Natural Gas

Owing to its attractive environmental profile, natural gas-fired capacity is one of the fastest-growing sources of electric power today. DAI’s appraisal services have supported natural gas projects in a variety of financing applications, including project finance, lease, and debt financing. This support has included not only fully -contracted gas-fired projects, but also merchant and quasi-merchant projects facing competitive market dispatch. The complexity and importance of the dispatch modeling methodology makes the selection of a qualified appraiser paramount in the valuation of any gas-fired asset.

Recent Experience:  On behalf of investors in notes collateralized by a portfolio of peaking projects, DAI appraised eleven natural gas fired combustion turbine facilities located in northern California. This 500 MW portfolio was operating under contracts put in place during the California energy crisis. Its investors wanted to understand the position of their collateral when those contracts were up for renewal under less stressed market conditions. DAI’s appraisal of the projects evaluated not only their economic position in the California market, but also the importance of these projects to the grid’s provision of ancillary services.

Today’s deregulated energy markets are complex. Gas-fired merchant power plants face production and profit uncertainty as they operate in markets that require competitive bidding. Using a simulation-based dispatch model, calibrated to actual historical data, plant-specific characteristics, and current market prices, DAI can estimate future power production at merchant power plants while keeping stake-holders informed about production uncertainty.

Recent Experience:  DAI served as market advisor for the acquisition and financing of La Paloma, a large California GTCC facility and the first post-Enron merchant power plant financing. DAI’s simulation-based merchant dispatch analysis was used to inform potential investors and lenders about the plant’s expected performance under different market conditions. The financing, which was several times oversubscribed, won Project Finance Magazine’s 2005 “Power Deal of the Year.”

In some cases, litigation is unavoidable. When parties must pursue their claims at trial, clear, credible, and defensible analysis is essential. Although thorough analytical support is a necessity, it is by no means sufficient. The analysis must also be presented in a clear, compelling manner. Highly-technical concepts must be communicated persuasively. DAI’s skilled and well-published staff includes recognized experts in their fields, with decades of experience in power and energy issues. More importantly, communication of technical concepts has been a DAI hallmark, widely acknowledged by clients with a wide array of backgrounds.

Recent Experience:  DAI advised a very large municipal tax authority on thou-sands of megawatts of gas-fired facilities located throughout the city in a property tax dispute. The dispute covered both regulated and unregulated assets, as well as valuation during two periods of time with different required procedures. DAI’s ability to evaluate the facilities not only from an engineering and operational perspective, but also from a financial perspective provided the taxing authority with solid evidence against the facility owner’s claim that they were obsolete and unprofitable, significantly strengthening the taxing authority’s negotiating position.