Might just be me but I don't write a cover letter at all in these circumstances. I treat it the same way as if a past client called me on the phone. Ballpark: "Hi (name), good to heaer from you. Sounds like a good project, I should be able to help you, when would you like to discuss it further?"
Of course sometimes I have to tell the client I can't do the work, for whatever reason.
Seems to me you are handling it right.
The only exception would be if it's a totally new area or the client has told you that he/she is opening it up to public bidding for some reason.
