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Utilities Make Own Plans for CO2 Curbs --- Entergy Sets Emissions Cap As Bush
Climate Policy Remains to Be Resolved Wall Street Journal, 05/04/01 California and the West Secretary of Energy, Davis Meet on U.S. Plan to Boost Conservation Crisis: Federal buildings and military bases, accounting for 1.5% of state's usage, will cut back. Los Angeles Times, 05/04/01 Calif Gov Asks 12 Generators To May 9 Energy Crisis Mtg Dow Jones, 05/04/01 Enron agrees to meet with India committee Houston Chronicle, 05/04/01 INTERVIEW:Early Resolution Seen On India Dabhol Pwr Spat Dow Jones, 05/04/01 India: Enron wants renegotiation meet rescheduled Business Line (The Hindu), 05/04/01 ENRON'S HOUSTON TEAM TO MEET RENEGOTIATING COMMITTEE Asia Pulse, 05/04/01 SALVE MAY REPRESENT FEDERAL GOVT ON ENRON NEGOTIATING COMMITTEE Asia Pulse, 05/04/01 Enron ready to take part in PPA talk The Times of India, 05/04/01 Godbole terms of reference not acceptable: DPC Business Standard, 05/04/01 Outlook: Power failure The Independent - London, 05/04/01 ScottishPower survives the blackout The Guardian, 05/04/01 April rough for merger mavens The Daily Deal, 05/04/01 Companies: European Companies The Wall Street Journal Europe, 05/04/01 Purchase should boost Ansoft ... Pittsburgh Post-Gazette, 05/04/01 Enron's Dabhol to Meet Indian Panel Over $64 Mln Debt (Update1) Bloomberg, 05/04/01 India Gets $450 Million From World Bank to Push Power Market Bloomberg, 05/03/01 Senate special counsel said power sellers broke law Associated Press, 05/03/01 Economy Utilities Make Own Plans for CO2 Curbs --- Entergy Sets Emissions Cap As Bush Climate Policy Remains to Be Resolved By John J. Fialka Staff Reporter of The Wall Street Journal 05/04/2001 The Wall Street Journal A2 (Copyright © 2001, Dow Jones & Company, Inc.) WASHINGTON -- Some major U.S. utilities are beginning to step out ahead of the Bush administration on the climate-change issue, developing their own plans for curbing emissions of carbon dioxide, the man-made gas thought to be contributing to global warming. Meanwhile, the White House is under growing pressure to demonstrate that its plans to boost energy production can be environmentally sensitive. President Bush signed an executive order requiring the federal government to conserve energy during periods of peak demand in California and other places facing energy shortages. Mr. Bush also said the federal government would make available power generators in case of emergencies. "Conservation has got to be an integral part of making sure we've got a reasonable energy policy," Mr. Bush said. New Orleans-based Entergy Corp., the nation's third largest utility in terms of electricity produced, said that it will will impose a limit on CO2 from its 25 power plants that burn natural gas, oil or coal and stay within that level of emissions for five years. "We understand that this is a very politically contentious subject," said company Vice President Jim Mutch. "If other companies do their fair share now, hopefully when there is a regulatory scheme, there will be less of a problem." By running its plants with greater efficiency, improving the efficiency of its electricity and gas transmission systems and engaging in some outside CO2 reduction efforts, such as planting trees that absorb the gases, Entergy hopes to keep its overall CO2 emissions at 50 million tons per year, Mr. Mutch said. The company, which derives 61% of its power from fossil fuels, will work with the New York-based group Environmental Defense, to make sure its efforts are effective and measurable. Meanwhile, a coalition of five other electric power companies is calling for a mandatory cap on CO2 emissions that would decline annually, if the Bush administration develops a national emissions trading system that allows a company to decide which technologies to use to reduce CO2 and other pollutants. "We're basically planning on a glide path downward" regarding emissions limits, explained Mark Irion, a spokesman for the group, which includes Enron Corp. and El Paso Energy Corp. of Houston; Calpine Corp. of San Jose, Calif.; Trigen Energy Corp. of White Plains, N.Y.; and NiSource Inc. of Merrillville, Ind. Emissions trading gives companies incentives to introduce new technology, Mr. Irion said. Under the trading scheme, which is used currently to address sulfur-dioxide pollution, a company that reduces emissions below its target level gets trading credits that it can sell to other companies, thus helping to offset the costs of new capital investment. Sulfur dioxide plays a major role in acid rain. The announcements come as the entire U.S. utility industry, which produces about a third of the nation's man-made CO2, is engaged in behind-the-scenes negotiations with the White House energy task force headed by Vice President Cheney over how to set up a meaningful, voluntary system for reducing CO2 nationwide. Meanwhile, private utilities, federally owned entities such as the Tennessee Valley Authority, and rural electric cooperatives are trying to develop an industry consensus on a voluntary program. According to one industry official involved in both discussions, who asked not to be identified, one idea of interest to the task force involves voluntary contracts that power companies would make with the government calling for CO2 emissions cuts. Once signed, the contract's target reductions would become mandatory. Called a "soft cap" program, it could become part of the U.S. position for the next round of international climate-change talks, slated for Bonn, Germany, in July. "We have only recently begun to engage the administration," said the official. Since March when the Bush administration aroused a furor among environmental groups and European allies by announcing it was no longer interested in the Kyoto Protocol to curb climate change, it has held a series of cabinet-level seminars on climate change, bringing in industry experts and a variety of government and outside scientists. President Bush will need to have some outline of a new U.S. climate-change policy by next month when he goes to Sweden for a summit with leaders of the European Union. "We're well aware of the calendar," said one U.S. official. Tom Kuhn, president of the Edison Electric Institute, a trade association here that represents private-sector utilities, said "I think the [Bush] administration is definitely interested in things that they can do to address this issue." He noted, however, that it is too early for a industry-government consensus on CO2 reduction. "Nobody's agreed upon specifics." Bob Davis contributed to this article. Metro Desk California and the West Secretary of Energy, Davis Meet on U.S. Plan to Boost Conservation Crisis: Federal buildings and military bases, accounting for 1.5% of state's usage, will cut back. RICHARD SIMON; DAN MORAIN TIMES STAFF WRITERS 05/04/2001 Los Angeles Times Home Edition A-3 Copyright 2001 / The Times Mirror Company SACRAMENTO -- In a visit meant to underscore the Bush administration's heightened concern about the California electricity crisis, Secretary of Energy Spencer Abraham met Thursday with Gov. Gray Davis in Sacramento to discuss federal energy conservation plans. "I think we have an approach that can result in significant savings," Abraham told Davis. The energy secretary said he was in California "to gauge what we can do to add to what California is already doing." The trip came after President Bush revealed plans for a series of conservation measures for federal buildings and military bases nationwide. Those facilities in California account for 1.5% of the state's total energy use. Today, Abraham is scheduled to meet with federal officials in San Francisco to work out details of the nationwide program for more than 500,000 federal buildings. After meeting with Abraham at the White House earlier Thursday, Bush said: "We're worried about blackouts that may occur this summer, and we want to be a part of any solutions. This administration is deeply concerned about California and its citizens." Defending his response to the California crisis, Bush said, "As I said from the very beginning of my administration, we'll work to help California in any way we can." Also Thursday, Davis met with alternative energy producers in an attempt to persuade them to continue operations, despite being owed more than $1 billion by California's private utilities. Alternative energy producers, including oil companies that generate electricity as a byproduct of their operations, account for about 27% of the electricity consumed in California. Several have stopped producing after the utilities could no long afford to pay soaring prices for their power. Davis assigned S. David Freeman and former Assemblyman Richard Katz, a Davis appointee to a state water board, to be in charge of negotiations. Davis said he hoped that the talks could be completed within a week. And in a sign that major energy companies may get more involved in the California crisis, Kenneth Lay, CEO of the Houston-based energy giant Enron Corp., met Thursday with Davis, Assembly Speaker Bob Hertzberg (D-Sherman Oaks) and Senate President Pro Tem John Burton (D-San Francisco). Meanwhile, Bush on Thursday directed federal agencies to "take appropriate actions to conserve energy use at their facilities." In California, such measures could include setting thermostats to 78 degrees, lowering lighting and turning off escalators during Stage 2 and Stage 3 power emergencies, administration officials said. Those occur when the state's electricity reserves fall below 5% and 1.5%, respectively, and can trigger interruptions in service. Bush did not set an energy-saving target. But the Defense Department, one of the state's single largest energy consumers--using about 1% of peak demand--pledged to reduce peak use by 10% this summer and an additional 5% by summer 2002. That would make available 200 megawatts, officials said, enough to provide electricity to about 150,000 homes during the summer. The federal government accounts for about 1.5% of total energy use across the country, making it one of the nation's largest energy consumers, according to the Energy Department. Bush also offered to make available to the state power-generating units owned by the federal government. But his efforts failed to mollify Democratic critics, who renewed calls for the administration to impose price controls on wholesale electricity. "The generating companies are gouging California consumers while the president turns his back on us," Sen. Barbara Boxer (D-Calif.) said in a statement. Rep. Sam Farr (D-Carmel), leader of the California Democratic congressional delegation, sent a letter to Vice President Dick Cheney protesting Democrats' exclusion from Cheney's meeting this week with California GOP lawmakers. "As we head into the high summer demand months, it is unfortunate that you have decided to keep Democrats in the dark about the administration's plans to deal with the crisis," Farr said. Bush's conservation initiative comes after Cheney, who is heading a task force on national energy policy, was assailed by some critics for emphasizing production over conservation. "Conservation has got to be an integral part of making sure we've got a reasonable energy policy," Bush said Thursday. "But what the vice president was saying is we can't conserve our way to energy independence, nor can we conserve our way to having enough energy available. We've got to do both. We must conserve, but we've also got to find new sources of energy." David M. Nemtzow, president of the Alliance to Save Energy, called the directive an "emergency answer to a long-term problem." "We need to fix the underlying problem by investing in energy-efficient lighting, cooling and controls," he said. "We hope that this crisis will encourage the president to increase the budget for energy management rather than cut it by 48% as previously proposed." Political analysts said the effort was driven by concerns for not only electrons but also elections. "It's all about political conservation," said Marshall Wittmann, senior fellow at the conservative Hudson Institute. Thomas E. Mann, senior fellow at the nonpartisan Brookings Institution, agreed: "The administration has come to the view that just because they can't win California in a presidential election doesn't mean the Republican Party can afford to kiss off the largest state in the Union." Analysts speculated that the administration came under pressure from California Republicans in Congress who worried about perceptions that the White House was not being aggressive enough in responding to the crisis. As federal officials search for ways that California can avoid blackouts this summer, a Woodland Hills-based advocacy group, More Power to You, has suggested that the Navy hook its nuclear-powered ships to the state power grid to provide energy while in port. The Navy has nuclear-powered aircraft carriers and submarines in San Diego and Washington state. But Navy officials said it is not technologically feasible to use the nuclear reactors aboard the ships to provide power for the grid because most of that power goes directly to the propulsion systems. Even to "capture" power not used for propulsion would require extensive construction on shore and retrofitting aboard ship, officials said. Also, using ships to provide onshore power could disrupt training and deployment schedules, they said. * Times staff writer Tony Perry contributed to this report. PHOTO: Gov. Gray Davis and U.S. Energy Secretary Spencer Abraham confer about federal plans to assist California in the energy crisis.; ; PHOTOGRAPHER: BOB CAREY / Los Angeles Times Calif Gov Asks 12 Generators To May 9 Energy Crisis Mtg 05/04/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) (This article was originally published Thursday.) LOS ANGELES -(Dow Jones)- California Gov. Gray Davis has invited 12 electricity and natural-gas generators and marketers to meet with him in Sacramento May 9 to discuss the state's energy crisis, according to a press release Thursday. The agenda will include "unpaid debts, credit and the supply of power," the release said. The governor invited the chief executives of Enron Corp. (ENE), AES Corp. (AES), Reliant Energy Inc. (REI), Dynegy Inc. (DYN), Duke Energy Corp. (DUK), Mirant Corp. (MIR), Williams Cos. (WMB), Calpine Corp. (CPN), National Energy Group Inc. (NEGI), Edison/Mission Energy (EIX), Sempra Energy (SRE) and El Paso Corp.'s (EPG) Natural Gas unit, the release said. "There will be no discussion about curtailling state investigations or litigation," Davis said. "I strongly support the investigations underway by the Public Utilities Commission and the attorney general. I am not calling off the dogs." As previously reported, Duke released a letter Wednesday that it sent to Davis saying the company would forgive some of the $110 million it is owed by cash-strapped utilities if Davis agreed to drop several state investigations into the company's trading practices. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com Houston Chronicle Briefs: Houston & state, 05/04/01 Enron agrees to meet with India committee Enron Corp.'s Dabhol Power Co. agreed Thursday to meet with a negotiating committee from India's Maharashtra state next week regarding a dispute over $64 million in unpaid bills. Houston-based Enron said it rejected proposals expected to be the basis of the meeting. The Maharashtra State Electricity Board, a state-run utility, refused to pay the bills, saying they were too high. Dabhol, the biggest foreign-investment project in India, invoked government guarantees against nonpayment. Enron spokesman John Ambler said that Enron will meet the committee "as a matter of courtesy" and won't present proposals of its own. Enron owns 65 percent of Dabhol. INTERVIEW:Early Resolution Seen On India Dabhol Pwr Spat By Himendra Kumar Of DOW JONES NEWSWIRES 05/04/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- A prolonged electricity payment dispute between U.S.-based Enron Corp.'s (ENE) Indian unit, the Dabhol Power Co., and the Maharashtra State Electricity Board could be resolved within a month, the head of an independent energy think tank said Friday. The dispute over the controversial 2,184-megawatt, $3-billion DPC project in India's western state of Maharashtra came to a head recently when the DPC's board authorized the management to proceed with a preliminary notice of termination - the first of three steps that lead to the abandonment of the project. Despite the move, Rajendra K. Pachauri, director of the New Delhi-based Tata Energy Research Institute, said he is optimistic of a resolution. "It's in everybody's interest to come up with a reasonable settlement. I think DPC will accept a renegotiated contract because they are in an impasse right now," Pachauri told Dow Jones Newswires in an interview. Pachauri is also one of the nine members of the committee appointed by the Maharashtra state government to renegotiate the MSEB's controversial power purchase agreement with DPC. "I do hope that within a month the whole thing can be sorted out. DPC wants the negotiations to be short and decisive and if all the parties are willing, an agreement won't be difficult," he added. The project has been mired in financial disputes since its main customer, the Maharashtra State Electricity Board, has failed to pay several of its bills. Dabhol has come under fire because of the relatively high cost of its power. Critics object to Dabhol charging 7.1 rupees ($1=INR46.83) a kilowatt-hour for its power, compared with INR1.5/KWh charged by other suppliers. The state government has asked the committee to try to negotiate a revised agreement within a month. The committee's goal is to lower the power tariff and allow the sale of excess power to the federal government or its utilities. A restructure of the DPC's stakeholding may also be on the agenda. As reported, the negotiating committee's first meeting with the DPC management scheduled for Saturday has been postponed until 0530 GMT May 11 at DPC's request. DPC Must Run Plant At Full Capacity - Pachauri Pachauri said that it is in DPC's interest to run its plant at full capacity and maximize sales. "Their sales won't be maximized unless the price is attractive. They really need to bring down the cost to the consumer. Our brief is very clear. We have to sit down with them and identify a strategy by which the Dabhol project can be viable for everyone," he said. "This will involve a complete financial engineering of the DPC. You'd need to restructure the project debts and bring down the interest rates (on debts) to the current levels in the market," he added. The DPC project - the largest single foreign investment in India - has a debt-equity ratio of 70:30. Pachauri said Dabhol should agree to charging between INR3.00 and INR3.25/KWh. "This is a reasonable range and should be acceptable to everyone," he said. He said if Enron decided to pull out of Dabhol, it wouldn't have a serious impact on foreign direct investments into India, particularly in the country's power sector. Texas-based Enron has a 65% stake in the DPC, and is the project's largest shareholder. Other shareholders include the MSEB with 15%, and General Electric Co. (GE) and Bechtel Enterprises (X.BTL) with 10% each. The DPC currently operates a 740-MW naphtha plant contributing around 0.7% to India's installed capacity. Enron has maintained that work will be completed by the year-end in the second phase of Dabhol project that will add 1,444 MW to its capacity. The plant will switch from naphtha to liquified natural gas as a fuel source in 2002. -By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com India: Enron wants renegotiation meet rescheduled 05/04/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, May 3. ENRON, promoter of Dhabol Power Company, has asked for rescheduling of its first renegotiation meeting with the State Government and Maharashtra State Electricity Board (MSEB) to May 11. The parties were to meet on May 5 to begin negotiations. "They (Enron) want a longer notice period because they want their lenders and shareholders to attend the meeting. And this is a good sign," said a senior MSEB official. "These parties will be coming from all over the world and thus the request for postponement," he said. The Government had announced the Dabhol project renegotiation committee last week. The panel's terms of reference include restructuring of the project and tariff, finding out if any Central power utilities or States would be willing to lift surplus power generated by DPC, and any other issue or aspect it (the panel) deems fit to include. "Enron has said that they want their lenders to be represented during the negotiations. But we (other members except Enron) will meet on May 5, irrespective," said a senior State Government official. He, however, did not comment on the agenda of the first renegotiation meeting. - Our Bureau ENRON'S HOUSTON TEAM TO MEET RENEGOTIATING COMMITTEE 05/04/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. MUMBAI, May 4 Asia Pulse - Enron-promoted Dabhol Power Company today said it had agreed to meet the Godbole committee "as a matter of courtesy" and this should "in no manner be construed as an open offer from DPC to renegotiate the terms of the contract". In a statement issued here tonight, the US energy major made it clear that the purpose of the meeting with the nine member renegotiating committee was "to hear out the panel and understand their thoughts, and not present any proposals". Furthermore, the published terms of the Godbole report did not represent any acceptable basis for further discussions, it said adding the company constantly maintained that it was open to a dialogue towards resolving issues. Earlier, the state government sources told PTI that a team of senior officials from Enron headquarters in Houston is slated to attend the first Godbole renegotiations committee meeting, now to be held on May 11. The panel deferred its meeting from May 5 as in a formal communication, DPC requested the state government for a suitable date other than the stipulated one, they said. However, the multinational is yet to send a list of its nominees, who are due to arrive next week, they said. Meanwhile, the Centre is likely to appoint Solicitor General Harish Salve as its representative on the high-power committee to renegotiate the Power Purchase Agreement signed between DPC and Maharashtra State Electricity Board. (PTI) 04-05 1824 SALVE MAY REPRESENT FEDERAL GOVT ON ENRON NEGOTIATING COMMITTEE 05/04/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. NEW DELHI, May 4 Asia Pulse - Solicitor General Harish Salve is likely to be named as federal government's representative on the high- power committee appointed by Maharashtra government to renegotiate the Power Purchase Agreement (PPA) with the US energy giant Enron-promoted Dabhol Power Company (DPC). According to highly placed government sources, Salve's name has been cleared by both ministries of Finance and Power. The government of the western state of Maharashtra has appointed a negotiating committee headed by former bureaucrat Madhav Godbole to renegotiate the estranged PPA signed by the Maharashtra State Electricity Board (MSEB) and DPC. Enron had made opening of talks with Maharashtra conditional on the presence of Centre's representative on the negotiating committee. Salve would meet secretaries in the ministries of Finance, Power and Law to firm up the federal government's stand on the crisis arising out of payment defaults by MSEB, sources said adding that the Petroleum secretary is also likely to be included in the panel. Sources said Enron appeared to be keen on solving the present impasse through negotiations judging from Corporation Chairman Kenneth Lay's statement yesterday in Houston that the company had no plans to sell its stake in the $2.9 billion Dabhol project. (PTI) 04-05 1705 Enron ready to take part in PPA talk Nitin Yeshwantrao 05/04/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) MUMBAI: The Enron management has finally agreed to participate in a 'discussion' with the Madhav Godbole-led re-negotiation committee set-up to facilitate the restructuring of the Power Purchase Agreement (PPA) signed between the US power major and the state government. Officials of Dabhol Power Company (DPC), a subsidiary of Enron, alongwith their team of shareholders and lenders will arrive here on May 11 for talks with the nine-member Godbole panel. Though the DPC spokesperson was reluctant to give a confirmation, a key Mantralaya official told The times of India that the team had expressed willingness for talks with the experts committee in a bid to end the imbroglio. Enron's response is viewed as a welcome development to amicably resolve the controversy which had been raging for the last few weeks, with the board of directors of Enron authorising its India MD K Wade Cline to serve a termination notice to MSEB. The state government, on its part, too adopted a confrontational position by slapping a Rs 401 crore rebate charge on DPC for defaulting on power supply. However, the sudden change of heart by the Enron management is largely attributed to the stand taken by its local lenders led by Industrial Development Bank of India (IDBI) which had recently opposed the move to pull out of the project. This was in contradiction to the stand taken by the foreign lenders of the DPC who were in favour of slamming the brakes on disbursement of funds to DPC. The Congress-led Democratic Front government had publicly declared that it would impress upon the Enron management to renegotiate the PPA as scrapping the project would not be in the interest of both the parties. Last week, the state government constituted a nine-member panel of experts under former bureaucrat Madhav Godbole. Godbole had written to the DPC management inviting it for talks to re-negotiate the PPA on May 5. For the delayed response from Enron, the meeting has been rescheduled to May 11. The issues which would be debated at the meeting include the separation of the LNG facility from the power plant, renegotiating LNG supply and shipping agreements, redefining the DPC tariff and to convert it into a two-part tariff. The Godbole panel will bargain hard for removal of dollar denomination in the fixed charge component and to allow the Maharashtra government to sell power to third parties. Godbole terms of reference not acceptable: DPC Our Corporate Bureau Mumbai 05/04/2001 Business Standard 1 Copyright © Business Standard The Enron-promoted Dabhol Power Company (DPC) has virtually ruled out negotiations with the Maharashtra government-appointed Godbole committee to renegotiate the tariff for the power project_and perhaps set the stage for terminating the controversial $3-billion power project. In a statement released on late Thursday evening, DPC said that it was prepared to meet the Godbole committee as a matter of courtesy but would not present any proposals. Significantly, the company said, "the published terms of reference of the Godbole report do not represent an acceptable basis for further discussions". It also added: "This meeting should in no manner be construed as an open offer from DPC to renegotiate the terms of the contract." The Godbole panel's terms of reference are to bring down the tariff of the 2184-mw power project. As a part of the agreement with the Maharashtra State Electricity Board (MSEB), DPC is planning to set up a 5-million-tonne LNG facility of which only 2.1 million tonne is meant for the power project. The terms of reference of the Godbole panel include negotiations for delinking the LNG facility from the power plant. The panel has also been armed with powers to negotiate on DPC's oft-voiced demand that it should be allowed to sell power not needed by MSEB to third parties. A senior MSEB official said that, "We will hear out what they have to say. However, as long as they have armed themselves with powers to issue the termination notice, nothing can be ruled out." On April 25, the DPC board at a meeting in London authorised Enron India MD Wade Cline to serve a termination notice on MSEB whenever he deemed fit. Business Outlook: Power failure 05/04/2001 The Independent - London FOREIGN 17 (Copyright 2001 Independent Newspapers (UK) Limited) SCOTTISHPOWER has belatedly acknowledged that electricity and water do not mix. By the time the group's new chief executive Ian Russell reports his next set of results, Southern Water should have safely floated off to a new owner. That will leave the group's much- vaunted multi-utility strategy a distant if unhappy memory. In fairness, Mr Russell was the first at ScottishPower to grasp the nettle, recognising that water customers were no more likely to buy their energy from the same place than electricity customers were to get their pensions and telephones from the same source. The decision to focus on energy and energy alone has at least enabled ScottishPower to stop the rot in its core business. Customer defections to rival suppliers, which were running at an alarming rate six months ago, have now all but stopped. And shorn of trying to be all things to all households, ScottishPower can exploit what it is good at. The shake- up in the UK power market has meant that generating assets now come cheap so we can expect to see ScottishPower adding to its portfolio south of the border. It is also clearly interested in further US expansion, having gained a bridgehead with the pounds 4bn acquisition of PacifiCorp on the West Coast. The jury is still out on the PacifiCorp deal. ScottishPower says cost savings are ahead of plan - but then the first cuts, including the previous management's fleet of company jets and helicopters, are always the easiest ones. More seriously, PacifiCorp has been hit by the lethal combination of surging demand, insufficient capacity and sky-rocketing wholesale electricity prices which has left a pounds 300m hole in its revenues, of which only a proportion can be recouped through higher domestic bills. Mr Russell wants to build his way out of trouble. Another 1,000 megawatts of capacity are coming on stream this year in the US and more will follow. But the real question is whether ScottishPower will ever achieve the necessary critical mass to stand toe-to-toe with the likes of Enron and E.ON. PowerGen bought one UK supply business and one US utility, then found it had run out of room to finance any further growth and capitulated to the Germans. ScottishPower, with pounds 5bn worth of debt around its neck, is at a similar crossroads. Mr Russell says it will just have to concentrate on doing what it does best. In the hope that someone with deeper pockets notices? ScottishPower survives the blackout SIMON BOWERS 05/04/2001 The Guardian Copyright (C) 2001 The Guardian; Source: World Reporter (TM) ScottishPower, Britain's largest electrical utility, yesterday brushed aside US power and other problems and claimed that it was making considerable progress in reducing its exposure to shortages on the west coast of America. Its US business incurred extra costs of almost pounds 300m in the year to March, pounds 90m of which were caused by the breaking down of its Hunter generator plant in Utah. The 160-day closure forced the company to buy in power from other generators - at a time when prices were high. ScottishPower said that the Hunter plant was now repaired and had been supplying customers since last weekend. The company plans to increase its generation capacity by 1,000MW, or 10%, in this financial year. A new plant in Gadsby, Salt Lake City, was the first to begin generation this week, while five more are in construction. The company said its profits would continue to be significantly hit by power shortages in the US for the next two months, but increased generation capacity would reduce exposure by September. For the year to March 2001, it posted underlying pre-tax profits of pounds 628m, down from pounds 736m the previous year and in line with analysts' forecasts. However, the City greeted news of a planned restructuring warmly, with shares in ScottishPower closing 6.5p higher at 448p. A spokesman said that the utility firm was confident of recovering 'most, though not all' of the pounds 300m costs incurred during the US power shortage through increased charges to customers. The proposed increases are subject to court proceedings, though most analysts consider ScottishPower to have a strong case. Ian Russell, who took over as chief executive in March, said the balance between company's power generation and supply divisions had been 'out of kilter', and added that in creased generation in the US was helping to redress that balance. ScottishPower is thought also to be considering acquir ing US firm Enron's Portland plant quoted at around Dollars 3bn. 'When we acquired PacifiCorp [Scottish Power's US business] we said it was a platform for further growth,' Mr Russell said. 'Obviously Portland is right in our own back yard.' An acquisition could be funded by the proposed sale of its water business, Southern Water, which has proved ex pensive since the introduction of extra regulatory requirements. The company said it had received several expressions of interest for the business. ScottishPower's acquisition of Southern Water formed part of its disastrous attempt to establish the company as a multi-utility provider - supplying customers not only with power, but with water, fi nancial services (through a joint venture with Royal Bank of Scotland) and telecoms (through its partly spun-off business Thus). Yesterday Mr Russell, who had backed these ambitious plans during his eight years at ScottishPower, outlined a more modest vision for the future. 'You have to limit what you take on,' he said. 'Right now we are focusing on improving the businesses that we have got.' The now aborted plans to diversify across a host of utility services contributed to the loss of 200,000 customers in the UK last year in ScottishPower's core business. The figure has since stabilised at 3.5m. Powergen, the British utility that has agreed to a takeover by German power giant E.ON, yesterday said that its pre-tax profits for the first three months had fallen to pounds 200m, compared with pounds 233m the previous year. Turnover was up 49% thanks to expanding UK business and a three months contribution from its US acquisition LG&E, though regulatory price caps in Britain had held back earnings. M and A April rough for merger mavens by Heidi Nasr 05/04/2001 The Daily Deal Copyright © 2001 The Deal LLC By month's end, 17 deals were undone worth $11.67 billion, putting merger terminations on track to overtake the $15 billion worth of deals canceled in the first quarter. April is the cruelest month, or so it is proving for merger-minded companies and their advisory teams. On April 2, three mergers worth $8 billion were canceled. By month's end, the pace had barely slowed as 17 deals worth $11.67 billion unraveled. Merger terminations in the second quarter were on track to overtake the $15 billion of the first quarter. Yet the April drop -- 17 compared to an average of 36 a month in the first quarter -- points to a contrary trend. Richard Hall, a corporate partner with Cravath Swaine & Moore, said the decline in April was related to the overall count to date this year. "People are going into deals with a reoriented idea of the stock market levels," Hall said. "A rising stock market hides a multiplicity of things. Whatever is the stated reason, it wouldn't surprise me if the basic problem was that people didn't want to do the deals any more with the stock market tanking." The high dollar value of deals undone in April came from four big transactions: Ariba Inc.'s $2.5 billion bid for Agile Software Corp.; FPL Group Inc.'s $5.5 billion offer for Entergy Corp.; Sierra Pacific Resources' failed $2.1 billion move for Enron Corp.'s Portland General Electric division and financier Carl Icahn's doomed $650 million grab at Trans World Airlines Inc. On the advisory side, the biggest investment banking firms took the biggest hits. In April, it was Morgan Stanley's turn. The investment bank led with only two deals canceled, but worth $8 billion; the Agile deal and Entergy's $6.4 billion transaction, the full value of which was $12.4 billion, including assumed debt. J.P. Morgan came in second with two canceled deals worth $5.5 billion, with nearly all of that value coming from the FPL/Entergy deal as well. Hall said most of the failed April deals were simply too much of a stretch in a falling market. "What happened is that the bad times in the stock market late last year have shaken out the deals that were hard to justify without a frothing stock market," he said. Hall suggested that even companies where stock prices remained strong were wary of what could happen if the market continued to suffer. "With everyone's stock price going into the slammer, people went back and questioned the rationale for the deal," he said. The Ariba deal fell apart because of a steep drop in Ariba's stock, which has suffered as business executives cut back on software purchases. The Ariba deal, when first announced, was worth $2.55 billion; when it broke up April 2, it was worth only $400 million. The stock of Mountain View, Calif. based Ariba fell from $40 a share to $6.53 during that period. The deal between Florida Power & Light owner FPL Group Inc. and New Orleans based Entergy highlighted just the opposite problem -- rising stock values in the energy sector. When announced in late July, the transaction was worth $6.4 billion. By the time it broke up April 2, the booming utilities and energy sectors had lifted the price to $7.9 billion. But charges and countercharges of sloppy due diligence killed the merger. The marriage would have created the largest U.S. power distribution company. In the end, though, FPL complained that Entergy's suddenly lower financial projections "destroyed our confidence in [Entergy's] management." Entergy, in turn, called the complaint a "totally manufactured issue." http://www.thedeal.com Companies: European Companies 05/04/2001 The Wall Street Journal Europe 5 (Copyright © 2001, Dow Jones & Company, Inc.) Scottish Power's Profit For Fiscal Year Drops 15% LONDON -- Scottish Power PLC reported lower earnings for its fiscal year but said it has resolved problems with its U.S. Pacificorp subsidiary and has streamlined its domestic business for further growth. The U.K. utility declined to confirm or deny reports earlier this week that it is considering bidding for Enron Corp.'s Oregon-based subsidiary, Portland General. Scottish Power said pretax profit before goodwill, amortization and exceptional items for the year ending March 31 fell 15% to GBP 628 million (1.01 billion euros) from GBP 736 million a year ago, in line with overall analyst expectations. Sales rose to GBP 6.35 billion from GBP 4.12 billion a year ago. (Dow Jones) BUSINESS [ Purchase should boost Ansoft ... ] 05/04/2001 Pittsburgh Post-Gazette ONE STAR C-13 (Copyright 2001) Purchase should boost Ansoft Ansoft Corp., a South Side software company that helps engineers design chips and other electronic components, has agreed to buy a competing 3-D electromagnetic modeling product from Agilent Technologies Inc. Terms of the agreement were not disclosed. The purchase, according to Ansoft President Nick Csendes, means California-based Agilent will no longer compete with Ansoft on a product that represents about half of Ansoft's sales. Also in business ... James A. Cederna has been named chairman of Calgon Carbon Corp. He remains president and chief executive officer of the company ... Allegheny Energy Inc. said it completed the acquisition of three gas- fired electricity generating plants in the Midwest from Enron Corp. Allegheny Energy also said it sold 14.26 million shares in a public offering at a price of $48.25 a share ... IT Group Inc. won a services contract valued at more than $100 million from Brooks Air Force Base in Texas ... H.J. Heinz Co. will launch a line of frozen single-serving pizza under the Smart Ones Bistro banner and a line of barbecue grilling sauces under the Jack Daniel's label. Both products are being shipped to stores this month. Enron's Dabhol to Meet Indian Panel Over $64 Mln Debt (Update1) 2001-05-04 02:40 (New York) Enron's Dabhol to Meet Indian Panel Over $64 Mln Debt (Update1) (Adds the meeting date in the fifth paragraph.) Mumbai, May 4 (Bloomberg) -- Enron Corp.'s Dabhol Power Co. agreed to meet with a negotiating committee from India's Maharashtra state regarding a dispute over 3 billion rupees ($64 million) in unpaid bills. Enron said it rejected proposals expected to be the basis of the meeting. The Maharashtra State Electricity Board, a state-run utility, refused to pay the bills, saying they are too high. Dabhol, the biggest foreign investment project in India, invoked government guarantees against non-payment. ``While we have constantly maintained that we are open to continuing a dialogue towards resolving issues, this meeting should in no way be construed as an open offer from DPC to renegotiate the terms of the contract,'' Enron spokesman John Ambler said. Enron, the world's largest energy trader, will meet the committee ``as a matter of courtesy'' and won't present proposals of its own, Ambler said. Houston-based Enron owns 65 percent of Dabhol. The meeting will be held on May 11 in Mumbai, Dabhol spokesman Jimmy Mogal said. Enron Corp. Chairman Ken Lay said this week it's ``not in any discussion right now'' to sell Dabhol because of the payment problem. ``I think we will work this problem through in a way that won't impair our investment.'' Enron's $3 billion, 740 megawatt-a-year project faced numerous delays and at one point was canceled after a change of state government. Enron revived it after agreeing to cut power prices by 22 percent and to sell a 30 percent stake to the state. Enron shares fell $2.15 to $58.35 yesterday. --Margot Habiby in the Dallas newsroom (214) 740-0873, or mhabiby@bloomberg.net through the San Francisco newsroom (415) 912- 2980 with reporting by Ravil Shirodkar in Mumbai /dfr/rb Story illustration: To chart Enron's share movement, see {ENE US <Equity< HCPI <GO<}. India Gets $450 Million From World Bank to Push Power Market 2001-05-03 20:16 (New York) India Gets $450 Million From World Bank to Push Power Market Washington, May 3 (Bloomberg) -- India will get $450 million from the World Bank to boost interstate power trading and coordination among utilities, the bank said. The new loan, part of a $1.3 billion project, comes as India is both trying to attract new investment in power production and delivery, and squabbling openly with its highest profile foreign investor, Enron Corp., over its Dabhol power plant. The state government's electricity board has refused to pay Enron's bills, saying they're too high. With this loan, the World Bank said it aims to speed changes in power regulation to provide more reliable electricity to more of India's one billion people. India uses only 3 percent the power per person the U.S. does, and the lack of reliable power is blamed for its chronic poverty. By linking state utilities under this program, dubbed Power Grid, the World Bank says it will help states cut loose from costly power subsidies and bring cheaper electricity to more people. ``Power Grid is moving India towards an interconnected national grid -- a win-win scenario for both customers and suppliers,'' said Kari Nyman, task leader for the project. ``The growth of Power Grid and the success of state power reforms are interdependent.'' Specifically, this loan will be used to build the transmission systems to transfer power from one utility's grid to another, and help build the market so that utilities can contract, trade and move power across state boundaries. Power trading will allow areas with insufficient electricity to purchase power from states with an abundant supply, the bank said. --Mark Drajem in Washington (202) 624-1964 or mdrajem@bloomberg.net /jo Senate special counsel said power sellers broke law By DON THOMPSON Associated Press Writer 05/03/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SACRAMENTO (AP) - A Senate investigatory committee's new lawyer said Thursday he is convinced power generators acted illegally to drive up California's energy prices. Meanwhile, the San Joaquin District Attorney's office joined the Senate investigation into whether electricity suppliers conspired to fix electricity prices - something they adamantly deny. Sen. Joe Dunn, D-Garden Grove, who chairs the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market, said his goal is to create a statewide network of state and local investigations into the causes behind the power shortage and spiraling cost. He named plaintiff's attorney Laurence Drivon of Stockton special legal counsel to the committee. Drivon will work for the committee for free, spending about four days a week on the job initially. Drivon said his initial review of thousands of power-related documents either already public or made available to the committee by the state's five large generators leads him to believe "it is likely there was some criminal activity." He would not elaborate. San Joaquin County Supervising Deputy District Attorney Franklin Stephenson said three experienced investigators from his office will help the committee probe whether there was illegal price-fixing, antitrust violations, or theft of public funds by public or private electric generators. Stephenson said his office started its investigation April 11, but decided to join forces with the Senate panel to avoid duplicating efforts and to get access to documents provided to the committee. The California Independent System Operator, which runs the state's power grid, has agreed to supply the committee with confidential documents under subpoena, Dunn said. The committee will likely subpoena other documents that generators refuse to provide, he said. The committee has broadened its document review to include Enron Corp. and other power traders, along with in addition to power generators Duke Energy, Dynegy Inc., Mirant Inc., Reliant Energy Inc. and Williams Cos., Dunn said.
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