o The Projects use commercially proven technology and are operated in
accordance with recognized utility industry practices.
o The Projects can be expected to operate commercially beyond the final
maturity of the Securities.
o Principal project participants possess the necessary experience to
successfully fulfill their project obligations.
o Operating plant capacity factors used in the financial projections are
reasonable based on actual performance for the operating years commencing in
1991.
o The Salton Sea Projects and Partnership Projects should continue to
operate in accordance with all relevant current permit conditions and
environmental laws.
Financial Projections
o Stone & Webster developed an economic/financial model which represents
our judgment of the projected performance of the Guarantors. The assumptions
underlying the economic/financial model are reasonable, and the projected
operating results reasonably represent the future financial profile of the
Guarantors.
o Projected operating and maintenance costs and capital expenditures for
major maintenance are reasonable and representative of the planned operations
of the Salton Sea and Partnership Projects.
o Base case financial projections indicate that revenues are adequate to
pay operations and maintenance expenses and provide sufficient cash flow
available for debt service with base case debt service coverage ratios of
1.51 minimum and 1.89 average.
o The financial projections remain stable across a wide range of
sensitivities and avoided cost assumptions.
B-4
<PAGE>
Salton Sea Expansion
o The Salton Sea Expansion technology is proven and reliable. The Salton
Sea Expansion expected completion date of June 1996 is achievable and the
scope of work is within demonstrated capabilities of the principal project
participants.
o The Salton Sea Expansion should meet expected performance criteria and
should comply with all applicable environmental regulations.
o The Salton Sea Expansion capital cost budget of $135 million is
adequate. A substantial budgeted contingency combined with an unlimited cost
overrun commitment from California Energy plus Dow's substantial prior
experience with these plants mitigates the risk of cost overruns.
o All necessary discretionary permit approvals have been obtained for the
completion of the Salton Sea Expansion.
o The pH Modification technology is proven and reliable. It has been
installed and has operated successfully for five years at Salton Sea Unit II.
As proven by the operating history at Salton Sea Unit II, the pH Modification
program when installed should increase availability and decrease costs
consistent with assumptions in the financial projections.
Project Contracts
o Major project contracts for the Salton Sea Projects and Partnership
Projects, including power purchase agreements, construction contracts, major
subcontracts, and related contracts for transmission system interconnection
appear reasonable from a technical perspective and are consistent with the
financial projections.
o Power purchase agreements and transmission contract terms extend well
beyond the term of the Securities.
SECTION 2.0
PROJECT OVERVIEW
2.1 GENERAL DESCRIPTION OF MAGMA PROJECTS AND PROCESSES
The Salton Sea and Partnership Projects are located in the Salton Sea
Known Geothermal Resource Area (SSKGRA) and are within a central radius of
approximately five miles. A map showing plant locations is provided in Figure
1-1.
Hot brine from a geothermal resource is flashed into high pressure,
standard pressure, and low pressure steam which is expanded through steam
turbine generators to produce electric power. The steam is condensed and then
used for cooling tower make-up. Excess condensate is injected back into the
geothermal reservoir. Noncondensible gases are removed from the condenser and
dispersed to the atmosphere through the cooling tower plume. Brine from the
steam flash process is further processed to remove solids or maintain them in
solution and is injected back into the geothermal reservoir. The Salton Sea
and Partnership Projects employ proven geothermal resource flash technology
which has been commercially operated worldwide for over 30 years.
Plant design and operation are affected by the geothermal resource which,
in the SSKGRA, is relatively high in solids content at approximately 250,000
to 300,000 parts per million. With the exception of Salton Sea Unit II, the
operating plants utilize the crystallizer reactor clarifier (CRC) process to
control scaling and to precipitate solids. The majority of the solids are
disposed of in a landfill and the remainder are recycled to the crystallizers
to promote crystal growth ("seeding") to control scaling on vessel walls.
Salton Sea Unit II utilizes the pH Modification resource production process
to control scaling. Implementation of this process under the Salton Sea
Expansion is expected to simplify resource handling in a similar fashion,
thus improving availability and reducing costs. This process involves
injection of a pH modification agent into the liquid brine resource to
maintain solids in solution so that the brine may be injected directly into
the reservoir without removal of the solids.
B-5
<PAGE>
Noncondensable gases from the Salton Sea and Partnership Projects are
removed from the condensers for efficient power generation and turbine
operation using a combination of steam jet ejectors and vacuum pumps. Systems
for abatement of hydrogen sulfide present in the noncondensable gases are not
currently required for the Salton Sea and Partnership Projects since ambient
hydrogen sulfide concentrations are at acceptable levels. However, due to
additional resource required by the Salton Sea Expansion, the Authority to
Construct Permits require hydrogen sulfide abatement systems for Salton Sea
Units I, II, III and IV which will be installed as part of the Salton Sea
Expansion. The technology for such abatement systems is proven and reliable.
The cooling systems for all operating projects consist of surface
condensers and wet mechanical draft cooling towers. Balance-of-plant systems
are provided to support each operating plant. The necessary fire protection
systems are provided, including cooling tower wetdown systems which keep the
tower wet during shutdown periods, and fire monitors which are provided at
grade around the perimeter of each tower. Brine is injected into the
reservoir with injection pumps after solids processing. Brine ponds are
provided at each plant for temporary storage of brine during startup/shutdown
periods and for emergency use. Standby diesel generators are available to
support plant safety systems during shutdowns.
2.2 MANAGEMENT AND ORGANIZATION
A Region Superintendent of the Salton Sea Projects and the Partnership
Projects is responsible for operations, maintenance, and plant performance.
Each Project is managed by a Plant Superintendent who is responsible for the
onsite staff and overall operation of the plant. The plant staff consists of
an Operations Supervisor, Maintenance Supervisor, lab technician and
secretary. The Operations Supervisor is responsible for four operating crews
which have a control operator, and three plant outside operators. A lab
technician is onsite full time, but is assigned to the central lab. The
Maintenance Supervisor is responsible for both the instrument and electrical
technicians and the mechanics. The plants have onsite staff trained to
conduct routine maintenance activities. When additional manpower is required,
the central maintenance shop provides the necessary staff. These
organizations and staffings are typical for plants of these types.
All of the plants utilize the same organizational structure although some
plants have larger on-site maintenance staffs than others. There is an
ongoing effort to standardize plant staffing and operations. As part of this
plan, maintenance and spare parts were centralized in April 1995 to reduce
cost.
Stone & Webster considers the overall operating and maintenance
organization adequate to support operation of the Salton Sea and Partnership
Projects. The regional concept appears to be effective and should provide
operating and maintenance cost reductions. When the Computerized Maintenance
Management System (CMMS) is fully implemented, later in 1995, work order
control and inventory control will be further optimized resulting in reduced
costs.
2.3 SALTON SEA PROJECTS
Salton Sea Unit I has been in service since 1982. Power generation
equipment consists of a 10 MW Fuji steam turbine operating with standard
pressure (SP) steam produced by CRC technology. This process also produces
high pressure (HP) and low pressure (LP) steam. The generation voltage of
13.8 kV is stepped up to 34.5 kV providing electrical power to SCE.
Salton Sea Unit II was placed in service in 1990. A total of three steam
turbines produce electrical power. A 4 MW Rotoflow turbine utilizes HP steam
and exhausts to the SP steam header. In addition, an 11 MW Mitsubishi turbine
operates on SP steam, and a 5 MW steam turbine utilizes LP steam. Salton Sea
Unit II is the only plant currently operating with the pH Modification
process. This process is described in more detail in Section 3.2. The
Mitsubishi turbine-generator produces electrical power at 4160 volts which is
stepped-up to 13.8 kV; the other generators produce power at 13.8 kV. One
transformer steps-up power from these three generators to 92 kV for
transmission by the Imperial Irrigation District (IID) to the Rancho Mirage
substation for sale to SCE.
Salton Sea Unit III is a 49.8 MW plant with a Mitsubishi turbine that
operates on SP and LP steam produced from the crystallizer/clarifier process.
The turbine is a 5-stage, dual flow, condensing turbine.
B-6
<PAGE>
Three stages of steam jet air ejectors remove noncondensible gases from the
steam. Operational flexibility is provided by steam jet air ejector trains
used to respond to varying noncondensible gas content. Commercial operation
was declared on February 14, 1989. Power is stepped up to 92 kV for
transmission by the IID to the Rancho Mirage substation for sale to SCE.
Salton Sea Units I, II, and III are managed by a Region Superintendent and
each unit is operated by an operating and maintenance supervisor. The
operations programs include safety, training, and operating procedures.
Maintenance programs include a CMMS, training, and spare parts inventory
control.
Safety
CEOC, the Operator of the Vulcan, Del Ranch, Elmore, and Leathers
Projects, has an established safety program based on a corporate safety
manual. Several safety procedures were reviewed and found to be consistent
with general industry practices. CEOC utilizes a "Safe Work Permit" that must
be obtained by maintenance personnel prior to starting any work and a plant
lockout/tagout procedure for isolating systems for maintenance and personnel
protection.
Training
The Salton Sea Projects have a very comprehensive training and operator
certification program. There are four classifications of operators: 1, 2, 3,
and control operator. Each classification has a Certification Manual. The
manual, tests, and information are developed according to the organizational
structure of the individual plant. The program includes tests conducted by a
training department and plant walk-through test conducted by the Training
Review Board. In Stone & Webster's opinion, the program is generally better
than that found in most plants.
Operating Procedures
Operating Procedures are in place for the Salton Sea Projects. They
included step-by-step methods for startup, normal operation, and shutdown of
the Projects. Stone & Webster's review determined that the operating
procedures were satisfactory.
Maintenance Programs
Maintenance at each plant is supervised by a Maintenance Supervisor.
Whenever possible, most of the maintenance is performed in the centralized
maintenance shop. The Salton Sea Projects are scheduled to start using the
CMMS in July 1995, which will improve management of plant maintenance
activities.
Stone & Webster's review of the plants during a site walk-through found
the plants to be well maintained. Plant personnel indicated that spare parts
were generally available when required. Spare parts tracing should be further
improved when the CMMS is in service.
Salton Sea Units I and II are located adjacent to the Salton Sea; the
shoreline has appropriate dikes and levies (installed and maintained jointly
by the project operating company and the Partnership Irrigation District) to
protect these units from increases in the Salton Sea water level. The dikes
appear to be adequately maintained. Salton Sea Unit III is located
approximately 0.5 miles from the Salton Sea.
2.4 PARTNERSHIP PROJECTS
The Vulcan Project was commissioned in February 1986. An HP and LP turbine
generate electrical power for transmission to SCE via IID lines.
Noncondensible gases are directed to the cooling tower using two stages of
steam jet air ejectors and one vacuum pump. Each of these components has at
least one spare. A standby diesel generator is available to provide emergency
power. Solids precipitated from the CRC process are monitored for metals
concentrations and hauled by truck to a permitted landfill. Covered storage
on a concrete slab is provided onsite.
Electrical power is generated at 14.4 kV and is transmitted to SCE over 92
kV IID lines. The Del Ranch and the Vulcan Projects are connected via an
electrical tie-line.
B-7
<PAGE>
The Vulcan Project operating and maintenance programs, safety program,
training program, and operating procedures are similar to those programs and
procedures in place at the Salton Sea Projects. Currently, Vulcan spare parts
inventory is not completely covered by the CMMS. There is an ongoing effort
to centralize all plant spare parts and control inventory with the CMMS.
Consumable spares such as pipe fittings, nuts and bolts are currently stored
onsite. There are plans to implement centralized spare parts storage which
should result in significant cost savings.
Outage planning for major overhauls is done by central maintenance with
input from the sites. Major overhauls are scheduled every two years with
mini-outages (three to five days) scheduled each spring in preparation for
the summer peak runs. Specialized maintenance such as electrical protective
relay calibration is done by local contractors. The plant operates reliably
primarily as a result of this maintenance and overhaul scheduling practice.
The Del Ranch Project achieved commercial operation in October 1988. The
plant is very similar to the Vulcan Project. A dual pressure 9 stage Fuji
turbine produces electrical power for transmission to SCE via IID. A heat
recovery system is employed in the steam production cycle which utilizes
steam from the initial flash of the resource as the heat source to a reboiler
which, in turn, produces clean HP steam from condensate. This clean HP steam
is combined with HP steam from the HP crystallizer and is directed to the
turbine. LP steam is also produced from the LP crystallizer. Steam scrubbers
are used for both the HP and the LP steam supplies to the turbine to ensure a
clean, dry supply of steam. Noncondensible gases are removed from the
condenser by one steam jet air ejector followed by a vacuum pump and are
dispersed to the atmosphere by the cooling tower plume. Spare noncondensible
gas removal equipment is available. Solids are handled in a similar manner to
the Vulcan Project. One 480 volt and one 4160 volt diesel generator are
available to provide emergency power and black start capabilities.
Stone & Webster reviewed the safety program, training program, operating
procedures, and maintenance programs and found them to be similar to those
implemented at the Vulcan Project.
Commercial operation was achieved at the Elmore Project in December 1988
and at the Leathers Project in January 1990. These two plants are identical
in all major design respects to the Del Ranch Project, including the main
turbine. Three spare turbine rotors and two spare sets of diaphragms are
stored for the Del Ranch, Elmore, and Leathers Projects.
The safety programs, training programs, and operating procedures at both
plants are also similar to the Salton Sea Projects. Stone & Webster considers
these programs satisfactory and supportive of prudent plant operations.
The Elmore Project has its own maintenance staff. Central maintenance and
the CMMS are used for spare parts. The Elmore Project is on a two-year
turnaround schedule with most of the planning done on-site. Major turnarounds
are scheduled for 12 days and include process valve maintenance, cleaning,
and descaling of process pipe and vessels. This is the first of the
Partnership Projects to use a computer based system for preventative and
routine maintenance planning. Spare pipe spool pieces have been fabricated
for those piping systems prone to frequent scale build-up. These spool pieces
can be installed much faster than descaling the installed pipe. The program
appears to be effective.
2.5 ROYALTY PROJECTS
Magma receives royalties, fees and other payments ("Royalties") from the
Leathers, Del Ranch and Elmore Projects based on a percentage of each
project's annual revenue. Total Royalties from these Partnership Projects
paid to Magma annually are projected to be $38,034,000 in 1995 increasing to
$46,470,000 in 1998. Thereafter Royalties are projected to step-down as
revenues from the three Partnership Projects experience avoided cost pricing.
The Royalties from the Leathers, Del Ranch and Elmore Projects are included
in the financial projections.
Magma also receives Royalties based on a percentage of revenue from the
East Mesa Project. Royalties from the East Mesa Project paid to Magma
annually are projected to be $1,229,000 in 1995 increasing to $1,465,000 in
1998. Thereafter Royalties are projected to step-down as variable energy
revenues from the East Mesa Project experience avoided cost pricing.
B-8
<PAGE>
SECTION 3.0
SALTON SEA EXPANSION
3.1 CAPACITY EXPANSION
A new steam turbine generator will be installed near the Salton Sea Unit
III site to provide additional capacity of 39.6 MW pursuant to the combined
Salton Sea Unit IV PPA. The new steam turbine generator will be located near
the Salton Sea Unit III site in order to optimize the capacity expansion
design. The capacity expansion design is based on the use of HP, SP, and LP
steam for electrical power production. In addition to the installation of new
steam and brine process equipment, piping, wells, and power generation
equipment; the capacity expansion involves modification of existing steam and
brine processing equipment, piping, and control systems at Salton Sea Units
I, II, and III and interconnection of various steam lines.
Three new resource wells, three new brine injection wells, and associated
piping will be installed to provide additional HP and SP steam and brine
injection capability to support the installation of the new turbine
generator. Modifications to existing steam and brine injection systems at
Salton Sea Units I, II, and III will be made to provide two HP and SP steam
processing and brine injection trains that will be designed to accommodate pH
Modification of the brine prior to injection back into the geothermal
resource. The pH Modification process is described in Section 3.2.
The pH Modification process will be installed in conjunction with the
capacity expansion and together will require the installation of the
following major equipment and systems:
o New steam plant including a 47.5 MW gross steam turbine generator,
cooling tower, condenser, pumps, air ejector system, hydrogen sulfide
abatement system, and associated piping and valves.
o Electrical interconnection equipment including a new transformer,
switchgear building, and electrical switchyard.
o Three new resource wells, three new brine injection wells, pumps, and
associated piping, and separator vessels.
o Corrosion resistant piping, tanks, pumps, and injection system for
brine pH Modification.
o Instrumentation and control systems.
o Equipment foundations and process piping.
A preliminary process flow diagram for the capacity expansion was reviewed
to ensure that contract capacity can be achieved given adequate geothermal
resource. The process flow diagram results support the capacity levels used
in the financial projections.
Train 1 consists of a new resource well and associated piping, the three
existing HP steam separator vessels and a new SP steam separator vessel.
Train 2 will consist of two new resource wells and associated piping, new
brine injection piping, a new HP steam separator vessel, and a new SP steam
separator vessel.
The proposed capacity expansion geothermal processes and power generation
technology for the capacity expansion are well proven. The General Electric
turbine generator, balance-of-plant equipment, and process equipment selected
for the capacity expansion is of a type used successfully in geothermal and
industrial applications and the overall design is satisfactory.
The technology for the new noncondensable gas hydrogen sulfide removal
system for Salton Sea Units I, II, III, and IV required by the capacity
expansion permits will be selected as part of the Salton Sea Expansion.
Several proven technologies are commercially available that can meet the
hydrogen sulfide emission limit requirements specified in the Authority to
Construct. A reasonable cost allowance for a hydrogen sulfide removal system
has been included in the capacity expansion design.
3.2 PH MODIFICATION PROCESS
The pH Modification process used at Salton Sea Unit II lowers the pH of
the geothermal resource by injection of a pH modification agent into the
liquid brine stream. As a result, solids remain in solution
B-9
<PAGE>
rather than precipitate out of solution as in the CRC process used at Salton
Sea Units I and III and at the Partnership Projects. Therefore, scaling is
minimized and solids in solution can be injected into the reservoir. The
process is a proprietary process developed by Unocal and subsequently sold to
Magma. The pH Modification process was part of Unocal's original design of
Unit II and has been operating successfully since 1990. The pH Modification
process is expected to be installed at Salton Sea Units I and III by mid-year
1996 as described in Section 3.1.
The geothermal resource at the Salton Sea Projects and the Partnership
Projects is unique in that it contains high solids as compared to other
geothermal resources. Consequently, the concept of reducing brine pH to a
level where solids remain in solution reduces operating costs at these plants
since solids can be injected back into the resource with the brine,
significantly reducing precipitated solids handling costs. The process has
been developed specifically for application at the Salton Sea and Partnership
Projects and has been successfully demonstrated and operated reliably at
Salton Sea Unit II. Significant benefits in the form of operating and
maintenance savings are realized as a result of pH Modification in the
elimination of equipment associated with the processing of the resource and
solid waste handling and disposal. Projected operating and maintenance costs
for the pH Modification process are approximately half that of the CRC
process. pH Modification also has the following impacts:
a. The process must inject brine at a higher temperature to ensure
that solids remain in solution; therefore, less heat energy is available
for conversion to electricity thus decreasing overall plant thermal
efficiency.
b. Incorporation of a design that provides for adequate LP steam for
existing plants.
c. The process results in increased plant availability realized
through elimination of CRC downtime.
d. Piping and equipment materials associated with pH Modification must
be corrosion resistant. Use of titanium piping in the new wells is
planned. Liquid brine piping will be cement lined steel.
Cost versus benefits analyses support installation of the pH Modification
process for the Salton Sea Projects currently using the CRC process. Based on
successful demonstration of the process at Salton Sea Unit II, the process is
proven and reliable and can be implemented successfully at the Salton Sea
Projects.
The pH Modification process will be installed in conjunction with the
capacity expansion. The existing CRC process will remain as a redundant
standby system during startup and operation of the pH Modification process
and capacity expansion equipment.
3.3 ENGINEERING SERVICES AGREEMENT
An Engineering Services Agreement between Magma and Dow dated February
1994 provides project management, process engineering, design engineering,
procurement, construction management, startup, and other engineering services
by Dow for Magma's benefit. This contract is a general services agreement
that is applied to various Projects and is the engineering services agreement
being used for the Salton Sea Expansion. Under the agreement the parties
define a specific scope of services for a given project which is performed by
Dow on a time and materials reimbursable cost basis. The contract arrangement
facilitates completion of the Salton Sea Expansion by mid-year 1996.
The Salton Sea Expansion is being performed under the Engineering Services
Agreement in two phases.
o Phase I consists of the design and construction of Train 1 steam
processing and pH Modification.
o Phase II consists of design and construction of Salton Sea Unit IV and
related support equipment and Train 2 pH Modification and steam processing.
The Phase I scope of work is approximately 25 percent of the entire
capacity expansion and pH Modification effort. The work scope for both phases
has been adequately defined. Magma estimates that approximately ten
construction tasks for Phase I and II will be required under the Engineering
Services Agreement to complete the Salton Sea Expansion. Turnkey construction
subcontracts for individual construction tasks are intended to be negotiated.
B-10
<PAGE>
The budgeted cost for a reimbursable arrangement if properly managed
should be less than the costs of a fixed price contract arrangement. Based on
the proposed Phase I and II scope of work, it is unlikely that there would be
substantial completion delays (other than by force majeure events). Stone &
Webster has reviewed the Funding Corporation budget for the capacity
expansion and pH Modification project and considers it reasonable based upon
the proposed scope of work and a completion date of mid-year 1996. Stone &
Webster considers both Funding Corporation affiliates and Dow capable of
executing the work under this type of contract arrangement on schedule and
within budget. In addition, California Energy is providing a cost overrun
commitment for amounts, if any, which would be required to be expended in
excess of the budget.
3.4 SCHEDULE
Phase I construction of the Salton Sea Expansion commenced in January 1995
and should be completed by August 1995. Phase II work commenced in early June
1995 and is approximately 10 percent complete. The early Phase II work
consists of site preparation, underground work, and foundations for the
expansion. The entire Salton Sea Expansion will be completed when Phase II is
completed in mid-year 1996. Phase I is expected to be in operation no later
than October 1995 depending on the next available Salton Sea Unit III outage.
A Salton Sea Unit III outage of approximately three days is required to
tie-in the new Phase I steam processing system. Salton Sea Unit III CRC
technology can be taken out of service when Phase I becomes operable.
The Industrial Company (TIC), a recognized geothermal power plant
constructor, performed services as a construction subcontractor for Phase I.
Additional fixed price construction subcontracts to complete Phase II are
expected to be negotiated approximately July 1995. Dow will be responsible
for the startup, testing, and commissioning of the Salton Sea Expansion.
Salton Sea Expansion work is proceeding within budget, and engineering and
procurement activities are on schedule. As of June 1995 the entire Salton Sea
Expansion is approximately 30 percent complete.
The Salton Sea Expansion will be installed without affecting Salton Sea
Unit I, II, or III operations until the systems are ready for connection to
the existing systems. The plant downtime for connecting Train 1 at Salton Sea
Unit III will be minimized and is estimated to be 48 hours. The outage
required for the remainder of the required connections has been well planned
and should be accomplished in four weeks.
A purchase order is in the process of being placed with General Electric
for the capacity expansion steam turbine generator. Quotations have been
received for all other major equipment and a number of other purchase orders
have been placed. All equipment purchases are fixed priced. General Electric
is expected to provide performance guarantees for the steam turbine generator
performance. General Electric is expected to schedule shipment of the turbine
generator on December 7, 1995, which provides adequate time to meet the June
1996 completion date. General Electric is subject to substantial weekly delay
damages. All other balance-of-plant equipment is expected at the site prior
to January 12, 1996.
The scheduled June 1996 completion date for the pH Modification and
capacity expansion program is achievable. In Stone & Webster's opinion, the
Salton Sea Unit IV PPA sunset date of June 12, 1998 should not be jeopardized
since it is unlikely in the worst case that there would be a delay in excess
of 120 days (for reasons other than force majeure events).
Three additional production wells and three additional injection wells
will be required. One production well has been drilled and tested, and
drilling activities for the remaining wells are continuing. Completion of the
drilling activities should be completed well in advance of the scheduled
startup of the Salton Sea Expansion.
3.5 COST ESTIMATE
Stone & Webster reviewed the capital cost estimate for the Salton Sea
Expansion. The total capital cost is estimated at $135 million as shown in
Table 3-1. This includes approximately $78.8 million for the
B-11
<PAGE>
capacity expansion, (including the capacity expansion related pH Modification
and hydrogen sulfide abatement costs), and $21 million for three new
production wells and three new injection wells. A contingency of
approximately seven percent of the total Project capital cost has been
included, which is considered reasonable.
The $78.8 million for the additional generation equates to approximately
$1,830 per net kilowatt of new installed capacity which is comparable to the
costs of other geothermal facilities requiring solids removal technology.
Major material costs for the Salton Sea plant modifications include steam
separator vessels, injection pump sets, and steam piping. The estimate for
the steam plant modification cost appears reasonable.
The $21 million cost estimate for installation of three new production
wells and three new injection wells appears reasonable assuming well depths
are similar to existing well depths and no unusual drilling problems are
encountered.
The $8.3 million estimate for new brine pipelines appears reasonable,
assuming piping lengths required from the production wells to the plant and
back to the injection wells do not increase because of changes in well
drilling locations. The anticipated operating cost reductions, estimated at
$4.0 million by Funding Corporation affiliates, resulting from Salton Sea pH
Modifications are reasonable.
TABLE 3-1
SALTON SEA EXPANSION
CAPITAL COST
<TABLE>
<CAPTION>
$ MILLIONS
------------
<S> <C>
Project Administration ..................... 10.0
Exploration and Wellfield Development ..... 21.0
Plant Development/Construction/Contingency 104.0
------------
TOTAL ................................... 135.0
</TABLE>
SECTION 4.0
PROJECT OPERATIONS
The Salton Sea and Partnership Projects use proven technology and have
operated reliably since commercial operation. The most significant operating
and maintenance activities for the Salton Sea and Partnership Projects are
caused by geothermal resource corrosion and production of solids in the
geothermal resource processing systems. These activities at the Salton Sea
Projects should be significantly reduced by the implementation of the pH
Modification program. The tables in the following sections summarize the
operating history for each of the Salton Sea and Partnership Projects. Two
capacity factor values are reported in the operating summaries for each
plant. One expresses production relative to the Contract Capacity and the
other expresses production relative to the plants' nominal capacity. The
nominal capacity factors were used in the financial projections.
B-12
<PAGE>
4.1 SALTON SEA PROJECTS
Salton Sea Unit I Performance Summary
Salton Sea Unit I is nominally a 10 megawatt (MW) net output plant. Salton
Sea Unit I entered commercial operation in 1982 and is not able to produce
power at the 100 percent power purchase contract power output level because
of steam limitations and an increase in house power load. The capacity factor
for Salton Sea Unit I should increase after completion of capacity expansion
and pH modification in mid 1996. The Salton Sea Unit I operating history is
summarized below:
<TABLE>
<CAPTION>
CONTRACT NOMINAL
GROSS MW HRS AVG. NET AVAIL CAPACITY CAPACITY
MW HRS AVG. MW DELIVERED MW FACTOR FACTOR FACTOR
YEAR GENERATED GENERATED TO SCE TO SCE (%) (%) (%)**
- ------- ----------- ----------- ----------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1986 89,208 10.38 84,066 9.78 98.08 95.97 119.96
1987 67,824 9.34 63,744 8.78 82.89 82.26 90.96
1988 89,604 10.63 84,164 9.98 95.99 96.29 120.10
1989 69,354 10.50 65,171 9.87 75.38 75.17 93.00
1990 83,160 9.93 60,766 7.26 95.56 69.36 86.71
1991 82,962 10.86 61,667 8.07 87.20 70.78 87.61
1992 90,270 10.46 66,540 7.71 98.20 75.75 94.95
1993 78,515 9.96 55,707 7.07 89.98 64.13 79.48
1994 83,844 9.59 57,637 6.59 99.82 65.81 82.24
1995* 24,660 10.44 17,205 7.29 99.86 60.39 74.67
</TABLE>
Note: *1995 data is for four months (January through April)
**Nominal capacity is calculated after parasitic load and may vary
from time to time based on operating conditions.
The plant availability for Salton Sea Unit I for the last five years of
operation has been in the 87 to 99 percent range.
Salton Sea Unit II Performance Summary
Salton Sea Unit II is nominally a 20 MW net output plant. Salton Sea Unit
II first went into commercial operation in 1990 and is meeting power purchase
contract power output requirements. The Salton Sea Unit II operating history
is summarized below:
<TABLE>
<CAPTION>
CONTRACT NOMINAL
GROSS MW HRS AVG. NET MW HRS AVAIL CAPACITY CAPACITY
MW HRS AVG. MW DELIVERED MW DELIVERED FACTOR FACTOR FACTOR
YEAR GENERATED GENERATED TO IID** TO IID TO SCE** (%) (%) (%)***
- ------- ----------- ----------- ----------- ---------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 106,509 16.30 106,506 16.30 101,447 74.59 77.20 64.34
1991 146,090 18.40 143,910 18.13 138,729 90.63 106.06 87.98
1992 156,897 17.97 155,892 17.85 150,710 99.42 114.38 95.58
1993 152,673 18.63 152,130 18.56 147,314 93.57 112.46 93.43
1994 157,593 18.07 150,868 17.30 150,914 99.55 114.85 95.71
1995* 48,103 18.90 48,016 18.87 45,889 99.38 106.89 88.52
</TABLE>
Note: *1995 data is for four months (January through April)
**The megawatt hours delivered to the SCE substation which is the
basis for power purchase contract are shown. The difference between
the power delivered to IID and the power delivered to SCE account
for the transmission line losses in the IID distribution system.
***Nominal capacity is calculated after parasitic load and may vary
from time to time based on operating conditions.
B-13
<PAGE>
The plant availability and power purchase contract capacity factors since
commercial operations have averaged 91.6 percent and 105 percent,
respectively.
Salton Sea Unit III Performance Summary
Salton Sea Unit III is nominally a 49.8 MW net output plant. Salton Sea
Unit III first went into commercial operation in February 1989 and is meeting
power purchase contract output requirements. The Salton Sea Unit III
operating history is summarized below:
<TABLE>
<CAPTION>
CONTRACT NOMINAL
GROSS MW HRS AVG. NET MW HRS AVAIL CAPACITY CAPACITY
MW HRS AVG. MW DELIVERED MW DELIVERED FACTOR FACTOR FACTOR
YEAR GENERATED GENERATED TO IID** TO IID TO SCE** (%) (%) (%)***
- ------- ----------- ----------- ----------- ---------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 405,792 50.13 388,342 47.98 377,407 92.40 90.83 86.51
1991 463,372 53.03 444,392 50.86 430,614 99.74 103.49 98.71
1992 433,152 52.91 414,322 50.61 402,211 93.47 96.53 92.20
1993 470,304 54.04 448,694 51.56 435,247 99.34 104.60 99.77
1994 462,912 53.11 438,324 50.29 426,911 99.49 102.60 97.86
1995* 140,832 49.33 132,578 46.44 129,262 99.72 94.62 90.13
</TABLE>
Note: *1995 data is for four months (January through April)
**The megawatt hours delivered to the SCE substation which is the
basis for power purchase contract payments are shown. The difference
between the power delivered to IID and the power delivered to SCE
accounts for the transmission line losses in the IID distribution
system.
***Nominal capacity is calculated after parasitic load and may vary
from time to time based on operating conditions.
The plant availability and contract capacity factors have averaged 97
percent and 99 percent respectively since 1990.
4.2 PARTNERSHIP PROJECTS
Vulcan Project Performance Summary
The Vulcan Project is nominally a 34 MW net output plant. The Vulcan
Project first went into commercial operation in February 1986 and is meeting
the power purchase contract power output requirements. The Vulcan Project
operating history is summarized below:
<TABLE>
<CAPTION>
CONTRACT NOMINAL
GROSS MW HRS AVG. NET MW HRS AVAIL CAPACITY CAPACITY
MW HRS AVG. MW DELIVERED MW DELIVERED FACTOR FACTOR FACTOR
YEAR GENERATED GENERATED TO IID** TO IID TO SCE** (%) (%) (%)***
- ------- ----------- ----------- ----------- ---------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 325,732 37.2 287,952 32.9 279,788 89.94 NA 93.94
1991 313,394 39.2 279,442 35.0 270,736 91.21 104.77 90.89
1992 335,842 40.2 300,684 36.0 292,066 95.13 112.71 97.8
1993 334,919 40.8 303,392 37.0 295,308 93.70 114.27 99.15
1994 342,371 42.5 310,656 38.56 304,325 97.55 118.08 102.2
1995* 119,930 42.39 109,660 38.76 107,342 98.23 126.34 109.62
</TABLE>
Note: *1995 data is for four months (January through April)
**The megawatt hours delivered to the SCE substation which is the
basis for power purchase contract payments are shown. The difference
between the power delivered to IID and the power delivered to SCE
accounts for the transmission line losses in the IID distribution
system.
***Nominal capacity is calculated after parasitic load and may vary
from time to time based on operating conditions.
Plant availability and contract capacity factors have averaged 94 percent
and 115 percent respectively since commercial operation.
B-14
<PAGE>
Del Ranch Project Performance Summary
The Del Ranch Project is nominally a 38 MW net output plant. The Del Ranch
Project first went into commercial operation in January 1989 and is meeting
the power purchase contract power output requirements. The Del Ranch Project
operating history is summarized below:
<TABLE>
<CAPTION>
CONTRACT NOMINAL
GROSS MW HRS AVG. NET MW HRS AVAIL CAPACITY CAPACITY
MW HRS AVG. MW DELIVERED MW DELIVERED FACTOR FACTOR FACTOR
YEAR GENERATED GENERATED TO IID** TO IID TO SCE** (%) (%) (%)***
- ------- ----------- ----------- ----------- ---------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 359,775 42.9 327,050 39.0 318,391 95.73 106.90 95.65
1991 349,574 41.5 316,572 37.6 307,051 96.22 103.09 92.24
1992 375,290 44.2 338,680 39.9 329,075 96.60 110.19 98.6
1993 380,439 46.0 343,704 41.5 334,589 94.44 112.34 100.51
1994 398,665 46.17 362,472 41.98 355,088 98.43 115.3 106.67
1995* 115,484 44.99 105,578 41.13 103,324 86.26 105.5 94.41
</TABLE>
Note: *1995 data is for four months (January through April)
**The megawatt hours delivered to the SCE substation which is the
basis for power purchase contract payments are shown. The difference
between the power delivered to IID and the power delivered to SCE
accounts for the transmission line losses in the IID distribution
system.
***Nominal capacity is calculated after parasitic load and may vary
from time to time based on operating conditions.
Plant availability and contract capacity factors have averaged 95 percent
and 109 percent respectively since commercial operation.
Elmore Project Performance Summary
The Elmore Project is nominally a 38 MW net output plant. The Elmore
Project first went into commercial operation in January 1989 and is meeting
the power purchase contract power output requirements. The Elmore Project
operating history is summarized below:
<TABLE>
<CAPTION>
CONTRACT NOMINAL
GROSS MW HRS AVG. NET MW HRS AVAIL CAPACITY CAPACITY
MW HRS AVG. MW DELIVERED MW DELIVERED FACTOR FACTOR FACTOR
YEAR GENERATED GENERATED TO IID** TO IID TO SCE** (%) (%) (%)***
- ------- ----------- ----------- ----------- ---------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 359,882 43.6 331,744 40.2 323,228 94.31 108.5 97.10
1991 369,459 42.0 336,144 39.7 326,379 96.56 109.6 97.73
1992 352,363 40.1 319,990 36.4 311,255 90.86 104.2 93.32
1993 384,539 43.9 351,166 40.1 341,979 97.04 114.8 102.73
1994 385,503 43.8 350,526 39.9 344,338 94.75 114.6 103.44
1995* 166,028 45.93 150,580 41.65 147,371 99.83 119.64 107.04
</TABLE>
Note: *1995 data is for five months (January through May)
**The megawatt hours delivered to the SCE substation which is the
basis for power purchase contract payments are shown. The difference
between the power delivered to IID and the power delivered to SCE
accounts for the transmission line losses in the IID distribution
system.
***Nominal capacity is calculated after parasitic load and may vary
from time to time based on operating conditions.
Plant availability and capacity factors have averaged 95 percent and 111
percent respectively since commercial operation.
B-15
<PAGE>
Leathers Project Performance Summary
The Leathers Project is nominally a 38 MW net output plant. The Leathers
Project first went into commercial operation in January 1990 and is meeting
the power purchase contract power output requirements. The Leathers Project
operating history is summarized below:
<TABLE>
<CAPTION>
CONTRACT NOMINAL
GROSS MW HRS AVG. NET MW HRS AVAIL CAPACITY CAPACITY
MW HRS AVG. MW DELIVERED MW DELIVERED FACTOR FACTOR FACTOR
YEAR GENERATED GENERATED TO IID** TO IID TO SCE** (%) (%) (%)***
- ------- ----------- ----------- ----------- ---------- ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 358,046 44.4 330,076 40.9 321,000 92.11 111.8 96.43
1991 352,707 42.7 324,629 39.3 315,710 94.20 108.8 94.84
1992 377,770 44.6 349,824 41.3 340,785 96.79 118.0 102.10
1993 371,821 44.8 342,129 41.2 333,794 99.53 117.1 100.27
1994 377,550 45.5 349,740 42.1 342,247 97.69 118.5 102.81
1995* 156,601 44.5 143,940 41.3 141,065 98.06 114.52 102.46
</TABLE>
Note: *1995 data is for five months (January through May)
**The megawatt hours delivered to the SCE substation which is the
basis for power purchase contract payments are shown. The difference
between the power delivered to IID and the power delivered to SCE
accounts for the transmission line losses in the IID distribution
system.
***Nominal capacity is calculated after parasitic load and may vary
from time to time based on operating conditions.
Plant availability and contract capacity factors have averaged 96 percent
and 115 percent respectively since commercial operation.
SECTION 5.0
PROJECT CONTRACTS
5.1 POWER PURCHASE AGREEMENTS AND RELATED AGREEMENTS
Stone & Webster reviewed technical adequacy of the contracts and
agreements discussed below. Stone & Webster is of the opinion that Funding
Corporation affiliates are capable of satisfying their contractual
obligations which set forth the requirements for operation of the Salton Sea
and Partnership Projects. The pertinent technical obligations of the
contracts are presented in this section.
5.1.1 OPERATING PLANTS
Each of the operating Salton Sea and Partnership Projects is subject to
terms and conditions as specified in its associated power purchase agreement.
All of the contracts include a number of identical conditions related to
operation, maintenance, metering, and other commercial terms which are
reasonable and consistent with financial projections assumptions for the
respective power plants. Each contract is unique in certain aspects, such as
contract capacity, payments, or contract term. Tables 5-1A and 5-1B provide a
summary of Magma's ownership interest and contractual terms for each power
plant. These are accurately included in the financial projections.
Based upon the capacity and energy payment rates summarized in Tables 5-1A
and 5-1B, actual billing rates for some plants are calculated for On-Peak,
Mid-Peak, Off-Peak, and Super Off-Peak for Summer and Winter seasons as
defined by Time of Use Schedules published by the California Public Utilities
Commission (CPUC). These billing rates provide for higher payments than shown
on the financial projections during Summer Peak, Summer Mid-Peak and Winter
Mid-Peak periods, which total 3465 hours per year and lower payments than
shown during Winter Super Off-Peak which total 1434 hours per year. Payment
rates during Summer and Winter Off-Peak periods, which include 3861 hours,
equal or are close to the rates shown in Tables 5-1A and 5-1B. Average energy
rates received in any year could vary below the financial projections
assumptions if the capacity factor of the power plants were significantly
reduced during the Summer Period between June 1 and October 1, when energy
payments equal or exceed the average rates shown on Tables 5-1A and 5-1B.
B-16
<PAGE>
The financial projections include energy payments during Phase I as
specified in Table 5-1A for energy generated up to the nameplate capacity.
Payment for energy generated at capacity in excess of nameplate capacity is
included based on compensation at avoided cost which is conservative since
facilities owned by others with similar contracts reportedly are paid full
contract energy rates rather than avoided cost energy rates by SCE. Magma and
SCE are currently attempting to resolve this issue.
Capacity payments specified in Tables 5-1A and 5-1B are included in the
financial projections. Capacity factors for Salton Sea Unit III and the
Partnership Projects have been well in excess of the contractual
requirements. Salton Sea Units I and II are expected to meet 100 percent of
their respective power purchase contract power requirements when pH
Modification and capacity expansion projects are completed in mid-year 1996.
Stone & Webster has reviewed Salton Sea Unit I performance summary
statistics for 1994. The unit generated 4,180,000 kWh during the Summer Peak
period, which corresponds to 80.1 percent of the contract capacity during
those hours. Accordingly, Salton Sea Unit I met the performance requirements.
The planned Salton Sea Expansion will increase brine processing capabilities
thereby providing further assurance that contract capacity requirements can
be met in the future.
Salton Sea Unit II is capable of meeting its contract capacity requirement
taking into account the 20 percent allowance for forced outages. The planned
Salton Sea Expansion will increase brine processing capabilities thereby
providing assurance that contract capacity requirements can be met in the
future.
B-17
<PAGE>
TABLE 5-1A
SUMMARY OF TERMS -- POWER PURCHASE CONTRACT
SALTON SEA PROJECTS
<TABLE>
<CAPTION>
SALTON SEA SALTON SEA SALTON SEA
UNIT 1 UNIT 2 UNIT 3
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Facility Owner/Magma Interest (%) Salton Sea Power Salton Sea Power Salton Sea Power
Generation Generation Generation
L.P./100% L.P./100% L.P./100%
Contract Capacity (kW) 10,000 16,500 (On-Peak) 47,500
15,000 (Mid and
Off Peak)
As Available Capacity Not Applicable 0 0
Expected Annual Production Not Specified 105,000,000 312,075,000
(kWh) (7)
Capacity Payment ($/kW-year) 121.71 (1) 187 175
Capacity Bonus ($/kW-year) (2) (6) (6)
As Available Capacity Payment Not Applicable Not Applicable Not Applicable
($/kW-yr)
Energy Payment ($/kWh) 0.04701 (3) 0.106 (Phase 1) 0.098 (Phase 1)
(4) (Phase 2) (4) (Phase 2)
Dispatchability Price Not Applicable (5) Not Applicable
Adjustment
Contract Term July 2017 April 2000 January 1999
(Phase 1) (Phase 1)
April 2020 January 2019
(Phase 2) (Phase 2)
</TABLE>
NOTES:
1. Capacity payment as of 2nd Quarter 1992, subject to quarterly
adjustments based on Bureau of Labor Statistics.
2. Payment for capacity in excess of contract capacity is based on as
available capacity price in Standard Offer No. 1 Capacity Payment
Schedule. Pro forma does not include bonus payments.
3. Energy payment as of 2nd Quarter 1992, subject to quarterly adjustments
based on Bureau of Labor Statistics. Rate applies to all energy
delivered at specified point of delivery.
4. Energy payments in Phase 2 to be equal to 100% of Tariff Schedule No.
TOU-8 published avoided cost of energy rates as periodically updated.
5. Utility receives 5% of all kWh delivered in excess of 80% of Contract
Capacity at no cost which is appropriately accounted for in pro forma.
6. For capacity factors greater than 85%, monthly payment = [(1.2 x On
Peak Capacity Factor) -1.02][Capacity Payment][Contract Capacity][ 1/12].
Pro formas appropriately indicate bonuses of 18% of capacity payment.
7. Expected annual production is not a contract limit.
B-18
<PAGE>
TABLE 5 - 1B
SUMMARY OF TERMS -- POWER PURCHASE CONTRACT
PARTNERSHIP PROJECTS
<TABLE>
<CAPTION>
VULCAN DEL RANCH ELMORE LEATHERS
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Facility Owner/Magma Interest Vulcan/BN Del Ranch Elmore L.P./50% Leathers L.P./50%
(%) Geothermal L.P./50%
Power Company/50%
Contract Capacity (kW) 29,500 34,000 34,000 34,000
As Available Capacity 4,500 4,000 4,000 4,000
Expected Annual Production 206,736,000 238,272,000 238,272,000 238,272,000
(kWh) (7)
Capacity Payment ($/kW-year) 158 198 198 187
Capacity Bonus ($/kW-year) (6) (6) (6) (6)
As Available Capacity Payment 8 8 8 8
($/kW-yr)
Energy Payment ($/kWh) 0.109 - 0.126 0.109 - 0.146 0.109 - 0.146 0.109 - 0.156
(Phase 1) (4) (Phase 1) (4) (Phase 1) (4) (Phase 1) (4)
(Phase 2) (Phase 2) (Phase 2) (Phase 2)
Dispatchability Price Not Not Not Not
Adjustment Applicable Applicable Applicable Applicable
Contract Term February 1996 January 1999 January 1999 January 2000
(Phase 1) (Phase 1) (Phase 1) (Phase 1)
February 2016 January 2019 January 2019 January 2020
(Phase 2) (Phase 2) (Phase 2) (Phase 2)
</TABLE>
NOTES:
1. Capacity payment as of 2nd Quarter 1992, subject to quarterly
adjustments based on Bureau of Labor Statistics.
2. Payment for capacity in excess of contract capacity is based on as
available capacity price in Standard Offer No. 1 Capacity Payment
Schedule. Pro forma does not include bonus payments.
3. Energy payment as of 2nd Quarter 1992, subject to quarterly adjustments
based on Bureau of Labor Statistics. Rate applies to all energy
delivered at specified point of delivery.
4. Energy payments in Phase 2 to be equal to 100% of Tariff Schedule No.
TOU-8 published avoided cost of energy rates as periodically updated.
5. Utility receives 5% of all kWh delivered in excess of 80% of Contract
Capacity at no cost which is appropriately accounted for in pro forma.
6. For capacity factors greater than 85%, monthly payment = [(1.2 x On
Peak Capacity Factor) -1.02][Capacity Payment][Contract Capacity][1/12].
Pro formas appropriately indicate bonuses of 18% of capacity payment.
7. Expected annual production is not a contract limit.
B-19
<PAGE>
5.1.2 SALTON SEA CAPACITY EXPANSION
Under the existing Salton Sea Unit I power purchase agreement, Magma was
entitled to add 20,000 kW of generating capacity. Magma, through its
subsidiary, Fish Lake Power Company, had also executed a power purchase
agreement for the 16,000 kW Fish Lake project in Nevada. On November 29,
1994, Fish Lake Power Company and another Magma subsidiary, the Salton Sea
Power Generation L.P., which were signatories to the Fish Lake power purchase
agreement and Salton Sea Unit I power purchase agreements, respectively,
executed a consolidated power purchase agreement with SCE (the Salton Sea IV
PPA). This contract consolidates the allowable capacity increase at Salton
Sea Unit I of 20,000 kW and the Fish Lake project capacity of 16,000 kW into
a single contract which provides for a contract capacity of 34,000 kW and an
as available capacity of 2000 kW to be added at the Salton Sea Unit III site
for a total of 36,000 kW. Contract capacity must be demonstrated annually.
The Salton Sea IV PPA was approved by the CPUC on April 26, 1995. The
contract term is 30 years commencing on the date of firm operation, provided
firm operation occurs prior to the Sunset Date. The Sunset Date is June 12,
1998. Project completion is expected in mid 1996, well before the Sunset
Date.
The Salton Sea IV PPA provides for capacity payments for firm and
as-available capacity. Payments for 20,000 kW corresponding to all of the
capacity of the Salton Sea Unit I addition are $121.72/kW-year adjusted
quarterly based on Bureau of Labor Statistics using the second quarter of
1992 as reference. The capacity payments continue until June 30, 2017. As of
the first quarter 1995, these payments had been escalated to $127.80/kW-year
based on these indices. Payments for 14,000 kW corresponding to most of the
16,000 kW capacity of the Fish Lake project are set at $158/kW-year with no
adjustment. Payments for additional capacity (including the 2000 kW of
as-available capacity) will be calculated based on SCE's published avoided
cost of energy as periodically revised.
The Salton Sea IV PPA provides for energy payments for all energy
delivered to SCE up to 110 percent of the nameplate rating of 36,000 kW.
Energy payments are calculated by blending rates associated with generation
of 20,000 kW corresponding to the Salton Sea Unit I addition and 16,000 kW
corresponding to the Fish Lake project. The energy payments associated with
the Salton Sea Unit I addition continue until June 30, 2017, and are
established using a base rate of 4.701 cents/kWh as of the second quarter of
1992 and escalated quarterly based on Bureau of Labor Statistics. As of the
first quarter 1995, these payments had been escalated to 4.90cents/kWh based
on these indices. The energy payments associated with the Fish Lake project
continue for the contract term of 30 years and range from 8.8 in 1996 to 12.4
cents/kWh through 2005, and are based on SCE's published avoided cost
thereafter with an incremental addition of from 1.0 to 3.5 cents/kWh between
2006 and 2010, and no additional increment thereafter. Energy in excess of
110 percent of nameplate rating prior to June 30, 2017 and in excess of 110
percent of 16/36 of nameplate rating thereafter through the term of the
contract will be priced at SCE's published avoided cost.
5.1.3 TRANSMISSION INTERCONNECTION AGREEMENTS
Transmission lines owned and operated by IID are used to interconnect each
of the operating power plants except Salton Sea Unit I with SCE. Salton Sea
Unit I delivers power directly to SCE which uses the IID transmission lines.
The durations of the interconnection agreements differ from those of the
power purchase agreements, although interconnection agreements are in place
for the term of the proposed financing.
The capacity increase associated with project development at Salton Sea
Unit IV, described in Section 5.1.2 herein, will also be interconnected
through a transmission line owned by IID. An agreement to acquire
transmission entitlement has been executed with IID and an interconnection
and transmission agreement is expected to be issued shortly. Transmission
service charges are included in the financial projections.
A portion of the construction cost of the transmission line was paid for
each power plant except Salton Sea Unit I in accordance with the Funding and
Construction Agreement of June 29, 1987 and separate agreements for each of
the plants with IID. SCE is responsible for the Salton Sea Unit I
transmission cost on the IID lines. Magma currently has transmission line
entitlements for 288.6 MW on
B-20
<PAGE>
this line, which is in excess of existing combined capacity of 244 MW for the
Salton Sea Units I, II, III, and IV, Vulcan, Del Ranch, Elmore, and Leathers
operating power plants. The Funding and Construction Agreement provides for
credits equal to contributions and other financing costs to be applied
against Transmission Service Agreement charges. These credits are included in
the financial projections. SCE is responsible for transmission of power from
Salton Sea Unit I.
5.2 GEOTHERMAL SALES CONTRACTS--OPERATING PLANTS
5.2.1 SALTON SEA UNITS I, II, AND III
Geothermal energy sales for Salton Sea Units I and II are subject to terms
and conditions as specified in the Geothermal Sales Contract between certain
Magma affiliates. Geothermal energy sales for Salton Sea Unit III are subject
to similar terms and conditions as specified in the Geothermal Sales Contract
between certain Magma affiliates.
The geothermal royalties to be paid by Magma Land Company I as a
percentage of Total Electricity Payments are summarized below.
<TABLE>
<CAPTION>
YEAR TOTAL
------------ ---------
<S> <C>
1994 3.9338%
1995 4.0139%
1996 4.0959%
1997 4.2362%
1998 4.2643%
1999 4.4176%
2000 4.5245%
2001 4.6074%
2002 4.6074%
thereafter N/A*
</TABLE>
* The percentage royalty payments will increase by approximately 1.75% per
annum.
The payments do not include additional non-material payments to be made by
Magma Land Company I (e.g., surface rentals and rent for undeveloped
parcels). All payments are included in the financial projections.
5.2.2 VULCAN PROJECT
Geothermal energy sales for the Vulcan Project are subject to terms and
conditions as specified in the Brine Sales Agreement dated August 30, 1985
between Vulcan Power Company and Vulcan/BN Geothermal Power Company. Vulcan
Power Company provides resources as specified in the Brine Sales Agreement
and receives in return 4.167 percent of the energy component of the price of
electricity sold in accordance with the power purchase agreement and an
Administrative Fee which is subject to negotiation at unspecified intervals.
The financial projections include the 4.167 percent royalty and include an
Administrative Fee.
Pursuant to underlying resource documents Magma pays a royalty to resource
owners equal to 4.167 percent of energy revenues. There are also other
payments for use of surface rights and leases for the plants. These royalty
payments are included in the financial projections.
5.2.3 DEL RANCH, ELMORE, AND LEATHERS PROJECTS
Del Ranch, L.P., Elmore, L.P. and Leathers, L.P. have each entered into an
Easement Grant Deed and Agreement with Magma. These agreements provide for
sale of geothermal energy for use by the Del
B-21
<PAGE>
Ranch, Elmore, and Leathers Projects. Magma receives as payment a Grantors
Fuel Charge equal to 17.333 percent of all energy revenues received by the
facilities pursuant to the power purchase agreements and a Geothermal
Lessor's Fee equal to 4.167 percent of all energy revenues received by the
facilities. Magma also receives a Resource Development Fee equal to 0.833
percent of all energy revenues for the Del Ranch and Elmore Projects, but not
for the Leathers Project. The financial projections accurately include these
payments based on projected energy sales.
Pursuant to underlying resource documents Magma pays a royalty to resource
owners equal to 4.167 percent of energy revenues. There are also other
payments for use of surface rights and leases for the plants. These royalty
payments are included in the financial projections.
5.3 SOLIDS DISPOSAL AGREEMENTS--OPERATING PLANTS
Solid geothermal end products are disposed of in the Magma owned Desert
Valley Company monofill in accordance with the Amended and Restated Waste
Disposal Agreement of February 23, 1994. Contract term is 10 years. Tipping
fees were set at $51.50 per ton subject to annual adjustment based on
specified indices.
Other solid geothermal scale, pipe, filter cake, and other materials which
are characterized as hazardous waste are transported and disposed of by
Laidlaw Environmental Services in accordance with an Environmental Services
Agreement in effect through March 31, 1996. This contract will be extended to
allow disposal until the pH Modification project is complete. Costs for
disposal of bulk solids requiring no treatment range from $77 to $100 per ton
depending on quantity. Disposal costs for wastes requiring solidification
range from $145 to $185 per ton. Disposal cost for wastes requiring
stabilization range from $175 to $215 per ton. An additional 10 percent
county tax and transportation costs of $14 per ton are also assessed.
In 1994, 21,613 tons of solids were disposed of with Laidlaw, of which
8,143 tons were attributable to non-routine facility cleanout operations.
Approximately 14,000 tons/year of solids would normally be disposed of with
Laidlaw at an average cost of $80/ton subject to escalation. The appropriate
portion of these costs is allocated in the financial projections for Vulcan,
Del Ranch, Elmore, and Leathers Projects. The financial projections do not
include significant solids disposal costs for Salton Sea Units I, II, and
III, since solids generation will be significantly reduced by implementation
of the pH Modifications. Approximately 33,000 tons of filter cake were
disposed of at Desert Valley in 1994 at rates as specified in the contract
from all plants excluding Salton Sea Unit II, which incorporates pH
Modification in its design to eliminate precipitation and disposal of brine
solids. The financial projections for the Vulcan, Del Ranch, Elmore, and
Leathers Projects include their portion of these costs for disposal based on
the specified tipping fee. Costs for filter cake disposal for Salton Sea
Units I and III are not included since the pH Modification program is assumed
to be implemented.
5.4 OPERATING AND MAINTENANCE AND ADMINISTRATION AGREEMENTS
5.4.1 SALTON SEA UNITS I, II, AND III
An Amended and Restated Operating and Maintenance Agreement was executed
on February 23, 1994, between CEOC, Salton Sea Power Generation L.P., and
Salton Sea Brine Processing L.P. The Operating and Maintenance Agreement
provides for CEOC to perform or, when necessary, subcontract the performance
of all necessary operations, maintenance, and repairs, with specific
responsibilities comprehensively described. The Agreement also provides for
performance of administrative services and maintenance of specified reserve
accounts. The term of the agreement is 33 years. CEOC is reimbursed for
actual incurred costs and expenses, which are included as part of operating
expenses in the financial projections. The Agreement does not provide for any
additional fees. All administration services and costs are covered by the
Operating and Maintenance Agreement.
5.4.2 VULCAN PROJECT
A Construction, Operating, and Accounting Agreement was executed on August
30, 1985, between Vulcan/BN Geothermal Power Company and Vulcan Power
Company. Although more general than the
B-22
<PAGE>
Salton Sea Operating and Maintenance Agreement described above, the Agreement
adequately defines responsibilities and provides for Vulcan Power Company to
perform or, when necessary, subcontract operations, maintenance, repair, and
administrative services. The contract term is annual, terminable upon 30 days
notice. Vulcan Power Company is reimbursed for actual incurred costs and
expenses which are included as part of operating expenses in the financial
projections. The agreement does not provide for any additional fees. All
administration services and costs are covered by the Construction, Operating,
and Accounting Agreement.
5.4.3 DEL RANCH, ELMORE, AND LEATHERS PROJECTS
Del Ranch, L.P., Elmore L.P., and Leathers, L.P. entered into Operating
and Maintenance Agreements with Red Hill Geothermal, Inc., a 100 percent
Magma owned subsidiary subsequently renamed and referred to hereafter as
California Energy Operating Company (CEOC). The Agreements provide for
operation of the Del Ranch, Elmore, and Leathers Projects. The agreements, as
amended, are all very similar to each other and provide for CEOC to perform
or, when necessary, subcontract the performance of all necessary operations,
maintenance, and repairs. Included in the scope of work are budget
development, implementation of preventive maintenance, safety and loss
prevention, and spare parts programs. Also included are performance of
administrative functions including billing, revenue collection and
disbursement, and maintenance of working capital and reserve accounts. The
term of the contract is 32 years.
CEOC is reimbursed for actual costs and expenses incurred. In addition,
the contracts provide for payments to CEOC of a Guaranteed Capacity Payment
and Special Priority Distribution pursuant to the applicable Limited
Partnership Agreements. The financial projections include these base and
incentive payments based on projected energy sales.
A separate Administrative Services Agreement between the same parties has
been entered into for each facility. The term of each contract is 32 years.
Each agreement provides that CEOC will perform administrative and management
activities not covered by the respective Operating and Maintenance Agreement
for the facility. The contracts provide for payment of an Administration Fee
equal to three percent of total electricity revenues, but in no event less
than a floor amount of $800,000 per year per facility which is subject to
escalation based on the Consumer Price Index based on its value in August
1988. These fees are included in the financial projections.
5.5 SUPPORT SERVICES AGREEMENT
It is expected that California Energy and Magma will enter into an
agreement under which California Energy will provide to Magma certain general
and administrative (G&A) support services, including but not limited to the
following:
o Procurement
o Construction administration
o Legal
o Accounting
o Financial
o Money management
o Risk management
o Personnel
o Administration and business planning
The cost of the services provided under this agreement is to be determined
by California Energy within certain parameters.
B-23
<PAGE>
SECTION 6.0
FUNDING CORPORATION AFFILIATES AND PARTICIPANTS
6.1 CALIFORNIA ENERGY COMPANY, INC. (CALIFORNIA ENERGY)
California Energy is a U.S. based independent power developer and operator
located in Omaha, Nebraska. The company was founded in 1971 and has a strong
history of geothermal power plant development and operation, owning 12
geothermal plants with a combined capacity in excess of 515 MW.
Prior to the recent acquisition of Magma, California Energy owned more
than $700 million in assets and has a net income in excess of $45 million per
year. Peter Kiewit Sons', Inc., a U.S. based construction company with
construction revenues exceeding $1.7 billion per year, owns approximately 34
percent of the California Energy shares. In 1993, it also purchased an
engineering firm, The Ben Holt Company (BHCO), a company well known in the
geothermal business.
California Energy plans to continue geothermal development in Asia where
it is currently developing over 500 MW of other geothermal plants at Upper
Mahiao, Malitbog, and Mahanagdong which are located in the Philippines. We
consider California Energy a capable geothermal project developer and
operator.
6.2 MAGMA POWER CORPORATION (MAGMA)
Magma, prior to its acquisition by California Energy, was a U.S. based
independent power producer specializing in geothermal energy. Magma was in
the business of generating electricity from seven operating geothermal power
plants, and acquiring, exploring, and developing geothermal resources. Magma
was a successor to a business founded in 1954 that pioneered geothermal
development at the Geysers in Northern California, which is the largest
geothermal development in the U.S.
6.3 DOW ENGINEERING COMPANY (DOW)
Dow is performing engineering and procurement services for the Region I pH
Modification and capacity expansion program. Dow is the commercial element of
Dow Chemical's Engineering and Construction Services Division (E&CS) located
in Houston, Texas. The E&CS employs approximately 600 people performing
consulting services related to engineering, procurement, and construction
management. The E&CS has performed engineering services on projects with a
total value in excess of $25 billion over a period of 36 years.
Dow's capabilities include project management and engineering, design
engineering in all disciplines, cost and scheduling support functions,
procurement, and construction management. Dow has considerable previous
experience with Magma in the Salton Sea Basin, including the development,
design, construction, and startup of the Partnership Projects.
We consider Dow capable of fulfilling their project obligations.
6.4 SOUTHERN CALIFORNIA EDISON (SCE)
SCE is a public utility regulated by the California Public Utilities
Commission. SCE's service area includes approximately 50,000 square miles
with a population of more than 11 million.
SCE added approximately 30,000 customer accounts in 1994, compared with
about 10,000 new accounts in 1993. This brings the total number of customer
accounts served to 4.15 million. SCE's customer base has grown by
approximately three percent or 0.75 percent per year, over the past four
years. Customer growth in the near term is expected to increase reflecting
the projected expansion of California's population. Peak system demand in
1994 was 18,044 MW and system generating capacity was 20,615 MW. According to
its 1994 Annual Report, SCE's energy mix in 1994 consisted of 20 percent
nuclear, 26 percent gas, 13 percent coal, 4 percent hydro, and 37 percent
purchased power. The majority of power purchased by SCE comes from
non-utility generators.
B-24
<PAGE>
SECTION 7.0
PERMITTING AND ENVIRONMENTAL
7.1 OPERATING PLANTS
Stone & Webster reviewed permit information and other relevant file
materials for the Salton Sea and Partnership Projects at Magma's facility in
Calapatria, California on May 16, 1995. Our review was performed in
conjunction with interviews with Magma's Environmental Manager.
Our review of operating permit information, compliance files, and
representations of Funding Corporation indicate that project operations are
conducted in compliance in all material respects with applicable
environmental regulations.
The Desert Valley Monofill Operating Permit issued by the Integrated Solid
Waste Management Board is current, and the plan for closing one of the two
Monofill storage cells has been submitted to the Board for review. The
Monofill can be expanded if necessary to provide additional waste storage
capacity.
7.2 SALTON SEA EXPANSION
Amendments to the Conditional Use Permits for Salton Sea Units I, II, and
III were approved by the Imperial County Planning Commission on November 23,
1994. These amendments provide county authorization for installation of the
pH Modification and construction of Salton Sea Unit IV. Authority to
Construct Permits were issued by the Imperial County Air Pollution Control
District on April 10, 1995. Discretionary permits required for the Salton Sea
Expansion appear to be in place to support construction and completion. Stone
& Webster considers the requirements for compliance with all discretionary
permits achievable.
The Authority to Construct Permit requires reduction of hydrogen sulfide
emissions for Salton Sea Units I and II from noncondensable gases by 90
percent or to a maximum emission limit of 0.95 lbs/hr. Salton Sea Unit III
similarly is required to reduce emissions in accordance with the Authority to
Construct Permit by 90 percent or maximum of 7.2 lbs/hr. These reductions
should be readily achievable using existing hydrogen sulfide abatement
technology. The Salton Sea and Partnership Projects currently comply and
should continue to comply with applicable Authority to Construct permit
emission limits.
SECTION 8.0
ASSESSMENT OF FINANCIAL PROJECTIONS
8.1 BASE CASE ASSUMPTIONS
Stone & Webster prepared financial projections that were based on
information provided by Funding Corporation. The projections were prepared to
represent reasonable expectations and are consistent with Project documents
and data provided by Funding Corporation.
Stone & Webster's review is based on the following project structure and
financial details, as described by Funding Corporation.
o Funding Corporation will be created and will be wholly-owned by Magma.
o Magma owns the Salton Sea Projects, the Salton Sea Unit IV, and equity
interests in the Partnership Projects and the Royalty Guarantor.
o The Salton Sea Guarantors receive project cash flows from the Salton
Sea Projects. The Partnership Guarantors receive equity distributions,
royalties and other payments which are received by Vulcan Power Company and
CEOC from the Partnership Projects, and the Royalty Guarantor receives
royalties and other payments which have been assigned to the Royalty
Guarantor by Magma from the Royalty Projects except Vulcan.
o The $475 million investment-grade bonds will be obligations of Funding
Corporation guaranteed by each of the Salton Sea Guarantors, the Partnership
Guarantors, and the Royalty Guarantor.
B-25
<PAGE>
o The $475 million proceeds will be used to (i) refinance a portion of
the non-recourse debt incurred by California Energy to acquire Magma, (ii)
replace certain project level debt at the Salton Sea Projects, and (iii)
finance the Salton Sea Expansion.
Beginning with 1995 and continuing through 2012, the projections forecast
revenues and expenses, assuming certain operating conditions, maintenance
schedules, and escalation rates to arrive at cash flows over 18 years. The
base case projection indicates that the Project revenues from the sale of
electrical energy and capacity pursuant to the terms of the power purchase
agreements for the Salton Sea and Partnership Projects, and royalties from
the Royalty Projects are adequate to pay for the annual operating expenses,
and debt service of the investment-grade bonds. The average debt service
coverage ratio is 1.89 and the minimum Debt service coverage ratio is 1.51.
8.2 BASE CASE FINANCIAL PROJECTIONS
Power Production
The projections were modeled using annual energy production of 1,912 GWh
from the existing units, based on production records for the period 1991
through 1994. The projections also indicate that beginning mid-year, 1996 the
Salton Sea Expansion project will add 39.6 MW of production capacity at an
assumed 95 percent capacity factor. These values are technically feasible and
consistent with the power purchase agreements. Capacity factors based on
nominal plant capacity for the Salton Sea and Partnership Projects were based
on historical data and are shown in Table 8-1.
TABLE 8-1
CAPACITY FACTORS
<TABLE>
<CAPTION>
DEL
SS#I SS#II SS#III VULCAN RANCH ELMORE LEATHERS SS#IV
-------- -------- -------- -------- -------- -------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nominal Capacity
Factor 86.07 93.17 97.13 97.46 99.50 99.28 98.99 95.00
Nominal Capacity
(kW) 10,000 20,000 49,800 34,000 38,000 38,000 38,000 39,600
</TABLE>
Revenues
SCE is obligated to pay energy payments and capacity payments pursuant to
the power purchase agreements as summarized in Table 5-1A and 5-1B. The power
contracts for Salton Sea Units II and III and the Partnership Projects also
specify bonus capacity payments if the capacity factors during peak periods
exceed 85 percent.
The energy payments for Salton Sea Unit I are based on the actual billing
rate of 4.79cents/kWh in 1994, escalating at an assumed rate of 3.5 percent.
Energy payments for Salton Sea Units II and III and Partnership Projects are
based on a defined schedule of rates for the first ten years (Phase I) of
each project's life, then at SCE's avoided cost of energy. The projected
energy payments during Phase I are consistent with the power purchase
agreements and the capacities of the plants. During Phase II, the revenues
are less certain because future avoided costs are unknown. SCE's avoided cost
of energy was assumed to be 2.9cents/kWh in 1995, escalating at 3.0 percent
(assumed natural gas escalation), based on 1992, 1993, 1994, and 1995 average
SCE avoided cost information. A sensitivity analysis to avoided costs of
2.2cents/kWh, 2.8cents/kWh, and 3.28cents/kWh was performed to assess the
impact on debt service coverage.
The capacity payments are comprised of firm capacity payments (or
as-available capacity payments) and bonus capacity payments. The fixed
capacity payments and as-available capacity payments are calculated as the
product of the appropriate capacity rate defined in the power purchase
agreements and the respective contract capacity or as-available capacity. The
bonus capacity is available for all of the domestic plants except Salton Sea
Unit I, and is based on the on peak capacity factor for each plant. The
capacity payments are consistent with the power purchase agreements and the
capabilities of the plants.
B-26
<PAGE>
Magma owns the Desert Valley Landfill Company, which is used for disposal
of filter cake. It pays fees to that Company and receives the revenues.
Partnership Royalty Revenues
Each of the Partnership Guarantor and the Royalty Guarantor will receive
Royalties from the Partnership Projects. These Royalties are paid by each
partnership under various easement and operating agreements. The Royalties
are calculated as a function of revenues as summarized below. These
percentages all apply to energy payments except the administration fees and
total revenue royalties, which are based on total revenues.
<TABLE>
<CAPTION>
ROYALTY VULCAN DEL RANCH ELMORE LEATHERS
- ---------------------- -------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Brine Fee ............. 0.0% 17.333% 17.333% 17.333%
Priority Distribution 0.0% 2.667% 2.667% 2.667%
Administration Fee ... 3.0% 3.0% 3.0% 3.0%
Priority Payment ...... 0.0% 0.0% 0.0% 1.0%
Lessor Fee ............ 0.0% 4.167% 4.167% 4.167%
Total Revenue ......... 0.0% 1.0% 1.0% 0.0%
Energy ................ 0.0% 0.83% 0.83% 0.0%
</TABLE>
Other Royalty Revenues
Magma is entitled to a royalty payment from the East Mesa Project, in
which Magma does not have an ownership interest. Magma will assign the
Royalties it is entitled to receive to the Royalty Guarantor. These are
determined as 4.0 percent of the capacity and energy payments.
Capital Costs
The plants require ongoing capital expenditures to maintain the brine
supply and handling systems. The Salton Sea Projects will require
approximately $1.3 million for annual capital expenditure in 1994 dollars,
based on pH Modification being implemented. Funding Corporation estimates
that the capital expenditures at the Partnership Projects will be
approximately $8.0 million in 1995, half of which will be borne by CEOC.
The projections assume that the capital expenditures will escalate at 3.0
percent per year.
Operating Expenses
A $4.5 million, $5.06 million, and $6.47 million general operating and
maintenance reduction is projected by Funding Corporation affiliates in years
1995, 1996, and 1997 respectively as a result of having made and making
future organizational and operational changes.
Funding Corporation affiliates anticipate operating and maintenance cost
reductions of $4.0 million per year beginning in the first full year of
operation associated with shutting down the CRC process and using the pH
Modification process at the Salton Sea Projects.
Other operating and maintenance cost reductions of approximately $1.5
million per year at each of the Partnership Projects are projected starting
in 1998 and 1999, escalating at 3.0 percent.
The costs are assumed to escalate at 3.0 percent. Stone & Webster
considers the proposed cost reductions reasonable, but not certain, therefore
sensitivity analyses were performed to determine sensitivity to operating and
maintenance costs.
Operating expenses for the plants and wellfield were estimated by Funding
Corporation based on historical expenses and California Energy's operating
experience at the Coso geothermal project. There are plans to achieve certain
operating cost reductions in the following ways:
o Maintaining optimal and efficient staffing and wage levels.
o Consolidating overhead functions.
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<PAGE>
o Consolidating control room operations in the future.
o Obtaining quantity discounts on material purchases by combining
purchases with purchases by the Coso plants.
o Reallocating engineering staff to development projects.
o Reducing turbine overhaul frequency.
o Aggressively controlling operating and maintenance expenses and capital
expenditures.
o Shutting down the CRC technology at Salton Sea Units I and III.
The amount of the cost reductions in the aggregate relative to Magma
annual expense levels is 14 percent in 1995, increasing to 32 percent by
1999, and increasing to 36 percent by 2010.
Project Debt
The project debt assumptions in the financial projections are as follows:
o The current Salton Sea Project loans are retired with proceeds from the
Securities.
o The Vulcan Project loan has no loan outstanding.
o The Del Ranch Project loan has a loan balance of $34.0 million as of
January 1, 1995 and is retired before the year 2002.
o The Elmore Project loan has a loan balance of $35.6 million as of
January 1, 1995 and is retired before the year 2002.
o The Leathers Project loan has a loan balance of $61.4 million as of
March 1, 1995 and is retired before the year 2003.
The loan rates for the Del Ranch, Elmore, and Leathers Projects are
assumed to be at 150 basis points over LIBOR. LIBOR was assumed to be 7.0
percent in the base case, resulting in loan rates of 8.5 percent. The loan
rates are actually tied to commercial paper rates, but those rates are
expected to be reasonably close to LIBOR.
Funding Corporation Securities
The debt service coverage ratios were calculated for 1995 through 2010.
The ratio is calculated as the total revenues of each of the Guarantors less
the total expenses of each of the Guarantors (including necessary capital
expenditures), divided by the debt service of the loans to be paid to Funding
Corporation. The debt service coverage ratios are calculated on an annual
basis. Principal and interest payments are made every six months based on an
interest rate of 7.75 percent in the base case. The original outstanding
balance is $475 million.
B-28
<PAGE>
The projections assume that the principal will be amortized according to
the following schedule:
<TABLE>
<CAPTION>
<S> <C>
1995 4.91%
1996 9.30%
1997 13.05%
1998 15.36%
1999 7.98%
2000 3.51%
2001 4.47%
2002 4.72%
2003 4.48%
2004 4.86%
2005 5.32%
2006 4.80%
2007 4.79%
2008 4.96%
2009 4.88%
2010 2.59%
</TABLE>
The base case projections result in debt service coverage ratios that vary
from 1.51 to 2.48, with an average of 1.89.
8.3 SENSITIVITY ANALYSIS
Stone & Webster assessed the sensitivity of the debt service coverage
ratios to a number of conditions which could affect project performance. The
sensitivity of the average debt service coverage ratios to the following
parameters was investigated using the base case financial projections.
o Avoided cost
o General operating and maintenance cost reductions
o pH Modification cost reductions
o G&A expenses
o Cost escalation rate
o LIBOR
The results of the sensitivity analysis are shown in Table 8-2.
Avoided Cost Sensitivity
SCE's avoided cost of energy tends to track fuel prices, but can be
impacted by the efficiency of SCE's plants and changes in the methodology
approved by the CPUC for calculating the avoided cost. A sensitivity analysis
to avoided costs of 2.2cents/kwh and 3.28cents was performed to assess the
impact on debt service coverage ratios. At an escalation rate of 3.0 percent,
the average and minimum debt service coverage ratios for the 2.2cents/kWh
case are 1.60 and 1.46 respectively. The average and minimum debt service
coverage ratios for the 3.28cents/kWh are 2.06 and 1.51 respectively. A
sensitivity to an avoided cost of 2.8cents/kWh with zero escalation was also
performed resulting in average and minimum debt service coverage ratios of
1.54 and 1.50 respectively.
General Operating and Maintenance Cost Reduction Sensitivity
Cost reductions of $4.5 million, $5.1 million and $6.47 million are
expected to occur in 1995, 1996, and 1997, respectively. A sensitivity
analysis was performed using a value of minus 15 percent of $6.47 million in
1997. The average and minimum debt service coverage ratios are 1.86 and 1.50,
respectively.
B-29
<PAGE>
pH Modification Cost Reduction Sensitivity
An expected cost reduction of $4.0 million is estimated by Funding
Corporation affiliates. A sensitivity analysis was performed at a savings of
$2.0 million in 1997 dollars, or half of the Funding Corporation affiliate's
estimate. This resulted in average and minimum debt service coverage ratios
of 1.83 and 1.49 respectively.
G&A Expense Sensitivity
California Energy is projected to provide G&A services to Magma at a cost
of $1.381 million in 1995. Sensitivities were performed at a G&A expense
level of $5.0 million. This case resulted in average and minimum debt service
coverage ratios of 1.77 and 1.45 respectively.
Cost Escalation Sensitivity
A general cost escalation rate of 3.0 percent was used to escalate all
expenses except property tax. This rate was calculated as a percentage of
general inflation assumed to be 3.5 percent. A sensitivity analysis was
performed with a cost escalation rate of 4.0 percent, with resulting average
and minimum debt service coverage ratios of 1.78 and 1.50 respectively.
LIBOR Sensitivity
The project loans were assumed to be tied to LIBOR, which was assumed to
be 7.0 percent. A sensitivity was performed with LIBOR at 8.0 percent. This
analysis indicated that the debt service coverage ratios are not sensitive to
LIBOR.
Sensitivity Summary
The results from the sensitivity analyses that were conducted to determine
the susceptibility of the economics of the Projects to changes in future
avoided cost, capacity expansion and pH Modification costs, operating and
maintenance cost levels, and cost escalation rates showed that revenues are
more than adequate to pay operating and maintenance costs and cover debt
service.
TABLE 8-2
SENSITIVITY ANALYSIS SUMMARY
<TABLE>
<CAPTION>
AVERAGE DEBT
MINIMUM DEBT SERVICE
SERVICE COVERAGE
SENSITIVITY PARAMETER COVERAGE RATIOS RATIOS
- ------------------------------------------------- --------------- --------------
<S> <C> <C>
Base Case ........................................ 1.51 1.89
Avoided Cost High (3.28cents/kwh) ................ 1.51 2.06
Avoided Cost Low (2.20cents/kwh) ................. 1.46 1.60
Avoided Cost 2.8cents/kwh Flat ................... 1.50 1.54
General Operating and Maintenance Cost Reductions
minus 15% case (1997) .......................... 1.50 1.86
pH Modification Cost Reductions .................. 1.49 1.83
G&A Expenses ..................................... 1.45 1.77
Cost Escalation 4.0% ............................. 1.50 1.78
LIBOR 8.0% ....................................... 1.49 1.89
</TABLE>
B-30
<PAGE>
ATTACHMENT 1
ASSUMPTIONS AND DOCUMENTS REVIEWED
<PAGE>
ATTACHMENT 1
ASSUMPTIONS AND DOCUMENTS REVIEWED
The principal assumptions and considerations made by Stone & Webster in
developing the results and conclusions presented in this report include the
following:
o Only the power plants and above ground geothermal resource piping and
processing facilities were evaluated. The adequacy and reliability of
geothermal resources and wells were assessed by GeothermEx. Plant performance
data provided in the Report assume no decline in geothermal resource
production or injection capability from current levels.
o The estimated interest rates on the securities, estimated reinvestment
rates and the amortization schedule of the securities used in the debt
service coverage analysis has been provided to Stone & Webster.
o The avoided cost used in the base case financial projection was calculated
using the historical average of avoided costs for qualified facilities as
provided by SCE for the three year period through March 1995.
o Stone & Webster personnel visited the operating plants on December 14 and
15, 1994 and May 17 and 18, 1995 to assess current operating conditions and
construction progress of the Salton Sea Expansion. The Report addresses the
condition of the plants based upon this examination.
o Certain other assumptions identified in the text, including paragraphs 8.1
and 8.3 thereof.
1-1
<PAGE>
DOCUMENTS REVIEWED
<TABLE>
<CAPTION>
DATE
RECEIVED DOCUMENT
- ------------ --------------------------------------------------------------------------------------------------
<S> <C>
5/1/95 SCE statements for the last 12 months for Units I, II, and III
5/1/95 Historical 1993 Monthly Income Statements for Units I and II, and III (April through December).
5/1/95 Historical 1994 Monthly Income Statements for Units I and II, and III
5/1/95 Detail on Transmission Credits
5/1/95 Engineering Services Agreement between Magma Power Company and Dow Engineering dated February 1994
5/1/95 Consolidated and Amended PPA among Southern California Edison Company, Fish Lake Power Company,
and Salton Sea Power Generation L.P.
5/1/95 Approval Order directed to the PUC by SCE
5/5/95 Dow Schedule for Expansion Project
5/5/95 Expansion Turbine Specification
5/5/95 PUC Approval
5/5/95 Authority to Construct Permit
5/5/95 Dow Estimates for the pH Mod Conversion and the Expansion Plant
5/9/95 Transmission Line Credits
5/10/95 Complete amortization schedules for each of the Partnership Project loans
5/10/95 Sinking fund schedule for the Desert Valley Pollution Control Bonds
5/10/95 Summary of contingency support for the project financings
5/10/95 1992 costs by Unit
5/10/95 pH Mod Conversion Tie-in Description
5/10/95 Vulcan, Del Ranch, and Leathers Process Flow Diagrams
5/10/95 Leathers P&IDs
5/10/95 Vulcan P&IDs
5/10/95 Del Ranch P&IDs
5/10/95 Salton Sea Plants Process Flow Diagrams
5/10/95 Salton Sea Plants P&IDs
5/15/95 Elmore Process Flow Sheets
5/19/95 PUC Decision 95-04-057
5/19/95 Transmission Agreement Payment Acknowledgement
5/19/95 Combined Fish Lake and Salton Sea Power Purchase Agreement
5/19/95 Preliminary Drawings
o Expanded Master Development Plan, Salton Sea 1, 2, 3
o Overall Layout Plan & Project Notes
o Civil Grid Plan & General Notes
o Site Development Rough Grading Plan Expansion Area
o Site Layout Plan Expansion Area
</TABLE>
1-2
<PAGE>
ATTACHMENT 2
FINANCIAL PROJECTIONS
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
BASE CASE
<TABLE>
<CAPTION>
CASH FROM PROJECTS 1995 1996 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Salton Sea Unit I 4,274 4,432 4,578 4,739
Salton Sea Unit II 18,623 18,665 18,623 18,623
Salton Sea Unit III 51,336 51,450 51,336 51,336
Salton Sea Unit IV 0 17,155 30,617 32,110
Vulcan 19,891 8,627 7,230 7,364
Del Ranch 23,528 24,910 26,509 28,165
Elmore 23,486 24,865 26,460 28,112
Leathers 23,208 24,583 26,174 27,821
--------- --------- --------- ---------
Total Revenues 164,346 174,687 191,527 198,270
EXPENSES
Salton Sea Units I&II 8,378 7,640 6,917 7,122
Salton Sea Unit III 11,543 11,036 11,268 11,565
Salton Sea Unit IV 0 3,346 5,430 5,123
Vulcan 6,452 6,096 6,483 5,893
Del Ranch 6,947 7,221 7,877 8,155
Elmore 7,551 7,815 8,495 8,789
Leathers 7,125 7,375 7,768 8,322
--------- --------- --------- ---------
Total Expenses 47,996 50,530 54,239 54,969
Project Operating Income 116,350 124,158 137,289 143,301
PROJECT ROYALTY EXPENSES (ROYALTIES TO
MAGMA)
Vulcan 597 534 556 578
Del Ranch 6,155 6,590 7,067 7,573
Elmore 6,133 6,567 7,042 7,546
Leathers 6,132 6,563 7,035 7,537
--------- --------- --------- ---------
Royalty Expenses 19,017 20,254 21,700 23,235
Cash After Royalty Payments 97,333 103,903 115,589 120,067
CAPITAL EXPENDITURES
Salton Sea I, II, & III 1,030 1,061 1,093 1,126
Salton Sea IV 0 0 337 347
Vulcan 1,040 1,082 1,100 1,133
Del Ranch 1,030 1,061 1,093 1,126
Elmore 1,085 1,118 1,151 1,186
Leathers 1,030 1,061 1,093 1,126
--------- --------- --------- ---------
Total Capital Expenditures 5,215 5,382 5,866 6,042
INTEREST INCOME
Del Ranch 197 197 197 197
Elmore 198 198 198 198
Leathers 249 249 249 249
--------- --------- --------- ---------
Total Interest Income 644 644 644 644
RESERVE RELEASES
Del Ranch 0 0 0 0
Elmore 0 0 0 0
Leathers 0 0 0 0
--------- --------- --------- ---------
Total Reserve Releases 0 0 0 0
Changes in AP/AR (544) (998) (1,687) (571)
Cash Available for Project Debt Service 92,217 98,167 108,680 114,098
PROJECT DEBT SERVICE (MAGMA SHARE)
Salton Sea Units I&II 5,176 0 0 0
Salton Sea Unit III 12,076 0 0 0
Del Ranch Debt Service 4,734 4,612 4,319 4,025
Elmore Debt Service 4,960 4,832 4,525 4,217
Leathers Debt Service 6,585 8,036 8,063 7,529
--------- --------- --------- ---------
Total Project Debt Service 33,530 17,480 16,906 15,772
Cash After Project Debt Service 58,687 80,687 91,773 98,326
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FROM PROJECTS 1999 2000 2001 2002
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Salton Sea Unit I 4,904 5,086 5,254 5,438
Salton Sea Unit II 18,623 10,918 8,312 8,463
Salton Sea Unit III 23,640 24,094 24,482 24,922
Salton Sea Unit IV 33,473 33,899 34,630 35,908
Vulcan 7,502 7,657 7,791 7,941
Del Ranch 9,392 9,570 9,721 9,893
Elmore 9,380 9,557 9,709 9,880
Leathers 29,469 9,320 9,471 9,642
--------- --------- --------- ---------
Total Revenues 136,384 110,101 109,370 112,088
EXPENSES
Salton Sea Units I&II 7,420 7,631 7,739 7,977
Salton Sea Unit III 10,697 11,037 11,378 11,726
Salton Sea Unit IV 5,752 5,402 6,355 5,944
Vulcan 6,053 6,216 6,391 6,573
Del Ranch 6,421 6,599 6,780 6,967
Elmore 7,230 7,431 7,636 7,886
Leathers 7,826 6,897 7,084 7,277
--------- --------- --------- ---------
Total Expenses 51,399 51,213 53,363 54,350
Project Operating Income 84,985 58,888 56,007 57,738
PROJECT ROYALTY EXPENSES (ROYALTIES TO
MAGMA)
Vulcan 601 625 650 676
Del Ranch 2,092 2,168 2,232 2,305
Elmore 2,086 2,163 2,226 2,299
Leathers 8,040 2,192 2,255 2,329
--------- --------- --------- ---------
Royalty Expenses 12,819 7,148 7,364 7,609
Cash After Royalty Payments 72,165 51,740 48,643 50,128
CAPITAL EXPENDITURES
Salton Sea I, II, & III 1,159 1,194 1,230 1,267
Salton Sea IV 357 368 379 390
Vulcan 1,167 1,202 1,238 1,275
Del Ranch 1,159 1,194 1,230 1,267
Elmore 1,221 1,258 1,296 1,335
Leathers 1,159 1,194 1,230 1,267
--------- --------- --------- ---------
Total Capital Expenditures 6,223 6,410 6,602 6,800
INTEREST INCOME
Del Ranch 197 197 98 0
Elmore 198 198 99 0
Leathers 249 249 249 125
--------- --------- --------- ---------
Total Interest Income 644 644 446 125
RESERVE RELEASES
Del Ranch 0 0 3,280 0
Elmore 0 0 3,300 0
Leathers 0 0 0 4,150
--------- --------- --------- ---------
Total Reserve Releases 0 0 6,580 4,150
Changes in AP/AR 5,641 2,259 104 (271)
Cash Available for Project Debt Service 72,226 48,232 49,171 47,332
PROJECT DEBT SERVICE (MAGMA SHARE)
Salton Sea Units I&II 0 0 0 0
Salton Sea Unit III 0 0 0 0
Del Ranch Debt Service 1,384 1,290 1,196 0
Elmore Debt Service 1,450 1,351 1,253 0
Leathers Debt Service 7,035 873 814 775
--------- --------- --------- ---------
Total Project Debt Service 9,868 3,514 3,263 755
Cash After Project Debt Service 62,358 44,718 45,908 46,577
</TABLE>
2-1
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
BASE CASE
<TABLE>
<CAPTION>
CASH FROM PROJECTS 2003 2004 2005 2006
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Salton Sea Unit I 5,628 5,836 6,029 6,240
Salton Sea Unit II 8,617 8,791 8,940 9,109
Salton Sea Unit III 25,376 25,887 26,324 26,819
Salton Sea Unit IV 37,058 37,875 38,685 32,155
Vulcan 8,097 8,272 8,421 8,591
Del Ranch 10,071 10,270 10,441 10,635
Elmore 10,057 10,256 10,427 10,620
Leathers 9,819 10,017 10,187 10,380
--------- --------- --------- ---------
Total Revenues 114,721 117,204 119,455 114,548
EXPENSES
Salton Sea Units I & II 8,224 8,481 8,743 9,015
Sealton Sea Unit III 12,091 12,469 12,855 13,255
Salton Sea Unit IV 6,100 5,964 7,305 5,365
Vulcan 6,760 6,953 7,150 7,354
Del Ranch 7,160 7,360 7,563 7,774
Elmore 8,105 8,331 8,562 8,800
Leathers 7,475 7,680 7,890 8,107
--------- --------- --------- ---------
Total Expenses 55,914 57,237 60,068 59,670
Project Operating Income 58,808 59,967 59,387 54,878
PROJECT ROYALTY EXPENSES (ROYALTIES TO
MAGMA)
Vulcan 703 731 761 791
Del Ranch 2,381 2,468 2,541 2,625
Elmore 2,375 2,462 2,534 2,618
Leathers 2,404 2,490 2,563 2,646
--------- --------- --------- ---------
Royalty Expenses 7,864 8,152 8,399 8,680
Cash After Royalty Payments 50,944 51,816 50,988 46,198
CAPITAL EXPENDITURES
Salton Sea I, II, & III 1,305 1,344 1,384 1,426
Salton Sea IV 402 414 426 439
Vulcan 1,313 1,353 1,393 1,435
Del Ranch 1,305 1,344 1,384 1,426
Elmore 1,375 1,416 1,458 1,502
Leathers 1,305 1,344 1,384 1,426
--------- --------- --------- ---------
Total Capital Expenditures 7,004 7,214 7,431 7,654
INTEREST INCOME
Del Ranch 0 0 0 0
Elmore 0 0 0 0
Leathers 0 0 0 0
--------- --------- --------- ---------
Total Interest Income 0 0 0 0
RESERVE RELEASES
Del Ranch 0 0 0 0
Elmore 0 0 0 0
Leathers 0 0 0 0
--------- --------- --------- ---------
Total Reserve Releases 0 0 0 0
Changes in AP/AR (261) (241) (220) 568
Cash Available for Project Debt Service 43,679 44,361 43,338 39,113
PROJECT DEBT SERVICE (MAGMA SHARE)
Salton Sea Units I & II 0 0 0 0
Salton Sea Unit III 0 0 0 0
Del Ranch Debt Service 0 0 0 0
Elmore Debt Service 0 0 0 0
Leathers Debt Service 0 0 0 0
--------- --------- --------- ---------
Total Project Debt Service 0 0 0 0
Cash After Project Debt Service 43,679 44,361 43,338 39,113
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FROM PROJECTS 2007 2008 2009 2010
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Salton Sea Unit I 6,458 6,697 6,918 7,160
Salton Sea Unit II 9,283 9,479 9,647 9,837
Salton Sea Unit III 27,329 27,904 28,396 28,954
Salton Sea Unit IV 32,099 31,995 31,341 31,958
Vulcan 8,766 8,963 9,131 9,322
Del Ranch 10,834 11,059 11,251 11,469
Elmore 10,819 11,043 11,235 11,453
Leathers 10,578 10,802 10,993 11,210
--------- --------- --------- ---------
Total Revenues 116,168 117,943 118,914 121,364
EXPENSES
Salton Sea Units I & II 9,296 9,587 9,885 10,193
Sealton Sea Unit III 13,668 14,096 14,533 14,987
Salton Sea Unit IV 5,682 5,723 6,802 5,812
Vulcan 7,564 7,782 8,004 8,234
Del Ranch 7,991 8,216 8,445 8,682
Elmore 9,046 9,300 9,560 9,829
Leathers 8,330 8,561 8,798 9,042
--------- --------- --------- ---------
Total Expenses 61,578 63,266 66,027 66,779
Project Operating Income 54,589 54,677 52,887 54,585
PROJECT ROYALTY EXPENSES (ROYALTIES TO
MAGMA)
Vulcan 823 856 890 926
Del Ranch 2,711 2,811 2,894 2,989
Elmore 2,704 2,803 2,886 2,981
Leathers 2,732 2,831 2,913 3,008
--------- --------- --------- ---------
Royalty Expenses 8,971 9,300 9,583 9,905
Cash After Royalty Payments 45,619 45,376 43,304 44,680
CAPITAL EXPENDITURES
Salton Sea I, II, & III 1,469 1,513 1,558 1,605
Salton Sea IV 452 466 480 494
Vulcan 1,478 1,523 1,568 1,615
Del Ranch 1,469 1,513 1,558 1,605
Elmore 1,547 1,593 1,641 1,691
Leathers 1,469 1,513 1,558 1,605
--------- --------- --------- ---------
Total Capital Expenditures 7,883 8,120 8,363 8,614
INTEREST INCOME
Del Ranch 0 0 0 0
Elmore 0 0 0 0
Leathers 0 0 0 0
--------- --------- --------- ---------
Total Interest Income 0 0 0 0
RESERVE RELEASES
Del Ranch 0 0 0 0
Elmore 0 0 0 0
Leathers 0 0 0 0
--------- --------- --------- ---------
Total Reserve Releases 0 0 0 0
Changes in AP/AR (146) (158) (75) (233)
Cash Available for Project Debt Service 37,590 37,098 34,865 35,833
PROJECT DEBT SERVICE (MAGMA SHARE)
Salton Sea Units I & II 0 0 0 0
Salton Sea Unit III 0 0 0 0
Del Ranch Debt Service 0 0 0 0
Elmore Debt Service 0 0 0 0
Leathers Debt Service 0 0 0 0
--------- --------- --------- ---------
Total Project Debt Service 0 0 0 0
Cash After Project Debt Service 37,590 37,098 34,865 35,833
</TABLE>
2-2
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
BASE CASE
<TABLE>
<CAPTION>
MAGMA CASH FLOW STATEMENT 1995 1996 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
MAGMA REVENUES
Cash from Projects 58,687 80,687 91,773 98,326
Monofill Revenues 1,000 1,000 1,000 0
Royalties from Vulcan 1,194 1,069 1,112 1,156
Royalties from Del Ranch 12,311 13,181 14,134 15,147
Royalties from Elmore 12,266 13,134 14,083 15,093
Royalties from Leathers 12,263 13,126 14,071 15,074
Other Royalties 1,229 1,229 1,381 1,465
--------- --------- --------- ---------
Total Magma Revenues 98,950 123,495 137,554 146,261
MAGMA EXPENSES
Magma G&A 1,381 1,422 1,465 1,509
Restructuring Expenditures 8,600 5,000 0 0
Less: General O&M Reduction (4,500) (5,064) (6,466) (6,660)
--------- --------- --------- ---------
Total Magma Expenses 5,481 1,358 (5,001) (5,151)
Cash Available for Magma Obligations 93,469 122,137 142,555 151,412
MAGMA OBLIGATIONS
Pollution Control Debt Interest 305 305 305 237
Pollution Control Debt Principal 0 0 890 960
Installment Obligations 1,388 1,393 1,321 1,101
LOC Fees 94 94 94 94
Debt Service Reserve LC Fees 200 400 400 400
--------- --------- --------- ---------
Total Magma Obligations 1,987 2,192 3,010 2,792
Cash Available for Funding Corp Debt 91,482 119,945 139,545 148,620
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MAGMA CASH FLOW STATEMENT 1999 2000 2001 2002
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
MAGMA REVENUES
Cash from Projects 62,358 44,718 45,908 46,577
Monofill Revenues 0 0 0 0
Royalties from Vulcan 1,202 1,250 1,301 1,353
Royalties from Del Ranch 4,184 4,337 4,464 4,611
Royalties from Elmore 4,173 4,325 4,452 4,598
Royalties from Leathers 16,079 4,385 4,511 4,657
Other Royalties 509 518 526 534
--------- --------- --------- ---------
Total Magma Revenues 88,506 59,533 61,161 62,331
MAGMA EXPENSES
Magma G&A 1,554 1,601 1,649 1,698
Restructuring Expenditures 0 0 0 0
Less: General O&M Reduction (6,860) (7,066) (7,277) (7,496)
--------- --------- --------- ---------
Total Magma Expenses (5,305) (5,465) (5,629) (5,797)
Cash Available for Magma Obligations 93,811 64,998 66,790 68,128
MAGMA OBLIGATIONS
Pollution Control Debt Interest 164 85 0 0
Pollution Control Debt Principal 1,035 1,115 0 0
Installment Obligations 137 137 0 0
LOC Fees 94 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
--------- --------- --------- ---------
Total Magma Obligations 1,829 1,737 400 400
Cash Available for Funding Corp Debt 91,982 63,261 66,390 67,728
</TABLE>
2-3
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
BASE CASE
<TABLE>
<CAPTION>
MAGMA CASH FLOW STATEMENT 2003 2004 2005 2006
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Magma Revenues
Cash from Projects 43,679 44,361 43,338 39,113
Monofill Revenues 0 0 0 0
Royalties from Vulcan 1,407 1,463 1,521 1,582
Royalties from Del Ranch 4,763 4,937 5,082 5,250
Royalties from Elmore 4,750 4,923 5,068 5,236
Royalties from Leathers 4,808 4,981 5,125 5,292
Other Royalties 543 554 562 572
--------- --------- --------- ---------
Total Magma Revenues 59,950 61,218 60,697 57,045
MAGMA EXPENSES
Magma G&A 1,749 1,802 1,856 1,912
Restructuring Expenditures 0 0 0 0
Less: General O&M Reduction (7,721) (7,952) (8,191) (8,437)
--------- --------- --------- ---------
Total Magma Expenses (5,971) (6,150) (6,335) (6,525)
Cash Available for Magma Obligations 65,921 67,369 67,032 63,570
MAGMA OBLIGATIONS
Pollution Control Debt Interest 0 0 0 0
Pollution Control Debt Principal 0 0 0 0
Installment Obligations 0 0 0 0
LOC Fees 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
--------- --------- --------- ---------
Total Magma Obligations 400 400 400 400
Cash Available for Funding Corp Debt 65,521 66,969 66,632 63,170
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MAGMA CASH FLOW STATEMENT 2007 2008 2009 2010
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Magma Revenues
Cash from Projects 37,590 37,098 34,865 35,833
Monofill Revenues 0 0 0 0
Royalties from Vulcan 1,646 1,711 1,780 1,851
Royalties from Del Ranch 5,423 5,621 5,787 5,979
Royalties from Elmore 5,409 5,606 5,772 5,963
Royalties from Leathers 5,464 5,661 5,827 6,017
Other Royalties 582 594 604 615
--------- --------- --------- ---------
Total Magma Revenues 56,114 56,292 54,635 56,257
MAGMA EXPENSES
Magma G&A 1,969 2,028 2,089 2,152
Restructuring Expenditures 0 0 0 0
Less: General O&M Reduction (8,690) (8,950) (9,219) (9,495)
--------- --------- --------- ---------
Total Magma Expenses (6,721) (6,922) (7,130) (7,344)
Cash Available for Magma Obligations 62,835 63,215 61,765 63,601
MAGMA OBLIGATIONS
Pollution Control Debt Interest 0 0 0 0
Pollution Control Debt Principal 0 0 0 0
Installment Obligations 0 0 0 0
LOC Fees 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 200
--------- --------- --------- ---------
Total Magma Obligations 400 400 400 200
Cash Available for Funding Corp Debt 62,435 62,815 61,365 63,401
</TABLE>
2-4
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
BASE CASE
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1995 1996 1997 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I&II 8,829 14,927 15,739 15,677
Salton Sea III 27,202 39,883 39,522 39,208
Salton Sea IV 0 13,809 24,850 26,640
Vulcan 12,815 2,056 547 1,259
Del Ranch 5,960 6,863 7,933 9,113
Elmore 5,188 6,120 7,218 8,399
Leathers 3,736 3,092 4,118 5,260
Changes in AP/AR (544) (998) (1,687) (571)
-------- --------- --------- ---------
Total Cash From Projects 63,187 85,751 98,239 104,986
OTHER REVENUE CASH FLOWS
Monofill Revenue 1,000 1,000 1,000 0
Royalties from Vulcan 1,194 1,069 1,112 1,156
Royalties from Del Ranch 12,311 13,181 14,134 15,147
Royalties from Elmore 12,266 13,134 14,083 15,093
Royalties from Leathers 12,263 13,126 14,071 15,074
Other Royalties 1,229 1,299 1,381 1,465
-------- --------- --------- ---------
Total Other Revenues 40,263 42,808 45,780 47,935
OTHER EXPENDITURES
Magma G&A 1,381 1,422 1,465 1,509
Restructuring Expenses 8,600 5,000 0 0
Installment Obligations/Pollution Control Debt Service 1,787 1,792 2,610 2,392
Debt Service Reserve LC Fees 200 400 400 400
-------- --------- --------- ---------
Total Other Expenditures 11,968 8,614 4,475 4,301
Net Cash Available for SSFC Debt Service 91,482 119,945 139,545 148,620
Interim Debt Service 22,302 0 0 0
Project Debt Interest (Net) 14,831 30,574 30,381 25,363
Project Debt Principal 23,335 44,138 62,002 72,981
-------- --------- --------- ---------
Project Debt Service 60,468 74,732 92,382 98,343
Project Debt Coverages 1.51 1.61 1.51 1.51
Average DCR 1.89
Minimum DCR 1.51
Maximum DCR 2.48
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I&II 15,529 7,776 5,212 5,290
Salton Sea III 12,363 12,460 12,489 12,563
Salton Sea IV 27,364 28,129 27,897 29,573
Vulcan 1,225 1,205 1,149 1,105
Del Ranch 212 245 3,444 1,189
Elmore (528) (509) 2,693 416
Leathers 7,412 219 198 4,207
Changes in AP/AR 5,641 2,259 104 (271)
-------- -------- -------- --------
Total Cash From Projects 69,218 51,784 53,186 54,073
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,202 1,250 1,301 1,353
Royalties from Del Ranch 4,184 4,337 4,464 4,611
Royalties from Elmore 4,173 4,325 4,452 4,598
Royalties from Leathers 16,079 4,385 4,511 4,657
Other Royalties 509 518 526 534
-------- -------- -------- --------
Total Other Revenues 26,148 14,815 15,253 15,753
OTHER EXPENDITURES
Magma G&A 1,554 1,601 1,649 1,698
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 1,429 1,337 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 3,384 3,337 2,049 2,098
Net Cash Available for SSFC Debt Service 91,982 63,261 66,390 67,728
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 20,387 17,861 16,479 14,809
Project Debt Principal 37,887 16,693 21,250 22,431
-------- -------- -------- --------
Project Debt Service 58,274 34,554 37,729 37,240
Project Debt Coverages 1.58 1.83 1.76 1.82
Average DCR 1.89
Minimum DCR 1.51
Maximum DCR 2.48
</TABLE>
2-5
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
BASE CASE
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2003 2004 2005 2006
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I&II 5,369 5,474 5,534 5,621
Salton Sea III 12,633 12,746 12,777 12,851
Salton Sea IV 30,556 31,497 30,954 26,351
Vulcan 1,059 1,025 961 910
Del Ranch 1,115 1,046 958 876
Elmore 320 229 119 14
Leathers 609 536 445 358
Changes in AP/AR (261) (241) (220) 568
-------- -------- -------- --------
Total Cash From Projects 51,400 52,313 51,529 47,550
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,407 1,463 1,521 1,582
Royalties from Del Ranch 4,763 4,937 5,082 5,250
Royalties from Elmore 4,750 4,923 5,068 5,236
Royalties from Leathers 4,808 4,981 5,125 5,292
Other Royalties 543 554 562 572
-------- -------- -------- --------
Total Other Revenues 16,271 16,857 17,359 17,932
OTHER EXPENDITURES
Magma G&A 1,749 1,802 1,856 1,912
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt
Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 2,149 2,202 2,256 2,312
Net Cash Available for SSFC Debt Service 65,521 66,969 66,632 63,170
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 13,093 11,408 9,577 7,666
Project Debt Principal 21,298 23,072 25,278 22,804
-------- -------- -------- --------
Project Debt Service 34,391 34,479 34,855 30,469
Project Debt Coverages 1.91 1.94 1.91 2.07
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2007 2008 2009 2010
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I&II 5,711 5,833 5,902 6,002
Salton Sea III 12,927 13,052 13,084 13,165
Salton Sea IV 25,965 25,806 24,060 25,652
Vulcan 857 818 745 686
Del Ranch 791 712 612 518
Elmore (95) (199) (324) (444)
Leathers 269 186 82 (17)
Changes in AP/AR (146) (158) (75) (233)
-------- -------- -------- --------
Total Cash From Projects 46,280 46,049 44,084 45,328
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,646 1,711 1,780 1,851
Royalties from Del Ranch 5,423 5,621 5,787 5,979
Royalties from Elmore 5,409 5,606 5,772 5,963
Royalties from Leathers 5,464 5,661 5,827 6,017
Other Royalties 582 594 604 615
-------- -------- -------- --------
Total Other Revenues 18,524 19,194 19,769 20,424
OTHER EXPENDITURES
Magma G&A 1,969 2,028 2,089 2,152
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt
Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 200
-------- -------- -------- --------
Total Other Expenditures 2,369 2,428 2,489 2,352
Net Cash Available for SSFC Debt Service 62,435 62,815 61,365 63,401
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 5,899 4,119 2,301 477
Project Debt Principal 22,775 23,555 23,179 12,305
-------- -------- -------- --------
Project Debt Service 28,674 27,674 25,480 12,782
Project Debt Coverages 2.18 2.27 2.41 2.48
</TABLE>
2-6
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
AVOIDED COST HIGH (3.28CENTS/KWH) SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1995 1996 1997 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 8,829 14,927 15,739 15,677
Salton Sea III 27,202 39,883 39,522 39,208
Salton Sea IV 0 13,809 24,850 26,640
Vulcan 12,816 2,543 1,108 1,837
Del Ranch 5,961 6,863 7,934 9,114
Elmore 5,188 6,119 7,217 8,398
Leathers 3,736 3,091 4,117 5,260
Changes in AP/AR (544) (1,053) (1,696) (573)
-------- --------- --------- ---------
Total Cash From Projects 63,187 86,182 98,792 105,562
OTHER REVENUE CASH FLOWS
Monofill Revenue 1,000 1,000 1,000 0
Royalties from Vulcan 1,194 1,069 1,112 1,156
Royalties from Del Ranch 12,311 13,181 14,134 15,147
Royalties from Elmore 12,266 13,134 14,083 15,093
Royalties from Leathers 12,263 13,126 14,071 15,074
Other Royalties 1,229 1,299 1,381 1,465
-------- --------- --------- ---------
Total Other Revenues 40,263 42,808 45,780 47,935
OTHER EXPENDITURES
Magma G&A 1,381 1,422 1,465 1,509
Restructuring Expenditures 8,600 5,000 0 0
Installment Obligations/Pollution Control Debt Service 1,787 1,792 2,610 2,392
Debt Service Reserve LC Fees 200 400 400 400
-------- --------- --------- ---------
Total Other Expenditures 11,968 8,614 4,475 4,301
Net Cash Available for SSFC Debt Service 91,482 120,376 140,097 149,195
Interim Debt Service 22,302 0 0 0
Project Debt Interest (Net) 14,831 30,574 30,381 25,363
Project Debt Principal 23,335 44,158 62,002 72,981
-------- --------- --------- ---------
Project Debt Service 60,468 74,732 92,382 98,343
Project Debt Coverages 1.51 1.61 1.52 1.52
Average DCR 2.06
Minimum DCR 1.51
Maximum DCR 2.81
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 15,529 8,226 5,837 5,934
Salton Sea III 14,095 14,247 14,323 14,451
Salton Sea IV 27,364 28,155 27,933 29,611
Vulcan 1,821 1,820 1,781 1,756
Del Ranch 692 740 3,952 1,713
Elmore (45) (11) 3,205 944
Leathers 7,411 716 709 4,733
Changes in AP/AR 5,328 2,134 70 (287)
-------- -------- -------- --------
Total Cash From Projects 72,195 56,027 57,811 58,854
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,202 1,250 1,301 1,353
Royalties from Del Ranch 4,575 4,741 4,879 5,038
Royalties from Elmore 4,562 4,728 4,865 5,024
Royalties from Leathers 16,079 4,785 4,922 5,080
Other Royalties 545 555 564 574
-------- -------- -------- --------
Total Other Revenues 26,964 16,060 16,530 17,068
OTHER EXPENDITURES
Magma G&A 1,554 1,601 1,649 1,698
Restructuring Expenditures 0 0 0 0
Installment Obligations/Pollution Control Debt Service 1,429 1,337 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 3,384 3,337 2,049 2,098
Net Cash Available for SSFC Debt Service 95,775 68,750 72,291 73,824
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 20,387 17,861 16,479 14,809
Project Debt Principal 37,887 16,693 21,250 22,431
-------- -------- -------- --------
Project Debt Service 58,274 34,554 37,729 37,240
Project Debt Coverages 1.64 1.99 1.92 1.98
Average DCR 2.06
Minimum DCR 1.51
Maximum DCR 2.81
</TABLE>
2-7
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
AVOIDED COST HIGH (3.28CENTS/KWH) SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2003 2004 2005 2006
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 6,031 6,158 6,235 6,343
Salton Sea III 14,576 14,751 14,835 14,969
Salton Sea IV 30,595 31,536 30,995 27,133
Vulcan 1,729 1,718 1,672 1,642
Del Ranch 1,654 1,603 1,531 1,465
Elmore 864 790 696 608
Leathers 1,151 1,095 1,019 950
Changes in AP/AR (277) (259) (236) 466
-------- -------- -------- --------
Total Cash From Projects 56,322 57,392 56,747 53,576
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,407 1,463 1,521 1,582
Royalties from Del Ranch 5,203 5,392 5,549 5,730
Royalties from Elmore 5,188 5,377 5,533 5,714
Royalties from Leathers 5,244 5,432 5,588 5,768
Other Royalties 584 596 605 617
-------- -------- -------- --------
Total Other Revenues 17,625 18,259 18,796 19,412
OTHER EXPENDITURES
Magma G&A 1,749 1,802 1,856 1,912
Restructuring Expenditures 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 2,149 2,202 2,256 2,312
Net Cash Available for SSFC Debt Service 71,798 73,449 73,288 70,676
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 13,093 11,408 9,577 7,666
Project Debt Principal 21,298 23,072 25,278 22,804
-------- -------- -------- --------
Project Debt Service 34,391 34,479 34,855 30,469
Project Debt Coverages 2.09 2.13 2.10 2.32
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2007 2008 2009 2010
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 6,454 6,599 6,688 6,812
Salton Sea III 15,107 15,301 15,392 15,539
Salton Sea IV 26,770 26,637 24,914 26,532
Vulcan 1,611 1,597 1,545 1,510
Del Ranch 1,398 1,338 1,256 1,181
Elmore 516 432 325 224
Leathers 879 815 728 649
Changes in AP/AR (167) (182) (96) (256)
-------- -------- -------- --------
Total Cash From Projects 52,569 52,538 50,752 52,191
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,646 1,711 1,780 1,851
Royalties from Del Ranch 5,918 6,133 6,312 6,520
Royalties from Elmore 5,902 6,117 6,295 6,502
Royalties from Leathers 5,955 6,169 6,347 6,553
Other Royalties 628 641 652 665
-------- -------- -------- --------
Total Other Revenues 20,048 20,771 21,386 22,090
OTHER EXPENDITURES
Magma G&A 1,969 2,028 2,089 2,152
Restructuring Expenditures 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 200
-------- -------- -------- --------
Total Other Expenditures 2,369 2,428 2,489 2,352
Net Cash Available for SSFC Debt Service 70,248 70,881 69,650 71,929
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 5,899 4,119 2,301 477
Project Debt Principal 22,775 23,555 23,179 12,305
-------- -------- -------- --------
Project Debt Service 28,674 27,674 25,480 12,782
Project Debt Coverages 2.45 2.56 2.73 2.81
</TABLE>
2-8
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
AVOIDED COST LOW (2.20CENTS/KWH) SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1995 1996 1997 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 8,829 14,927 15,739 15,677
Salton Sea III 27,202 39,883 39,522 39,208
Salton Sea IV 0 13,809 24,850 26,640
Vulcan 12,815 1,158 (487) 194
Del Ranch 5,959 6,861 7,931 9,111
Elmore 5,189 6,121 7,220 8,400
Leathers 3,737 3,093 4,119 5,261
Changes in AP/AR (544) (895) (1,672) (567)
-------- --------- --------- ---------
Total Cash From Projects 63,187 84,957 97,222 103,926
OTHER REVENUE CASH FLOWS
Monofill Revenue 1,000 1,000 1,000 0
Royalties from Vulcan 1,194 1,069 1,112 1,156
Royalties from Del Ranch 12,311 13,181 14,134 15,147
Royalties from Elmore 12,266 13,134 14,083 15,093
Royalties from Leathers 12,263 13,126 14,071 15,074
Other Royalties 1,229 1,299 1,381 1,465
-------- --------- --------- ---------
Total Other Revenues 40,263 42,808 45,780 47,935
OTHER EXPENDITURES
Magma G&A 1,381 1,422 1,465 1,509
Restructuring Expenses 8,600 5,000 0 0
Installment Obligations/Pollution Control Debt Service 1,787 1,792 2,610 2,392
Debt Service Reserve LC Fees 200 400 400 400
-------- --------- --------- ---------
Total Other Expenditures 11,968 8,614 4,475 4,301
Net Cash Available for SSFC Debt Service 91,482 119,151 138,528 147,559
Interim Debt Service 22,302 0 0 0
Project Debt Interest (Net) 14,831 30,574 30,381 25,363
Project Debt Principal 23,335 44,158 62,002 72,981
-------- --------- --------- ---------
Project Debt Service 60,468 74,732 92,382 98,343
Project Debt Coverage 1.51 1.59 1.50 1.50
Average DCR 1.60
Minimum DCR 1.46
Maximum DCR 1.87
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1999 2000 2001 2002
--------- --------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 15,529 6,946 4,060 4,104
Salton Sea III 9,171 9,168 9,110 9,084
Salton Sea IV 27,364 28,080 27,830 29,505
Vulcan 128 72 (14) (94)
Del Ranch (671) (666) 2,507 224
Elmore (1,417) (1,427) 1,749 (556)
Leathers 7,413 (695) (742) 3,239
Changes in AP/AR 6,217 2,489 166 (241)
--------- --------- -------- --------
Total Cash From Projects 63,735 43,968 44,666 45,266
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,202 1,250 1,301 1,353
Royalties from Del Ranch 3,465 3,592 3,700 3,824
Royalties from Elmore 3,456 3,583 3,691 3,815
Royalties from Leathers 16,079 3,646 3,754 3,878
Other Royalties 442 449 455 462
--------- --------- -------- --------
Total Other Revenues 24,645 12,521 12,902 13,331
OTHER EXPENDITURES
Magma G&A 1,554 1,601 1,649 1,698
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 1,429 1,337 0 0
Debt Service Reserve LC Fees 400 400 400 400
--------- --------- -------- --------
Total Other Expenditures 3,384 3,337 2,049 2,098
Net Cash Available for SSFC Debt Service 84,996 53,151 55,519 56,499
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 20,387 17,861 16,479 14,809
Project Debt Principal 37,887 16,693 21,250 22,431
--------- --------- -------- --------
Project Debt Service 58,274 34,554 37,729 37,240
Project Debt Coverage 1.46 1.54 1.47 1.52
Average DCR 1.60
Minimum DCR 1.46
Maximum DCR 1.87
</TABLE>
2-9
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
AVOIDED COST LOW (2.20CENTS/KWH) SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2003 2004 2005 2006
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 4,148 4,215 4,241 4,291
Salton Sea III 9,053 9,052 8,986 8,950
Salton Sea IV 30,486 31,423 30,879 24,911
Vulcan (176) (250) (349) (439)
Del Ranch 121 20 (96) (210)
Elmore (681) (804) (943) (1,080)
Leathers (388) (493) (613) (731)
Changes in AP/AR (230) (206) (190) 757
-------- -------- -------- ---------
Total Cash From Projects 42,332 42,958 41,915 36,448
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,407 1,463 1,521 1,582
Royalties from Del Ranch 3,953 4,098 4,223 4,364
Royalties from Elmore 3,943 4,088 4,212 4,354
Royalties from Leathers 4,005 4,150 4,274 4,415
Other Royalties 469 476 483 490
-------- -------- -------- ---------
Total Other Revenues 13,776 14,275 14,713 15,206
OTHER EXPENDITURES
Magma G&A 1,749 1,802 1,856 1,912
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- ---------
Total Other Expenditures 2,149 2,202 2,256 2,312
Net Cash Available for SSFC Debt Service 53,959 55,031 54,372 49,343
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 13,093 11,408 9,577 7,666
Project Debt Principal 21,298 23,072 25,278 22,804
-------- -------- -------- ---------
Project Debt Service 34,391 34,479 34,855 30,469
Project Debt Coverage 1.57 1.60 1.56 1.62
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2007 2008 2009 2010
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 4,342 4,420 4,452 4,511
Salton Sea III 8,913 8,909 8,833 8,791
Salton Sea IV 24,482 24,274 22,486 24,031
Vulcan (533) (617) (729) (833)
Del Ranch (328) (443) (575) (705)
Elmore (1,222) (1,361) (1,519) (1,675)
Leathers (853) (972) (1,109) (1,243)
Changes in AP/AR (106) (115) (37) (191)
--------- --------- --------- ---------
Total Cash From Projects 34,695 34,095 31,801 32,686
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,646 1,711 1,780 1,851
Royalties from Del Ranch 4,511 4,677 4,820 4,982
Royalties from Elmore 4,500 4,666 4,808 4,970
Royalties from Leathers 4,561 4,726 4,868 5,030
Other Royalties 498 507 514 523
--------- --------- --------- ---------
Total Other Revenues 15,716 16,288 16,790 17,356
OTHER EXPENDITURES
Magma G&A 1,969 2,028 2,089 2,152
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 200
--------- --------- --------- ---------
Total Other Expenditures 2,369 2,428 2,489 2,352
Net Cash Available for SSFC Debt Service 48,042 47,955 46,103 47,690
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 5,899 4,119 2,301 477
Project Debt Principal 22,775 23,555 23,179 12,305
--------- --------- --------- ---------
Project Debt Service 28,674 27,674 25,480 12,782
Project Debt Coverage 1.68 1.73 1.81 1.87
</TABLE>
2-10
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
AVOIDED COST AT 2.8CENTS/KWH FLAT SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1995 1996 1997 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM PROJECTS
Salton Sea I&II 8,829 14,927 15,739 15,677
Salton Sea III 27,202 39,883 39,522 39,208
Salton Sea IV 0 13,809 24,850 26,640
Vulcan 12,815 1,823 162 746
Del Ranch 5,958 6,861 7,930 9,110
Elmore 5,190 6,121 7,220 8,401
Leathers 3,737 3,092 4,119 5,261
Changes in AP/AR (544) (971) (1,670) (556)
-------- --------- --------- ---------
Total Cash From Projects 63,187 85,545 97,872 104,488
OTHER REVENUE CASH FLOWS
Monofill Revenue 1,000 1,000 1,000 0
Royalties from Vulcan 1,194 1,069 1,112 1,156
Royalties from Del Ranch 12,311 13,181 14,134 15,147
Royalties from Elmore 12,266 13,134 14,083 15,093
Royalties from Leathers 12,263 13,126 14,071 15,074
Other Royalties 1,229 1,299 1,381 1,465
-------- --------- --------- ---------
Total Other Revenues 40,263 42,808 45,780 47,935
OTHER EXPENDITURES
Magma G&A 1,381 1,422 1,465 1,509
Restructuring Expenses 8,600 5,000 0 0
Installment Obligations/Pollution Control Debt Service 1,787 1,792 2,610 2,392
Debt Service Reserve LC Fees 200 400 400 400
-------- --------- --------- ---------
Total Other Expenditures 11,968 8,614 4,475 4,301
Net Cash Available for SSFC Debt Service 91,482 119,739 139,178 148,121
Interim Debt Service 22,302 0 0 0
Project Debt Interest (Net) 14,831 30,574 30,381 25,363
Project Debt Principal 23,335 44,158 62,002 72,981
-------- --------- --------- ---------
Project Debt Service 60,468 74,732 92,382 98,343
Project Debt Coverages 1.51 1.60 1.51 1.51
Average DCR 1.54
Minimum DCR 1.50
Maximum DCR 1.63
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1999 2000 2001 2002
--------- --------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM PROJECTS
Salton Sea I&II 15,529 7,201 4,299 4,234
Salton Sea III 10,483 10,181 9,810 9,465
Salton Sea IV 27,364 28,095 27,844 29,512
Vulcan 580 421 227 38
Del Ranch (309) (387) 2,700 329
Elmore (1,051) (1,144) 1,945 (449)
Leathers 7,413 (414) (547) 3,345
Changes in AP/AR 5,993 2,490 246 (148)
--------- --------- -------- --------
Total Cash From Projects 66,002 46,444 46,523 46,327
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,202 1,250 1,301 1,353
Royalties from Del Ranch 3,760 3,821 3,859 3,911
Royalties from Elmore 3,751 3,811 3,849 3,901
Royalties from Leathers 16,079 3,873 3,911 3,963
Other Royalties 470 470 470 470
--------- --------- -------- --------
Total Other Revenues 25,263 13,226 13,389 13,597
OTHER EXPENDITURES
Magma G&A 1,554 1,601 1,649 1,698
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 1,429 1,337 0 0
Debt Service Reserve LC Fees 400 400 400 400
--------- --------- -------- --------
Total Other Expenditures 3,384 3,337 2,049 2,098
Net Cash Available for SSFC Debt Service 87,881 56,333 57,863 57,825
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 20,387 17,861 16,479 14,809
Project Debt Principal 37,887 16,693 21,250 22,431
--------- --------- -------- --------
Project Debt Service 58,274 34,554 37,729 37,240
Project Debt Coverages 1.51 1.63 1.53 1.55
Average DCR 1.54
Minimum DCR 1.50
Maximum DCR 1.63
</TABLE>
2-11
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
AVOIDED COST AT 2.8CENTS/KWH FLAT SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2003 2004 2005 2006
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM PROJECTS
Salton Sea I&II 4,166 4,118 4,026 3,954
Salton Sea III 9,106 8,767 8,355 7,963
Salton Sea IV 30,487 31,418 30,867 24,547
Vulcan (157) (347) (565) (779)
Del Ranch 135 (60) (272) (486)
Elmore (666) (883) (1,120) (1,358)
Leathers (374) (573) (790) (1,008)
Changes in AP/AR (134) (107) (88) 902
-------- -------- --------- ---------
Total Cash From Projects 42,563 42,332 40,412 33,735
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,407 1,463 1,521 1,582
Royalties from Del Ranch 3,965 4,033 4,079 4,140
Royalties from Elmore 3,955 4,024 4,070 4,131
Royalties from Leathers 4,017 4,086 4,132 4,193
Other Royalties 470 470 470 470
-------- -------- --------- ---------
Total Other Revenues 13,813 14,076 14,272 14,516
OTHER EXPENDITURES
Magma G&A 1,749 1,802 1,856 1,912
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- --------- ---------
Total Other Expenditures 2,149 2,202 2,256 2,312
Net Cash Available for SSFC Debt Service 54,226 54,206 52,428 45,938
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 13,093 11,408 9,577 7,666
Project Debt Principal 21,298 23,072 25,278 22,804
-------- -------- --------- ---------
Project Debt Service 34,391 34,479 34,855 30,469
Project Debt Coverages 1.58 1.57 1.50 1.51
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2007 2008 2009 2010
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM PROJECTS
Salton Sea I&II 3,881 3,829 3,730 3,653
Salton Sea III 7,559 7,174 6,715 6,274
Salton Sea IV 23,982 23,632 21,702 23,099
Vulcan (1,000) (1,217) (1,462) (1,704)
Del Ranch (706) (927) (1,166) (1,408)
Elmore (1,603) (1,849) (2,116) (2,385)
Leathers (1,233) (1,459) (1,704) (1,951)
Changes in AP/AR 16 13 92 (56)
--------- --------- --------- ---------
Total Cash From Projects 30,897 29,196 25,789 25,521
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,646 1,711 1,780 1,851
Royalties from Del Ranch 4,204 4,282 4,338 4,409
Royalties from Elmore 4,194 4,272 4,328 4,399
Royalties from Leathers 4,256 4,334 4,390 4,461
Other Royalties 470 470 470 470
--------- --------- --------- ---------
Total Other Revenues 14,769 15,070 15,306 15,591
OTHER EXPENDITURES
Magma G&A 1,969 2,028 2,089 2,152
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 200
--------- --------- --------- ---------
Total Other Expenditures 2,369 2,428 2,489 2,352
Net Cash Available for SSFC Debt Service 43,296 41,838 38,606 38,760
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 5,899 4,119 2,301 477
Project Debt Principal 22,775 23,555 23,179 12,305
--------- --------- --------- ---------
Project Debt Service 28,674 27,674 25,480 12,782
Project Debt Coverages 1.51 1.51 1.52 1.52
</TABLE>
2-12
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
GENERAL OPERATING AND MAINTENANCE COSTS 15% HIGHER SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1995 1996 1997 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM PROJECTS
Salton Sea I & II 8,829 14,927 15,739 15,677
Salton Sea III 27,202 39,883 39,522 39,208
Salton Sea IV 0 13,809 24,850 26,640
Vulcan 12,664 1,885 328 1,034
Del Ranch 5,795 6,677 7,695 8,868
Elmore 5,003 5,912 6,952 8,125
Leathers 3,564 2,897 3,870 5,005
Changes in AP/AR (544) (998) (1,687) (571)
-------- --------- --------- ---------
Total Cash From Projects 62,512 84,991 97,269 103,987
OTHER REVENUE CASH FLOWS
Monofill Revenue 1,000 1,000 1,000 0
Royalties from Vulcan 1,194 1,069 1,112 1,156
Royalties from Del Ranch 12,311 13,181 14,134 15,147
Royalties from Elmore 12,266 13,134 14,083 15,093
Royalties from Leathers 12,263 13,126 14,071 15,074
Other Royalties 1,229 1,299 1,381 1,465
-------- --------- --------- ---------
Total Other Revenues 40,263 42,808 45,780 47,935
OTHER EXPENDITURES
Magma G&A 1,381 1,422 1,465 1,509
Restructuring Expenses 8,600 5,000 0 0
Installment Obligations/Pollution Control Debt Service 1,787 1,792 2,610 2,392
Debt Service Reserve LC Fees 200 400 400 400
-------- --------- --------- ---------
Total Other Expenditures 11,968 8,614 4,475 4,301
Net Cash Available for SSFC Debt Service 90,807 119,186 138,575 147,621
Interim Debt Service 22,302 0 0 0
Project Debt Interest (Net) 14,831 30,574 30,381 25,363
Project Debt Principal 23,335 44,158 62,002 72,981
-------- --------- --------- ---------
Project Debt Service 60,468 74,732 92,382 98,343
Project Debt Coverages 1.50 1.59 1.50 1.50
Average DCR 1.86
Minimum DCR 1.50
Maximum DCR 2.42
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM PROJECTS
Salton Sea I & II 15,529 7,776 5,212 5,290
Salton Sea III 12,363 12,460 12,489 12,563
Salton Sea IV 27,364 28,129 27,897 29,573
Vulcan 994 967 904 852
Del Ranch (40) (14) 3,177 914
Elmore (810) (800) 2,394 108
Leathers 7,149 (52) (81) 3,920
Changes in AP/AR 5,641 2,259 104 (271)
-------- -------- -------- --------
Total Cash From Projects 68,189 50,724 52,094 52,949
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,202 1,250 1,301 1,353
Royalties from Del Ranch 4,184 4,337 4,464 4,611
Royalties from Elmore 4,173 4,325 4,452 4,598
Royalties from Leathers 16,079 4,385 4,511 4,657
Other Royalties 509 518 526 534
-------- -------- -------- --------
Total Other Revenues 26,148 14,815 15,253 15,753
OTHER EXPENDITURES
Magma G&A 1,554 1,601 1,649 1,698
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 1,429 1,337 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 3,384 3,337 2,049 2,098
Net Cash Available for SSFC Debt Service 90,953 62,201 65,298 66,604
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 20,387 17,861 16,479 14,809
Project Debt Principal 37,887 16,693 21,250 22,431
-------- -------- -------- --------
Project Debt Service 58,274 34,554 37,729 37,240
Project Debt Coverages 1.56 1.80 1.73 1.79
Average DCR 1.86
Minimum DCR 1.50
Maximum DCR 2.42
</TABLE>
2-13
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
GENERAL OPERATING AND MAINTENANCE COSTS 15% HIGHER SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2003 2004 2005 2006
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM PROJECTS
Salton Sea I & II 5,369 5,474 5,534 5,621
Salton Sea III 12,633 12,746 12,777 12,851
Salton Sea IV 30,556 31,497 30,954 26,351
Vulcan 798 757 685 625
Del Ranch 831 754 657 566
Elmore 3 (98) (218) (333)
Leathers 313 231 131 35
Changes in AP/AR (261) (241) (220) 568
-------- -------- -------- --------
Total Cash From Projects 50,242 51,120 50,300 46,284
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,407 1,463 1,521 1,582
Royalties from Del Ranch 4,763 4,937 5,082 5,250
Royalties from Elmore 4,750 4,923 5,068 5,236
Royalties from Leathers 4,808 4,981 5,125 5,292
Other Royalties 543 554 562 572
-------- -------- -------- --------
Total Other Revenues 16,271 16,857 17,359 17,932
OTHER EXPENDITURES
Magma G&A 1,749 1,802 1,856 1,912
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 2,149 2,202 2,256 2,312
Net Cash Available for SSFC Debt Service 64,363 65,776 65,404 61,904
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 13,093 11,408 9,577 7,666
Project Debt Principal 21,298 23,072 25,278 22,804
-------- -------- -------- --------
Project Debt Service 34,391 34,479 34,855 30,469
Project Debt Coverages 1.87 1.91 1.88 2.03
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2007 2008 2009 2010
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM PROJECTS
Salton Sea I & II 5,711 5,833 5,902 6,002
Salton Sea III 12,927 13,052 13,084 13,165
Salton Sea IV 25,965 25,806 24,060 25,652
Vulcan 563 516 433 365
Del Ranch 471 383 273 169
Elmore (453) (567) (703) (835)
Leathers (64) (157) (272) (381)
Changes in AP/AR (146) (158) (75) (233)
-------- -------- -------- --------
Total Cash From Projects 44,976 44,706 42,701 43,904
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,646 1,711 1,780 1,851
Royalties from Del Ranch 5,423 5,621 5,787 5,979
Royalties from Elmore 5,409 5,606 5,772 5,963
Royalties from Leathers 5,464 5,661 5,827 6,017
Other Royalties 582 594 604 615
-------- -------- -------- --------
Total Other Revenues 18,524 19,194 19,769 20,424
OTHER EXPENDITURES
Magma G&A 1,969 2,028 2,089 2,152
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 200
-------- -------- -------- --------
Total Other Expenditures 2,369 2,428 2,489 2,352
Net Cash Available for SSFC Debt Service 61,131 61,472 59,982 61,977
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 5,899 4,119 2,301 477
Project Debt Principal 22,775 23,555 23,179 12,305
-------- -------- -------- --------
Project Debt Service 28,674 27,674 25,480 12,782
Project Debt Coverages 2.13 2.22 2.35 2.42
</TABLE>
2-14
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
PH MODIFICATION COST REDUCTIONS SENSITIVITY
CASH FLOWS AVAILABLE FOR BOND PAYMENTS
<TABLE>
<CAPTION>
1995 1996 1997 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I&II 8,829 14,427 14,739 14,647
Salton Sea III 27,202 39,383 38,522 38,178
Salton Sea IV 0 13,809 24,850 26,640
Vulcan 12,815 2,056 547 1,259
Del Ranch 5,960 6,863 7,933 9,113
Elmore 5,188 6,120 7,218 8,399
Leathers 3,736 3,092 4,118 5,260
Changes in AP/AR (544) (998) (1,687) (571)
-------- --------- --------- ---------
Total Cash From Projects 63,187 84,751 96,239 102,926
OTHER REVENUE CASH FLOWS
Monofill Revenue 1,000 1,000 1,000 0
Royalties from Vulcan 1,194 1,069 1,112 1,156
Royalties from Del Ranch 12,311 13,181 14,134 15,147
Royalties from Elmore 12,266 13,134 14,083 15,093
Royalties from Leathers 12,263 13,126 14,071 15,074
Other Royalties 1,229 1,299 1,381 1,465
-------- --------- --------- ---------
Total Other Revenues 40,263 42,808 45,780 47,935
OTHER EXPENDITURES
Magma G&A 1,381 1,422 1,465 1,509
Restructuring Expenses 8,600 5,000 0 0
Installment Obligations/Pollution Control Debt Service 1,787 1,792 2,610 2,392
Debt Service Reserve LC Fees 200 400 400 400
-------- --------- --------- ---------
Total Other Expenditures 11,968 8,614 4,475 4,301
Net Cash Available for SSFC Debt Service 91,482 118,945 137,545 146,560
Interim Debt Service 22,302 0 0 0
Project Debt Interest (Net) 14,831 30,574 30,381 25,363
Project Debt Principal 23,335 44,158 62,002 72,981
-------- --------- --------- ---------
Project Debt Service 60,468 74,732 92,382 98,343
Project Debt Coverages 1.51 1.59 1.49 1.49
Average DCR 1.83
Minimum DCR 1.49
Maximum DCR 2.37
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I&II 14,468 6,683 4,086 4,131
Salton Sea III 11,302 11,367 11,364 11,403
Salton Sea IV 27,364 28,129 27,897 29,573
Vulcan 1,225 1,205 1,149 1,105
Del Ranch 212 245 3,444 1,189
Elmore (528) (509) 2,693 416
Leathers 7,412 219 198 4,207
Changes in AP/AR 5,641 2,259 104 (271)
-------- -------- -------- --------
Total Cash From Projects 67,096 49,598 50,935 51,755
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,202 1,250 1,301 1,353
Royalties from Del Ranch 4,184 4,337 4,464 4,611
Royalties from Elmore 4,173 4,325 4,452 4,598
Royalties from Leathers 16,079 4,385 4,511 4,657
Other Royalties 509 518 526 534
-------- -------- -------- --------
Total Other Revenues 26,148 14,815 15,253 15,753
OTHER EXPENDITURES
Magma G&A 1,554 1,601 1,649 1,698
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 1,429 1,337 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 3,384 3,337 2,049 2,098
Net Cash Available for SSFC Debt Service 89,860 61,076 64,139 65,410
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 20,387 17,861 16,479 14,809
Project Debt Principal 37,887 16,693 21,250 22,431
-------- -------- -------- --------
Project Debt Service 58,274 34,554 37,729 37,240
Project Debt Coverages 1.54 1.77 1.70 1.76
Average DCR 1.83
Minimum DCR 1.49
Maximum DCR 2.37
</TABLE>
2-15
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
PH MODIFICATION COST REDUCTIONS SENSITIVITY
CASH FROM PROJECTS
<TABLE>
<CAPTION>
2003 2004 2005 2006
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I&II 4,174 4,245 4,267 4,316
Salton Sea III 11,439 11,516 11,510 11,547
Salton Sea IV 30,556 31,497 30,954 26,351
Vulcan 1,059 1,025 961 910
Del Ranch 1,115 1,046 958 876
Elmore 320 229 119 14
Leathers 609 536 445 358
Changes in AP/AR (261) (241) (220) 568
-------- -------- -------- --------
Total Cash From Projects 49,012 49,853 48,995 44,940
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,407 1,463 1,521 1,582
Royalties from Del Ranch 4,763 4,937 5,082 5,250
Royalties from elmore 4,750 4,923 5,068 5,236
Royalties from Leathers 4,808 4,981 5,125 5,292
Other Royalties 543 554 562 572
-------- -------- -------- --------
Total Other Revenues 16,271 16,857 17,359 17,932
OTHER EXPENDITURES
Magma G&A 1,749 1,802 1,856 1,912
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 2,149 2,202 2,256 2,312
Net Cash Available for SSFC Debt Service 63,133 64,509 64,099 60,560
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 13,093 11,408 9,577 7,666
Project Debt Principal 21,298 23,072 25,278 22,804
-------- -------- -------- --------
Project Debt Service 34,391 34,479 34,855 30,469
Project Debt Coverages 1.84 1.87 1.84 1.99
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
2007 2008 2009 2010
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I&II 4,367 4,449 4,476 4,534
Salton Sea III 11,584 11,668 11,658 11,696
Salton Sea IV 25,965 25,806 24,060 25,652
Vulcan 857 818 745 686
Del Ranch 791 712 612 518
Elmore (95) (199) (324) (444)
Leathers 269 186 82 (17)
Changes in AP/AR (146) (158) (75) (233)
-------- -------- -------- --------
Total Cash From Projects 43,592 43,280 41,233 42,391
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,646 1,711 1,780 1,851
Royalties from Del Ranch 5,423 5,621 5,787 5,979
Royalties from elmore 5,409 5,606 5,772 5,963
Royalties from Leathers 5,464 5,661 5,827 6,017
Other Royalties 582 594 604 615
-------- -------- -------- --------
Total Other Revenues 18,524 19,194 19,769 20,424
OTHER EXPENDITURES
Magma G&A 1,969 2,028 2,089 2,152
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 200
-------- -------- -------- --------
Total Other Expenditures 2,369 2,428 2,489 2,352
Net Cash Available for SSFC Debt Service 59,747 60,046 58,513 60,464
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 5,899 4,119 2,301 477
Project Debt Principal 22,775 23,555 23,179 12,305
-------- -------- -------- --------
Project Debt Service 28,674 27,674 25,480 12,782
Project Debt Coverages 2.08 2.17 2.30 2.37
</TABLE>
2-16
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
G&A EXPENSES SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1995 1996 1997 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 8,829 14,927 15,739 15,677
Salton Sea III 27,202 39,883 39,522 39,208
Salton Sea IV 0 13,809 24,850 26,640
Vulcan 12,815 2,056 547 1,259
Del Ranch 5,960 6,863 7,933 9,113
Elmore 5,188 6,120 7,218 8,399
Leathers 3,736 3,092 4,118 5,260
Changes in AP/AR (544) (998) (1,687) (571)
-------- --------- --------- ---------
Total Cash From Projects 63,187 85,751 98,239 104,986
OTHER REVENUE CASH FLOWS
Monofill Revenue 1,000 1,000 1,000 0
Royalties from Vulcan 1,194 1,069 1,112 1,156
Royalties from Del Ranch 12,311 13,181 14,134 15,147
Royalties from Elmore 12,266 13,134 14,083 15,093
Royalties from Leathers 12,263 13,126 14,071 15,074
Other Royalties 1,229 1,299 1,381 1,465
-------- --------- --------- ---------
Total Other Revenues 40,263 42,808 45,780 47,935
OTHER EXPENDITURES
Magma G&A 5,000 5,150 5,304 5,464
Restructuring Expenses 8,600 5,000 0 0
Installment Obligations/Pollution Control Debt
Service 1,787 1,792 2,610 2,392
Debt Service Reserve LC Fees 200 400 400 400
-------- --------- --------- ---------
Total Other Expenditures 15,587 12,342 8,314 8,255
Net Cash Available for SSFC Debt Service 87,863 116,218 135,706 144,665
Interim Debt Service 22,302 0 0 0
Project Debt Interest (Net) 14,831 30,574 30,381 25,363
Project Debt Principal 23,335 44,158 62,002 72,981
-------- --------- --------- ---------
Project Debt Service 60,468 74,732 92,382 98,343
Project Debt Coverages 1.45 1.56 1.47 1.47
Average DCR 1.77
Minimum DCR 1.45
Maximum DCR 2.26
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 15,529 7,776 5,212 5,290
Salton Sea III 12,363 12,460 12,489 12,563
Salton Sea IV 27,364 28,129 27,897 29,573
Vulcan 1,225 1,205 1,149 1,105
Del Ranch 212 245 3,444 1,189
Elmore (528) (509) 2,693 416
Leathers 7,412 219 198 4,207
Changes in AP/AR 5,641 2,259 104 (271)
-------- -------- -------- --------
Total Cash From Projects 69,218 51,784 53,186 54,073
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,202 1,250 1,301 1,353
Royalties from Del Ranch 4,184 4,337 4,464 4,611
Royalties from Elmore 4,173 4,325 4,452 4,598
Royalties from Leathers 16,079 4,385 4,511 4,657
Other Royalties 509 518 526 534
-------- -------- -------- --------
Total Other Revenues 26,148 14,815 15,253 15,753
OTHER EXPENDITURES
Magma G&A 5,628 5,796 5,970 6,149
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt
Service 1,429 1,337 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 7,457 7,533 6,370 6,549
Net Cash Available for SSFC Debt Service 87,909 59,066 62,069 63,277
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 20,387 17,861 16,479 14,809
Project Debt Principal 37,887 16,693 21,250 22,431
-------- -------- -------- --------
Project Debt Service 58,274 34,554 37,729 37,240
Project Debt Coverages 1.51 1.71 1.65 1.70
Average DCR 1.77
Minimum DCR 1.45
Maximum DCR 2.26
</TABLE>
2-17
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
G&A EXPENSES SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2003 2004 2005 2006
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 5,369 5,474 5,534 5,621
Salton Sea III 12,633 12,746 12,777 12,851
Salton Sea IV 30,556 31,497 30,954 26,351
Vulcan 1,059 1,025 961 910
Del Ranch 1,115 1,046 958 876
Elmore 320 229 119 14
Leathers 609 536 445 358
Changes in AP/AR (261) (241) (220) 568
-------- -------- -------- --------
Total Cash From Projects 51,400 52,313 51,529 47,550
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,407 1,463 1,521 1,582
Royalties from Del Ranch 4,763 4,937 5,082 5,250
Royalties from Elmore 4,750 4,923 5,068 5,236
Royalties from Leathers 4,808 4,981 5,125 5,292
Other Royalties 543 554 562 572
-------- -------- -------- --------
Total Other Revenues 16,271 16,857 17,359 17,932
OTHER EXPENDITURES
Magma G&A 6,334 6,524 6,719 6,921
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt
Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 6,734 6,924 7,119 7,321
Net Cash Available for SSFC Debt Service 60,937 62,247 61,769 58,160
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 13,093 11,408 9,577 7,666
Project Debt Principal 21,298 23,072 25,278 22,804
-------- -------- -------- --------
Project Debt Service 34,391 34,479 34,855 30,469
Project Debt Coverages 1.77 1.81 1.77 1.91
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2007 2008 2009 2010
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 5,711 5,833 5,902 6,002
Salton Sea III 12,927 13,052 13,084 13,165
Salton Sea IV 25,965 25,806 24,060 25,652
Vulcan 857 818 745 686
Del Ranch 791 712 612 518
Elmore (95) (199) (324) (444)
Leathers 269 186 82 (17)
Changes in AP/AR (146) (158) (75) (233)
-------- -------- -------- --------
Total Cash From Projects 46,280 46,049 44,084 45,328
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,646 1,711 1,780 1,851
Royalties from Del Ranch 5,423 5,621 5,787 5,979
Royalties from Elmore 5,409 5,606 5,772 5,963
Royalties from Leathers 5,464 5,661 5,827 6,017
Other Royalties 582 594 604 615
-------- -------- -------- --------
Total Other Revenues 18,524 19,194 19,769 20,424
OTHER EXPENDITURES
Magma G&A 7,129 7,343 7,563 7,790
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt
Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 200
-------- -------- -------- --------
Total Other Expenditures 7,529 7,743 7,963 7,990
Net Cash Available for SSFC Debt Service 57,275 57,500 55,891 57,763
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 5,899 4,119 2,301 477
Project Debt Principal 22,775 23,555 23,179 12,305
-------- -------- -------- --------
Project Debt Service 28,674 27,674 25,480 12,782
Project Debt Coverages 2.00 2.08 2.19 2.26
</TABLE>
2-18
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
COST ESCALATION AT 4.0% SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1995 1996 1997 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 8,824 14,836 15,556 15,417
Salton Sea III 27,197 39,764 39,281 38,858
Salton Sea IV 0 13,809 24,832 26,610
Vulcan 12,822 2,007 440 1,260
Del Ranch 5,948 6,782 7,780 8,898
Elmore 5,176 6,032 7,049 8,161
Leathers 3,724 3,009 3,960 5,040
Changes in AP/AR (544) (998) (1,687) (571)
-------- --------- --------- ---------
Total Cash From Projects 63,147 85,243 97,212 103,672
OTHER REVENUE CASH FLOWS
Monofill Revenue 1,000 1,000 1,000 0
Royalties from Vulcan 1,194 1,069 1,112 1,156
Royalties from Del Ranch 12,311 13,181 14,134 15,147
Royalties from Elmore 12,266 13,134 14,083 15,093
Royalties from Leathers 12,263 13,126 14,071 15,074
Other Royalties 1,229 1,299 1,381 1,465
-------- --------- --------- ---------
Total Other Revenues 40,263 42,808 45,780 47,935
OTHER EXPENDITURES
Magma G&A 1,381 1,436 1,494 1,553
Restructuring Expenses 8,600 5,000 0 0
Installment Obligations/Pollution Control Debt Service 1,787 1,792 2,610 2,392
Debt Service Reserve LC Fees 200 400 400 400
-------- --------- --------- ---------
Total Other Expenditures 11,968 8,628 4,503 4,345
Net Cash Available for SSFC Debt Service 91,442 119,423 138,489 147,262
Interim Debt Service 22,302 0 0 0
Project Debt Interest (Net) 14,831 30,574 30,381 25,363
Project Debt Principal 23,335 44,138 62,002 72,981
-------- --------- --------- ---------
Project Debt Service 60,468 74,732 92,382 98,343
Project Debt Coverages 1.51 1.60 1.50 1.50
Average DCR 1.78
Minimum DCR 1.50
Maximum DCR 2.16
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 15,185 7,343 4,685 4,663
Salton Sea III 11,894 11,866 11,762 11,693
Salton Sea IV 27,320 28,070 27,823 29,484
Vulcan 1,176 1,103 991 885
Del Ranch 165 145 3,287 973
Elmore (573) (614) 2,525 179
Leathers 7,364 117 38 3,985
Changes in AP/AR 5,641 2,259 104 (271)
-------- -------- -------- --------
Total Cash From Projects 68,173 50,290 51,214 51,591
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,202 1,250 1,301 1,353
Royalties from Del Ranch 4,184 4,337 4,464 4,611
Royalties from Elmore 4,173 4,325 4,452 4,598
Royalties from Leathers 16,079 4,385 4,511 4,657
Other Royalties 509 518 526 534
-------- -------- -------- --------
Total Other Revenues 26,148 14,815 15,253 15,753
OTHER EXPENDITURES
Magma G&A 1,616 1,680 1,747 1,817
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 1,429 1,337 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 3,445 3,417 2,147 2,217
Net Cash Available for SSFC Debt Service 90,876 61,689 64,319 65,127
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 20,387 17,861 16,479 14,809
Project Debt Principal 37,887 16,693 21,250 22,431
-------- -------- -------- --------
Project Debt Service 58,274 34,554 37,729 37,240
Project Debt Coverages 1.56 1.79 1.70 1.75
Average DCR 1.78
Minimum DCR 1.50
Maximum DCR 2.16
</TABLE>
2-19
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
COST ESCALATION AT 4.0% SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2003 2004 2005 2006
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 4,634 4,626 4,564 4,523
Salton Sea III 11,611 11,564 11,424 11,317
Salton Sea IV 30,450 31,372 30,810 26,186
Vulcan 774 672 534 405
Del Ranch 834 696 535 375
Elmore 11 (158) (350) (544)
Leathers 320 177 11 (156)
Changes in AP/AR (261) (241) (220) 568
-------- -------- -------- --------
Total Cash From Projects 48,374 48,708 47,308 42,675
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,407 1,463 1,521 1,582
Royalties from Del Ranch 4,763 4,937 5,082 5,250
Royalties from Elmore 4,750 4,923 5,068 5,236
Royalties from Leathers 4,808 4,981 5,125 5,292
Other Royalties 543 554 562 572
-------- -------- -------- --------
Total Other Revenues 16,271 16,857 17,359 17,932
OTHER EXPENDITURES
Magma G&A 1,890 1,966 2,044 2,126
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt
Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 2,290 2,366 2,444 2,526
Net Cash Available for SSFC Debt Service 62,354 63,200 62,224 58,081
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 13,093 11,408 9,577 7,666
Project Debt Principal 21,298 23,072 25,278 22,804
-------- -------- -------- --------
Project Debt Service 34,391 34,479 34,855 30,469
Project Debt Coverages 1.81 1.83 1.79 1.91
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2007 2008 2009 2010
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 4,477 4,455 4,371 4,309
Salton Sea III 11,200 11,120 10,936 10,788
Salton Sea IV 25,778 25,595 23,825 25,391
Vulcan 268 141 (26) (185)
Del Ranch 207 40 (154) (347)
Elmore (746) (949) (1,180) (1,412)
Leathers (330) (503) (704) (904)
Changes in AP/AR (146) (158) (75) (233)
-------- -------- --------- ---------
Total Cash From Projects 40,710 39,741 36,993 37,407
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,646 1,711 1,780 1,851
Royalties from Del Ranch 5,423 5,621 5,787 5,979
Royalties from Elmore 5,409 5,606 5,772 5,963
Royalties from Leathers 5,464 5,661 5,827 6,017
Other Royalties 582 594 604 615
-------- -------- --------- ---------
Total Other Revenues 18,524 19,194 19,769 20,424
OTHER EXPENDITURES
Magma G&A 2,211 2,299 2,391 2,487
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt
Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 200
-------- -------- --------- ---------
Total Other Expenditures 2,611 2,699 2,791 2,687
Net Cash Available for SSFC Debt Service 56,622 56,235 53,971 55,144
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 5,899 4,119 2,301 477
Project Debt Principal 22,775 23,555 23,179 12,305
-------- -------- --------- ---------
Project Debt Service 28,674 27,674 25,480 12,782
Project Debt Coverages 1.97 2.03 2.12 2.16
</TABLE>
2-20
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
LIBOR 8.0% SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1995 1996 1997 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 8,657 14,927 15,739 15,677
Salton Sea III 26,802 39,883 39,522 39,208
Salton Sea IV 0 13,809 24,850 26,640
Vulcan 12,815 2,056 547 1,259
Del Ranch 5,791 6,726 7,831 9,045
Elmore 5,011 5,977 7,111 8,328
Leathers 3,429 2,824 3,908 5,113
Changes in AP/AR (544) (998) (1,687) (571)
-------- --------- --------- ---------
Total Cash From Projects 61,962 85,204 97,821 104,701
OTHER REVENUE CASH FLOWS
Monofill Revenue 1,000 1,000 1,000 0
Royalties from Vulcan 1,194 1,069 1,112 1,156
Royalties from Del Ranch 12,311 13,181 14,134 15,147
Royalties from Elmore 12,266 13,134 14,083 15,093
Royalties from Leathers 12,263 13,126 14,071 15,074
Other Royalties 1,229 1,299 1,381 1,465
-------- --------- --------- ---------
Total Other Revenues 40,263 42,808 45,780 47,935
OTHER EXPENDITURES
Magma G&A 1,381 1,422 1,465 1,509
Restructuring Expenses 8,600 5,000 0 0
Installment Obligations/Pollution Control Debt Service 1,787 1,792 2,610 2,392
Debt Service Reserve LC Fees 200 400 400 400
-------- --------- --------- ---------
Total Other Expenditures 11,968 8,614 4,475 4,301
Net Cash Available for SSFC Debt Service 90,257 119,398 139,126 148,335
Interim Debt Service 22,302 0 0 0
Project Debt Interest (Net) 14,831 30,574 30,381 25,363
Project Debt Principal 23,335 44,158 62,002 72,981
-------- --------- --------- ---------
Project Debt Service 60,468 74,732 92,382 98,343
Project Debt Coverages 1.49 1.60 1.51 1.51
Average DCR 1.89
Minimum DCR 1.49
Maximum DCR 2.48
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 1999 2000 2001 2002
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOW FROM PROJECTS
Salton Sea I & II 15,529 7,776 5,212 5,290
Salton Sea III 12,363 12,460 12,489 12,563
Salton Sea IV 27,364 28,129 27,897 29,573
Vulcan 1,225 1,205 1,149 1,105
Del Ranch 179 223 3,433 1,189
Elmore (562) (532) 2,681 416
Leathers 7,328 199 184 4,200
Changes in AP/AR 5,641 2,259 104 (271)
-------- -------- -------- --------
Total Cash From Projects 69,066 51,718 53,149 54,066
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,202 1,250 1,301 1,353
Royalties from Del Ranch 4,184 4,337 4,464 4,611
Royalties from Elmore 4,173 4,325 4,452 4,598
Royalties from Leathers 16,079 4,385 4,511 4,657
Other Royalties 509 518 526 534
-------- -------- -------- --------
Total Other Revenues 26,148 14,815 15,253 15,753
OTHER EXPENDITURES
Magma G&A 1,554 1,601 1,649 1,698
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 1,429 1,337 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 3,384 3,337 2,049 2,098
Net Cash Available for SSFC Debt Service 91,830 63,195 66,353 67,721
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 20,387 17,861 16,479 14,809
Project Debt Principal 37,887 16,693 21,250 22,431
-------- -------- -------- --------
Project Debt Service 58,274 34,554 37,729 37,240
Project Debt Coverages 1.58 1.83 1.76 1.82
Average DCR 1.89
Minimum DCR 1.49
Maximum DCR 2.48
</TABLE>
2-21
<PAGE>
SALTON SEA FUNDING CORPORATION
S&W PROJECTIONS
LIBOR 8.0% SENSITIVITY
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2003 2004 2005 2006
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM PROJECTS
Salton Sea I & II 5,369 5,474 5,534 5,621
Salton Sea III 12,633 12,746 12,777 12,851
Salton Sea IV 30,556 31,497 30,954 26,351
Vulcan 1,059 1,025 961 910
Del Ranch 1,115 1,046 958 876
Elmore 320 229 119 14
Leathers 609 536 445 358
Changes in AP/AR (261) (241) (220) 568
-------- -------- -------- --------
Total Cash From Projects 51,400 52,313 51,529 47,550
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,407 1,463 1,521 1,582
Royalties from Del Ranch 4,763 4,937 5,082 5,250
Royalties from Elmore 4,750 4,923 5,068 5,236
Royalties from Leathers 4,808 4,981 5,125 5,292
Other Royalties 543 554 562 572
-------- -------- -------- --------
Total Other Revenues 16,271 16,857 17,359 17,932
OTHER EXPENDITURES
Magma G&A 1,749 1,802 1,856 1,912
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 400
-------- -------- -------- --------
Total Other Expenditures 2,149 2,202 2,256 2,312
Net Cash Available for SSFC Debt Service 65,521 66,969 66,632 63,170
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 13,093 11,408 9,577 7,666
Project Debt Principal 21,298 23,072 25,278 22,804
-------- -------- -------- --------
Project Debt Service 34,391 34,479 34,855 30,469
Project Debt Coverages 1.91 1.94 1.91 2.07
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
CASH FLOWS AVAILABLE FOR BOND PAYMENTS 2007 2008 2009 2010
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CASH FLOWS FROM PROJECTS
Salton Sea I & II 5,711 5,833 5,902 6,002
Salton Sea III 12,927 13,052 13,084 13,165
Salton Sea IV 25,965 25,806 24,060 25,652
Vulcan 857 818 745 686
Del Ranch 791 712 612 518
Elmore (95) (199) (324) (444)
Leathers 269 186 82 (17)
Changes in AP/AR (146) (158) (75) (233)
-------- -------- -------- --------
Total Cash From Projects 46,280 46,049 44,084 45,328
OTHER REVENUE CASH FLOWS
Monofill Revenue 0 0 0 0
Royalties from Vulcan 1,646 1,711 1,780 1,851
Royalties from Del Ranch 5,423 5,621 5,787 5,979
Royalties from Elmore 5,409 5,606 5,772 5,963
Royalties from Leathers 5,464 5,661 5,827 6,017
Other Royalties 582 594 604 615
-------- -------- -------- --------
Total Other Revenues 18,524 19,194 19,769 20,424
OTHER EXPENDITURES
Magma G&A 1,969 2,028 2,089 2,152
Restructuring Expenses 0 0 0 0
Installment Obligations/Pollution Control Debt Service 0 0 0 0
Debt Service Reserve LC Fees 400 400 400 200
-------- -------- -------- --------
Total Other Expenditures 2,369 2,428 2,489 2,352
Net Cash Available for SSFC Debt Service 62,435 62,815 61,365 63,401
Interim Debt Service 0 0 0 0
Project Debt Interest (Net) 5,899 4,119 2,301 477
Project Debt Principal 22,775 23,555 23,179 12,305
-------- -------- -------- --------
Project Debt Service 28,674 27,674 25,480 12,782
Project Debt Coverages 2.18 2.27 2.41 2.48
</TABLE>
2-22
