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Enron Mail |
Power Traders See Profits Rise On High Prices
The Wall Street Journal, 04/18/01 Business and Finance The Wall Street Journal, 04/18/01 Briefcase: Skilling, analyst verbally butt heads Houston Chronicle, 04/18/01 Energy giants have a season to remember Houston Chronicle, 04/18/01 Edison Posts Losses for Quarter, Year Energy: The utility parent declares a huge write-off for 2000 costs. Meanwhile, electricity suppliers are big winners. Los Angeles Times, 04/18/01 Edison reports 4th-quarter losses totaled $2.55 billion The San Francisco Chronicle, 04/18/01 Chip Giant Cutting 2,500 Jobs The Washington Post, 04/18/01 California Power Utility Loses $2.5 Billion in Fourth Quarter KRTBN Knight-Ridder Tribune Business News: The Orange County Register - California, 04/18/01 Enron's CEO fires from the lip The Globe and Mail, 04/18/01 Bill restoring direct access advances The San Francisco Chronicle, 04/18/01 Action on energy trading floors reverberate in power-hungry California Associated Press Newswires, 04/18/01 Nigeria's electricity firm 'anxious' for US power project Agence France-Presse, 04/18/01 US Government Issues Warning Letter to Italy's DeLonghi S.p.A., NetCompliance, Inc., Reveals Business Wire, 04/18/01 CHIEF MINISTER OF INDIA'S MAHARASHTRA WRITES TO PM ON ENRON Asia Pulse, 04/18/01 India: Enron slaps two more arbitration notices Business Line (The Hindu), 04/18/01 USA: WRAPUP1-Calif. utility has huge loss, Texans strike it rich. Reuters English News Service, 04/17/01 Texas Panel Cites Lessons From Calif Power Crisis Dow Jones Energy Service, 04/17/01 Enron President & CEO - Interview CNBC/Dow Jones Business Video, 04/17/01 Dynegy passes Street target Marketing and trade power Q1 results CBSMarketWatch.com, 04/17/01 Enron, Duke, Dynegy 1st-Qtr Profits Rise as Energy Sales Surge Bloomberg, 04/17/01 Enron earnings jump by 20% Financial Times.com, April 17, 2001 Power Traders See Profits Rise On High Prices By Rebecca Smith Staff Reporter of The Wall Street Journal 04/18/2001 The Wall Street Journal A3 (Copyright © 2001, Dow Jones & Company, Inc.) Big power traders Enron Corp., Dynegy Inc. and Duke Energy Corp. reported robust first-quarter earnings, beating Wall Street estimates and capitalizing on a strong seller's market for electricity and natural gas, particularly in the West. For the first quarter, Enron had net income of $425 million, up 25% from $338 million a year earlier. Revenue nearly quadrupled to $50.1 billion from $13.1 billion. On a diluted-share basis, profit rose 22% to 49 cents from 40 cents a year earlier. Enron, Houston, the nation's biggest energy trader, posted a 59% increase in the value of its retail energy-services contracts as companies sought a haven from volatile electricity and natural-gas prices. Quarterly revenue for the enterprise rose to $693 million from $314 million a year earlier. "There's strong interest all across the country," said Enron Chief Executive Jeffrey Skilling, and not just in places with high prices. The company also showed solid overall growth in telecommunications business, despite some growing pains in its broadband-services unit. Mr. Skilling said, though, that he expects the bubble in energy prices to burst in a year or so, with prices dropping to more normal levels as natural-gas prices moderate and a slew of new electricity-generating plants come on line. Dynegy, also a Houston-based energy firm, reported first-quarter net of $139.5 million, double the $69 million posted for a year earlier. Total revenue rose to $14.2 billion from $5.3 billion. On a per-share basis, Dynegy earned 41 cents, up from 23 cents a year earlier. Dynegy Chairman Chuck Watson said he sees continued price volatility as a good profit opportunity for the company. Dynegy, which acquired utility Illinova Corp. in February 2000, continues to add aggressively to its generating-plant portfolio and is nearly one-third of the way to its stated goal of controlling 70,000 megawatts of plant capacity by 2005. "Ultimately, we want to control 10% of the electric power marketplace," said Rob Doty, chief financial officer. Neither Enron nor Dynegy has disclosed the amount of reserves they have taken against possible losses stemming from power supplied to California's troubled utilities. Pacific Gas & Electric Co., the state's largest utility, filed for court protection under U.S. bankruptcy law earlier this month. Southern California Edison could suffer the same fate if an agreement reached with California's governor, calling for the state purchase of certain utility assets, isn't consummated within four months. The two utilities took a combined $6.6 billion in charges against 2000 earnings because of excessive wholesale power costs incurred in the latter half of the year. Barry Abramson, utilities analyst at UBS Warburg, says the two companies are probably being cagey about their reserve levels for fear that regulators or a bankruptcy court judge "might say to them `you don't get to recover what you've already reserved.' " Duke Energy, of Charlotte, N.C., posted first-quarter net of $458 million, up 17% from $393 million a year earlier. Earnings per share rose to 61 cents from 53 cents. Duke said revenue more than doubled to $16.5 billion. Unlike Enron and Dynegy, Duke disclosed that it took a $110 million reserve in last year's fourth quarter to cover any loss associated with the California market. No additional reserve was taken in the first quarter, the company said. Duke's wholesale energy enterprises reported earnings, before tax and interest expenses, of $348 million, four times the result for the same quarter of 2000. The unit now has more than 13,600 megawatts of generating capacity in operation or under construction and plans to add a dozen or so plants each year through 2003. It was a major purchaser of power plants of which PG&E divested itself. At 4 p.m. in New York Stock Exchange composite trading, Enron shares were up 56 cents to $60; Dynegy shares were up $2.80 to $55.95; and Duke Energy shares were up $2.09 to $44.60. --- Journal Link: Energy crisis? Not for everyone. See a video report of Enron President and CEO Jeffrey Skilling discussing how a tight market is helping fuel the company's growth, in the online Journal at WSJ.com/JournalLinks. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. What's News Business and Finance 04/18/2001 The Wall Street Journal A1 (Copyright © 2001, Dow Jones & Company, Inc.) Enron, Dynegy and Duke posted robust earnings, beating expectations and capitalizing on a strong seller's market for electricity and natural gas. Edison reported a record quarterly loss of $2.55 billion on a huge charge related to the California energy crisis. --- Energy prices in New York could be much higher than previously forecast unless the state moves swiftly to find sites for new power plants, a study said. --- Stocks eked out small gains despite Cisco's earnings warning. The Nasdaq closed up 13.65 points on a late rally. --- Excite@Home warned that first-quarter results would be weaker than expected due to an advertising slump. --- Markets -- Stocks: NYSE vol. 1,110,501,800 shares, Nasdaq vol. 1,844,891,898. Dow Jones industrials 10216.73, up 58.17; Nasdaq 1923.22, up 13.65; S&P 500 index 1191.81, up 12.13. Bonds:(4pm) 10-yr Treas up 18/32, yld 5.196%; 30-yr Treas up 20/32, yld 5.649%. Commodities: Oil futures $28.24 a barrel, off $0.55; Dow Jones-AIG futures index 109.381, off 0.868; DJ spot index 108.97, up 0.27. Dollar: 123.33 yen, off 1.25; 1.1313 euros, up 0.0035; 2.2129 marks, up 0.0072. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. April 18, 2001 Houston Chronicle Briefcase: Skilling, analyst verbally butt heads Enron Corp.'s top executive Tuesday fired off the same vulgarity that brought President Bush embarrassment when he unwittingly uttered it in front of an open microphone last fall. But unlike Bush, Enron President and CEO Jeffrey Skilling says he knew the microphone was on during a conference call on first-quarter earnings. Skilling laid down the insult in an exchange with Richard Grubman, managing director of Highfields Capital Management in Boston, who asked to see Enron's balance sheet and was told it would not be available until later. "You're the only financial institution that can't come up with balance sheet or cash flow statement after earnings," Grubman grumbled. "Well, thank you very much, we appreciate that. Asshole," Skilling responded with a laugh. "The specific fellow that I was not real happy with is a short-seller in the market. I don't think it is fair to our shareholders to give someone a platform like that they are using for some personal vested interest related to their stock position." Grubman disputed Enron's assertion the information was not available. -- Reuters News Service April 18, 2001 Houston Chronicle Energy giants have a season to remember Winter price spike helped Enron, Dynegy earnings By MICHAEL DAVIS Copyright 2001 Houston Chronicle Houston energy companies Enron Corp. and Dynegy posted strong increases in first-quarter earnings Tuesday largely because of much higher prices received for natural gas and power sold during the winter. Enron's revenues topped $50 billion during the first quarter, equal to half of what the company generated during the entire year of 2000. The company on Tuesday said it was increasing its earnings expectations for the year 2001 to a range of $1.75 to $1.80 per share, up from $1.70 to $1.75. "We really don't project revenues, but with a $50 billion first quarter, we could break $200 billion this year," said Jeffrey Skilling, Enron's chief executive officer. Both Enron and Dynegy are owed millions in California, where Enron markets power and natural gas and Dynegy owns power plants and sells natural gas and power as well. Enron, which is owed $570 million by bankrupt utility Pacific Gas & Electric Co., did not address its California exposure in its earnings report. The topic was discussed at length with analysts on a conference call. Skilling said in a telephone interview that the company is fully reserved against its California receivables, but the company has not specified how much. Enron's raising of earnings expectations for the year should indicate the company is confident its California exposure will not be a problem, Skilling said. "We are continuing to supply natural gas and electricity to PG&E," Skilling said. M. Carol Coale, energy analyst with Prudential Securities in Houston, estimates Enron has taken a reserve of about 75-80 percent of what it is owed in California. "Enron has done a good job of addressing the way they handle risk, not just in California but across the country because other regions are likely to be short of power as well," Coale said. Dynegy said its West Coast Power joint venture with NRG Energy, which owns and operates the company's California power plants, has mitigated substantially all of its credit exposure in the California market through its long-term supply agreement with the state's Department of Water Resources that runs through 2004. Dynegy disclosed it was owed $265 million from power sales to California in a a recent filing with the Securities and Exchange Commission. Enron reported first-quarter net income of $425 million, or 49 cents per share, on revenues of $50.1 billion. That compared with net income of $338 million, or 40 cents per share, on revenues of $13.1 billion in the first quarter of 2000. Enron's net income included a $19 million after-tax gain from a change in accounting practices. Excluding that item, the company earned $406 million, or 47 cents per share. Analysts had expected the company to earn 45 cents per share for the quarter, according to estimates compiled by First Call/Thomson Financial in Boston. Enron shares closed Tuesday at $60, up 56 cents per share. Dynegy reported first-quarter net income of $139.4 million, or 41 cents per share, on revenues of $14.1 billion. That compared with net income $69 million, or 23 cents per share, on revenues of $5.3 billion in last year's first quarter. Dynegy's first-quarter 2001 results included a $2.02 million after-tax gain because of a change in accounting principals. Without that gain, the company earned $137.4 million, or 41 cents per share. Analysts had expected Dynegy to earn 40 cents per share during the quarter, according to First Call/Thomson Financial. "It was a very solid quarter," said Jeff Dietert, vice president of research at Simmons & Company International in Houston. "I think Dynegy is in an excellent position to have sustained earnings growth in excess of 20 percent." Dynegy's shares closed Tuesday at $55.95, up $2.80 per share. Results reported at Enron's various businesses included: ? Wholesale Services: Enron's division that sells natural gas and electricity, among other commodities, had an operating profit of $755 million in the first quarter, up from $429 million in the year-ago quarter. ? Retail Energy Services: Enron's business that offers energy management products to business customers in North America and Europe had operating income of $40 million in the first quarter, up from $6 million in the first quarter of 2000. ? Transportation and Distribution: Enron's unit that includes its natural gas pipelines and its Portland General Electric utility had operating income of $193 million, down from $233 million in the same period last year. ? Broadband Services: Enron's broadband business reported a $35 million operating loss for the first quarter. This unit was not broken out separately in the year-ago quarter. Results reported at Dynegy's business units included: ? Marketing and Trade: The company's unit that sells natural gas and power almost doubled its operating profit to $100.3 million, up from $50.3 million in the 2000 first quarter. This one unit contributed 73 percent of the company's total first-quarter net income as the average price of gas more than doubled from a year ago. ? Midstream Services: Dynegy's unit that processes and markets natural gas liquids had an operating profit of $22.9 million, down slightly from $24.2 million. ? Illinois Power: Dynegy's electricity transmission and distribution utility had an operating profit of $25.9 million, up sharply from $4.9 million. The company credited cost reductions and higher winter demand for the increase. ? Global Communications: Dynegy's newest division, which markets and trades broadband services, had an $11.6 million operating loss from start-up and expansion costs. The unit was not broken out from last year's first quarter earnings. Business; Financial Desk Edison Posts Losses for Quarter, Year Energy: The utility parent declares a huge write-off for 2000 costs. Meanwhile, electricity suppliers are big winners. NANCY RIVERA BROOKS; SARAH HALE TIMES STAFF WRITERS 04/18/2001 Los Angeles Times Home Edition C-1 Copyright 2001 / The Times Mirror Company Edison International on Tuesday joined its partner in deregulation dysfunction, PG&E Corp., in declaring a huge write-off of electricity and other costs. That resulted in large net and operating losses at the Rosemead-based company for the fourth quarter and all of 2000. But both utility parents continued to hold out hope that they would eventually recover those costs and return their ailing balance sheets to good health. PG&E, whose utility arm Pacific Gas & Electric Co. filed for bankruptcy law protection April 6, posted its results Monday; both companies delayed their filings by two months because of the uncertainty surrounding their financial predicaments. In stark contrast, in the last two day, several electricity suppliers to California's gold-plated power market reported sharply higher earnings for the first quarter. Together, the earnings statements provide a handy scorecard of who has won and who has lost in the crisis that has sizzled through the state's electricity business in the last year. Electricity suppliers "certainly are doing well," said Douglas Christopher, utility analyst with Crowell, Weedon & Co. "If you control the source of supply, you control a lot." Consumer advocate Michael Shames sounded a darker note. "Dollars are flowing out of the state at an accelerated rate," said Shames, executive director of the Utility Consumers' Action Network in San Diego. "It's leaving the utilities and flowing right into the hands of the energy suppliers. They can't lose. The contrast is disgusting." As expected, Edison International took a $4.2-billion pretax charge against earnings, which translated into $2.5 billion after taxes. The charge primarily reflected debts the company's beleaguered Southern California Edison subsidiary piled up last year as wholesale electricity prices skyrocketed and the utility was unable to charge customers all that it paid for power because of a retail rate freeze. Edison said it took the charge because of a recent decision by the California Public Utilities Commission that forced Edison and PG&E to recalculate electricity- and deregulation-related debt to include past profit earned during the first two years of deregulation, when wholesale costs were lower than retail rates. That charge resulted in net losses for Edison International of $2.5 billion, or $7.83 per share, for the fourth quarter and $1.9 billion, or $5.84 per share, for the year. In 1999, the company posted net income of $96 million for the fourth quarter and $623 million for the year. Edison posted a fourth-quarter operating loss of $3.8 billion, versus operating income of $326.9 million in 1999. Operating loss for 2000 was $1.73 billion, compared with operating income of $1.75 billion in 1999. Excluding the electricity write-off, Edison International would have earned $578 million for 2000; Southern California Edison would have earned $471 million in 2000 without the write-off, versus $484 million in 1999. "Today's financial charge, painful as it is for the company, only recognizes the well-known reality of SCE's large, unreimbursed costs of serving its customers," said John E. Bryson, chairman and chief executive of Edison International. "What is important now, however, is not so much compliance with accounting rules but whether Edison ultimately has a path to recover its costs." Edison executives said the agreement it signed last week with Gov. Gray Davis, if enacted by the state Legislature and the PUC, would allow the company to recover most of the costs it wrote off Tuesday. The agreement would allow for the sale of Edison's transmission grid to the state for $2.76 billion as well as for the sale of revenue bonds to help repay debt. Only "prompt implementation" of the agreement, Bryson warned, "can avoid the large costs of an SCE bankruptcy and make it possible for the company to restore its financial health and ability to maintain a reliable power grid." Legislators have been grousing about the agreement, raising fears that passage might not be smooth. "This is not a slam dunk," said Brian Youngberg, senior utility analyst for the Edward Jones investment firm in St. Louis. "If everything falls into place, they may well recover a large portion of the charge. But if it doesn't, all bets are off." Bankruptcy, whether voluntary or forced, remains a possibility, he said. Consumer activists have opposed the agreement as a bailout by the state. "I have very little sympathy for the utilities," said Mindy Spatt, media director for the Utility Reform Network in San Francisco. "They supported the deregulation of rates. They made their bed; now they have to lie in it." Several electricity suppliers to California reported gigantic earnings surges for the quarter ended March 31: * Duke Energy Corp. of Charlotte, N.C., saw a 63% increase in first-quarter operating profit, jumping to $554 million from $339 million a year ago. * Houston-based Dynegy Inc. said its operating income increased 40%, improving to $255 million in the first three months of 2001 from $182 million a year earlier. * Enron Corp. of Houston, which owns no power plants in California but is the world's biggest buyer and seller of electricity and natural gas, said it posted operating income of $406 million in the first quarter, compared with $338 million in the same period last year, a 20% increase. * Reliant Energy, another Houston energy conglomerate, said Monday that operating profit for the first quarter rose 35%, to $460 million from $341 million in the year-ago quarter. Carol Coale, an analyst with Prudential Securities Inc. in Houston, said increased demand for electricity and natural gas in California and the rest of the country fueled the earnings increases. "Clearly, the California energy crisis has raised the bar on those power and gas trading and marketing profits," Coale said. "Opportunities have existed outside California as well." But the companies all took great pains to note that California operations were only a small part of their businesses. Dynegy President Steve Bergstrom said the company has been "unfairly and inaccurately accused of withholding power from the California market" to drive up prices and profit. When asked about big profits at electricity suppliers, Edison Chief Financial Officer Ted Craver quipped: "We're envious." But he quickly turned serious, declining to comment on whether the generators were profiting at the utility's expense. "This is very, very serious business for us," Craver said, noting that the company could take further charges that "could completely extinguish our equity at the utility." But the utilities are not the only companies facing possibly lowered expectations, because a political or regulatory backlash could eventually hinder future profit for generators as well. "This free lunch is not going to last forever," utility analyst Christopher said. Edison International shares gained 3 cents to close at $11.88 on the New York Stock Exchange; the stock remains well off its 52-week closing high of $26.13 on Sept. 13. The generators' stocks have generally fared well as the broader market has declined. In trading Tuesday, all gained on the NYSE: Duke closed $2.09 higher at $44.60 a share; Dynegy rose $2.80 to $55.95; Enron gained 56 cents to $60; and Reliant was up $1.92 to $48.92. * Associated Press was used in compiling this report. (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Shifting Fortunes for Energy Players Financial results reported this week by California's two major utilities and by out-of-state energy companies that supply them show the dramatic shift in fortunes in the power business over the last year. * * PG&E in 2000 -$4.1 billion * Edison in 2000 -$2.5 billion * . . . While Their Suppliers Boom Operating income for key energy suppliers, in millions of dollars, first quarter of 2001 versus first quarter of 2000: * Sources: Company filings, Bloomberg News, Times research Researched by NONA YATES and TOM PETRUNO/Los Angeles Times PHOTO: A worker in Edison's grid-control room in Alhambra.; ; PHOTOGRAPHER: Los Angeles Times; PHOTO: Edison CEO John E. Bryson said the agreement reached with the state needs to be applied soon.; ; GRAPHIC: Shifting Fortunes for Energy Players, Los Angeles Times; Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. BUSINESS Edison reports 4th-quarter losses totaled $2.55 billion Carolyn Said Chronicle Staff Writer 04/18/2001 The San Francisco Chronicle FINAL D.1 (Copyright 2001) Edison International, the parent company of Southern California Edison Co., posted a $2.55 billion quarterly loss yesterday, a day after its Northern California counterpart, PG&E Corp., reported a $4.1 billion loss. Meanwhile, three out-of-state energy providers -- Dynegy Inc., Enron Corp. and Duke Energy Corp. -- reported stellar profits for the first quarter of this year but hastened to deflect charges that those profits came at California's expense. "The moral is: Some of these guys (the power companies) are unregulated; PG&E and Edison are not," said Paul Patterson, an energy- industry analyst at Credit Suisse First Boston in New York. The power companies "have the flexibility to do what they want in the power market," Patterson said. "The regulated utilities were not free to act in a manner that would have have probably mitigated their (financial) situation." After teetering on the edge of bankruptcy for months, Edison reported its fourth-quarter results yesterday. The report had been delayed during its bailout negotiations with the state. Most of the $2.55 billion loss stemmed from writing off the $2.52 billion difference between what Edison paid for electricity and what it was allowed to charge customers. Rates were frozen under state law. Without that write-off, Edison would have lost $28 million for the quarter ended Dec. 31, 2000 -- still a drop from the $96 million in profit it made in the fourth quarter of 1999. RECOUPMENT PLANS Edison of Rosemead (Los Angeles County) still hopes in one of two ways to regain the money it wrote off. It is suing California in federal court in Los Angeles for the right to pass along its unrecovered wholesale costs to customers. Alternatively, if Gov. Gray Davis' plan to keep the company from bankruptcy goes through, it would allow Edison to reverse the $2.52 billion charge, the company said. Under the plan, Edison would recoup its losses by selling its transmission lines to the state for $2.76 billion and issuing more than $2 billion in bonds to pay back debt. The rescue plan's future is far from certain. Many California legislators reportedly oppose the plan, which -- after protracted negotiations -- was quickly hammered out in the aftermath of Pacific Gas and Electric Co.'s Chapter 11 bankruptcy filing earlier this month. If the deal falls through, Edison's creditors are likely to force the company to follow in PG&E's footsteps in filing bankruptcy. Edison's annual results, also reported yesterday, showed a loss of $1.9 billion. Excluding the writeoff, it earned $578 million for 2000, compared with $623 million in 1999. Shares of Edison rose 3 cents to $11.88. The stock has fallen 24 percent this year. PROFITABLE SELLERS The news was considerably sunnier on the other side of the energy equation, where soaring wholesale prices and demand led to runaway profits for energy sellers: -- Enron -- Houston's Enron, the world's top buyer and seller of natural gas and electricity, earned $425 million (49 cents per share) for the first quarter, up from $338 million (40 cents) in the year- ago quarter. Sales for the quarter ended March 31 zoomed to $50.1 billion, almost four times the $13.1 billion collected from sales a year ago. The results include a $19 million (2 cents per share) gain, because of the adoption of new accounting standards; excluding that, Enron earned $406 million (47 cents). Enron's stock closed up 56 cents at $60. -- Dynegy -- A major power supplier in California, Houston's Dynegy saw first-quarter earnings more than double, to $139.5 million (41 cents), compared with $69 million (26 cents) in the year-ago quarter. Revenues almost tripled to $14.2 billion, from $5.3 billion during the same period last year. Shares of Dynegy closed up $2.80 at $55.95. -- Duke -- Responsible for about 5 percent of California's energy supply, Duke of Charlotte, N.C., saw first-quarter earnings rise 51 percent to $458 million (74 cents), up from $393 million (49 cents) during the same period in 2000. Revenues for the quarter increased 126 percent over the same period last year to $16.5 billion. Duke's shares closed at $44.60, up $2.09. All three energy firms took pains to defend themselves from charges that they have taken advantage of California's energy crisis to enrich themselves. Dynegy said sales to California "did not make a material contribution" to its profit growth, instead, attributing it to cold- weather demands in Northern states. In a statement, President and Chief Operating Officer Steve Bergstrom said the company had been unfairly and inaccurately accused of withholding power from the California market. Enron said 80 percent of the growth in its power deliveries came on the East Coast. "We've been called all sorts of names," said Harvey Padewer, president of Duke Energy Services. "The reality is we're selling most of our power for below-market prices." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Financial Chip Giant Cutting 2,500 Jobs 04/18/2001 The Washington Post FINAL E02 Copyright 2001, The Washington Post Co. All Rights Reserved Semiconductor giant Texas Instruments said it will lay off 2,500 workers, or 6 percent of its workforce, and expects double-digit declines in sales to continue through the first half of the year. The company said revenue fell 17 percent in the first quarter and it expects a 20 percent drop in the second quarter because of weakening demand for its semiconductor chips in cell phones and other products. Texas Instruments posted net income of $230 million, down from earnings of $421 million in the year-ago quarter. Internet Service Settles Copyright Suit RecordTV.com agreed to pay $50,000 to a group of movie studios and to stop offering recorded shows without the studios' permission, settling a nine-month legal fight. The Internet-based TV taping service had signed up 100,000 people who could have the site record specific TV shows and then play them back over the Internet at a later date. Twelve members of the Motion Picture Association of America, including MGM and Disney, filed a lawsuit in federal court in June, alleging copyright infringement. MORE NEWS AOL Time Warner was sued by a California software company that claims America Online version 6.0 infringes on a copyright for software used to play MP3 audio files. Privately owned Playmedia Systems seeks a court order to stop AOL's use of the allegedly infringing software, as well as damages in excess of $47 million. Playmedia contends that AOL's 1999 purchase of Nullsoft, which licensed older technology produced by Playmedia, did not give it the right to use the software in AOL 6.0. Siebel Systems, a maker of business software, is expected to lay off hundreds of workers because of a worsening sales slump. The exact number of jobs being cut is expected to be disclosed as part of Siebel's first-quarter earnings announcement, scheduled for release today after the markets close. Estimates on Siebel's layoffs have ranged as high as 20 percent of its 7,400 workers. The Federal Energy Regulatory Commission ordered power suppliers to California to reimburse the state $587,000 -- far less than in earlier months -- for overcharges in March. Under the order, Dynegy Power Marketing must pay $469,662.60, Mirant Corp. must pay $92,620 and Williams Energy Services must pay $25,574.25. AARP announced a campaign against predatory mortgage lending. The organization for people over 50 plans to intensify its lobbying for state laws against such practices. AARP posted information about its campaign at www.aarp.org/homeloans. The Commerce Department wants to impose penalties on foreign steel manufacturers that are subsidized by their governments, saying they are hurting the American steel industry. The companies in India, Indonesia, South Africa and Thailand make hot-rolled steel, used to manufacture cars and heavy equipment. The Commerce Department ruled that penalties should be imposed for damage to 20 U.S. steel companies in 13 states. INTERNATIONAL Philips Electronics said it will slash as many as 7,000 jobs, or about 3 percent of its workforce, to offset a slowdown of "extraordinary speed" in demand for technology products. Europe's largest electronics maker also reported a 91 percent drop in first-quarter earnings, to $93.3 million, and warned that it may post a loss in the second quarter. LOCAL BUSINESS The U.S. Army and Johns Hopkins University's Applied Physics Laboratory in Laurel will create and operate a national biotechnology center to research, develop, test and deliver products to benefit the Army. Over the next year, APL and the Army will decide on the center's location, organization and participants. Smithfield Foods agreed to buy Moyer Packing in the pork producer's first foray into the beef sector. Souderton, Pa.-based Moyer, with annual sales of about $600 million, is the country's ninth-largest beef processor. Terms of the acquisition were not released. EARNINGS Edison International, owner of California's second-largest utility, had a $2.5 billion loss in the fourth quarter, including a charge for power-buying losses that have driven the company to the brink of bankruptcy. Edison, based in Rosemead, Calif., lost $7.83 a share, including the charge. Excluding the charge, the company had a loss from operations of $28 million, compared with net income of $96 million a year earlier. Meanwhile, PG&E -- whose Pacific Gas & Electric unit filed for bankruptcy protection earlier this month -- said it lost $4.1 billion in the fourth quarter and $3.4 billion for the year. The loss was entirely due to a before-tax charge of $6.9 billion for power-buying losses. Big banks reported mixed first-quarter results. FleetBoston Financial said its earnings fell 6.2 percent, to $870 million, while Bank One reported that its profit declined 1.5 percent, to $679 million. But earnings at Wells Fargo rose 12.5 percent, to $1.17 billion, and Mellon Financial's profit increased 8 percent, to $264 million. Philip Morris's profit rose 4 percent in the first quarter as its industry-leading tobacco business expanded its market share and food profits swelled as Nabisco brands were added to its Kraft Foods roster. The maker of Marlboro cigarettes, Maxwell House coffee, Post cereals and Oscar Mayer meats earned $2.09 billion, versus $2.01 billion a year ago. Johnson & Johnson's first-quarter profit rose 14 percent, outpacing a 6.5 percent gain in revenue, on improved sales of its most profitable products, such as the Procrit anemia drug. Net income rose to $1.5 billion, from $1.31 billion a year earlier. Sales rose to $7.79 billion. Enron, the largest energy-trading company, said first-quarter profit rose to $425 million, from $338 million a year earlier, as increased electricity and natural gas demand sent prices surging in California and other parts of the country. Revenue almost quadrupled, to $50.1 billion from $13.1 billion. Sprint and its mobile phone unit, Sprint PCS, came up shy of expectations. Sprint, the nation's No. 3 long-distance carrier, reported that its non-PCS business earned $315 million, down from $1.12 billion in the same period a year ago. Sprint PCS reported a loss of $391 million, improving from a loss of $513 million in the first quarter of 2000. Charles Schwab Corp. said first-quarter profit fell 68 percent, to $97 million, as individual investors shunned the stock market and clients' assets fell. The biggest discount broker said that when acquisition-related charges are excluded it earned $120 million, down 63 percent from a year earlier. Duke Energy said first-quarter profit rose to $458 million, from $393 million a year ago. Weyerhaeuser reported a 56 percent decrease in first-quarter profit, mostly because of low lumber prices. The timber company had net earnings of $107 million, compared with $244 million in the same period last year. First-quarter sales were $3.6 billion, down from $3.9 billion. Caterpillar blamed an earnings decline on weak sales of truck engines and mining equipment. The company reported earnings of $162 million, down from $258 million for the first three months of 2000. Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers http://www.washingtonpost.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. California Power Utility Loses $2.5 Billion in Fourth Quarter James B. Kelleher 04/18/2001 KRTBN Knight-Ridder Tribune Business News: The Orange County Register - California Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM) If you're still having trouble sorting out the corporate winners and losers in California's power market, here's a handy mnemonic device that might help. Power generators generate money for their shareholders. Power distributors distribute pain to theirs. The sour truth lurking behind that premise was on display once again Tuesday, when Dynegy Inc., Duke Energy Corp., Enron Corp. and Edison International, the parent company of Southern California Edison, all opened their books and reported earnings. For Edison, the cash-strapped utility that delayed reporting its fourth-quarter earnings for two months as it waited for a state-led bailout, the news was grim. The Rosemead-based company, which distributes electricity to most of the homes and businesses in Orange County, said it lost $2.5 billion in the fourth quarter its worst quarter ever. The loss came after Edison was forced to write off the $4.2 billion it paid last year buying exorbitantly priced power on the state's deregulated wholesale market for its rate-protected customers. Edison had hoped to recover those outlays through higher rates and may still do so if its deal with Gov. Gray Davis is OK'd by state legislators. But a recent decision by the California Public Utilities Commission required the company to change the way it accounted for the outlays and absorb at least temporarily the massive loss. Speaking to reporters on a conference call shortly after the results were released, Ted Craver, Edison's chief financial officer, warned: "The cash position and the liquidity of the utility is in very serious difficulty." The company also declined to provide analysts and investors with any estimates for future earnings, citing California uncertainty. "In order to have a complete disclosure," Craver said, "we would have to (give investors an earnings range) and the range would be so wide as to be meaningless." Yet Wall Street, which has already hammered Edison shares in recent months, seemed to find some relief in Edison's finally coming clean. The stock rose 3 cents to close Tuesday's session at $11.88. Shares of PG&E, the utility that declared bankruptcy earlier this month and reported a $4.1 billion loss on Monday, also rose. While Edison was finally acknowledging the losses it suffered last year as a result of the situation in California, Houston-based Dynegy, a power producer that co-owns almost 3,000 megawatts of generating capacity in the state, reported that its first quarter earnings jumped 73 percent. The news sent the company's shares surging 5.27 percent, or $2.80, to $55.95. Dynegy, of course, is one of 13 companies that the Federal Energy Regulatory Commission says overcharged the state's grid operator $69 million last December and January. The FERC has ordered the companies to either justify the prices or refund the money. Also Tuesday: Enron Corp., another Houston-based energy trading company that's made a killing in California, said recurring income rose 18 percent, beating estimates, and confidently raised its projections for the rest of 2001. The earnings news lifted Enron's shares about 1 percent on Wall Street and prompted Salomon Smith Barney analyst Raymond Niles to raise his estimate on the company's 2001 earnings even though PG&E, the state's other distressed utility, owes Enron more than half a billion dollars. "We note that ENE has taken significant reserves against their estimated $580 million receivable exposure to PCG," Niles told investors in a morning note, "but that this reserve has already been built into their results. We preliminarily raise our 2001 EPS estimate to $1.80 from $1.73." Duke Energy, a North Carolina-based company with a growing footprint in California, said first-quarter recurring income rose 51 percent. Asked for his reaction to the latest round of record earnings from these out-of-state companies, Edison's Craver quipped, "We're envious." "This is obviously very, very serious for us," he said. "It has eliminated our retained earnings within the utility. It's actually caused them to go negative. We have a high potential of additional quarters of additional write-offs which could completely extinguish our equity within the utility." If Edison's deal with the governor is approved by the legislature, Craver said the $4.2 billion charge would be reversed. Edison is expected to report its first-quarter earnings in mid-May. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Report on Business: International Enron's CEO fires from the lip C. BRYSON HULL Reuter News Agency 04/18/2001 The Globe and Mail Metro B8 "All material Copyright © Bell Globemedia Publishing Inc. and its licensors. All rights reserved." HOUSTON -- Enron Corp.'s top executive publicly fired off yesterday the same vulgarity that brought U.S. President George W. Bush embarrassing headlines when he unwittingly uttered it in front of an open microphone last fall. But unlike Mr. Bush, Enron president and chief executive officer Jeff Skilling says he knew the microphone was on when he called a fund manager an "asshole" during a conference call to discuss first-quarter earnings with analysts. Mr. Bush made headlines on the campaign trail last year when he remarked to Vice-President Dick Cheney that a New York Times reporter was a "major-league asshole," not knowing that a microphone had picked up his remark. Mr. Skilling laid down the insult after an exchange with Richard Grubman, managing director of Highfields Capital Management in Boston, who asked to see Enron's balance sheet and was told it would not be available until its inclusion in a Securities and Exchange Commission filing later this month. "You're the only financial institution that can't come up with balance sheet or cash flow statement after earnings," Mr. Grubman grumbled. "Well, thank you very much, we appreciate that. Asshole," Mr. Skilling responded with a laugh. Mr. Skilling, whose candour frequently gives his public relations staff fits, said in a telephone interview that he knew the microphone was on. "The specific fellow that I was not real happy with is a short-seller in the market. I don't think it is fair to our shareholders to give someone a platform like that they are using for some personal vested interest related to their stock position," Mr. Skilling told Reuters in an interview. "I get a little exasperated with that sort of thing, and I want people to know I am exasperated," he said. Mr. Grubman said he felt "pretty thin-skinned" about the CEO's remark. He disputed Enron's assertion the balance sheets and cash flow statements were not ready yet, particularly in light of Mr. Skilling's mention during the call that Enron reconciles its credit risks and trading book daily. "I'm sort of at a loss as to why that was such an objectionable question," Mr. Grubman said. Then he added: "He's got some nerve. He and his management team sold seven million shares into the market 2last year, so he's plugged the market for a half-a-billion dollars worth of stock valued in the $70s and $80s. "Now the stock is the high $50s-low $60s and I'm an asshole because I ask about the balance sheet?" Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. NEWS Bill restoring direct access advances Greg Lucas Sacramento Bureau Chief 04/18/2001 The San Francisco Chronicle FINAL A.15 (Copyright 2001) Power users would be able to get their electricity from sources other than utilities under a bill approved yesterday by a key state Senate committee. The ability to buy power from producers, known as direct access, was removed by a law signed by Gov. Gray Davis in January that turned the state into the nation's largest buyer of electricity. Some of the largest energy users in the state -- manufacturers, oil refineries, office building owners, farms, grocery store chains -- are pushing for a return to direct access, though some believe the deal moving through the state Senate isn't good enough. Direct access was killed because lawmakers feared too many large users would get power on their own, leaving residential and small business customers to shoulder the bulk of the rate increases needed to pay off the costs of the state's power purchases. "It's a question of who pays," Sen. Debra Bowen, D-Marina del Rey, said of her bill restoring direct access. "If you exempt some classes of customers, that means those costs will be borne by other customers." The bill was approved yesterday by the Senate Energy Committee on a 6-to-1 vote and now goes to the Senate Appropriations Committee. Direct access has been around since 1996 when the state deregulated the electricity market. But few energy customers, business or residential, opted for it. A year ago, just 2.2 percent of all electricity customers used direct access. That has shrunk since January, when Enron Energy Systems and Green Mountain dropped most of their direct access customers. But big users want the right restored, hoping for more reliability and a better price dealing direct with generators. Those same big users, however, don't like Bowen's bill and prefer an Assembly bill now in the Senate. Consumer groups also oppose Bowen's bill because they think it is too kind to big users. The big users say it isn't kind enough. The chief objection by manufacturers and oil companies is the "exit fee" Bowen would charge them if they buy their power direct. The fee would repay the state for the costs it incurred buying electricity at high prices and selling it to users at lower capped prices. Consumer groups say her bill should be changed to prevent big users from sticking with the utility when it benefits them financially, then switching to direct access if that's a better deal - - at the expense of smaller customers. "They want it both ways," said Lenny Goldberg of the consumer advocate group The Utility Reform Network. "In when it suits their purposes and out when it doesn't." Manufacturers and oil companies prefer an Assembly bill that restores direct access but doesn't make them pay as much for the privilege. Although that bill also imposes an exit fee, customers who build their own power systems or choose co-generation to meet their energy needs would be exempt. That bill has been passed by the Assembly but has yet to be heard in the Senate. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Action on energy trading floors reverberate in power-hungry California By MICHAEL LIEDTKE AP Business Writer 04/18/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. In Houston, it's known as "the power corner." Separated by just a few city blocks, four major power wholesalers run trading exchanges that have a strong influence on energy prices nationwide. The trading floors run by Enron Corp., Reliant Energy Inc., Dynegy Inc. and Duke Energy Corp. represent ground zero in a power crisis threatening the quality of life in much of the western United States this summer. By seizing upon opportunities created by deregulation, the energy traders have turned up the juice in the electricity business in ways similar to how junk bond traders ignited Wall Street in the 1980s and venture capitalists fueled Silicon Valley last decade. And thanks to an exemption granted in the early 1990s, nobody monitors daily trading to detect unfair or illegal practices. Utility bills in California have gone up nearly fourfold in the past year, to $27.1 billion. Without fundamental changes in the energy market, this year's bill will rise to $70 billion - more than $2,000 for every person in the state, according to operators of the state's power grid. The staggering electricity price increases have pushed the state's largest utility, Pacific Gas and Electric, into bankruptcy and left No. 2 Southern California Edison on the brink of insolvency. California's once-ample budget surplus also has shriveled, as the state is spending about $50 million a day to buy enough power to keep the lights on. The energy wholesalers say they're doing nothing wrong. They blame the high prices on the rising price of natural gas, burned to generate electricity, and the state's botched deregulation plan. By failing to line up reliable power ahead of time and by imposing price caps for consumers, the state put itself into this mess, the companies say. "There have been accusations of wrongdoing for eight months now and there isn't a shred of evidence to support the allegations," said Gary Ackerman, executive director of the Western Power Trading Forum, a Menlo Park, Calif., trade group. "People are very angry and frustrated about electricity right now and attorneys are trying to take that anger out on us." Attorneys general in Washington, Oregon and California are probing whether the wholesalers have violated antitrust laws or engaged in unfair business practices. A California state senate committee may issue subpoenas for records and the testimony of top energy executives, and at least five lawsuits accuse energy companies of market abuses. "This is the best fraud I have ever seen," attorney Michael Aguirre of San Diego, who is involved in one of the class-action suits. "The generators are doing everything that you think that they might be doing, only it's worse than you ever imagined." The lawsuits and investigations allege that generators have conspired to hijack billions of dollars from consumers and taxpayers by withholding electricity from energy-starved California until the last minute, and then supplying it at exorbitant prices. At Enron's headquarters in Houston, energy specialists among the company's 1,500 traders swap electricity and natural gas contracts like stocks and bonds. Mathematicians, meteorologists and economists make complex calculations to identify where to buy the cheapest power and where to deliver it at the greatest profit. "They are extremely good at what they do," said Severin Borenstein, director of the University of California at Berkeley's energy institute. The Internet has provided the traders with the tools to do their jobs even better. Online marketplaces and password-protected exchanges provide them with invaluable real-time information on the buying and selling patterns of their rivals. Two lawsuits allege that traders have parlayed the sensitive information collected online to fix prices artificially high, a violation of antitrust laws. Aguirre has spent six months assembling reams of data about traders and their activities, but he has yet to develop concrete evidence to prove his price-fixing allegations. A March 21 report by California's electricity grid managers concluded that, between last May and November, 98 percent of trading bids were driven up by noncompetitive patterns of behavior. The California Independent System Operator report stopped short of accusing wholesalers of illegal market manipulation, but it did determine that the wholesalers collected as much as $6.9 billion in "unjust and unreasonable" rates. Enron says its trading system, particularly the online exchange, has resulted in fairer and more efficient markets. The allegations of market abuse are "just some sour grapes from people who didn't come up with the idea in the first place," said Enron spokesman Eric Thode. The online exchanges and other industry Web sites provide the energy traders with a window to see the energy availability and bids in markets around the country. Power industry critics, however, contend the Web's instant access provides the traders a way to exploit a delicate supply-demand balance. If the scale is tipped even slightly toward an inadequate supply, they say, prices soar and energy traders reap huge gains. "The whole trading thing is just a front that lets them game the market," Aguirre said. "They can get away with it because no one (outside the industry) can figure out what they are doing." Whatever the energy traders are doing, it's not closely monitored by government regulators. In 1993, the trading of energy products received an exemption from oversight by the Commodity Futures Trading Commission, a federal agency that oversees commodity and options trading to protect markets from fraud and manipulation. Energy is the only commodity that has received a blanket CFTC exemption. The exemption was shepherded beginning in 1992 by then-CFTC chairwoman Wendy Gramm, wife of Texas Sen. Phil Gramm. She left the CFTC three months before the exemption received final approval in 1993. That same year, she joined the Enron board of directors, a post that last year earned her $50,000. Gramm, an economist at the Mercatus Center at George Mason University, said she doesn't recall talking with Enron about the exemption, which she characterized as a routine matter triggered by an antitrust case involving crude oil. "It really didn't have anything to do with Enron or any specific company," said Gramm. "It had to do with a general market problem." In granting the exemption, the CFTC accepted the industry's contention that it shouldn't be subjected to the government's usual commodities regulation because its markets are dominated by "large sophisticated commercial entities" capable of protecting themselves - in short, that there would be no little people to hurt. At the time, then-CFTC commissioner Sheila Bair scoffed at the reasoning, comparing energy traders to boiler room sales operations that had the potential to violate federal anti-fraud laws. "Is it really that much of burden on market participants (for the CFTC) to retain a sliver of authority regarding fraudulent activity?" Bair wrote in a dissenting opinion. Wholesale electricity prices negotiated by the traders are eventually compiled in quarterly reports and reviewed by the Federal Energy Regulatory Commission. And while FERC by law is supposed to prevent unfair prices, a majority of its commissioners have advocated a hands-off approach to California's energy crisis, insisting that the market can correct itself. That posture may finally be changing somewhat. On Wednesday in San Jose, Calif., FERC chairman Curt Hebert told lawmakers that his agency hopes to begin "monitoring and mitigating" the wholesale electricity market by May 1. This could allow FERC to preemptively influence prices. Energy economists who have studied the market see signs of ruthless, but perfectly legal, behavior. Paul Joskow, an MIT economist, concluded in January that electricity producers deliberately withheld power to drive up prices. "Every business exercises market power when it can, so I don't know why people are so surprised that (the generators) used their market power," Joskow said. "I didn't see any evidence of collusion in what they did ... It was just good business." Enron's specific trading methods remain a mystery even to industry analysts, partly because the company considers its techniques to be proprietary. But it yielded a big payoff last year - an operating profit of $1.6 billion, up 160 percent from $628 million in 1999. When electricity and natural gas prices soared to record highs in the fourth quarter, Enron's trading profit more than tripled to $538 million. Without providing specifics, Enron officials said the profits poured in from all over the country. "Our success is linked to efficient markets, not higher prices in California, or anywhere else for that matter," Steve Kean, an Enron executive vice president, said in January testimony before the U.S. Senate. "What we are interested in is competitive and well-functioning markets. Our financial success is not built on California's back." End advance for release Wednesday, April 18 AP Photo FX101 of April 16, AP Graphic POWER PLAYERS Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Nigeria's electricity firm 'anxious' for US power project 04/18/2001 Agence France-Presse (Copyright 2001) LAGOS, April 18 (AFP) - Nigeria's state-run electricity company NEPA is anxiously awaiting the launch of a US power project in the economic capital Lagos, officials said Wednesday. The US firm Enron was due to have begun supplying electricity to the city grid in December, but the project has yet to take off. Authorities in Lagos, Nigeria's largest city, had blamed the National Electric Power Authority (NEPA) for the delay, saying the company was "frustrating" the independent power project. But NEPA said in a statement Wednesday: "We are very anxious to see the project through. No one wants to stop that kind of project. It should be implemented religiously. We won't compromise standards, however." The deal to supply electricity to the city grid was signed in December 1999 between Lagos State, NEPA and the US power group Enron Inc. Under the terms of the agreement, Enron was expected to complete the first phase of the project by December last year. Enron was to supply 90 megawatts of electricity to the city in the first phase and increase it to 270 megawatts by August from barges floated on the Lagos lagoon. joa/gd Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. US Government Issues Warning Letter to Italy's DeLonghi S.p.A., NetCompliance, Inc., Reveals 04/18/2001 Business Wire (Copyright © 2001, Business Wire) WASHINGTON--(BUSINESS WIRE)--April 18, 2001--In part because a US laboratory employee was "almost electrocuted" during a compliance test, DeLonghi S.p.A. of Treviso, Italy - a European producer of electrical kitchen appliances - was warned in March its products would be detained by the US government from coming into America, according to a federal document revealed by NetCompliance, Inc., (www.netcompliance.com), a leading Internet provider of "paperless" compliance solutions, online worker training programs, safety equipment, and up-to-the-minute regulatory information. According to NetCompliance, Inc., the US government's Center for Devices and Radiological Health said last month one of its testers "was almost electrocuted" during the initial startup of compliance testing of a Delonghi microwave oven. The government said it was also concerned that two engineers from Delonghi S.p.A.'s Italy facility "failed to adequately train and supervise repair and final test personnel properly" at DeLonghi's New Jersey warehouse, which was visited by the government in February. DeLonghi America is located in Saddle Brook, New Jersey. The government added DeLonghi "is being placed on the import detention list and its products will be automatically detained at port of entry" until the issues were resolved. Copies of the US government decision are available upon request from NetCompliance, Inc at 703/534-5022 or by email at info@netcompliance.com. Through its eComply(TM) technology engine, NetCompliance affords international companies a better, cheaper, and faster way to determine compliance needs, meet training requirements, obtain specialized products and services, and become aware of and manage regulatory-related information to government agencies. Begun in 1998, NetCompliance's client list has included such companies and organizations as: Enron, Caesar's Palace, Duke Engineering and Services, Boise Cascade, Weyerhaeuser, Surgical Synergies, and Nebraska Health Systems, among others. NetCompliance is a member of the Advisory Committee to the US Congressional Internet Caucus, which includes other stellar companies such as Microsoft, MCI, IBM, and AOL. www.netcompliance.com info@netcompliance.com CONTACT: NetCompliance, Inc. Michael J. Volpe, 703/534-5022 mvolpe@netcompliance.com 02:32 EDT APRIL 18, 2001 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. CHIEF MINISTER OF INDIA'S MAHARASHTRA WRITES TO PM ON ENRON 04/18/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. MUMBAI (WESTERN METROPOLIS), April 18 Asia Pulse - The chief minister of India's western state of Maharashtra, Vilasrao Deshmukh, on Tuesday sent a letter to the prime minister, Atal Bihari Vajpayee, in connection with the report of the Godbole committee that has recommended renegotiations with the Enron promoted Dabhol Power Company (DPC) to reduce its tariff. In the letter, Deshmukh has suggested setting up of a committee comprising representatives of the centre, Maharashtra government, State Electricity Board (MSEB) and National Thermal Power Corporation (NTPC) in keeping with the Godbole panel's submissions, to work out framework of renegotiation with the US energy major, official sources told PTI here. The high power panel formed by Maharashtra government to review the controversial project, headed by the former federal home secretary, Madhav Godbole, had in its report criticised the approval granted to the Enron at various stages by both the state and central government. The report was tabled in the state legislature last week. (PTI)P 18-04 1715 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Enron slaps two more arbitration notices 04/18/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, April 17. ENRON'S Dabhol Power Company (DPC) has issued two more notices of arbitration to the Maharashtra Government. This is a third such international arbitration notice that the State Government and Maharashtra State Electricity Board are facing. While the first notice was issued for failure to honour the December 2000 and January 2001 bills along with interest, the two fresh notices are for failures to honour the Maharashtra's 'State support agreement' and the "Supplemental State Support Agreement." According to Enron, the State Government has gone back on its commitment to provide clearances and support for "further development and completion" of the Dabhol project as per the State support agreement signed in June 1994. The third notice claims the Government has not supplied "additional support" needed for completion of DPC as per the supplemental State support agreement signed in 1996. "They (DPC) have claimed that we have gone back on our word when clearances to their second phase trial runs were denied by the Maharashtra Pollution Control Board hampering completion of their project," the official said. "The Maharashtra Government has acted in a manner inconsistent with the (two) agreements. The Maharashtra Government's actions have adversely and materially impacted DPC's ability to perform under its contractual agreements," Enron officials said. A three-person panel will now be set up to solve the dispute in the London Court of Arbitration. Enron has appointed Honourable Andrew John Rogers, former Chief Judge Commercial Division, Supreme Court of New South Wales as their arbitrator. The State Government will have to reply this notice within 30 days and appoint an arbitrator who cannot be an Indian national. The State Government officials have expressed surprise at the notice of arbitration for dishonouring of the December 2000 (Rs 102 crore) dues along with the January 2001 (Rs 111.6 crore), considering the conciliation process with Government of India is already in place. "Actually they should not be allowed to contest the Rs 102 crore December bill on two fora simultaneously because there is an ongoing conciliation process with the Centre. But they can take recourse to redressals in different fora," the State Government official said. The State Government is considering ways of clubbing the two processes together. "It (conciliation and arbitration for the December bill) should be clubbed together. Considering this may give rise to a technically queasy situation if the Maharashtra Government wins one case and Centre has to go back on another," the official said. The Union Government was issued the notices of conciliation and arbitration by DPC. The Government chose the conciliation route for which Mr Jeevan Reddy, Chairman of the Law Commission has been appointed conciliator. Meanwhile, the Maharashtra Government officials said, "The State maintains that the December and January bills are not payable but adjustable against available rebate of Rs 401 crore." It is not clear whether the State will have to appoint different arbitrators for the three notices. "All we know is that we will have to spend huge amounts on answering the notices and paying the arbitrators," the official said. Archana Chaudhary Copyright , 2000 Dow Jones & Company,
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