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Enron Mail |
Energy giants join wind bandwagon
National Post, 04/14/01 The Hindu-Editorial: Time for negotiations The Hindu, 04/14/01 Dizzying offers create deregulation muddle Houston Chronicle, 04/14/01 Enron controversy to dampen investor confidence in India: envoy Agence France-Presse, 04/14/01 Pacific Gas & Electric owes us $570 million, Enron says Deseret News, 04/14/01 Financial Post: News Energy giants join wind bandwagon Diane Francis Financial Post 04/14/2001 National Post National D03 © National Post 2001. All Rights Reserved. Times are grim for farmers, caught between sagging prices, subsidies and livestock diseases. But the energy crunch may provide North America's farmers with another, lucrative line of work. Wind power has suddenly become viable and massive new projects have been announced both on and offshore. In January, the Bonneville Power Administration (a hydro-electric utility operating in the Pacific Northwest) said it will buy 1,000 megawatts of wind energy by 2003. That's enough to supply a city of 500,000 people. Just before that announcement, another utility, FPL (Florida Power & Light) Energy, announced plans to build the largest "wind farm" in the world with turbines in Oregon and Washington, enough for 70,000 homes. Last year, Texas-based Enron Corp., an energy conglomerate, had just finished 700 turbines in California, western Texas, Minnesota and Iowa. A handful of Canadian entities have announced small-scale projects within the past few months. What has changed is that wind power can be generated economically without subsidies, thanks to high fuel prices. What has also changed is that the wind power technology has improved dramatically. Equipment is less noisy and more attractive. Turbines have gone up 20-fold in price, but can produce 120 times more power than a generation ago. Another concern was that the fast-moving blades of wind turbines were killing birds. But newer designs are slower in speed and therefore less lethal. North America is way behind Europe in alternative energy, mostly because it is blessed with cheap, plentiful hydrocarbon sources. Only 1.5% of environmentally activist California's power needs are generated from wind turbines while Denmark and Germany depend on windpower for 6% of their supplies. Washington would like 5% of U.S. electricity generated from wind by 2020. But it already makes sense. Fuel costs are so high the wind business is even profitable for small, independent farmers and landowners in breezy parts (read prairies) of the United States and Canada. By harnessing the wind, they can enhance their cash flow, keep their own lights burning brightly and look after the neighbours or the local power grid, too. Most significantly, in February, the world's biggest oil giant -- Royal Dutch Shell Group -- waded in with an announcement it will construct a wind mega-project or two. But Shell is going to create wind farms offshore, away from urban development and political objections. "Wind energy is set to be the major new offshore industry of the next generation," Shell said in February. "We believe that by deploying Shell's world-class commercial, technical and financial capabilities to large and challenging projects we are confident that we can become a major player in the global wind energy sector," David Jones, executive vice-president of Shell's wind energy business, said at a conference. "Wind is the most competitive of the renewable energy sources when comparing costs with conventional fuels," said Mr. Jones. "Wind energy production is expected to increase rapidly as it moves offshore to achieve wind farms of greater scale." The company is evaluating offshore sites in North America and Europe and is also involved in turbine manufacture. It operates small pilot projects in Europe capable of meeting the needs of only a few thousand consumers. Sir Mark Moody-Stuart, Shell's chairman, underscored the shift in energy sources from hydrocarbons to wind, biomass and other renewables. He maintained this is merely the continuation of a steady trend based on consumer demands. "The energy industry evolves giving products the customers want. In the last century, there was mostly coal used, with few liquids, then liquids replaced coal, then gas came along after World War II. History shows there has been a steady de-carbonization of fuel from wood to coal to oil and gas," he said in a panel I attended in February at the World Economic Forum in Davos, Switzerland. The world "must take the climactic threat seriously" by using hydrocarbons more efficiently. "We think we can make money at the moment out of wind, some out of biomass, but not photovoltaics [batteries]," he added. "We want to meet the aspirations and needs of our customers and society. It's both a commercial challenge and a commercial imperative. We're just starting [wind power] offshore, where people cannot object." As for biomass, Shell has also been amassing forested acreage around the world which will eventually be the feedstock for fuel production from plant life. "Wind indeed is ready for prime time," Ralph Cavanagh, energy program director for the Natural Resources Defense Council, an environmental group based in New York, said recently. Another environmentalist, Worldwatch Institute's Seth Dunn, pointed in an interview to a study by Shell showing that "by 2050, over 50% of primary energy supply comes from renewables." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. The Hindu-Editorial: Time for negotiations 04/14/2001 The Hindu Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire THE CYCLE OF claims and counter-claims between the Maharashtra State Electricity Board (MSEB) and the Dabhol Power Company (DPC) has reached a point where the only way the imbroglio can be resolved is by renegotiations. The process of both parties slapping claims on each other helps neither even as it leaves unaddressed the basic problems in the project. The conciliation and arbitration process that has begun is also unlikely to provide any answers to the larger questions because it is about a specific issue - the decision of the Central Government not to honour a counter-guarantee on a demand of Rs. 102 crores by the DPC because the MSEB's own claim of Rs. 400 crores has not been settled - rather than about the deep flaws in the power purchase agreement itself. With the Godbole Committee calling for renegotiation to bring down the cost of Dabhol power, the Government of Maharashtra will now have to shed its ambivalence about where it stands on the project. While DPC has always been aggressive in asserting its rights, it cannot but be aware that it will be impossible for it to do business in the face of hostile public opinion and the increasingly ambivalent attitudes of the State and Central Governments as well. Given that in the U.S. the Enron Corporation itself has begun to exit from the energy production business and focus on the more profitable activity of energy trading this should be an additional factor working in favour of a renegotiated contract. But the question is how much such renegotiations will yield, for the fundamental problems of the Dabhol project were and still are about a very high capital cost, dollar-denominated tariffs and a contract for supply of liquefied natural gas (LNG) which will (after the implementation of the second phase) make DPC power all the more expensive if the plant were to operate at less than 80 per cent capacity. The Godbole Committee has not recommended scrapping the larger and more expensive Phase-II of the project and more disappointing for the State Government is that it has refused to bear the responsibility of renegotiations. It could not have been otherwise for a review committee can only provide the broad contours of a solution. When new negotiations begin with the DPC, as they now must lest the State and Central Government opt for the more dangerous course of arbitration, the MSEB and the Government of Maharashtra have to walk a tightrope. If the DPC were to be pushed too far it could choose arbitration and an arbitration panel based in London is more than likely to rule on the basis of narrow commercial considerations than on grounds of public policy, which is what the controversies in the Enron power project have all been about. On the other hand, renegotiations with a velvet glove are unlikely to do more than tinker with the contract. Fortunately for the State and the Centre, worries about what the global investing community will feel about India exerting pressure on the DPC to modify the contract are now acknowledged as being mistaken. Globally, the flaws in the PPA have become so well-known that a Government that does not re-open the agreement is less likely to command respect than one that drives a new bargain in a transparent manner. In the process of looking afresh at the Enron project it does not help if issues such as the poor finances of the MSEB and the subsidies that it provides are brought into the picture. These are issues that do need to be addressed but they are distinct from the problems caused by expensive DPC power. Even if the failings of the MSEB are dealt with it would not lighten the burden that the DPC now imposes on the two Governments, the economy of Maharashtra and eventually on the national economy as well. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. A Dizzying offers create deregulation muddle MIRIAM MOYNIHAN Staff 04/14/2001 Houston Chronicle 3 STAR 1 (Copyright 2001) One company is trying to lure Houstonians away from Reliant Energy HL&P with free electricity for the next two Decembers. Another competitor offers a $25 credit to sign up. A third company doesn't offer any particular incentive. So far, four retail ventures - The New Power Co., First Choice Power, Green Mountain Energy Co. and Shell Energy Co. - are offering lower rates for customers of HL&P. But a consumer can get lost trying to pick the best one. A close look suggests that the company with the plainest offer may be the best deal for consumers fearing all the unknowns. But it depends. Welcome to electric deregulation. Texans are getting their first taste of how competition will be when the deregulation law goes fully into effect on Jan. 1. So far, the results of the pilot program show it needs work. Price information is hard to come by, the promotions can be confusing and the potential savings may not add up to much. With the sign-up period under way for the Texas Electric Choice pilot program, for the first time Houston consumers can choose from which company they'll buy electricity. It's important that new competitors win over lots of customers, because in the future, electric rates in Texas will be based on competition rather than regulation. In the newspaper, on television and on the Internet, ads are urging consumers to sign up by phone or online and trim painfully high electric bills. The simplest way to break down the cost is by looking at the average cost per thousand kilowatt-hours. A bit of multiplication shows that at Reliant's average current rate - 10.13 cents per kwh - 2,000 kilowatt hours would cost $202.60. So Shell's rate of 9.3 cents would save a consumer nearly $15 a month. But shoppers looking to dump Reliant must wrestle with a lot of unknowns. The actual savings will be affected by future rate changes, monthly fees and special offers by the providers. And getting the details to answer those questions can be difficult, said Janee Briesemeister, senior policy analyst at the Austin office of Consumers Union. "They're being very vague in what they can promise," she said. There is a lot of information out there if you have a telephone, an Internet connection and a few hours to kill. But keep your calculator handy. A representative of Shell Energy wasn't able to do the math when asked how much 2,367 kilowatt-hours would cost during August. Also, be wary of promises that sound too good to be true. A telephone representative from New Power gave a series of rates radically lower than the other companies, but the fuel charge - a considerable part of the cost - wasn't included in the price. When asked if that had been included, the representative didn't seem to know what it was. Business customers in Houston have signed up in droves for the nonresidential portion of the pilot program. But so far, this test of deregulation hasn't been a big hit with Houston consumers. Retail electricity providers have drawn 25,625 residential customers away from HL&P, according to the latest figures from the Texas Public Utility Commission. That's about 42 percent of the goal officials are seeking for the pilot. Much as competing long-distance phone providers sell their services using lines that are already there, beginning June 1, retail electricity companies will run power through HL&P's existing lines and pay a fee to the investor-owned utility. Since the new providers don't have the cost of maintaining poles, wires and other facilities, they can offer lower prices per kilowatt- hour - the industry benchmark meaning the amount of energy needed to light a 100-watt light bulb for 10 hours. "We can purchase the electricity using our size and global strength on the market at a much lower rate than the utility can charge," said Patricia Betz, marketing manager for Shell Energy, an affiliate of Shell Oil Co. But consumers need to understand that since it hasn't been done before in Houston, it carries some risk. "There's no guarantee that everything will work right," said Briesemeister. "The companies need to do a better job of saying that." "That's why it's called a pilot. And it serves an important function - to see if everything works," she said. Making apples-to-apples price comparisons is difficult. The Public Utility Commission's Web site on the pilot program - www.powertochoose.org - recommends that consumers check the Electricity Facts Label of each program. But to find that item you need to go to the Terms and Conditions section of each company's Web site. In some cases, the prices posted there aren't the same as what's quoted by company officials over the phone because the prices on the Web are adjusted to include the added cost of the monthly fee. But the most straightforward offering comes from Shell Energy. It is quoting a flat rate of 9.3 cents per kilowatt-hour year- round. Its monthly service charge is $2 or $5, depending on the method of payment. Shell Energy doesn't require a contract and is also staying away from special incentives. "Electricity pricing is complicated," said Betz. "We're trying to make it as simple as possible for consumers to understand." But there's nothing simple about it. "If they want to compare apples to apples, look at the Electricity Facts Label, because they have to determine that in the exact same way," said Carrie Collier, a legislative analyst at the Public Utility Commission. "We can't tell them how to market their electricity, but . . . what we've told them is that they have to provide standardized information for customers." So, what exactly are they promising? "We'll always be cheaper than the utility," said Betz of Shell. She said the company does not foresee raising the rate during the pilot program, but it's not a guarantee because rising fuel costs could mean higher rates. "We're all subject to the same market forces," Betz said, "so it's possible your rates will go up." First Choice Power, an affiliate of Texas-New Mexico Power Co., is offering a rate of 9.4 cents per kilowatt-hour, with a $4.95 monthly service charge. "The offer is good for the life of the pilot," said Jim Niewald, First Choice's director of marketing. But he doesn't know how prices will be affected after that. His company requires a contract and gives a $25 credit on the first bill. It also plans contests to give away plane tickets, cash and T-shirts. Green Mountain Energy Co.'s rate is a bit higher - 9.8 cents per kilowatt-hour plus $4.95 a month - but the company is touting wind- powered energy. "We're the only clean-power option in Houston," said Gillan Taddune, vice president of Texas region. "And I think that's definitely a benefit." The New Power Co. - a marketing joint venture of Enron Corp., AOL and IBM - has two plans. One is a fixed rate of 9.3 cents per kilowatt-hour. That company is offering free Decembers for two years but has a $30 cancellation fee if a customer chooses to switch before the contract ends. But that rate, confirmed by the company's Web site, was far different from the one quoted by phone recently. A New Power customer service representative quoted a price of 4.5 cents for up to 250 kwh from May through October, and 7.1 cents after that. And for November through April, the price quoted was 4.2 cents. The real rate is higher because the representative hadn't included the fuel charge of 3.9 cents per kilowatt-hour that is added on. One reason consumers should consider their options is that the rates from Reliant will be going up again soon. The utility company - whose rate now starts at 9.75 cents per kilowatt-hour - is in the process of getting a rate increase to cover higher fuel costs approved by the PUC. "We're hoping to have interim rates in place by the end of April," said Reliant spokeswoman Leticia Lowe. The PUC has the power to review whether this fuel price adjustment is justified, though these requests usually go through with little change. Reliant's deregulated competitors do not have their rates reviewed by state regulators. But starting Jan. 1, when the deregulation law takes effect, Reliant will be able to drop its base rate by 6 percent. "In the pilot, consumers are comparing current rates," said Briesemeister. But down the line, the utility will get more competitive, she said. While up to 5 percent of residences currently served by Reliant can sign up, industry experts are unsure if that many will actually participate. "Residential customers traditionally are slower to enter the market," said Collier. "The dollar incentive is greater if your bills are higher. For that reason, the industrial customer has more incentive to switch." Janet Tuttle of Katy has taken the leap and signed with Shell. She heard about the pilot program on the evening news. "I've got two in college," she said, "so I'm trying to cut the costs wherever I can." ... Retail electricity rates Four companies are currently offering competing electricity service to customers of Reliant Energy HL&P. Prices listed here are quoted by the companies based on usage of 1,000 kilowatt-hours. For a more detailed breakdown, see www.puc.state.tx.us/electric/ projects/22834/reliant.pdf. Also, check New PowerOs Web site for its alternate plan. Company .. Monthly charge .. Rate per kilowatt-hour .. Incentives .. Penalty for early cancelation The New Power Co. / www.newpower.com / 877-901-7059 .. $3 .. 9.3 cents .. Two free Decembers .. $30 Shell Energy / www.shellenergy.com / 800-24-SHELL .. $2 or $5 .. 9.3 cents .. None .. None First Choice Power / www.firstchoicepower.com / 866-469-2464 .. $4.95 .. 9.4 cents .. $25 credit .. Forfeit credit Green Mountain Energy Co. / www.greenmountain.com / 866-473-3689 .. $4.95 .. 9.8 cents .. Power Perks discount card .. None Graph: Retail electricity rates (p. 14, TEXT) Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron controversy to dampen investor confidence in India: envoy 04/14/2001 Agence France-Presse (Copyright 2001) NEW DELHI, April 14 (AFP) - A controversy over US energy giant Enron's subsidiary in India will dampen investor confidence and have a negative impact on foreign investment, Washington's outgoing ambassador said Saturday. In an interview published in the Economic Times, Richard Celeste said the treatment of the subsidiary, Dabhol Power Corporation (DPC), "will have a substantial (negative) impact on large investors." The DPC, the single largest foreign investment project in India, has been mired in controversy since its inception. The deal was signed in 1993, but was scrapped in 1995 by the state's newly installed Hindu nationalist government. The project was renegotiated the same year and work began for the first phase of the project, which began generating 714 megawatts of electricity in 1999. Construction for phase 2 is ongoing, but opposition to the project has resurfaced over the cost of electricity, with the Maharashtra state chief minister Vilasrao Deshmukh saying that the government was being billed almost 8.00 rupees (18 US cents) per kilowatt hour for the electricity produced by Enron. Earlier this year, the cash-strapped Maharashtra electricity board said it could no longer meet payments due to DPC. This led to the DPC invoking a counter guarantee clause in the agreement, after which part of its dues were recovered. With a susbtantial portion of its dues still unrecovered, the DPC this week, invoked a "force majeure" notice. The notice warned that it maybe be unable for the company to perform its contractual obligations, due to the "concerted, deliberate and politically motivated actions" of the state and federal government as well as the Maharashtra electricity board. Urging the government to create an adequate environment for investors, Celeste warned: "The (DPC) problem will have a large impact on India's ability to raise large amounts of capital." er/am Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Pacific Gas & Electric owes us $570 million, Enron says 04/14/2001 Deseret News B08 Copyright © 2001 Deseret News Publishing Co. HOUSTON (AP) -- Enron Corp. says the utility Pacific Gas & Electric Co. owes the energy company $570 million, according to a letter to the utility's bankruptcy trustee. Mark Palmer, an Enron spokesman in Houston, said the company has taken adequate reserves to protect its balance sheet against any outstanding debts owed it by Pacific Gas & Electric. But Enron's disclosure was the first indication of how much the West Coast utility owes the Houston company. Enron was one of the companies named late Wednesday to the creditors' committee for San Francisco-based Pacific Gas & Electric's Chapter 11 bankruptcy case. The committee represents the parties with the largest claims in a bankruptcy case. Enron officials cited the utility's unpaid debt to secure a seat on the committee appointed by U.S. Trustee Linda Stanley, a Justice Department official. A week ago, Pacific Gas & Electric filed for bankruptcy protection because negotiations with California over how to resolve the state's power crisis were going nowhere. Pacific Gas & Electric sells electricity and natural gas to the San Francisco and Northern California areas. Earlier this week, a federal judge ordered Enron to keep supplying low-cost power to California's state university systems after Enron tried to shift responsibility for buying the school's power to the state's troubled utilities. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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