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Enron Mail |
USA: Williams backs limited Western power price controls.
Reuters English News Service, 04/25/01 Indian Power Minister Prabhu on Dabhol, Distribution: Comment Bloomberg, 04/25/01 USA: El Paso looks to build 750 mmcfd gas line to Calif. Reuters English News Service, 04/25/01 India, Enron In Dispute On Future Of Gas-fired Pwr Plant Dow Jones International News, 04/25/01 FRANCE: Shell sees months before Saudi gas deals signed. Reuters English News Service, 04/25/01 INDIA: India working on resolving Enron crisis-Minister. Reuters English News Service, 04/25/01 Enron Dabhol Pullout Won't Hurt India Foreign Invest -Min Dow Jones International News, 04/25/01 India's Law Min: Court System Hindering Economic Progress Dow Jones International News, 04/25/01 USA: Williams backs limited Western power price controls. By James Jelter 04/25/2001 Reuters English News Service (C) Reuters Limited 2001. SAN FRANCISCO, April 25 (Reuters) - Calling California's energy crisis "an extraordinary situation", one of the biggest energy merchants to the state said on Wednesday it would back limited price controls to tame runaway wholesale power costs. "We all have to work together, and this is the right thing to do," Williams Cos. chairman and chief executive officer Keith Bailey said in a statement, breaking ranks with other energy providers who so far have argued against regulatory intervention in the market. Bailey said that while long-term price controls could stifle construction of new power plants in the energy-starved state, there is a need to bring soaring power prices in the Western U.S. under control. "We ... recognize this is an extraordinary situation. We need to help create some breathing room over the next year or so to allow the current emergency supply initiatives to have a meaningful impact," the head of Williams said. Bailey said he was seeking "short-term, regional price controls during emergency periods." Federal regulators currently impose price controls only in California during so-called Stage Three power emergencies, when there is an imminent threat of rolling blackouts. Expanding the controls to rest of the West would likely meet opposition by neighboring states that sell power to California. The Federal Energy Regulatory Commission, which regulates the wholesale power market, was meeting in Washington D.C. on Wednesday to consider whether to impose price controls across the 11-state region. Williams, based in Tulsa, Okla., owns and markets about 4,000 megawatts of electricity in California, roughly enough power to run four million homes. PRICE GOUGING The company is one of several out-of-state power generators that Calif. Governor Gray Davis and other state lawmakers have frequently scolded for "price gouging" in the state's volatile electricity market. Wholesale power prices across the Western U.S. have jumped tenfold over the past 11 months, largely the result of the region's failure to add enough power plants to keep pace with its growing population and soaring appetite for electricity. The alarming rise in power costs has also sparked repeated pleas by Gov. Davis to put price caps on wholesale prices to limit further damage to the state's economy. Financial chaos stemming from the energy shortfall has forced the state of California to buy electricity in the open market after the credit-worthiness of its biggest utilities crumbled under a mountain of debt from unexpectedly costly power purchases. Williams, in line with other independent generators like Mirant Corp. , Enron Corp. , Dynegy Inc. , and Reliant Energy Inc and El Paso Corp. , enjoyed a huge jump in earnings last year while denying their business was charging usurious power prices. Nevertheless, the Federal Energy Commission has ordered Williams to refund $29.6 million to California for charging prices this winter it said Williams could not justify. Williams is fighting the refund order. GROWING CRISIS Meanwhile, damage from the energy crisis is growing daily, prompting Standard and Poors on Tuesday to downgrade California's credit rating as the state scrambles to buy emergency power, build new power plants and revive its financially distressed utility sector, with little near-term relief in sight. "We ... believe a rational course of action that seeks new sources of supply must be combined with public policy that ensures confidence that services provided in the past and future will be paid in full," Bailey said. "The combination of short-term, regional price controls during emergency periods ... along with the elimination of credit risk, should provide the market a respite while creating incentive for the private sector to invest with confidence," he said. Williams Cos said that as of March 31, it was owed $252 million for power sold to the California Independent System Operator (ISO) and the now defunct California Power Exchange. Since April 1, Williams' power sales to California have been through the state's Department of Water Resources, which enjoys a far better credit rating than the financially strapped ISO. The ISO, which oversees most of the California power grid, has been paying millions of dollars daily for most of the year to ensure there is enough power available to avoid blackouts. The California Power Exchange, established as part of California's disastrous 1996 law deregulating its power sector, folded in February. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Indian Power Minister Prabhu on Dabhol, Distribution: Comment 2001-04-25 10:02 (New York) New Delhi, April 25 (Bloomberg) -- Suresh Prabhu, India's minister for power, on Dabhol Power Co. in the western Indian state of Maharashtra. Dabhol, an affiliate of Enron Corp. of the U.S., the world's biggest energy trader, is not being paid for the power it produces by the state electricity board, which wants to renegotiate the price, saying it is too high. ``The Maharashtra State Electricity Board and Dabhol should sit and talk to each other. Any issue that needs to be resolved is to be (sorted out) between the two parties. ``We are awaiting the Maharashtra government to form a committee, which will negotiate (the contract with Enron). A representative of the government of India will be there (on the committee). On subsidies in power sales: ``Distribution of power is a thrust area. Commercialization (recovering costs in full from customers) of distribution is the key. ``Distribution reforms will make the power sector viable and we can give the quality of power consumers want. On dues owed by utilities to state-run power producers: Waiving ``past dues on a case-to-case basis will be examined. State utilities will be commercially viable in two years from now.'' On meeting the target of adding 100,000 megawatts by 2012: ``The target will be achieved not necessarily only through greenfield projects but also through aspects likes renovation, modernization, evacuating power from surplus regions to deficit regions, demand-side management and exploitation of immense potential of 150,000 megawatts of hydro-electric power.'' USA: El Paso looks to build 750 mmcfd gas line to Calif. 04/25/2001 Reuters English News Service (C) Reuters Limited 2001. SAN FRANCISCO, April 25 (Reuters) - El Paso Corp. unit Colorado Interstate Gas Co. said Wednesday it is considering building a huge 750 million cubic feet a day (mmcfd) Wyoming-to-California natural gas pipeline aimed at boosting supplies to the energy-starved state. The proposal for the 850-mile pipeline, which could begin service by late 2003, is subject to a five-week "open season" in which the company tests market demand through an open-bidding process, an El Paso spokeswoman told Reuters. "The open season runs from April 23 through May 31 and if we get enough market interest and get contracts lined up with customers, we will then apply for approval with the FERC," she said, referring to the Federal Energy Regulatory Commission, which approves all interstate energy projects. Gas prices in California have been among the highest in the U.S. over the past year, due to factors such as insufficient pipeline capacity, high gas demand from power plants, and low gas reserves. In the past month, several pipeline operators, including Enron unit Transwestern, Sempra Energy unit Southern California Gas Co, Williams Cos' Kern River Transmission, and Pacific Gas & Electric Corp.'s National Energy Group have announced plans to make major expansions to existing pipelines that feed California. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India, Enron In Dispute On Future Of Gas-fired Pwr Plant 04/25/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) DABHOL, India (AP)--Workers in yellow helmets scramble up steel girders to fit pipes into place for the world's largest natural gas-fired power plant, to be completed off India's western coast this year by American energy giant Enron Corp. (ENE). But 200 miles away in Bombay, government officials say they cannot afford the electricity that Enron is now providing from a naphtha plant at the site, and they expect the electricity generated by liquefied natural gas will cost even more. "Enron is simply unaffordable," said Padamsinh Patil, energy minister for the state of Maharashtra, which includes Bombay. "The state cannot afford the power, so we take less power, but still have to pay Enron huge amounts." India needs power. During the April-to-October 2000 hot season, the nation had a daily shortfall of nearly 8,000 megawatts of electricity, according to the Center for Monitoring the Indian Economy. Enron's naphtha and gas plants at Dabhol will together be able to generate about 2,200 megawatts, but politicians have trouble with the price. Aging coal- and gas-fired plants that have been depreciated can charge about two rupees (4 cents) per kilowatt hour, while Enron's naphtha plant has been charging 11 to 15 cents. "Everyone wants to use us to blame for the systemic problem that the state electricity boards in this country sell power for less than it costs them to generate or buy power," said K. Wade Cline, president of Enron India. Despite the protests, Cline believes that the $3 billion project - India's biggest-ever foreign investment - will go online at the end of 2001. An advantage for Enron - and the major complaint against it - is a unique contract that requires the federal government to pay up in case of default by Maharashtra. Another grievance is that the Enron deal requires Maharashtra to pay for electricity even if it doesn't use it. Enron invoked the federal guarantee in February, when the state utility said it could not afford to pay Dabhol Power Corp., Houston-based Enron's Indian subsidiary. But before the national government stepped in, state officials paid $17 million in overdue bills. Enron says it is owed $48 million for power delivered in December and January. The February power bill has already been paid, and Krishna Rao, member of the Maharashtra State Electricity Board, said Wednesday the March electricity bill was being paid. The state bailout drew attention to the Enron deal, with opponents again raising questions about the cost to be borne for foreign investment and development. The debate comes as the government in New Delhi tries to reduce subsidies and sell off state-owned enterprises. Enron says federal payment guarantees were essential because few foreign companies were willing to invest when India began opening its economy in the early 1990s. "Who wanted to come to India at that time? Very few companies did," said Cline. "We came along, with some others, and said we're willing to invest because we think India has a bright future." Preparing for that future, workers at Dabhol clamber around inside an LNG tank that could fit three jets stacked one atop another. They weld a steel-reinforced dome, while others outside drill concrete blocks for the mile-long jetty where the LNG tanker Laxmi -meaning "wealth" in Hindi -is scheduled to dock in November. Enron says LNG is the cleanest and most economical fuel, but Bombay politicians have their doubts. They point at electricity prices that have increased fourfold, which Enron attributes to the jump in oil prices and a depreciation of the Indian rupee. Opponents of the project say the government should have invested in its own power plant instead of tying up with a foreign company. "We're not against foreign companies, but the Enron project is a sure pill for India's financial collapse," said Pradyumna Kaul, an anti-Enron activist. "It will bankrupt the nation. Both sides should agree to a separation and abort the contract now." Enron believes a crackdown on power theft and reduction of waste in transmission and distribution would generate enough money to pay for Dabhol's electricity. A state government-appointed committee agreed and this month called for reform of the state power utility that defaulted on its payments to Enron. But the five-member panel also insisted on lower tariffs and urged renegotiating the price agreement. Enron chief executive Jeffrey Skilling likened the India situation to the power woes being felt in California. "The utility offers a fixed rate to their customers and the wholesale costs of electricity have gone up like they have in the U.S.," he said from Enron headquarters in Houston. "The distribution company is having a liquidity squeeze identical to what you have with (Pacific Gas & Electric)." Meanwhile at Dabhol, managers are moving to the next phase, training workers to man tug boats to guide that first LNG tanker into port. "When you first go into these villages with helicopters, bulldozers, they're nervous, as any of us would be," said Cline. "But we're in a 20-year partnership here. Dabhol is going to be producing power for Maharashtra for a long, long time." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. FRANCE: Shell sees months before Saudi gas deals signed. 04/25/2001 Reuters English News Service (C) Reuters Limited 2001. PARIS, April 25 (Reuters) - Oil major Shell thinks it will be a matter of months before it signs a memorandum of understanding with the government of Saudi Arabia to invest in multi-billion dollar gas projects, a Shell official said. Jeroen Van der Veer, President of Royal Dutch Petroleum said Riyadh was putting names to the three ventures that are being fought over by the world's 11 leading oil companies. "What will happen in the coming months is that they will try to put names to the various core ventures and of course then you have to detail the plan," Van der Veer told Reuters at a conference in Paris. Asked whether that meant the timetable for signing of MOUs would be months, Van der Veer said: "Sure, yes. We never expected that it would go very fast. These are huge projects." The comments were the clearest signal yet of a delay in Riyadh's timetable for the prestigious ventures that represent the biggest opportunity in Saudi for the big oil companies since nationalisation in 1975. Upstream oil exploration still remain off limits. Saudi had planned to finalise partners for the gas projects by the beginning of April having first approached the oil majors in 1998. Shell is tipped as a leading contender to develop the Shaybah gasfields - core project one. ExxonMobil is expected to win leadership of at least one of the other two projects on the Red Sea and in South Ghawar. Van der Veer said a Saudi delegation was due in the Netherlands on Thursday and would probably meet with Shell. "All the time there's been progress. It goes step by step. I think it makes sense to take time to develop the plans," he said. Also competing for operatorships or project stakes are BP, Chevron, TotalFinaElf, ENI, Enron/Oxy, TotalFinaElf, Marathon, Conoco, Phillips, Enron /Oxy and Marathon. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: India working on resolving Enron crisis-Minister. 04/25/2001 Reuters English News Service (C) Reuters Limited 2001. NEW DELHI, April 25 (Reuters) - India's power minister said on Wednesday the government wanted an amicable settlement of the bitter payment row between the Indian unit of U.S.-based Enron Corp and a state power utility. At the same time, the minister Suresh Prabhu said termination of the project would not hurt foreign investment. He dismissed warnings by analysts that winding up the $2.9 billion project would be a blow to India's efforts to woo foreign investors. "The government would react to the situation as it develops," he said. "We have no such worry that FDI (foreign direct investment) will be adversely affected." Enron is the largest single foreign investor in India through Dabhol but the project has been embroiled in controversy since the mid-1990s over accusations of high costs and corruption. The company this week asked creditors at a meeting in London to approve taking steps toward terminating the project. Dabhol Power Co, 65-percent-owned by Enron which operates a 2,184 megawatt power plant in the western Indian state of Maharashtra has been unable to collect $48.3 million (2.26 billion rupees) for power supplied to the state electricity board even after invoking state and federal government guarantees. The virtually bankrupt state electricity board has said it is unable to buy the costly power generated by Dabhol. The row has escalated and has involved the federal government which gave counter-guarantees to Dabhol in event the state electricity board failed to pay. "The federal government is actively looking at ways to resolve the issue and the Maharashtra government is setting up a panel, which will have a federal representative," Prabhu told reporters. Asked whether he was worried about the prospect of Enron terminating the project, Prabhu said: "There is life after death and there is power beyond Dabhol. It produces just 0.7 percent of the total electricity generated." (US$1 = 46.850 rupees). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Dabhol Pullout Won't Hurt India Foreign Invest -Min 04/25/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- Foreign direct investments into India's power sector won't be affected if the U.S. energy major Enron Corp. (ENE) decided to pull out of the Dabhol Power project in the western Indian state of Maharashtra, the Indian Power Minister Suresh Prabhu told a news conference Wednesday. "There's life after death and power beyond Dabhol. If Enron decides to pull out, it won't make much of a difference to us as they generate only 0.7% of India's total generation capacity. Their pullout won't have any bearing on the foreign direct investments as far as the Indian power sector is concerned," Prabhu told reporters. Enron holds a controlling 65% stake in Dabhol. Other stakeholders include the Maharashtra State Electricity Board with 15%, General Electric Co. (GE) with 10% and Bechtel (X.BTL) with 10%. As reported, the Dabhol Power Co., may take a preliminary step toward ending its project near Bombay, as part of a dispute over its inability to get paid for the electricity it generates, a Dabhol board member said. At a meeting Wednesday in London, Dabhol's board is to consider a preliminary termination notice, according to Don Sturmer, a vice president at Bechtel Enterprises and member of the board at Dabhol Power. Issuing such a notice could see Dabhol suspend deliveries as it negotiates its payment disputes, Sturmer said. However, Wednesday also saw the Maharashtra state power utility say it would pay outstanding electricity bills for March as part of an ongoing dispute over tariffs with Enron. In recent days, Indian media has speculated that Enron may withdraw from the project. The $3 billion Dabhol project is India's largest foreign investment to date. -By Himendra Kumar, Dow Jones Newswires; 91-11-461-9427; himendra.kumar@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India's Law Min: Court System Hindering Economic Progress 04/25/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI (AP)--India's law minister urged the country's courts Wednesday to help economic reforms flourish and to not obstruct them by entertaining a barrage of cases against Indian and foreign companies. "Don't interfere in every matter just because somebody has brought an invitation for you to interfere," Arun Jaitley, the minister for law, justice and company affairs, said in an address before hundreds of business leaders. "Major projects cannot be held up because of judicial cases. Delays and lack of interest are the result," said Jaitley, who is a lawyer by profession. India's courts, clogged by millions of pending cases, are notorious for delays in judgment. Several top international and domestic companies have also been adversely affected by court rulings on petitions by environmental and labor activists and other voluntary groups. More than 21,000 cases are pending in the Supreme Court. In the state high courts, more than 3.4 million cases are still to be decided on, Jaitley said. The number of pending cases before the subordinate courts has remained stagnant at 20 million for the last five years, he said. A $4.5 billion dam project across the Narmada River was delayed for four years because of a flurry of litigation by environmental activists. The objections were finally overruled by the Supreme Court. Last year, the U.S. power company Cogentrix, based in Charlotte, N.C., abandoned a $1.3 billion, 1,000-megawatt electricity project in the southern state of Karnataka after legal wrangles delayed the project by seven years. "We have seen cases in which investment was delayed by half a dozen litigations and finally the investor said, `I don't want to invest, thank you,"' Jaitley said. He was speaking at the annual conference of the Confederation of Indian Industry, an influential industry group. The wrangles have hampered private electricity generation in India, which needs an additional 100,000 megawatts of power per year, said Power Minister Suresh Prabhu, speaking at the same conference. Jaitley said that the government and courts had tried to enlarge their jurisdiction into areas traditionally outside their control. He mentioned the changes in economic policy that have swept the country since Prime Minister P.V. Narasimha Rao's government started unshackling controls on the socialist-style economy in 1991. "We need to tune ourselves to the changes taking place in the commercial world," he said. A $3 billion project of the U.S. energy giant Enron Corp. (ENE), India's biggest-ever foreign investment, is currently facing problems with the government-run utility in the western Maharashtra state, which says the power generated by Enron is too expensive compared to prevalent local prices. The state wants to renegotiate the contract. Jaitley also gave the example of 800,000 cases related to bounced checks - litigation that he said didn't need years to be decided in courts. He said there were also too many vacancies in judicial appointments. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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