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Enron Mail |
California Got Sacked by Power Companies, But That's How the Game Is Played
The Washington Post, 05/08/01 Enron May Buy U.K. Plants to Lift Profit, Reduce Risk (Update1) Bloomberg, 05/08/01 Scottish Power Streamlines Its Focus --- Uncertainty Over Water Unit, Telecom Venture Clouds U.K. Utility's Future --- `We Have a Reasonably Low Opinion of the Company' The Wall Street Journal Europe, 05/08/01 INDIA: Enron India unit lenders move to solve row-papers. Reuters English News Service, 05/08/01 India: Tackling the power mess Business Line (The Hindu), 05/08/01 India: Enron: Indian lenders threaten to move court Business Line (The Hindu), 05/08/01 Northern Border completes Midwestern Gas buy The Daily Deal, 05/08/01 Customs blocks Rs 300cr equipment of DPC The Times of India, 05/08/01 BP Amoco Considers Natural-Gas Terminal in Tampa, Fla. KRTBN Knight-Ridder Tribune Business News: St. Petersburg Times - Florida, 05/08/01 Enron could supply universities with state-subsidized power Associated Press Newswires, 05/07/01 USA: Northern Border Partners buys Midwestern Gas. Reuters English News Service, 05/07/01 Enron Confirms DPC's Meet With Indian State Panel May 11 Dow Jones International News, 05/07/01 Financial DEALS Allan Sloan California Got Sacked by Power Companies, But That's How the Game Is Played Allan Sloan 05/08/2001 The Washington Post FINAL E03 Copyright 2001, The Washington Post Co. All Rights Reserved In football, "piling on" a player who's already been tackled means a major penalty that can set your team back a long way. But when it comes to markets, piling on by taking advantage of the weak is called "opportunism," and it can get you a big bonus. Which brings us to California, where piling on enfeebled utilities and customers by power generators and power traders has become a way of life. Thanks to the idiotic way that California deregulated its electricity markets, the generators and traders of power in the state have been making a fortune because electricity costs have gone through the roof. Meanwhile, consumers are getting pounded rather than protected, economic instability is spreading throughout the western United States and some of the utilities that distribute power are getting clobbered. One big utility, Pacific Gas & Electric, has already gone broke, and others may soon follow. But while the market has produced a horde of losers -- California's wholesale power bill is running at 10 times the level of two years ago -- there are some big winners: companies that generate or trade power in the California market. Among the winners: Calpine, whose first-quarter profit quintupled compared with last year's; Reliant Energy and Williams Cos., whose profits more than doubled; Mirant, up 84 percent; and Dynegy and Duke Energy, whose wholesale power profits doubled and quadrupled, respectively. Enron, the nation's biggest energy trader, had a 75 percent increase in wholesale-services profits, but it says little of that was from California. Some of these companies' profits would have risen far more -- Mirant's would have quadrupled -- had they not taken big earnings hits to cover the risk of not being paid for some of their California sales. If they finally get paid, their profits will be outta sight. You can see why some of these companies' stocks have heated up as California melted down. To be fair, you can't attribute the entire increases to California -- but you can be sure California accounts for a good portion of them. There are other, less obvious winners, too. Among them: the unregulated subsidiaries of some companies that own California utilities; aluminum producers that are making more money by closing their plants and selling their power allotments than they would have made by producing aluminum; farms that find it more profitable to resell electricity than to grow crops; and, in general, anyone in the western United States or Canada with an electron to spare and some way of getting it into California. I'm not saying that these companies are immoral for making a fortune by taking advantage of California's problems. Breaking the law by creating an artificial shortage -- which has been alleged, but not remotely proven -- would be immoral. Taking advantage of a situation? That's what's known as amoral -- having no moral values, either good or bad. It's not nice, but it's perfectly legal, and it's the way market players are expected to act. So when California Gov. Gray Davis said last week that he was planning to have a "heart-to-heart" talk with California power generators, you just had to laugh. Because when it comes to business, those people have no hearts. They're not supposed to. What created the problem in California is not only deregulation, but a stupid deregulation plan carried out ineptly: the Kilowatt Keystone Cops, as it were. California put a cap on the rates that utilities could charge customers, but until recently it forced utilities to buy all of their power in the short-term market. The utilities foolishly agreed to this deal. The problem: Short-term markets are notoriously volatile. And notoriously ruthless. If there's a small surplus of power, you have desperate sellers trying to sell electricity, which can't be stored. But if there's a shortage, everyone piles on. Had California utilities been allowed to do the rational thing and buy most of their power in long-term markets, they would have paid more initially, but they and their customers would be in far better shape now. Compounding the problem is that while the state deregulated the wholesale rates the utilities paid for power, they capped the retail rates utilities could charge. Combine that with total reliance on the short-term market and -- voila! -- you're totally at the market's mercy. And markets have no mercy. In the old days, when utilities were regulated, there was often waste and inefficiency, but power was reliable and utilities cared desperately about keeping the lights on. Now, we have markets that don't care about anything. Someday, markets may give us total reliability at a cheaper price than regulation would. But in the meantime, get used to the piling-on concept. Just hope you end up on top of the pile. Kevin Peraino contributed to this column. Sloan is Newsweek's Wall Street editor. His e-mail address is sloan@panix.com. http://www.washingtonpost.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron May Buy U.K. Plants to Lift Profit, Reduce Risk (Update1) 2001-05-08 04:59 (New York) Enron May Buy U.K. Plants to Lift Profit, Reduce Risk (Update1) (Adds background on trading system in fifth paragraph.) London, May 8 (Bloomberg) -- Enron Corp., the world's biggest energy trader, may consider bidding for U.K. power stations to reduce its risk in trading and make more money from swings in electricity prices, an executive said. Enron is vying with European and U.S. rivals for dominance in U.K. electricity trading, a market worth about 7.5 billion pounds ($11 billion) a year. Edison Mission Energy and TXU Corp. have both said they may sell power stations in the U.K. Under a new system of electricity trading introduced in England in March, a company unable to deliver power to a customer as agreed must buy it on the market. The fluctuation in prices offers companies such as Enron and U.K. rivals Powergen Plc and Innogy Holdings Plc gains or losses of as much as 1,000 percent. ``A physical power station can put bids and offers into the balancing mechanism,'' said Richard Lewis, managing director of Enron's U.K. power and gas, in an interview. ``There is high volatility to extract there and that is valuable. We look at all opportunities.'' The regulator, Ofgem, hopes the new trading system will increase competition in the electricity market. Under previous rules, companies weren't penalized if they didn't deliver. Prices for electricity in the spot market, or the so-called balancing mechanism, have varied from 1,036 pounds a megawatt hour to a negative 434 pounds a megawatt hour when there is excess supply, said Elexon Ltd., which administers the new U.K. trading system, on its Internet site. Power Trading When the price of power is negative, the trading system effectively pays companies to reduce generation. If a 200 megawatt power station breaks down, and prices in the spot market reach 1,000 pounds a megawatt hour, the station's owner will have to pay 200,000 pounds an hour to meet its supply obligations. Owning power stations would allow Enron to meet its obligations by boosting generation at the plant rather than by purchasing electricity on the market. The company could also boost output at times when prices are surging, lifting profit. Companies owning a single power station, or companies that generate electricity from sources such as wind, are more prone to interruptions and provide Enron with possible customers for risk management products to guard against power failures. ``There is huge potential for aggregation of small generators,'' Lewis said. ``The provision of risk management is going to be more in demand. This is an opportunity for us to provide services.'' For Sale In the U.K., Enron employs 13 traders on its London-based electricity desk. The company controls 51 power plants worldwide, and other energy projects in 15 countries on four continents. In the U.K., it owns a 50 percent stake in Teesside Power Station, in the northeast of the country. Among U.K. generation assets that may be sold are the Fiddler's Ferry plant in Cheshire and the Ferrybridge station in Yorkshire, each capable of producing enough power to light 2 million homes. Edison Mission, a unit of Edison International, has said it may sell the stations to focus on its U.S. business. U.K. electric utilities are seeking to make money from trading amid waning profit from their main generation and supply business. The price of generation in the U.K. has tumbled with that of wholesale electricity. Wholesale prices dropped 15 percent in the year to March 27, according to regulator Ofgem. Other companies that may bid for the Edison assets include U.S. rival Duke Energy Corp., Electricite de France and RWE AG, Germany's biggest power company, the Sunday Telegraph newspaper reported March 16. European Markets Scottish Power Streamlines Its Focus --- Uncertainty Over Water Unit, Telecom Venture Clouds U.K. Utility's Future --- `We Have a Reasonably Low Opinion of the Company' By Andrea Chipman Dow Jones Newswires 05/08/2001 The Wall Street Journal Europe 12 (Copyright © 2001, Dow Jones & Company, Inc.) LONDON -- After more than a year of lagging earnings, investment missteps and unexpected disasters, U.K. utility Scottish Power PLC is hoping a new strategy to streamline its businesses will signal a more focused period for the company. But it has got its work cut out for it. While investors were cheered by news that its Utah-based Hunter power plant is back online after a six-month outage that cost the company an estimated $160 million (178.9 million euros), uncertainty over its plans for its Southern Water unit and apparent commitment to Thus, an unprofitable telecommunications venture, are seen as muddling the group's focus. "It all adds up -- the lack of coherent strategy, quite substantial downgrades and a whole host of noncore businesses that they don't have any natural management flair or expertise in," said Brian Gallagher, a senior fund manager at London-based Gartmore Investment Management, which has GBP 3 million (4.8 million euros) of Scottish Power shares in its Global Utilities Fund. "We have a reasonably low opinion of the company." The company said its pretax profit before goodwill amortization and exceptional items for the year ended March 31 fell 15% to GBP 628 million from GBP 736 million the year before. Adjusted earnings per share declined 26% to 30.65 pence from 41.22 pence. The company acknowledged profits have been hit hard by the Hunter outage, competition on wholesale and retail markets in the U.K. and strict price controls on its regulated infrastructure businesses. The company's shares are currently trading at 443.25 pence each, down 17% from 533 pence each a year ago. Executives say they are restructuring the business into three targeted divisions to capitalize on its traditional strengths in generation and power supply and infrastructure and to expand its overseas activities. "We've now got a trading and commercial link between generation and supply and the first thing we are doing is putting emphasis on that . . . on growing earnings across that value chain," said Scottish Power's chief executive, Ian Russell. "In the U.S., we are focused on cost cutting and on acquiring new businesses." Scottish Power's move away from a full multiutility profile -- begun last year with its partial disposal of Thus and its withdrawal from an Internet banking venture with Royal Bank of Scotland -- toward a more narrowly focused energy business mimics a trend across the industry toward greater specialization. The company is also considering selling Southern Water, which would allow it to focus even more closely on its power business. Yet analysts and investors say they are looking for more details of the company's overall growth strategy from Mr. Russell, who took over as chief executive last month, and other managers. The toll from months of drift, is evident, they said. Indeed, despite its efforts to chart a new road, Scottish Power appears to be reluctant to acknowledge the failure of some of its noncore ventures. Mr. Russell said his company remains "supportive" of Thus, which reported an annual loss of GBP 21.4 million this week, and has no plans to unload its remaining 50% stake in the company. Similarly, he said, Scottish Power hasn't yet made a final decision to dispose of Southern Water -- which has cut costs under its Scottish parent but is increasingly unable to cover its capital expenditure -- although he said the company had received "a number of offers" from potential buyers. Although he declined to identify any of the bidders, Italian energy company Enel SpA has confirmed its interest. People familiar with the industry said a prompt sale of the water unit looks likely, with some bids already exceeding the GBP 2 billion at which many analysts value the company's combined assets and debt. It is unclear, they said, how Southern Water or Thus would fit into Scottish Power's new image. "Scottish Power sees itself as an international energy company," a person familiar with the company said. In a year's time, he added, "it would be unlikely that Southern Water and Thus would be part of the company." Revenue from the sale of the water unit would also help Scottish Power pursue its U.S. expansion without extending its 90% debt-to-equity ratio, analysts and investors said. Mr. Russell declined to comment on reports Scottish Power is considering buying Enron Corp.'s Oregon-based unit, Portland General, but admitted the company would be a logical geographical fit with its Pacificorp subsidiary. Analysts said Scottish Power's plans for U.S. growth is likely to be a key part of its energy strategy. "We like their U.S. strategy, where they've leveraged expertise gained in the highly competitive U.K. market," said Gareth Lewis-Davies, head of utilities research at Lehman Brothers in London. Closer to home, competition and the trend toward increased specialization in the power industry may force Scottish Power to determine whether its business strength lies in asset management or retail and generation. "Strategic decisions need to be made, and I'm not sure if they are going to make them in the near term or not," said Andrew Wright, U.K. utilities analyst at UBS Warburg in London. "They are pretty much involved across the value chain, and I think it remains to be seen which part of the value chain they specialize in, if any." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Enron India unit lenders move to solve row-papers. 05/08/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, May 8 (Reuters) - Lenders to U.S. energy giant Enron Corp's troubled Dabhol Power Company (DPC) project in India may cut interest rates on almost $2 billion of loans to prevent default, business dailies said on Tuesday. Indian and foreign lenders are willing to help DPC produce power at cheaper cost, but would not hesitate to sue if the stand-off between the government and DPC continues, the news reports said. Enron's $2.9 billion project is mired in controversy after the Maharashtra State Electricity Board (MSEB) reneged on its commitment to buy all the power produced by the giant plant, saying it is too costly. MSEB has also defaulted on monthly payments to DPC for the electricity it has taken, forcing the company's board last month to authorise the management to terminate the contract. That possibility casts a long shadow over the fate of the project's 1,444 MW second phase, which is scheduled to start commercial operation next month. The 740 MW first phase began operating in May 1999. "All lenders, both Indian and offshore, want to see the second phase of the project taking off. We may cut the rates if there is any formal request from either DPC or the government," the Economic Times quoted an unnamed banking source as saying. Five Indian financial institutions have lent a total $1.4 billion to the project. The five are the Industrial Development Bank of India , State Bank of India , the Industrial Finance Corporation of India , ICICI Ltd and Canara Bank. The lenders are now working overtime to resolve the issue. Last week they sent a letter to the Indian finance ministry asking it to clear up $48 million in unpaid bills owed to Dabhol. But the Business Line newspaper reported the banks may take legal action if a quick solution is not found. "Our money is caught between two feuding parties....If they continue their hawkish stand, we will have no other option but sue the company, MSEB and the government," the paper quoted an unnamed banking source as saying. The dispute has already damaged India's image as a safe destination for foreign investment. It suffered another blow on Tuesday when the Times of India reported that customs officials in Bombay have blocked DPC's imports of project equipment due to a dispute over tax rates. ($1=46.80 Indian rupees). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Tackling the power mess 05/08/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire AFTER over a decade of reforms in the power sector, nothing much has changed for the better. On the contrary, the situation appears to have only worsened further. Ten years ago, the power outages - or load shedding as better known - in the Capital for a couple of hours in rotation only in summer during the peak hours used to be pre-announced. A decade through reforms and Delhiites have now accustomed to subsisting without electricity not only in peak summer for anything between seven and 14 hours during the day but also for a couple of hours in winter. This summer is turning out to be no different. Rotational load shedding for a good six to seven hours in most areas during both night and daytime have already started which shows that there is both energy and peaking shortage in the Capital. And, if this is the situation in Delhi - the country's so-called cosmopolitan pride - the fate of the hapless citizens in the other scorching States in the north can well be imagined. So, what have the power reforms achieved? Precious little. It's the people, and not the politicians, who have come to realise that quality power, like any other commodity, is to be paid for. This apart, scores of manhours have gone into deliberations on power reforms, numerous policy guidelines have been laid down, while the only people laughing all the way to the bank have been the power conference organisers. At the outset itself when reforms in the power sector were being ushered in, various sector-specific organisations, including the National Group on Power, as well as the media, had amply warned the various authorities, both at the Centre and in the States, that the path they were treading on would turn out to be counter-productive. For the simple reason that neither foreign nor private investment would venture into power generation for purposes of charity. On the contrary, the activity being capital- intensive, they would like to have assured returns as also ensure that the State electricity boards pay up. The authorities, in their zeal and drive to ensure that the reforms worked, paid little heed to making the SEBs bankable. And instead, the Centre was in a way duped to providing counter-guarantees for payment for a host of projects that were lined up through the memorandum of understanding (MoU) route. As long as the SEBs are utilised as pawns and electricity is supplied free to certain sectors for garnering votes, private investors will continue to demand guarantees such as escrow cover. Agreeing to that, again, is one of the surest way of choking the SEBs further. A classic example is the case of the Maharashtra State Electricity Board (MSEB) which was once one of the better SEBs financially. Despite repeated adverse criticism, Enron's Dabhol project was hung around MSEB'S neck like an albatross and the consequences have now surfaced for all to see. It is now that the authorities appear to have wisened up to the whole issue and escrow cover to Reliance's Patalganga and Ispat's Bhadravati projects are now being denied as the SEB cannot afford them. A late realisation, but better late than never. The pity is that all these years, the authorities had banked on private and foreign investors to make up for the power shortage and the public sector investment tap was literally turned off as a matter of policy, an act which Dr Manmohan Singh as the then Finance Minister had himself admitted, was faulty. It is time that the authorities reverted to the earlier policy of adding coal or gas-based generating capacity in the public sector while simultaneously restoring the SEBs back to health. Only then can private investment supplement the effort. - Ashok Dasgupta Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Enron: Indian lenders threaten to move court 05/08/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, May 7. INDIAN lenders to Dabhol Power Company (DPC) will not hesitate to drag all parties concerned - DPC, MSEB, and the Governments - to the court if the stalemate continues. "Our money is caught between two feuding parties. One (Enron) is saying that it does not agree with the terms of reference of the Godbole panel. The other (MSEB) says it cannot buy power from DPC unless offered at a lower rate. If these two continue their hawkish stand, we'll have no other go but sue the company, MSEB, and the Governments," institutional sources said. Even though the IDBI-led consortium is "hopeful" of getting all concerned across the table, and talking, top officials admit that it is quite an uphill task. Sources told Business Line that the lenders will do everything in their power to find an amicable solution to the issue. The lenders are also trying to persuade the Union Government to play a more "active role." Informal talks are going on regularly between DPC, its lenders and shareholders. Since domestic lenders are the ones who stand to lose the most, they are working overtime to persuade everyone involved to amicably arrive at a viable settlement. The State Government agrees with this stance of the lending institutions. "Indian lenders can go to court to recover their dues," a senior State Government official said. "Foreign lenders are covered by the Union Government counter-guarantee and various other guarantees by the Indian financial institutions. So, a burden of over Rs 6,000 crore will fall on the Indian institutions. It is understandable if they say they will pull us to court," he said. He, however, insisted that it was a remote possibility. The official expressed concern over the Union Government's delay to nominate a representative for the negotiation process. The State Government, has selected Mr Quinton Loh, a Chinese lawyer, to represent it for arbitration while MSEB has appointed Mr M.L. Pendse, a former Mumbai High Court judge, he said. Enron had issued the Centre a notice of negotiation on April 4. "The process (negotiation) has to be completed within 60 days. A month has gone by and the Centre has not yet begun the process of negotiation," the official said. The State is, however, waiting for a resolution of the Rs 401-crore rebate dispute between the State electricity board and DPC. "If the matter is settled and MSEB's claim, that DPC should pay them Rs 401 crore as rebate, is vindicated, DPC will be in no position to contest on any other ground. Even if they lose, the monies will have to be paid and the matter will be resolved," he said. Meanwhile, a senior MSEB official said that the board would have a strong defence as it has been regular in its payments to the DPC. Interestingly, if the lenders go to court, the two feuding parties - MSEB and Enron - will be on the same side slugging it out with the institutions. "The Indian lenders can pull us to court. But we have paid, albeit under protest, all DPC bills regularly, except for the disputed December and January bills," the MSEB official said. He, however, remarked: "If the lenders believe going to court is a faster way to recover their money..." - Dinesh Narayanan - Archana Chaudhary Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. InPlay Northern Border completes Midwestern Gas buy 05/08/2001 The Daily Deal Copyright © 2001 The Deal LLC Williams Cos - Enron Corp. - Northern Border Pipeline Co. - El Paso Corp. - Midwestern Gas Transmission - Northern Border Partners LP Omaha pipeline operator Northern Border Partners LP said Monday it had completed its acquisition of Midwestern Gas Transmission from Houston natural gas transporter El Paso Corp. for $100 million. The purchase closed after the U.S. Federal Trade Commission approved it. Midwestern owns and operates a 350 mile natural gas pipeline system extending from Portland, Tenn., to Joliet, Ill., with interconnections to seven major pipeline systems in the Chicago area, including the Northern Border Pipeline operated by Northern Border Pipeline Co., which is 70% owned by NBP. NBP's general partners are owned by Houston energy marketing giant Enron Corp. and Tulsa, Okla., natural gas company Williams Cos. -Claire Poole http://www.thedeal.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Customs blocks Rs 300cr equipment of DPC Vinu Lal 05/08/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) MUMBAI: It's a never-ending tale of woes for Enron and this time the city customs has played the role. The Customs department has blocked import of equipment belonging to Dabhol Power Company citing differences in payable duty. Sources informed that till date, goods worth Rs 300 crore have been blocked by the department. The bone of contention arose when the Customs department started demanding normal project imports duties for DPC goods, which used to be imported at concessional rates. The department said that the equipment imports pertaining to liquefied natural gas terminal, which includes goods used for setting up storage tank and terminals, and are not used for generating power but for a commercial activity. Enron officials, however, declined to comment on this issue. ``For a power project which involves intra-state sale of electricity, project equipment can be imported at concessional duties which works out to 5 per cent customs duty and another 16 per cent counter-vailing duty. But if equipment imported is being used to set up a LNG terminal for commercial purposes and not for generating power then the duty structure works out to 58 per cent,'' sources said. The Union ministry of power had given concessional import duties for attracting investments in power sector, if power is sold to other states, no duty is applicable. For Dabhol, being an intra-state project, the customs duty will be 5 per cent. DPC is setting up a 5 million tonnes LNG facility where only 2.1 million tonnes will be used for the Dabhol power project and the remaining capacity would be sold to other customers in the region. At present, the civil works are on for the entire capacity which include three storage tanks and terminal facilities. Works on two storage tanks are almost complete with a sizeable work left for the third tank and similar works pending for the terminal, which includes the regassification project. Though work on the site has been going on a slow pace due to the current controversy, this move will also have an adverse impact on the project completion, sources added. However, sources said that the company has been demanding concessional duty since the LNG project is not a separate project but clubbed with the power project and all other benefits, like taxes, are applicable to LNG project as well. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. BP Amoco Considers Natural-Gas Terminal in Tampa, Fla. Steve Huettel 05/08/2001 KRTBN Knight-Ridder Tribune Business News: St. Petersburg Times - Florida Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM) TAMPA, Fla.--Energy giant BP is looking into shipping natural gas into the Port of Tampa, the latest plan in a race among global companies to supply more gas to the booming Florida market. An affiliate of BP has options to lease 60 acres at the tip of Hooker's Point for a terminal where ships three times the length of a football field would unload natural gas cooled into a liquid at minus 256 degrees Fahrenheit. The project would include super-cooled storage tanks, a plant to heat the liquid fuel back into gas and a pipeline connecting to commercial customers, especially electric utilities that use gas-fired generators, the company says. Port director George Williamson says BP officials told him that the terminal would cost about $200-million and take at least four years to win approval from federal, state and local regulators. The company is considering several locations in North America, although Tampa is the only one disclosed so far, said BP spokesman Daren Beaudo in Houston. BP's study hasn't gone far enough to discuss construction cost estimates or other details, he said. BP paid the Tampa Port Authority $20,000 for a six-month option on the site and can extend the option another six months for $50,000 more. There are only two active liquefied natural gas terminals in the United States, although energy companies are working to get two others mothballed in 1980 back into service. Four big energy companies, including BP, plan to build as many as seven new terminals in the United States, Mexico and the Caribbean, according to an April report by Salomon Smith Barney. That includes two terminals in the Bahamas designed to serve Florida. Enron wants to run a pipeline 90 miles that will come ashore in Broward County. El Paso Energy won't say how it would transport the gas to Florida. Forecasters at the state Public Service Commission estimate demand for natural gas will grow an average of 5 percent a year over the next decade. Energy companies and analysts say the growth could be twice that much. Driving demand is a bevy of new gas-fired power plants and conversions of old plants to run on the clean-burning fuel, said Michael Schmitz, an analyst with Salomon Smith Barney. Liquefied gas from Trinidad, Venezuela and elsewhere will be needed to augment gas piped from domestic fields, he said. "Many, many of these new power plants are natural gas-fired, and it's tough to see where the big uptick is going to come in U.S. production," Schmitz said. "The supply for Florida is as tight or tighter than the rest of the country." While liquefied natural gas makes up only 1 percent of the U.S. gas supply, it is widely used in Japan and Korea. BP and other companies say they've got an outstanding safety record in shipping and handling the material. Liquefied natural gas isn't combustible until it vaporizes and reaches a certain mixture with oxygen. The liquid isn't stored under pressure, so it doesn't leak quickly, BP spokesman Neil Chapman said. "It oozes," he said. Still, plans by Williams Gas Pipeline to reactivate its Cove Point terminal in Lusby, Md., has neighbors jittery. Schmitz thinks Enron and El Paso are building in the Bahamas to avoid tougher scrutiny from federal regulators and local opposition in South Florida. Spokesmen for the companies say various factors went into their decisions. Forecasters at the state Public Service Commission estimate demand for natural gas will grow an average of 5 percent a year over the next decade. The prospect of a terminal in Tampa doesn't alarm Peter Clark, executive director of Tampa BayWatch, an environmental group. He notes that ships in Tampa Bay hold a variety of hazardous cargos. Vessels must maintain a 1,000-yard "clear zone" from barges carrying anhydrous ammonia and propane. They aren't allowed to pass them in shipping channels. "It's a matter of being able to transport it in a safe manner," Clark said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron could supply universities with state-subsidized power By DAVID KRAVETS Associated Press Writer 05/07/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SAN FRANCISCO (AP) - Enron Corp., which was ordered last month to honor its contracts to supply power to California's public universities, has won a key appellate ruling that could cost taxpayers millions. A federal appeals panel said the Houston-based energy wholesaler could buy power for the universities from the state's investor-owned utilities, rather than buying it on the expensive "spot" power market. Enron says it would save the company $12 million a month. But it means the state will have to spend more money buying electricity to supply the universities. Since January, California has already spent $5 billion buying electricity for the customers of three ailing utilities that will eventually be repaid by customers and taxpayers. In its Thursday ruling made public Monday, the 9th U.S. Circuit Court of Appeals overturned a federal judge's April decision that ordered Enron to directly supply power to most of the state's universities as part of a long-term agreement with them that expires in March. Where Enron buys that power makes a huge financial difference to the state under California's power deregulation rules. The state said it could spend - or Enron could save - up to $12 million a month. That's because buying last-minute power on the spot market, where Enron had been buying the schools' power, costs several times more than what the state can legally collect from ratepayers. Since January, the state has bought electricity for the customers of Pacific Gas and Electric Co., Southern California Edison Co. and San Diego Gas and Electric Co. in an attempt to keep them financially stable as power prices skyrocketed. The state has only been able to retrieve $1 billion from customers of the $5 billion it has spent on electricity buys, said Nathan Barankin, a spokesman with the attorney general. The state said it would ask the court to reconsider its supply decision. The ruling, Barankin said, "allows Enron to perpetuate its scam on California's taxpayers." That's a position Enron vehemently denies. "We believe, under the way the contract is written, it gives us the right to supply the power or have somebody else source the power for us, such as the utilities," said Enron spokeswoman Peggy Mahoney. Enron convinced the appeals panel that it should not have to purchase power on the spot market to honor its contract, and instead can make good on its cheap power contract by buying it from the utilities. That means Enron will pay substantially less for the electricity through the utilities and will reimburse the universities for possible charges that exceed the contracted price with Enron. Electricity sold through the utilities is capped under California law and does not reflect the true cost of the power. Billions of dollars of undercollected costs is among the main reasons PG&E filed for federal bankruptcy protection early last month. The case is UC Regents v. Enron Energy Systems Inc., 01-1006. --- http://www.governor.ca.gov http://www.enron.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: Northern Border Partners buys Midwestern Gas. 05/07/2001 Reuters English News Service (C) Reuters Limited 2001. OMAHA, Neb., May 7 (Reuters) - Northern Border Partners LP said it has completed the acquisition of Midwestern Gas Transmission from El Paso Corp for about $100 million. The Midwestern system, a 350-mile natural gas pipeline extending from Portland, Tenn. to Joliet, Ill., provides interconnections to seven major pipeline systems in the Chicago market area, including the Northern Border Pipeline. The purchase, announced in mid-March, was completed April 30 following approval of the Federal Trade Commission. Northern Border Partners owns a 70 percent general partner interest in Northern Border Pipeline Co., a 1,214-mile pipeline system that transports natural gas from the Montana-Saskatchewan border to markets in the Midwestern U.S. The partnership also has gathering systems and processing plants in the Powder River, Wind River and Williston Basins in the U.S. Rocky Mountain region; owns and operates processing plants and gathering pipelines in Alberta, Canada; and transports coal-water slurry via a pipeline in the Southwestern U.S. Northern Border Partners' general partners are units of Enron Corp. and Williams Cos. Inc. . Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Confirms DPC's Meet With Indian State Panel May 11 05/07/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- U.S. energy company Enron's (ENE) Indian unit Dabhol Power Co. will meet the country's Maharashtra state government's expert committee appointed with the objective to renegotiate the controversial power purchase agreement with DPC, Enron Vice President John Ambler confirmed to Dow Jones Newswires from Houston late Monday. In an online statement, Ambler who handles Enron's international public affairs, said: "We confirm that Dabhol Power Co. has been invited to meet with the recently formed negotiating committee. As a matter of courtesy we have agreed to meet with them (on May 11). Since the purpose of our meeting is to hear out the committee and understand their thoughts, we will not present any proposals." "While we have constantly maintained that we are open to continuing a dialogue towards resolving issues, this meeting should in no manner be construed as an open offer from DPC to renegotiate the terms of the contract," he added. Dabhol has come under fire because of the relatively high cost of its power. Critics object to Dabhol charging 7.1 rupees ($1=INR46.82) a kilowatt-hour for its power, compared with INR1.5/kwh charged by other suppliers. The $3 billion, 2,184-megawatt DPC project in Maharashtra has been mired in financial disputes after the Maharashtra State Electricity Board, its main customer, failed to pay several bills. The project has the largest single foreign investment in India. As reported, a nine-member state committee headed by retired federal Home Secretary Madhav Godbole is working toward lowering the DPC's power tariff and allowing the sale of excess power to the federal government or its utilities. A restructuring of the DPC's stakeholding may also be on the agenda. The Maharashtra government has asked the committee to try to negotiate a revised agreement within a month. The DPC currently operates a 740-megawatt naphtha plant contributing about 0.7% to India's installed capacity. Enron has maintained that work will be completed by the year-end in the second phase of the Dabhol project that will add 1,444 MW to its capacity. The plant will switch from naphtha to liquefied natural gas as a fuel source in 2002. Texas-based Enron has a 65% stake in the DPC and is the project's largest shareholder. Other shareholders include the MSEB with 15%, and General Electric Co. (GE) and Bechtel Enterprises (X.BTL) with 10% each. -By Himendra Kumar, Dow Jones Newswires; 91-11-461-9427; himendra.kumar@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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