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Enron Mail |
Chicago And Its Suburbs Pick Enron, ComEd For Power Deals
Dow Jones Energy Service, 06/06/01 India IDBI Says Lender Talks With Enron To Resume Thurs Dow Jones International News, 06/06/01 INDIA: Enron's Dabhol takes Indian regulator to court. Reuters English News Service, 06/06/01 USA: ANALYSIS-LNG gets new look as way to ease US energy woes. Reuters English News Service, 06/06/01 India PM Hopes Enron/Dahbol Power Dispute Can Be Settled Dow Jones International News, 06/06/01 India's Vajpayee Says Enron's Power Costs Too Much, AFP Reports Bloomberg, 06/06/01 Chicago And Its Suburbs Pick Enron, ComEd For Power Deals 06/06/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) CHICAGO -(Dow Jones)- The City of Chicago and 47 suburban communities have decided to divide new deals for 400 megawatts of power between Enron Corp. (ENE) and local utility Commonwealth Edison Co., Chicago officials said Wednesday. In the largest power purchase agreement in Illinois since the state choose to deregulate the industry in 1997, the local government groups will get 60% of their power from Enron and 40% from Exelon Corp.'s (EXC) ComEd. The municipalities use the power for public buildings and public transportation. "We used our purchasing power as local governments to get the best price we could and at the same time to promote competition in Illinois," Chicago Mayor Richard M. Daley said at a press conference. The government coalition sent out a request for proposals to the state's 13 registered electricity providers last summer requesting bids for cheaper power, and also for power that's generated with 20% renewable supplies. Combined, the municipalities currently pay ComEd about $110.6 million a year for 400 megawatts of power, most of which comes from nuclear and coal-fired power plants. Chicago announced Monday that the group has picked ComEd to meet the renewable target by providing 80 megawatts of power created with landfill gas, wind and other sources. ComEd will also provide the coalition with another 80 megawatts of power generated with fossil fuel and nuclear plants, and Enron will provide the other 240 megawatts. The new contracts are expected to go into effect this year. Terms of the power deals weren't announced, as about 4,000 accounts between municipal agencies and the two power providers must still be ironed out, city officials said. But the government groups do have a target for savings. Chicago, which uses about 200 megawatts and pays ComEd about $50 million annually for power, expects to save a net $3 million a year through a combination of cheaper power from Enron and more expensive renewable power from ComEd. Once all the accounting is completed, it's likely the municipal groups will save up to $5 million in total each year, the city estimates. "Enron gave us the most competitive price," Daley said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India IDBI Says Lender Talks With Enron To Resume Thurs 06/06/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- India and foreign lenders are scheduled to meet again Thursday in Singapore after two days of talks with Enron's (ENE) Dahbol Power Co. over the future of India's largest direct foreign investment ended in a deadlock, said R.M. Ganatara, general manager of the Industrial Development Bank of India Wednesday. Domestic lenders which include IDBI, State Bank of India (P.SBI) and ICICI Ltd. (IC) have lent $1.4 billion to the $2.9 billion Dabhol Power project. "Something is being hammered out, there isn't a common meeting point yet. We will be looking toward a solution to end this crisis at tomorrow's meeting. However, I'm not sure how and where the talks will end," Ganatara said. Last month, Dabhol Power issued a preliminary notice to terminate its agreement to sell power to India's Maharashtra state government and to provide power from its online 740-megawatt Dabhol Power plant. Dabhol Power issued the notice to terminate after the state failed to December and January pay power bills amounting to $48 million on time. The state and Dabhol Power are currently in talks in an effort to see if they can renegotiate the deal including a power purchase agreement the state says is now too expensive. Also, a second phase of the project, a 1,444 megawatt power plant, is more than 90% built whose completion is also in doubt. Indian lenders to the Dabhol Power project don't have any counter guarantees from the federal government as international lenders do. The parties agreed to meet in Singapore on Tuesday and Wednesday to see if they could bring about a settlement between Enron and the state of Maharashtra. -By Himendra Kumar, Dow Jones Newswires; 91-11-461-9426; Himendra.Kumar@Dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Enron's Dabhol takes Indian regulator to court. 06/06/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, June 6 (Reuters) - Enron's Dabhol Power Company (DPC) has challenged the jurisdiction of a local regulatory body in trying to resolve a dispute between the company and an Indian state utility that has threatened nearly $3 billion worth of foreign investment, an industry source said on Wednesday. Dabhol, owned 65 percent by Houston-based Enron , filed a petition on Wednesday before the Bombay high court questioning the jurisdiction of the Maharashtra State Electricity Regulatory Commission (MERC), the source added. MERC, which was not immediately available to comment, last week intervened in the dispute by granting interim relief to the utility. A Dabhol spokesman declined to comment. MERC, which is responsible for electricity regulation in Maharashtra, had intervened in the dispute last week by restraining Dabhol from certain actions. It asked the company, which is fighting a legal case against MSEB, from proceeding against the utility in the International Court of Arbitration in London. The regulator also asked the company not to activate a special bank account which is crucial for Dabhol to continue work on the project's second phase. Dabhol's 2,184 MW power project on India's western coast is being set up in two phases. The first phase of 740 MW is already supplying power to MSEB, while the second phase of 1,444 MW is expected to be operational soon. Dabhol had stated before the Commission that it does not recognise its authority to intervene in the dispute. As per the 1995 agreemnt with MSEB, all disputes are to be resolved through international arbitratration. The source said Wednesday's petiton before the Bombay high court questions MERC's role but did not reveal any other details. The Press Trust of India said the petiton would come up for hearing on June 11. The move comes amidst an escalating row between between Dabhol and the Maharashtra State Electricity Board (MSEB), over payment defaults and high tariffs. MSEB began defaulting on its payments six months ago to Dabhol saying that its power was too costly. It also cancelled its purchases and said it would be unable to lift output from the second phase. Dabhol filed for arbitration and issued a preliminary notice to cancel its contract with MSEB. The dispute has already affected India's image among foreign investors and global credit rating agency Moody's Investor Services said last week the dispute has raised concerns over whether India would be able to fulfill its contractual obgligations. The dispute is also affecting foreign and local lenders, who have been meeting for two days in Singapore to discuss the fate of the project. They are slated to continue discussions on Thursday. Foreign lenders want to cancel their loans worth around $600 million to the project while the local lenders are urging them against it. A senior banking official told Reuters that no decision was taken on Wednesday regarding the cancellation of loans. It will most probably be decided on Thursday when the foregin lenders confer amongst themselves.. The Indian lenders who participated in the meeting for two days are returning on Wednesday, he added. Meanwhile, the Indian Prime Minister, Atal Behari Vajpayee, said on Wednesday that he was hopeful of a solution to the dispute. "The Enron issue is on the way to being solved. I am confident the government of Maharashtra and Enron will together sort out the problem," he told reporters in Bombay. But he expressed doubts whether other Indian states will be able to afford the cost. "Yes, that is a problem and we are trying to solve it. The other states will also have the same problem that the Maharashtra government is facing. What will they do with such expensive power?," he asked. ($1=46.97 Indian rupees). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: ANALYSIS-LNG gets new look as way to ease US energy woes. By Manuela Badawy 06/06/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, June 6 (Reuters) - With blackouts in California a stark example of what is at stake if the United States runs short of natural gas, liquefied natural gas, or LNG, is getting a new look as a means to solve a growing U.S. energy crisis. While natural gas has been increasingly embraced in the United States for its environmental virtues - it burns more cleanly than oil or coal and emits fewer greenhouse gases - LNG has been all but abandoned due to poor economics and fears that transporting it safely by ship is not worth the risk. But with gas prices at historically high levels amid forecasts that U.S. gas demand is beginning to outpace domestic supplies, LNG suddenly looks financially viable, and the LNG industry insists improved technologies have minimized risks. Some analysts are even saying LNG's share of the U.S. gas market could triple to more than 10 percent over the next half decade as oil companies like El Paso Corp., Texaco Inc. and BP set plans to build about 10 new plants in and near the United States to process LNG. Those 10 would join four existing plants, two of which have been out of operation for years. "Significant new investment in LNG to serve U.S. markets will probably be attractive if long-term average gas prices in Gulf Coast producing areas are $3.25 per mmBtu or higher," said Howard Gruenspecht of Resources for the Future, a Washington think tank. Natural gas prices are now at about $4 per million British thermal units (mmBtu), down from an all-time high over $10 per mmBtu last December. LNG is natural gas in a highly compressed, super-cold form that enables it to be transported in special tankers much like crude oil. Safety concerns aside, spurring LNG imports is probably the quickest way among a number of options to prevent energy shortages like those in California from spreading. LNG would also give gas producers around the world access to the huge U.S. market which, in this decade, could grow by 30 percent. But those safety concerns remain in sharp focus, as citizens continue to raise not-in-my-backyard-type objections to LNG development, making winning regulatory approval extremely difficult. TEXACO MAY HAVE THE ANSWER LNG's public relations problem began with a 1944 accident in Cleveland involving leaking tanks that killed 128 people. The industry never quite got over that, and 38 more deaths in the 1970s from two East Coast LNG explosions all but sealed LNG's star-crossed fate. LNG's compressed, super-cold form requires careful handling, particularly when it is brought back to normal atmospheric temperatures and pressures. But analysts say the LNG industry has come a long way on safety, particularly of the tanks themselves, and risks are lower than they have ever been. "The LNG market makes for a good science fiction story because it's this cryogenic liquid, but the fact of the matter is that it's a far safer fuel than a lot of the combustible hydrocarbons," said Bob Nimocks, president of energy consulting firm Zeus Development Corp. Texaco thinks it may have the solution to the not-in-my-backyard obstacle that dogs LNG development with plans to build an offshore LNG plant off the coast of Louisiana in the Gulf of Mexico. Putting a plant offshore, far from towns and cities, would not only neutralize the so-called NIMBY factor, it would also speed regulatory approvals since many of the risks regulators weigh so carefully for land-based plants do not exist in the Gulf. "The possibility of constructing the terminal offshore may allow it to be built without incurring local citizen objection and it would be less expensive," Nimocks said. Double-walled tankers would offload the natural gas in a liquid state into low-pressure storage tanks. After the LNG is stored, it would then be "vaporized" into natural gas, which can then be transported by pipeline to shore. Texaco's terminal, which would be large by industry standards, would have an initial capacity of 1 billion cubic feet (bcf) of natural gas per day, or enough gas to power upward of 6 million single-family homes. "You would need three terminals of this size running full-time to provide just 1 trillion cubic feet (tcf) of annual LNG import capacity," Gruenspecht said. Total U.S. import capacity of LNG is about 1.0 tcf per year, or about 4 percent of U.S. gas consumption, though actual LNG imports in 2001 will be less than half of that because the two mothballed terminals are only now in the process of being reopened. ALL IN PERSPECTIVE If all the new projects being contemplated do materialize, LNG may feed 8 percent to 12 percent of the total U.S. gas market by 2007. Last year, U.S. demand for natural gas was about 22.7 tcf and is projected to increase up to 12 tcf during the next 10 years as utilities lean more heavily on gas to fire electricity generators, analysts said. In other words, gas now makes up 24 percent of U.S. energy use, but by 2020 that percentage will rise to 36.5 percent. As long as natural gas prices stay above the $3.50/$4.00 per mmBtu range, LNG import projects should be able to make money, analyst Benjamin Schlesinger from Schlesinger and Associates said. But, if prices fall to $3.00 mmBtu, it will be touch and go, Nimocks said. With such bullish gas projections, companies are revamping existing LNG terminals and building new ones. California, in particular, where roughly 40 percent of all electricity generation is derived from gas, would benefit from LNG development. Demand for gas in California, the second-largest U.S. market for gas and 10th-largest producing state, has outstripped the rate of local infrastructure expansion. The resulting shortfall of gas supplies, plus a lack of power plants, explain why the state is in a serious energy crisis. NEW AND EXISTING TERMINALS El Paso, the most ambitious of the LNG players, has plans for up to six new terminals in Mexico, the Bahamas, and the United States, with the first of two Mexican plants possibly on line in three years. And both El Paso and Chevron are looking to bring supply from Australia as high gas prices on the U.S West Coast make an alluring target for vast Asia-Pacific gas resources. BP has tentative plans to build up to three new terminals, with one in Florida, and energy powerhouse Enron Corp. has proposed a plant in the Bahamas connected by a 90-mile (145 km) pipeline to Florida. The LNG terminal-building spree would expand or open up the U.S. market to gas producers like Algeria, Trinidad, Nigeria and Qatar. Texaco, for its planned facility in the Gulf of Mexico, plans to bring LNG from Angola. Existing U.S. terminals are also in for a renaissance. Currently the country has four LNG import terminals, but only two of them - one at Lake Charles, La., the other at Everett, Mass., near Boston - are in operation. The other two, in Cove Point, Md., and Elba Island, Ga., were idled years ago for lack of demand but are expected to reopen in one to three years. "The new LNG plants are not going to make LNG a big player, but they could link natural gas prices in North America to the large supplies of gas elsewhere in the world," Gruenspecht said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India PM Hopes Enron/Dahbol Power Dispute Can Be Settled 06/06/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- The Indian Prime Minister Atal Bihari Vajpayee said Wednesday that he hoped the Maharashtra state government and the Dabhol Power Co., majority-owned by U.S.-based Enron Corp. (ENE), will be able to settle their dispute over the purchase of power, the United News of India reported. The Maharashtra State Electricity Board is the sole buyer for Dabhol-generated electricity, and is in conflict with Dabhol Power over what the state government claims are "unaffordable" power tariffs. The Dabhol project is located in the western Indian state of Maharashtra. "Under the present circumstances, we are trying to resolve the power tariff issue with Enron," the UNI report quoted Vajpayee as saying. Asked whether the federal government would purchase power from Dabhol, Vajpayee said it was too expensive for both the federal and the state governments. Politicians complain Dabhol's costs have averaged more than 4 rupees a unit ($1=INR46.99), compared with the INR1.8 a unit agreed in 1995, for naphtha-generated electricity from the 740-megawatt plant. The dispute erupted last year, when prices shot up to INR7 a unit because of worldwide fluctuations of oil prices and the rupee's depreciation. Maharashtra politicians have called for the tariff to be renegotiated. Other politicians and senior government officials have suggested selling power to nearby power-hungry states. Enron maintains that work to add 1,444 MW to the Dabhol project's capacity will be completed by the end of the year, which it has said will likely bring down prices. The plant will switch from naphtha to cheaper 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. India's Vajpayee Says Enron's Power Costs Too Much, AFP Reports 2001-06-06 12:30 (New York) Mumbai, June 6 (Bloomberg) -- Indian Prime Minister Atal Behari Vajpayee said it would be difficult to find buyers for power produced by Dabhol Power Co., a local unit of Enron Corp., because it's too expensive, the Agence France Presse reported. ``The difficulty (about the high cost of power) facing Maharashtra will be for other states as well. What is to be done about such costly power?'' AFP quoted Vajpayee as saying. Dabhol and the Maharashtra State Electricity Board, its only customer, are in a dispute over power rate. The board has stopped buying power from Dabhol after the U.S. energy company began steps to terminate a $3 billion power venture. Still, Vajpayee said he was hopeful the dispute will be resolved. ``The dispute is on the way to being resolved. I am confident the government of Maharashtra and Enron will come to a solution,'' he said. Indian banks that funded Dabhol and foreign lenders extended a meeting into a third day, after initially planning a two-day meeting in Singapore, to try and save the power project from closure. Indian banks, which have loaned $1.4 billion to the project, have most at stake in the project and are seeking ways to keep it alive. International lenders received government guarantees for about $600 million they lent to the project.
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