Fitch Comments on Goldman Sachs Acquisition of East Coast Power.

Business Editors

CHICAGO--(BUSINESS WIRE)--April 17, 2003

Fitch does not expect the planned acquisition by Goldman Sachs to have a material effect on the credit quality of East Coast Power (ECP). Fitch currently rates ECP's senior secured bonds 'BBB-'. ECP is substantially owned by Mesquite Investors, which is indirectly owned by El Paso Corp. and Limestone Electron Trust. A third party investor holds a 1% non-voting interest in ECP. Fitch currently views ECP as a bankruptcy remote entity. Therefore, the assigned rating reflects ECP's credit quality on a stand-alone basis, independent of the credit quality of its owners.

ECP bondholders rely solely on the cash flows of the six-unit Linden, NJ cogeneration facility, which sells energy principally to ConEd. ECP recently distributed its ownership interests in the Bayonne and Camden cogeneration facilities after restructuring the associated long term PPAs. Goldman Sachs has advised the change of ownership does not affect ECP's primary contracts, including the long term power purchase agreement (PPA) with Consolidated Edison (ConEd).

ECP's credit quality is dependent in part on EPC's ability to effectively procure natural gas. Payments under the ConEd PPA are indexed to ConEd's weighted average cost of gas (WACOG). Therefore, ECP's cash flow is negatively affected if it cannot purchase gas at a cost that is competitive with ConEd's WACOG. Fitch believes that Goldman Sachs, via its commodities trading subsidiary J. Aron & Company, has the appropriate expertise and market access to approximate ConEd's WACOG.

Fitch will continue to monitor Goldman Sachs's acquisition and implementation plan, and will confirm Fitch's rating prior to transfer of ownership.