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New Mix Needed to Fuel Energy Future
Los Angeles Times, 05/20/01 Developing Energy Bill Ignites Power Scramble The Washington Post, 05/20/01 Few flip the switch on electricity trial / Pilot program previews deregulation Houston Chronicle, 05/20/01 Electric deregulation fails to excite residential customers Associated Press Newswires, 05/20/01 Qatar Oil Min: Talks Progressing On Gas Exports To Kuwait Dow Jones Energy Service, 05/20/01 IRAN: OPEC unlikely to alter output at June meet-Qatar. Reuters English News Service, 05/20/01 India: Enron serves termination notice The Hindu, 05/20/01 India: Centre to wash its hands off DPC? The Hindu, 05/20/01 India: Notice improper, says Deshmukh The Hindu, 05/20/01 Business; Financial Desk JAMES FLANIGAN New Mix Needed to Fuel Energy Future JAMES FLANIGAN 05/20/2001 Los Angeles Times Home Edition C-1 Copyright 2001 / The Times Mirror Company For all the debates about President Bush's national energy policy, the issues are more simple than complicated. The most basic fact pushing the new policy is an Energy Department projection that U.S. use of electricity will grow seven times faster in the next two decades than it has in the last 10 years. And, of necessity, that growth will have to be satisfied with a different mix of fuels. Today 52% of the nation's electric power is generated by burning coal and 16% comes from burning natural gas. But natural gas is the growth element, projected to supply 33% of U.S. electricity 20 years from now. Coal will continue to be the largest factor in electricity generation, the Bush plan states, but its role will decline because of environmental considerations. Techniques already in use--such as turning coal to gas before burning--can eliminate most of the polluting sulfur and nitrogen oxides. But coal's inefficient combustion generates high levels of carbon dioxide and accompanying concerns about global warming, so its use will be in relative decline. That's why the energy policy talks of increasing the use of nuclear power, which supplies 20% of U.S. electricity. And that's also why the heart of the program supports exploration for natural gas and the building of pipelines to increase the availability of that efficient, relatively clean fuel. Why is energy use projected to rise faster than it has in the recent past? Because the use of computer networks that today control the functioning of most institutions in society--companies, schools, government--is already increasing. Such networks demand electric power that is far more reliable than ever before. And those demands have pushed the infrastructure of transmission lines and other facilities to the breaking point. So a major thrust of the new policy is to support the modernizing of transmission systems and other infrastructure. The plan's very existence is positive, business people say. It's an antidote to local bickering. "We now have a plan about energy expansion, so a national dialogue can begin," says Mark Stevens, head of strategic planning for Fluor Corp., a major engineering and construction company based in Aliso Viejo in Orange County. The new policy offers a stark contrast to the past. During the last major energy crisis, which began with the 1973 oil embargo, government policy aimed to allocate scarce resources. Utilities were restricted from burning natural gas to produce electricity, for example. Now the aim is to increase production of fuels and energy. A sure consequence will be lower prices for oil and natural gas within a few years, energy experts say. From current levels of $4 to $5 per thousand cubic feet, natural gas "will be selling for $3 to $4 by 2003," says Thomas Robinson of Cambridge Energy Research Associates. Such price levels, however, still will be more than double those of most years in the last decade. So the businesses of exploration, production and delivery of natural gas will remain brisk. Current U.S. consumption of natural gas is nearly 23 trillion cubic feet a year, up 21% from a decade ago. Pushed by such demand, industry is investing in major projects--such as the natural gas pipeline from Prudhoe Bay in northern Alaska down through Canada, on which design and engineering are underway. Oil field and gas service companies such as Halliburton Co. and BJ Services Co. have been working flat out for more than a year. Companies that survived lean years when oil and natural gas prices were low, such as Global Marine Inc., now are thriving. Under the Bush proposals, exploration for natural gas in the Rocky Mountains and other land areas would increase. That would mean even more work for drilling and production companies such as Helmerich & Payne Inc., Noble Affiliates Inc. and Noble Drilling Corp., which have been reaping higher sales and earnings after half a decade of lean times. Imports of natural gas will grow. Mexico's natural gas, now being flared as it comes up with oil in the Bay of Campeche, surely will find its way north to markets in the U.S. and northern Mexico, either as liquefied natural gas or through pipelines that will be constructed. A main thrust of the Bush proposals will be to modernize and expand electric transmission lines. And here again the new policy is focused on programs already underway. The Federal Energy Regulatory Commission is working to set up new kinds of private companies, called regional transmission organizations, that would buy transmission lines from investor-owned and municipal utilities and ultimately meld them into a national grid. Such RTOs, financed by institutional investors, would increase the flow of electricity across the country and, in theory, eliminate bottlenecks. That would enhance the growing practice of many utilities and companies such as Enron Corp. of trading electricity in financial futures markets. PG&E Corp. and Sempra Energy, the holding companies for two of California's three big investor-owned utilities, operate large power trading businesses. But legislation would be required to establish RTOs and to acquire local transmission lines, and that issue should lead to pitched battles in Congress. With its devotion to infrastructure, the White House energy plan is certain to give increased work to engineering and construction companies--Fluor, Bechtel Group Inc., Jacobs Engineering Group Inc., URS Corp. and Washington Group International Inc.--that already have heavy backlogs. "We'll be hiring engineers," says Fluor's Stevens--if he can find them. The numbers of engineering graduates from U.S. universities have been declining, but as a result of opportunities presented by the Bush energy program, enrollments in engineering schools could increase. Or U.S. companies could draw on engineering expertise at their subsidiaries in Asia and Europe, where engineering graduates still are in abundance. Bush's energy plan, if most of its proposals win approval in Congress, would serve as a catalyst for investment in electric power generation and oil and natural gas production, as well as research on coal, nuclear and, to a lesser extent, wind and solar power and other forms of renewable energy. Such investment always has a ripple effect on other industries. Even in the 1970s, this brought surpluses and lower prices for energy, which benefited companies in sectors as diverse as chemicals, food processing and tourism. That is this plan's aim also, as we look ahead to "interesting times," in the Chinese proverb's ambivalent phrase, for U.S. energy prospects and the economy. * James Flanigan can be reached at jim.flanigan@latimes.com. (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Energy Disparity Fuel sources for electricity in California and other states contrast sharply. California burns less coal but uses more renewable energy--chiefly wind, solar and geothermal power. Sources: California Energy Commission, U.S. Department of Energy GRAPHIC: Energy Disparity, Los Angeles Times; Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. A Section Developing Energy Bill Ignites Power Scramble Dan Morgan and Peter Behr Washington Post Staff Writers 05/20/2001 The Washington Post FINAL A01 Copyright 2001, The Washington Post Co. All Rights Reserved As Congress begins turning President Bush's energy plan into legislation in coming weeks, some of the biggest battles will be between regions, industries and companies maneuvering to protect old advantages -- or carve out new ones -- with the help of powerful mentors on Capitol Hill, according to congressional and industry officials. The wide mix of players includes big coal-burning utilities in the South and Midwest; companies that broker or sell power over the Internet to the highest bidder; huge public power providers such as Tennessee Valley Authority; rural and municipal cooperatives that enjoy grass-roots political support dating to the New Deal; and others. At the same time, the debate between cleaner-burning gas and dirtier coal, the Northeast vs. the Midwest, and Enron Corp. vs. Southern Co., could be as pivotal as the better publicized battle pitting environmentalists against advocates of more robust energy development. "That's what the Congress is all about, melding this all into a consensus package," said Rep. Joe Barton (R-Tex.), chairman of the House Energy and Commerce Committee panel that will draw up legislation to restructure the industry. That will be no easy task, according to members of Congress, aides and officials of the electric utility industry. Although the electrical power industry agrees broadly on the need for more oil and gas exploration and new investments in transmission lines and pipelines, crafting legislation is certain to bring out festering disagreements, according to congressional officials. There are divisions over environmental policy, the pace of mergers and consolidation, and the speed at which the country should move toward a national electricity grid in which the flow and price of power are determined by the laws of supply and demand. The administration's proposal to give the federal government broader authority to dictate the location of transmission lines could set up clashes with governors and advocates of states' rights. None of that takes away from the indisputable influence of the nation's power industry. Electrical utilities and their employees gave $18.9 million to political parties and candidates in the last election, double the amount in 1996. Bush received $447,089 of this amount, and Barton and other members of the House and Senate energy committees in both parties also collected hefty sums. But whether the strong political connections will enhance chances for a broad-based energy bill this year, or increase the likelihood of a stalemate between powerful but divergent interests, is still unclear, according to sources. "It's a political hornet's nest," said a senior Republican with close ties to the utility industry. The Bush plan, for example, holds out the possibility of regulatory relief for midwestern and southern coal-burning utilities that have been sued by the Environmental Protection Agency for allegedly violating air quality rules for old power plants. The notion infuriates environmental groups and has been sharply attacked by Democratic politicians. Rep. Edward Markey (D-Mass.) called the plan a "Trojan horse to take health and environmental laws passed in the last generation off the books." "The plan seems to favor the older and dirtier base-load coal plants in the southern and midwestern states," said Rebecca Stanfield, a lawyer with the U.S. Public Interest Research Group. But some of the strongest opposition to relaxing enforcement procedures comes from eastern utility companies that burn clean natural gas, or have complied with stringent state environmental codes. Rep. Frank Pallone Jr. (D-N.J.), who serves on the environmental subcommittee of the Energy and Commerce Committee, charged that the Bush plan would add to pollutants from Midwest power plants being carried to the Atlantic Coast by easterly winds. At the same time, he said, "it's wrong because you required utilities to meet more stringent standards and that's what they did. . . . It's not fair regionally." "It doesn't have to be bloody, but there's certainly going to be a fight," he added. "The regional tensions are in play with the Bush approach because it doesn't create a level business playing field," said Joseph Miakisz of the Clean Energy Group, which represents eight eastern utilities. Without clear emission targets for key pollutants, he said, the Bush reform will not solve the problem. The Bush administration plan sets out as a long-term objective a national grid for electricity in which prices would be determined by free-market forces. But coming on the heels of the California electricity crisis, some politically-powerful groups view such a deregulated system with renewed skepticism. Glenn English, a former Democratic congressman from Oklahoma who is chief executive of the National Rural Electric Cooperatives Association, said he could support a national grid, but only if cooperatives and other consumers have a say in "how it it is built and who is going to control it." At the prodding of the Federal Energy Regulatory Commission, utilities and states have begun setting up Regional Transmission Organizations (RTOs) to make decisions on the building of transmission lines and arbitrate between old-line utilities and new "merchant" companies that are vying to sell power over utility-owned lines. The concern of English and others is that big conglomerates will end up controlling the RTOs, diluting the voice of smaller local groups. Without extensive consumer protections, he said, his organization also opposes a provision of the Bush plan that would repeal a 1935 law that makes it difficult for utility companies to acquire other utilities outside their home districts. The issue pits cooperatives against many of the nation's largest investor-owned utilities, which favor repeal of the Public Utility Holding Company Act (PUHCA). Among those who have lobbied for repeal is famed investor Warren Buffett, whose Berkshire Hathaway Co. has a stake in MidAmerican Energy Holdings Co. But with member-owned rural cooperatives in 46 states and more than half the 435 congressional districts, English's organization can count on a hearing for its views. "The public power people have to be factored in and will be before this is over," said former Democratic congressman Vic Fazio (Calif.), now a lobbyist. For Northwest senators from states with plentiful hydroelectric power, the goal will be to preserve power systems that, until the California crisis, delivered a kilowatt hour of electricity for less than half what it costs in New England. Protecting northwestern electricity customers from price spikes resulting from power diversions to California could conflict with the drive for further deregulation and a more seamless electricity grid. To ensure a hearing for their views, major corporate interests have lined up an array of former members of Congress to lobby on their behalf. Former representative Susan Molinari (R-N.Y.) is working for Exelon, a newly consolidated utility that serves Illinois and Pennsylvania. Alison McSlarrow, former deputy chief of staff to Senate Majority Leader Trent Lott (R-Miss.), has signed on to work for repeal of PUHCA. British Energy Co. has hired lobbyist Thomas Boggs and former representative Gregory H. Laughlin (R-Tex.). Former senator J. Bennett Johnston (D-La.), who once chaired the Senate's Energy and Natural Resources Committee, has been rallying support for nuclear power. Enron Corp. Chairman Kenneth L. Lay, a major GOP contributor and fundraiser for Bush, has emerged as a leading advocate for deregulation and an open energy market, a strategy that fits with Enron's business as a major electricity trader and operator of interstate natural gas pipelines. Lay contended in an interview that FERC has authority "to impose non-discriminatory, open access rules on the grid. . . . We think FERC needs to step in and impose rules across the country." But any energy reform will have to take into account the political power of Atlanta-based Southern Co., which has been far more cautious about embracing the movement toward deregulation. Southern Co. operates its own unregulated electricity trading company, Mirant, which has participated in California and other states outside the South. But Southern Co. has been slow to open its regulated home markets in the Southeast to penetration by Enron and other marketers, industry sources said. Southern is represented in Washington by former Republican National Committee chairman Haley Barbour. Through Barbour, a Mississippi native, and Mississippi Power, a Southern Co. subsidiary, the utility has long enjoyed a close relationship with Lott, sources said. Southern Co. contributed $100,000 to the Bush-Cheney inaugural fund. It has given more than $565,000 to GOP organizations since 1997. In key aspects, the Bush energy proposal represents a victory for the utility in its campaign for "flexibility" in the enforcement of environmental rules. It calls for a review of EPA's pending lawsuit against Southern and other companies, charging they illegally modified coal-burning power plants to avoid a review procedure that could have required costly investments in pollution-control systems. Administration officials argue that rigid enforcement of environmental rules is thwarting a needed growth of coal-fired power generation. But whether the administration will ultimately prevail is uncertain. Several utilities have settled the EPA lawsuit. Natural gas utilities, which account for most of the new generating capacity added in the last decade, have no interest in seeing environmental requirements relaxed for coal-burning utilities that, increasingly, are their competitors for customers. The environmental split is even more graphically illustrated in an internal industry dispute over the administration's opposition to including carbon dioxide, a main culprit in global warming, as part of a "multi-pollutant" solution to emissions by coal-burning power plants. Southern supports the administration position, though it says it favors "useful, fair measures to address greenhouse gas emissions." But Ohio-based American Electric Power Co., one of the nation's largest coal-burning utilities, has joined the Business Environmental Leadership Council, which favors taking action to address global warming. AEP's chairman and president, E. Linn Draper Jr., has championed steps to reduce carbon emissions within the company's own operations. AEP, Cinergy and other big utilities have also discussed a "multipollutant" approach with environmental groups, in hopes of gaining greater certainty about their requirements for anti-pollution investments over the next decade. "We're not green, but we are realistic," an AEP spokesman said. http://www.washingtonpost.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. A Few flip the switch on electricity trial / Pilot program previews deregulation LAURA GOLDBERG Staff 05/20/2001 Houston Chronicle 2 STAR 1 (Copyright 2001) Consumers aren't exactly fired up over an important test of the state's shift to electricity deregulation. A pilot program scheduled to start next month is drawing far fewer residential electricity customers than the state hoped. The participation rate across Texas for individual consumers was just 21 percent of its goal as of last week. Houston's rate was higher, at 45 percent, but still short by thousands. Stakeholders in the deregulation process say no one should panic yet, offering a variety of reasons for consumers' slow embrace. Among them: It takes time to persuade people to try something new. People don't know about the pilot or are confused by the choices. The sticker shock of air-conditioning-driven summer bills has yet to arrive. California's power woes. "The public is confused by the situation in California, even though we have been trying to get the word out that their deregulation system is much different than the Texas plan," said Texas Sen. David Sibley, R-Waco, co-author of the state's deregulation law. "The second reason is inertia. You are asking people to take the time to shop around for a new provider and understand the program." The pilot program marks a significant milestone in what is soon to be a huge change in the way Texans think of electricity. In 1999, state lawmakers voted to open the market to competition, with supporters saying deregulation would result in lower rates and improved service. Under deregulation, Houstonians will no longer be forced to buy power from Reliant Energy HL&P. Instead, other companies will compete for their business. So far, six new electric providers are offering service here, with a variety of rates. Others are expected to enter the market. No one will be forced to switch, and those who don't will keep getting power from Reliant. Before throwing the market open Jan. 1, the state has decided to let a limited number of residential and business customers buy from new companies. All the players - regulators, the operator of the state's power grid, electric providers, utilities - can test computer systems and operating plans during the pilot. Originally, those who signed up with new electric providers were to start getting service in early June. Last week, the state's power- grid operator delayed the date to July 6 to give itself more time to change computer systems. State officials had hoped 5 percent of residential customers of investor-owned utilities would try new electric providers for the test. Customers can still sign up during the pilot program, which ends when full deregulation starts. Of the residential slots, the vast majority are for individuals and the rest for those who join power-buying groups or pools. Statistics tallied last week by the Public Utility Commission showed: Statewide, 43,356 of the 205,025 spots for individuals, or 21 percent, had been taken. In the Reliant HL&P service area, 27,017 of 60,106 spots for individuals, or 45 percent, had been taken. In Dallas-based TXU Electric's service area, 15,962 of the 90,636 spots for individuals, or 18 percent, had been taken. The PUC hasn't tabulated the numbers for buying pools but said participation has been low so far. Still, several retail providers said they were happy with their customer numbers for the pilot. "Our sign-up rate has far exceeded our wildest expectations," said Jim Niewald, director of marketing with First Choice Power, a unit of the Texas-New Mexico Power Co. In many cases, providers haven't yet launched full marketing blitzes. For the moment, several are going after customers only in limited areas such as Houston and Dallas. Once January nears, advertising and target areas are expected to expand. Electricity provider Entergy Solutions, the retail arm of New Orleans-based Entergy Corp., is doing a small amount of advertising for now. "We are using the pilot much like it was intended, to test systems and processes," said Jim DeLong, Entergy's vice president of retail markets. "We've had some modest goals on customer counts." Marketing campaigns under way include mailers, billboards and newspaper ads. NewPower Co., a partnership of Houston-based Enron Corp., America Online and IBM, is mailing various offers to homes, including one for free Continental Airlines frequent-flier miles, while Green Mountain Energy Co., which sells only wind-produced power in the state, has set up information booths at local events such as the Texas Crawfish Festival. The state is also doing an educational campaign, including putting information on its Web site at powertochoose.org. Consumers who want to switch must sort through various rate offers, which can be confusing. State officials recommend that they ask each provider for its "electricity facts label," which should provide apples-to-apples price comparisons. Texas is also battling against consumer identification with California, the site of power blackouts and skyrocketing rates. "People hear the phrase `electric deregulation' and equate our plan with the California situation, even though they are very different," Sibley said. In addition to different deregulation systems, Texas has more than enough power-generating capacity, while California has a shortfall. A number of new plants have been built in Texas in recent years, others are under construction, and more are planned. Houstonians have been signing up for the deregulation pilot program at the highest rate in the state. Residents here probably know more about the subject. "Houston tends to be a more energy-aware city just because so many people work in the industry," said Brett Perlman, a PUC commissioner from Houston. The Reliant Astrodome is also influencing some people. Last year, Reliant Energy agreed to a $300 million naming-rights deal for every building at the Astrodome complex, including the new football stadium. When the deal was announced, some Reliant HL&P customers were angry about the price tag as their rates increased. The parent company defended the deal, explaining that the money comes from a separate, unregulated part of its business. Niewald, at First Choice Power, said a "significant number" of people have said the stadium deal motivated them to switch from Reliant to his company. Separate slots were also reserved for commercial and industrial customers to participate in the pilot. In many areas statewide, a lottery was held because more than enough nonresidential customers signed up. "Businesses make these kinds of decisions all the time, whether it be coffee or copiers. They will switch if there is economic value," said Tim Vail, NewPower's vice president of energy technology solutions. "Consumers have a different view, much more of an emotional sale." Once full deregulation occurs, the worst-case scenario would be that consumers refuse to sign up for new providers, companies leave the residential marketplace and rates rise or don't fall because there is no competition. But those involved with deregulation say the pilot participation rate is no reason for worry. "We really need a dozen people to make sure the system works," said PUC Chairman Pat Wood. Once summer electricity bills start arriving in mailboxes, he predicted, consumers will be clamoring for a change. "Ask me in August," he said. Wood said he probably would be concerned if the goals of the residential pilot program haven't been met in Houston and Dallas by the end of the year. To Janee Briesemeister, a senior policy analyst in the southwest region of Consumers Union, the pilot participation rate does signal something. "It foretells that the market will be slow to develop for residential customers and residential customers will be slow to embrace it," she said. . . . New power flow Beginning this summer, residential electricity users who have signed up with the state's deregulation pilot program will be able to buy their electricity from several providers. How electricity will get from generator to customer: 1. Household The customer buys electricity from a Retail Electric Provider in Houston, residential customers may choose from competing companies entering the market or stay with their current provider (Reliant Energy/HL&P). 2. Retail Electric Provider The Retail electric Provider buys power from deregulated generating plants. 3. Generation companies Generators produce electricity and feed it into the state's power grid. Nearly all of the electricity used in Texas is production in this state. 4. Transmission lines Electricity flows over the same, regulated power lines and distribution poles that are used today. The Electric Reliability Council of Texas - or RECOT - will continue to schedule the flow of electricity for the region after competition is introduced in the market. . . . Power choices Here are alternatives to Reliant HL&P in the Houston area: Entergy Solutions 1-866-368-3749 www.entergy-solutions.com First Choice Power 1-866-4-MyChoice (1-866-469-2464) www.FirstChoicePower.com; www.EnergyWithASmile.com Green Mountain Energy Co. 1-866-GREEN-TX (1-866-473-3689) www.greenmountain.com The New Power Co. 800-NEW-POWER (800-639-7693) www.newpower.com Shell Energy 1-800-24-SHELL (1-800-247-4355) www.shellenergy.com TXU Energy Services 1-877-460-7066 www.txu.com For more information Public Utility Commission www.powertochoose.org. 1-866-PWR-4-TEX (1-866-797-4839) Hearing impaired: 1-877-864-4725 Photo: 1. Greg Guenther, left, and Jerry Douglas work at the Taylor operations center of the Electric Reliability Council of Texas. The role of ERCOT, which operates the state's power grid, in the delivery of electricity will expand once deregulation begins (color); Graphs: 2. New power flow (color, text); 3. Power choices (b/w, p. 21, text); Photos: 4. Modern wind turbines employed to generate power stand next to a distant technological ancestor near Big Spring. In deregulating Texas' electric utilities, the state is hoping it will encourage the development of more sources of renewable energy like these (b/w, p. 21); 5. Green Mountain Energy representative Julainne Gustafson-Lira talks with Lynda McKay, left, and Richard Hooper about the advantages of wind-powered energy at the company's booth at the Texas Crawfish Festival in Old Town Spring last week (b/w, p. 21) Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Electric deregulation fails to excite residential customers By DAVID KOENIG AP Business Writer 05/20/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. DALLAS (AP) - Despite three months of advertising, bonus offers and news coverage, Texas' grand experiment in electric deregulation is being met with a gigantic yawn from residents. The Legislature said up to 5 percent of the state's 5.3 million residential customers could take part in a trial - dumping their electric company and picking a competitor with lower rates. So far, less than 1 percent have signed up for early deregulation, expected to begin in July. The tepid response from consumers isn't surprising to industry officials. After all, by state law most Texans will get a 6 percent rate cut when full-scale deregulation arrives in January. "It's a slam dunk for residential users. They get that 6 percent rate cut, and they're just waiting it out," said Tom Noel, chief executive of the Electric Reliability Council of Texas, known as ERCOT, a coalition of companies that operate the state's electricity grid. "It's hard to get them excited because it doesn't make that much difference to them (in dollars), compared to a big industrial user." Some officials predicted that interest in deregulation will rise when consumers start seeing their summer electric bills. Others said consumers are wary of deregulation because they've heard it linked to rolling blackouts and huge rate increases in California - a comparison Texas energy officials heatedly deny. "Consumers have never had to shop for electric service before. It's confusing," said Janee Briesemeister, a senior policy analyst for Consumer's Union in Austin. She said many Texas consumers don't realize deregulation is coming. Under a 1999 law, most Texas residential and commercial power customers will be able to drop their longtime monopoly electric utility Jan. 1 and pick another power supplier - 19 have been certified by the state. The change will affect just about everyone except customers served by a municipal utility or electric co-op. This year's pilot program was created to help the power retailers test their billing and customer-switching systems. The first customers were scheduled to switch their service in June, but this week ERCOT, the electric-grid operator, pushed the start of the experiment back to early July. ERCOT also disputed a warning from a national group that monitors electric grids that the state's power system should be "closely watched" this summer because of the shift to deregulation. ERCOT said it was planning carefully for the Jan. 1 switch. On the eve of competition, the old monopoly utilities have reinvented themselves as free-market energy sellers. Dallas-based TXU is trying to hold on to its North Texas customers while expanding into Houston. Conversely, Reliant Energy is defending its Houston base while raiding TXU's turf in Dallas. Both are facing competition from another investor-owned utility, Texas-New Mexico Power, and from new players, including Enron spinoff The New Power Co.; a Shell Oil subsidiary; and Green Mountain Energy Co., which is a venture of BP Amoco and Nuon NV of the Netherlands. Supporters of deregulation say competition will reduce prices. This is especially likely for the big industrial power customers, who will be able to negotiate discounts. Deregulation supporters say residential customers - the smallest users of power - also will benefit because of the so-called "price-to-beat" provision. The clause will require utilities such as TXU, Reliant and Central Power & Light to give residential and small-business customers a 6 percent rate cut in January and not raise rates for three years or until they lose 40 percent of their customers. They will, however, be allowed to pass through increases in the cost of fuel burned to create power. Each area in the state also has a designated "provider of last resort," usually the former monopoly company, which is obligated to keep the lights on if the state's electric grid is overloaded or another provider fails. "Switching electric providers is a pretty low-risk proposition," said Waters Davis, president of Reliant's deregulated services. "If consumers have a bad experience, they can always switch back to the utility. It won't result in the lights going out." The chance to switch electric companies this summer has proved more popular with commercial power users - the 5 percent sign-up limit was reached quickly in many parts of the state. Plano-based Cinemark USA Inc., which operates movie theaters around the state, has already installed computerized energy-management programs and drilled the importance of conservation into theater managers. It picked TXU to serve 22 of its theaters outside TXU's home market of North Texas. "There were several factors, and obviously price was one of them," said Art Justice, Cinemark's energy manager, who declined to say exactly how much the company expects to save. "Everybody is a little more focused on energy, whether it's your home or office." There are about 2,000 large electric users in Texas - businesses or industrial plants that consume more than one megawatt of power at peak usage - and the electric retailers have fought hardest for those accounts. Despite the slow start to the pilot program, industry and state officials predict deregulation will be a hit. A spokesman for the Public Utility Commission predicted that the big dollars at stake would attract even more electricity providers, but there might not be room for all of them. "Within 12 to 18 months, you'll see a couple shakeouts," said Shawn Walker, vice president of TXU's consumer markets. "On the consumer side, you'll probably have no more than six to 10 providers." End advance --- On the Net: www.puc.state.tx.us www.txu.com www.reliant.com www.newpower.com www.FirstChoicePower.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Qatar Oil Min: Talks Progressing On Gas Exports To Kuwait 05/20/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) TEHRAN -(Dow Jones)- Qatar is progressing in its plans to sell gas to Kuwait and Bahrain, Qatar's oil minister, Abdullah bin Hamad Al Attiyah, said Sunday. Al-Attiyah, speaking to reporters on the sidelines of the Gas Exporting Countries Forum, said the volume being considered for Kuwait was 1 billion cubic feet a day. He didn't specify volumes for Bahrain. Commenting on recent reports that Enron Corp. might withdraw from the Dolphin gas project, a plan to export 2 billion cubic feet a day of Qatari gas to the United Arab Emirates starting in 2004, Al-Attiyah said that he had heard these reports but had seen no official notification from Enron Corp. Dolphin Energy Ltd, or DEL, is 51% owned by the UAE's Offset Group. The remaining 49% is equally split between Enron (ENE) and TotalFinalElf (TOT). Al-Attiyah said Qatar hopes to sign a production-sharing agreement with DEL before the September deadline. By Sally Jones, Dow Jones Newswires; 44 20 7842 9347, sally.jones@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. IRAN: OPEC unlikely to alter output at June meet-Qatar. 05/20/2001 Reuters English News Service (C) Reuters Limited 2001. TEHRAN, May 20 (Reuters) - Qatari Energy Minister Abdullah bin Hamad al-Attiyah said on Sunday he believed OPEC would not adjust output at its June meeting, saying the global oil cartel was determined to keep the market stable. "As things stand today, I don't think OPEC will take a decision to cut or increase production, but we will wait until June," Attiyah told reporters at the two-day Gas Exporting Countries' Forum which ends in Tehran on Sunday. "We want to avoid shocks, its important that OPEC does not limit supply. We will never create a shortage. If we see there is demand, we will meet this demand," he said. OPEC, which has cut production by a total 2.5 million barrels per day (bpd) this year, is due to meet on June 5-6 in Vienna. Attiyah repeated that an OPEC basket price of $25 a barrel was best for producers and consumers. "We're against high prices," he said. Qatar, which sits on the world's third largest natural gas reserves after Russia and Iran, is seeking to boost its gas exports to the Gulf after investing billions of dollars to tap its vast resources. Attiyah said Qatar was making progress on gas projects in Kuwait and Bahrain. He said the volumes involved in the potential Kuwait deal were around one billion cubic feet per day (cfd) but volumes for Bahrain had yet to be decided. Qatar is also seeking to sell gas to the United Arab Emirates and in March signed a "commercial term sheet agreement" with Dolphin Energy Ltd (DEL), which is majority owned by the UAE's Offset Group. The deal would allow DEL to develop a tract of Qatar's giant North Field and produce up to two billion cfd of gas. The gas is targeted to reach the UAE capital Abu Dhabi as early as 2004. France's TotalFinalElf and Enron hold the remaining 49 percent of DEL. Attiyah said Qatar hoped to sign a production-sharing agreement with the UAE firm before a September deadline. He also said that he had received no confirmation from DEL or the Offset Group that Enron, which is undergoing a global restructuring, was pulling out of the project. Market sources had earlier said that the U.S. firm looked set to bow out of the project. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Enron serves termination notice Arunkumar Bhatt 05/20/2001 The Hindu Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, MAY 19. The Dabhol Power Company, an Enron-sponsored firm, today served what it called a preliminary termination notice (PTN) on the Maharashtra State Electricity Board for scrapping the power purchase agreement between the two. The move comes a couple of days before the lenders of the $2.9- billion power project decide on the question of allowing the DPC to begin the termination proceedings. Enron had maintained a studied silence on the prospects of further talks with the renegotiating committee after the first meeting on May 11 last. The second meeting is scheduled for May 23 and Enron is yet to decide on attending it. In a statement, the DPC blamed the "unwillingness of the MSEB and the Maharashtra Government to honour their offtake commitments and that of the Centre to assist the State" but kept its options of renegotiations open. "As a final note, even though it was necessary to issue the PTN, we are still open to constructive discussion on solutions," the statement said. It suggested that a solution could be either the MSEB buying the power according to the contract or finding another "creditworthy" buyer. With this, the company which was supposed to come out with its own proposal in the wake of the Godbole Committee finding errors of omissions and commissions in the PPA, is now putting the onus on the MSEB, the Maharashtra and the Central Governments and that too within the framework of the existing PPA. While blaming the Indian side for the PTN, the DPCsaid this would continue and expected the buyers to meet their obligations. This means the company rejects the penalty notices for Rs. 402 crores slapped by the MSEB for not supplying power according to the contract. Four groups of trans-national financial institutions and the Indian lenders, IDBI and ICICI, are to decide the matter by voting through fax or e-mail on Monday. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Centre to wash its hands off DPC? Alok Mukherjee 05/20/2001 The Hindu Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire NEW DELHI, MAY 19. Though there was no official comment on the Enron- promoted Dabhol Power Company issuing the pre-termination notice to the Maharashtra State Electricity Board (MSEB), the Central Government seems to be in a mood to wash its hands off the controversial project. Highly-placed sources in the Power Ministry had indicated to The Hindu recently that the Centre would not be unduly perturbed in case Enron walked out of the project. This thinking was backed by some action also. After agreeing on April 23 to constitute a re- negotiating committee in which it would also have a nominee and, more importantly, agreeing to consider wheeling the excess power from the DPC out of the State, the Centre quietly went back on its word. First, it did not send its representative to the first meeting of the re-negotiating committee on May 11, even though the meeting date was announced in advance. Secondly, it reportedly indicated to Maharashtra that bailing out the project by taking the high cost excess power out of the State would not be feasible. In the absence of this facility, there was little the re-negotiating committee could do to salvage the project. In fact, while announcing the formation of the re- negotiating committee on April 23, the Finance Minister, Mr. Yashwant Sinha, clearly indicated that the re-negotiation would focus on two issues - the cost of power and use of power. Elaborating on the second point, he had said use of power would mean an assessment of how much power would be absorbed by the State and how much would have to be taken out. For the Centre, the financial liability in case of termination is not likely to be a big burden. As per the agreement, the liability of the Centre is limited to payment of one year's electricity bill with an overall ceiling of Rs. 1,500 crores (subject to suitable adjustments on account of inflation) and a termination fee which would be $300 million at the maximum. But even here, in case the Centre pays the money on account of its counter-guarantee to the project, a tripartite agreement is in place among the Centre, the State Government and the Reserve Bank under which the Centre can recover from the State any amount paid to the DPC under the counter-guarantee. Hence, the final liability would be on the State and not the Centre, which would basically be extending a deferred loan to Maharashtra to be recovered in stages. Sources in the power industry here say a thinking has probably crystallised among the top officials at the Centre as well as in the State that the entire power purchase agreement with the DPC is faulty and the project cannot continue on the basis of the existing agreement. In these circumstances, the DPC's pre-termination notice is seen as being advantageous for the country since it would amount to one of the partners walking out of a project, thereby weakening Enron's case for higher compensation. The Indian position would be that it had offered a re-negotiating committee in an attempt to make the project viable, but it was Enron which was withdrawing. The claims of Enron could then be pitched against the penalty notices issued by the MSEB to the DPC for non-supply of power on demand. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Notice improper, says Deshmukh Our Special Correspondent 05/20/2001 The Hindu Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, MAY 19. The Maharashtra Chief Minister, Mr. Vilasrao Deshmukh, had a lengthy meeting here today with his predecessor and president of the Nationalist Congress Party (NCP), Mr. Sharad Pawar, in the wake of initiation of the process of terminating the power purchase agreement (PPA) by the Enron -sponsored Dabhol Power Company. The PPA, initiated by Mr. Pawar, was signed by the DPC and the Maharashtra State Electricity Board when he was the Chief Minister. Sources close to the two leaders said they discussed strategic options of the State and the MSEB in view of the preliminary termination notice served by the DPC. They also took into account the possible stand the lenders of the project could take. The meeting is significant since the DPC has made it clear that the basis of renegotiations should not be the Godbole Committee report but the willingness of the Indian side to purchased the power from the both phases of the power project: total capacity of 2184 MW. The DPC also wants the Central Government's guarantee even for other buyers if proposed so. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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