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International Power has held discussions with AES about buying its 3.8 GW Drax power plant in northern England, but is balking at AES's price tag. Paul Parshley, director of corporate planning and communications at International Power, says the companies have held discussions over a sale but that AES is asking too much. He adds International Power will keep its powder dry until asset sale prices come down further in the U.K.

The failures of PG&Eand Enron are just the beginning. The adoption of revenue and cost management strategies pioneered by the U.S. airline industry is likely to heat up competition in the power industry and lead to the shakeout of the weakest players, argues Jerry Jackson, president of Jackson Associates.

* Energias Eolicas Europeas' non-recourse financing for the construction of a 1,173 MW wind energy project in the Castilla La Mancha region of Spain, was one of the few European project-level loans to reach the market last year. But even in a bumper year this landmark deal would have stood out from the field, enthuse lenders. The EUR814 million loan is by far the biggest wind-energy loan to date and should prove a bellwether transaction from the numerous other wind projects in early development, they add.

Rapid City, S.D.-based Blacks Hills Corp. is looking at tapping the bond market to refinance the construction costs of a 230 MW Las Vegas plant, a move that would herald the first non-recourse bond offering in the power sector this year. Richard Ashbeck, senior v.p. of finance, says the company is looking at an April investor roadshow for a 144a deal north of $200 million. The structure and size haven't been settled, as discussions with the rating agencies are continuing in order to achieve an investment-grade rating, he adds.

*CMS Energy, International Power and theAbu Dhabi Water & Electricity Authority's Al Shuweihat S1 project-level loan was in many ways the standout transaction in the Middle Eastern power market last year. In terms of size alone it deserves recognition, note many bankers. The $1.3 billion deal is the largest ever project loan in the Middle Eastern power sector, eclipsing the $1 billion Taweelah A1 non-recourse loan that closed the previous year. The sheer size meant that lead arrangersCitibank ,Barclays Capital, Royal Bank of Scotland, Bank of Tokyo-Mitsubishi, Kreditanstalt für Wiederaufbau, National Bank of Abu Dhabi and Abu Dhabi Investment had to launch a Herculean syndication effort to fully place the deal.

Enel could be forced to unload an extra 2 GW of generation capacity, on top of already announced divestiture plans, as part of a government directive to further deregulate Italy's wholesale power market. An investment banker advising Enel says Antonio Marzano, minister for trade and industry, is currently weighing up the idea and will make an announcement shortly. Under the current directive Enel must sell three portfolios of generation assets with a combined capacity of 15 GW.

Developers and project financiers may be falling into the trap of ignoring the impact low contracted power levels can have on spot price volatility.Paul Meyers, v.p. at Pace Global Energy Services, who gave a presentation on the issue at Société Générale's recent power shindig in Boca Raton, Fla., says the industry was similarly blind-sided four years back, when power companies mistakenly avoided the forward market because spot prices were so low and then were caught in exaggerated price spikes as demand rose. "The market is sort of priming itself for another 1998, because we have a whole bunch of people in the spot market," he says.

International Power is holding acquisition discussions with Florida power giant TECO Energy, a deal that would add 11 GW of generation capacity to the London-based IPP's 4.4 GW U.S. portfolio and give the company its first exposure to the regulated utility industry. A merger would create a $7 billion outfit given their current market valuations.

Steven Fetter, managing director and head of Fitch's global power group, has left the agency to launch an energy-consulting firm. Officials in the group say he has not yet been replaced and that Alan Spen, executive managing director in New York, is the interim head. Spen did not return calls.

Lead arrangers Barclays Capital and Union Bank Of California have received commitments from 13 other banks for a $421 million letter of credit facility backing sale and leaseback structures for three FirstEnergy subsidiaries. The deal should be finalized today, says one syndicate official, who adds the original March 5 target was missed because some banks in the deal had difficulty meeting that timeline.