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Enron Mail |
Suddenly, Pipeline Project Sparks Interest --- Pakistan, India Summit Revives
Plan for Gas To Travel Over Land The Wall Street Journal, 06/27/01 Enron Direct to tap Alberta retail market Firm's new unit is first major independent electricity and natural gas competitor The Globe and Mail, 06/27/01 U.S. giant enters deregulated Alberta market: Biggest energy trader: Enron Corp. seeks expansion in other areas of Canada National Post, 06/27/01 Former Bush aide named by Perry to last PUC post Houston Chronicle, 06/27/01 Enron says delay in India positive sign Houston Chronicle, 06/27/01 Dabhol: Lessons for FDI The Economic Times, 06/27/01 Powermen stage stir, demand Enron's exit The Times of India, 06/27/01 Europe Weighs Standard Gas-Trading Contract The Wall Street Journal Europe, 06/27/01 Data Centre bubble bursts amidst dotcom meltdown The Times of India, 06/27/01 Enron plans to enter steel trading in India Business Standard, 06/27/01 New York Electricity Supplier Tests Gadget that Controls Heat Via Internet KRTBN Knight-Ridder Tribune Business News: The Philadelphia Inquirer - Pennsylvania, 06/27/01 Coal Cos Take Cautious View Of Nymex Coal Futures Dow Jones News Service, 06/26/01 Oregon Vote on Electricity Deregulation Delayed by Partisan Dispute Dow Jones Business News, 06/26/01 El Paso: Calif Supply Constraints Keep Gas Prices Up Dow Jones Energy Service, 06/26/01 Enron Corp. Dives Into Retail Canadian Power, Gas Markets Dow Jones Energy Service, 06/26/01 Enron to Start Commercial Power, Gas Sales in Alberta (Update1) Bloomberg, 06/26/01 Enron Says Indian Court Defers Decision on Jurisdiction Bloomberg, 06/26/01 International Suddenly, Pipeline Project Sparks Interest --- Pakistan, India Summit Revives Plan for Gas To Travel Over Land By Daniel Pearl Staff Reporter of The Wall Street Journal 06/27/2001 The Wall Street Journal A8 (Copyright © 2001, Dow Jones & Company, Inc.) BOMBAY, India -- A planned summit of India's and Pakistan's top leaders is giving new momentum to a $5 billion international gas-pipeline plan that was once dismissed as a pipe dream. U.S. companies may be left out, though, because the gas would originate in Iran. The decades-old pipeline idea, from gas-rich Iran east through Pakistan and into gas-hungry India, has always floundered on India's reluctance to deal with Pakistan. Since gaining independence in 1947, India and Pakistan have fought three wars and a bloody border skirmish two years ago that derailed efforts to establish some economic cooperation. On July 14, Pakistani Gen. Pervez Musharraf, who seized power in a 1999 coup and recently named himself president, is scheduled to arrive in Agra, India, for his first summit meeting with India Prime Minister Atal Bihari Vajpayee. Pakistan officials have told reporters they expect the pipeline to be discussed. India's foreign ministry won't confirm that, but Mr. Vajpayee gave a green light to pipeline discussions during a recent trip to Tehran, industry officials said. India has previously limited itself to exploring undersea pipelines that avoid Pakistan. After the trip, Iran promptly asked Australia's BHP Petroleum to launch a feasibility study on a land route. "There have been some studies before, but I think this is the most official," an Iranian official said. Pipeline talks could present a quandary for the Bush administration. Washington has encouraged India and Pakistan to reduce tensions on the subcontinent, but has strongly opposed previous energy projects involving Iran. U.S. oil companies are lobbying hard for the administration to let sanctions on Iran expire this year instead of renewing them for two years. Though the 1,500-mile pipeline remains a long shot, it may be one of the few topics India and Pakistan can discuss without fear of political backlash at home. Neither country is likely to budge from their hardened positions on the disputed Kashmir territory, and low-level talks aimed at reducing risks of nuclear weapons have so far come to naught. Pakistan stands to gain badly needed revenue from transit fees; estimates range between $260 million and $600 million a year. India could get relief from a gas deficit that has fertilizer plants running on reduced fuel and power plants running on more-expensive naphtha. Also, India's biggest private company appears to be shifting the balance in favor of an Iran pipeline. Reliance Industries Ltd., a Bombay-based polyester and petroleum company that is gearing up to challenge government monopolies in telecommunications and gas supply, recently launched a $10 million study on importation of liquefied gas from Iran to India by ship, in partnership with BP Inc. and National Iranian Oil Co. But industry officials familiar with Reliance's plans said the company is expressing interest in the pipeline option, too, because of its cost advantages and potential to provide a backup energy source for Reliance's huge industrial complex in India's northwestern Gujarat state. Reliance wouldn't comment on its gas-supply plans. If the company does insert itself as a potential buyer of the pipeline gas, a deal could become easier to negotiate than if India's state-owned gas company were the buyer. Still, "What's missing really at this moment is someone who would broker an arrangement," says Hugh McDermott, a principal of consulting firm Nexant Inc. who heads a U.S.-funded project promoting energy cooperation among South Asian countries. (Pakistan isn't yet involved). The less India and Pakistan are willing to trust each other, the bigger role Iran is likely to play in any pipeline. One scenario being discussed within the gas industry is for Iran to agree on delivery all the way to the Indian border, paying Pakistan's transit fees and guaranteeing safe passage through Pakistan. Iran and Pakistan have warmed their previously frosty relations recently, but whether Iran -- or even Pakistan itself -- could really guarantee the pipeline's security is an open question. Matthew Forman, South Asia specialist at the London-based consulting firm Control Risk Group, said the pipeline would run through the huge and remote province of Baluchistan, a lawless haven for smugglers where suspected tribal militants recently attacked a Chinese petroleum-engineering company with bullets and rockets. Pakistan "will have to work hard to give the impression [the pipeline] is safe and reliable," Mr. Forman said. "It is going to need some serious political will for it to go ahead." Several competing proposals to bring natural gas to India have run into trouble lately. Enron Corp. recently withdrew from the latest plan for an underwater pipeline from the Persian Gulf. Unocal Corp. tried to promote a pipeline through Turkmenistan, Afghanistan, Pakistan and India, but Unocal shut down its Turkmenistan office in 1999, after finding the lure of transit fees wasn't enough to make Afghanistan a stable country. Unocal, Royal Dutch/Shell Group and other oil companies have staked out gas interests in Bangladesh, but Bangladesh officials have so far spurned oil companies' pleas to allow export of gas to neighboring India. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Report on Business: Canadian Enron Direct to tap Alberta retail market Firm's new unit is first major independent electricity and natural gas competitor DAVID PARKINSON 06/27/2001 The Globe and Mail Metro B3 CALGARY -- U.S. energy trading giant Enron Corp. announced yesterday the launch of a retail electricity and natural gas business in Alberta, becoming the first major independent competitor to enter the Alberta market since the province deregulated electricity at the start of the year. Enron Canada Corp., the Canadian unit of Houston-based Enron, unveiled Enron Direct Canada Corp., a new unit that will sell electricity and natural gas directly to commercial and light industrial businesses in Alberta. The company will go head to head with Alberta's established major utility retailers -- mainly Enmax Corp. of Calgary and Epcor Utilities Inc. of Edmonton -- in the battle for the roughly 120,000 business customers in the province's deregulated natural gas and electricity markets. "Obviously, we'd like to gain market share and be a significant competitor in Alberta," said Rob Milnthorp, president and chief executive officer of both Enron Canada and the new Enron Direct unit, from his office in Calgary. Enron enters the Alberta retail market at a time when some of the traditional regulated utilities have been moving away from the retail business. TransAlta Corp. sold its retail business last year, and Atco Ltd. announced in May that it put its retail operations up for sale to concentrate on the regulated side of its utilities. "I think this is a market where money is to be made, but it takes considerable marketing and trading skills," said analyst Winfried Fruehauf of National Bank Financial in Toronto. Enron's announcement prompted speculation that the company might be interested in the retail electricity and natural gas operations of Atco Ltd., which feature a base of about one million commercial and residential customers. Mr. Milnthorp wouldn't say whether Enron has talked with Atco about buying the assets. But Mr. Fruehauf said it "wouldn't surprise" him if Enron was interested. Enron has been providing retail power to commercial customers since 1993, when it launched Enron Direct in the deregulated British market. Since then, the company has expanded its retail sales into the United States, Spain and the Netherlands. Enron has been involved in wholesale energy marketing in Canada for several years. It began dabbling in the Alberta retail market four months ago, taking on a handful of commercial customers while it built up its retail office in preparation for an all-out launch. Its existing customers include retailer Calgary Co-operative Ltd. and real estate firm Boardwalk Properties Co. Mr. Milnthorp declined to say how many customers the Alberta retail operation already has, nor would he divulge the company's targets for the number of customers it hopes to add over the next year. However, he did say the company would be interested in expanding Enron Direct into Ontario once that province completes electricity deregulation. "If the regulatory market is conducive to competition, then we want to be there," he said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Financial Post: Canada U.S. giant enters deregulated Alberta market: Biggest energy trader: Enron Corp. seeks expansion in other areas of Canada Carol Howes Financial Post 06/27/2001 National Post National C06 © National Post 2001. All Rights Reserved. CALGARY - Enron Corp., the biggest energy trader in North America, has begun selling electricity and natural gas to consumers in Alberta and is looking to expand into Canada's other deregulating power markets. Enron Direct Canada Corp., a new Calgary-based subsidiary, will enter the market by selling to commercial and small industrial businesses and will evaluate demand for residential sales over the next few months. "As other markets open up -- if in fact the regulatory environments in those different parts of Canada are conducive to competition -- we will take a very serious look at becoming a major player [there]," said Darren Cross, chief operating officer of Enron Direct. Alberta opened its electricity market to competition Jan. 1, prompting ATCO Ltd., one of Canada's biggest publicly held utility companies, to put its retail electricity and gas units up for sale. Last year, Alberta's other large power generator, TransAlta Corp., sold its retail electricity unit and power lines to Kansas City-based UtiliCorp United Inc. for $860-million. UtiliCorp then sold the retail business to Edmonton's municipally owned Epcor Utilities Inc. for $110-million. Rob Milnthorp, president and chief executive of Enron Canada, said his company expects to make money where others couldn't because of its hold on the Canadian wholesale market and its ability to offer competitive pricing. "Where we really have the distinct advantage is our wholesale backbone. Being the largest wholesaler of natural gas and electricity in Canada gives us tremendous strength," he said. Mr. Milnthorp declined to discuss whether Enron has made a bid for ATCO's businesses, which were expected to be sold by the end of June. "Based on confidentiality restrictions we can't comment on that right now," he said. The retail units, which are essentially ATCO's 900,000 home and business customers, have been estimated at $300-million to $325-million. Jim Campbell, ATCO's chief financial officer, said the sale is "progressing as planned," but couldn't comment further. ATCO put its retail operations up for sale to concentrate on its government-regulated generation and distribution arms. Enron plans to offer long-term, flexible contracts to customers, eliminating some of the concern over the volatile pricing that has hit Alberta and elsewhere this past year. The company has already started marketing the energy contracts to Alberta's 100,000 businesses. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. June 27, 2001 Houston Chronicle Former Bush aide named by Perry to last PUC post By LAURA GOLDBERG Copyright 2001 Houston Chronicle A woman who served as a policy director for former Gov. George W. Bush will fill the last vacant spot on the agency that is overseeing the state's move to electricity deregulation. Gov. Rick Perry on Tuesday appointed Rebecca Armendariz Klein of Austin to the state Public Utility Commission. Armendariz Klein, currently a consultant with KPMG Consulting, served as general government policy director when Bush was governor. She also has previously worked as a senior attorney for the PUC and as a telecommunications law analyst for the American Enterprise Institute. Perry also announced Tuesday that Mario Max Yzaguirre will serve as chairman of the three-member PUC. Perry named Yzaguirre, who recently resigned from Enron Corp., to the PUC earlier this month. Consumers Union criticized Yzaguirre's appointment because of his ties to the energy industry. But Reggie James, director of the southwest regional office of Consumers Union in Austin, expressed support for Armendariz Klein. "We feel that she is going to be a competent commissioner," he said, adding that her technical and other experience make her suited for the job. "We've worked with her before," he said. "We know that she's bright." Consumers Union, he said, is happy to see someone with a more neutral background than Yzaguirre appointed, he said. The two join Brett Perlman of Houston on the PUC. He was appointed in 1999 by Bush. "Texans can count on her for fair treatment," Perlman said in a written statement. Given the great impact that the PUC has on consumers, "it was Gov. Perry's strong desire" to have one of his appointees as chair, said Kathy Walt, a Perry spokeswoman. "Gov. Perry is confident that both of his appointees on the Public Utility Commission will represent the varied interests of Texans," she said. The appointments come as Texas prepares to open its electricity market to competition. Starting Jan. 1, Texans will be able to choose their electricity providers. The PUC also oversees the telecommunications market. Armendariz Klein, who graduated from high school in Corpus Christi, has a bachelor's degree from Stanford University, a graduate degree from Georgetown University and a law degree from St. Mary's University School of Law in San Antonio. She is also a major in the Air Force Reserves, where she also serves as a staff judge advocate general. One of the two vacancies Perry had to fill occurred recently when PUC Chairman Pat Wood III stepped down after President Bush named him to the Federal Energy Regulatory Commission. June 27, 2001, 12:37AM Briefs: Houston & state Enron says delay in India positive sign Enron Corp. said an Indian court deferred a decision on whether a regulatory agency has the jurisdiction to rule in a dispute between the company and a regional government that is refusing to pay its power bills. The Bombay High Court gave the Maharashtra Electricity Regulatory Commission, the regulatory agency, six weeks to decide whether it has jurisdiction to settle a dispute on termination of the 7-year-old power-purchase agreement. Enron called the ruling positive. Enron owns Dabhol Power Co., which has a $3 billion power plant in Maharashtra state. The project's sole customer is the Maharashtra State Electricity Board, which said May 24 that it is canceling an agreement to buy power from the Dabhol plant. Dabhol: Lessons for FDI Swaminathan S Anklesaria Aiyar 06/27/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) IT WILL be hard for foreign investors to look seriously at India until this (Dabhol) dispute is resolved in a satisfactory way. So said Alan Larson, US Under-secretary of State for business and agriculture, at the meeting of the Indo-US Business Council last week. Many other observers of the foreign investment scene, including Indian diplomats in Washington, say the same. Some Indians take comfort in the fact that neither Moodys nor Standard and Poors have downgraded India as a credit risk. But these rating agencies rate the safety of not FDI but of sovereign Indian paper. Now, the government of India is clearly able and willing to service all its foreign debt. Its forex reserves stand at a record $43 billion, and its debt service ratio is down from a peak of 33 per cent to just 15 per cent or so. In the case of Dabhol, the central government has reaffirmed that it will honour its counter-guarantee. The entity that is both unwilling and unable to pay is the Maharashtra state government. The Maharashtra chief minister has made it clear that he does not believe in enforcement of contracts: he believes a politician has the right to renege on contracts simply on the ground that the price looks too high. Such wilful default is far worse in the eye of the foreign investor than mere bankruptcy. Maybe Dabhol will be renegotiated satisfactorily and the dust will settle. Meanwhile, it is essential to distil lessons from Dabhol for FDI. One lesson is that a foreign investor who negotiates a deal that yields a fabulous price from his viewpoint but bankrupts the customer is not a fabulous deal at all but a bad one that invites political risk on top of commercial risk. The second and more important lesson is that state governments in India are bankrupt but individuals and corporations are solvent. Enron made the serious error of thinking it was easier to collect dues from a state government than individual consumers. Other foreign investors in telecom, ports, banking and roads are faring better because their bills are paid by individuals and corporations. Not long ago, Maharashtra was regarded as one of the best administered and most solvent states. The Maharashtra State Electricity Board used to generate healthy profits in excess of Rs 100 crore per year. The states fiscal deterioration in the last five years has not received the attention it deserves. All states were hard hit by the Pay Commission award, and most analysts (including me) blithely assumed that `good states like Maharashtra would bounce back. That optimism has turned out to be misplaced. Except for Gujarat, Tamil Nadu and possibly one or two others, state governments today seem unable to meet their commitments. Worse, they regard this state of affairs as somewhat unfortunate but nevertheless a political necessity. They are not inclined to make the wrenching changes needed reducing non-merit subsidies and surplus staff, while increasing the collection of taxes and user charges. The quality of public services keeps deteriorating, which is why ruling parties keep losing elections. What election pundits call the anti-incumbency factor is simply unrepentant non-performance. This has been institutionalised since every outgoing regime believes that the other side will fail to perform too, letting it return to power unreformed. For many decades of planned development, the private sector was perceived to have little money while governments were perceived to have very deep pockets. The very opposite is true today. State governments are bust, and cannot deliver even basic services like primary education and health. Meanwhile, the private sector is able to take up the biggest projects ever. Reliance has just built the biggest oil refinery in the world with no government assistance at all. Individuals today shell out Rs 20 lakh or more for luxury cars, but governments departments cannot afford even Ambassador cars. So, conventional wisdom has been turned on its head. Today, the central government remains the most creditworthy of all entities. But, clearly, individuals and companies, warts and all, are more capable of paying their dues than all but a few state governments. What implications does this have for FDI? Any foreign investor must carefully survey potential customers first. If the main or only buyer is a state government and this is the case for power projects they should see this as a red flag. Enron is not the only power producer that cannot collect. The NTPC cannot collect in full from Kerala for power from Kayamkulam, and Andhra Pradesh too is in arrears of payment for private power. In all, state governments have run up arrears of Rs 40,000 crore to public sector suppliers alone. If states cannot pay Coal India, Bharat Heavy Electricals or the NTPC for supplies, why should foreign investors except any better treatment? When state governments refuse to honour even bank guarantees, can they be expected to honour escrow commitments? However, default does not plague other investments where the customers are corporations or even small individuals. FDI in ports is working, because port charges are payable by shipping companies, not state governments. FDI in telecom is working because bills are paid mainly by companies and individuals. Toll roads are working too, because the tolls are paid by individual motorists and truck drivers. Finally, the central government remains solvent. So FDI in Railway equipment or defence equipment looks safe enough. The problem lies not with India as a whole, but with state governments in particular. So the real lesson for foreign investors is beware of any projects where state governments are the sole or even important buyers. Assume that a political culture of non-payment is spreading where state governments regard the presentation of unpaid bills as an irritant rather than a badge of shame. Finally, do not confuse the bankruptcy of state governments with the bankruptcy of India or individual Indians. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Powermen stage stir, demand Enron's exit The Times of India News Service 06/27/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) LUCKNOW: With an announcement to continue their agitation till the Enron is chased out of the country, the power engineers and employees all over the country observed 'Enron Bharat chodo Diwas' on Tuesday. The call of the agitation was given by the National Coordination Committee of Electricity Employees and Engineers (NCCOEEE). The power men staged demonstrations in front of the Shakti Bhawan here. Similar demonstrations and other protest meetings were also held at other district headquarters of the state. Addressing a meeting, the convenor of Vidyut Karmachari Sanyukt Sanghursha Samiti, Shailendra Dubey, said that the privatisation experiment of the power sector had totally failed and Enron was one of its examples. He said that the Maharashtra Electricity Board had incurred a whopping loss of about Rs 2000 crore in one year because the generation cost of 744 MW capacity Dabhol Power Project was Rs 8.26 per unit. "As per the guarantee given by the Maharashtra government to Enron company and the counter-guarantee given by the central government, if the Maharashtra electricity board does not purchase power at such exorbitant rates even then the board will have to cough up the capacity charge of Rs 95 crore per month to the Enron company," explained the samiti leader. He said that if the power agreement was not cancelled then not only Maharashtra electricity board but even the Maharashtra state would become bankrupt. The meeting passed a resolution urging the UP Power Corporation not to purchase power from the Enron under any circumstances. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. European Markets Europe Weighs Standard Gas-Trading Contract By Germana Canzi Dow Jones Newswires 06/27/2001 The Wall Street Journal Europe 12 (Copyright © 2001, Dow Jones & Company, Inc.) LONDON -- Opening up Europe's gas market is slowly getting underway. One crucial element is lacking -- a standardized short-term trading contract that will help large customers to pick and choose the best offer in the market, rather than remain shackled to a traditional long-term supplier. Energy company representatives will gather in Amsterdam today to thrash out such a contract. "Due to the development of gas markets in Europe, especially in Germany, the time is ripe for creating a standard European contract," said Joerg Spicker, a spokesman for the European Federation of Energy Traders. Mr. Spicker is managing director of the German subsidiary of Aquila Energy, a Utilicorp United Inc. unit. EFET members will create a "template" that could be used in all the trading hubs around Europe, which are emerging as delivery locations for gas sold on a short-term basis, Mr. Spicker said. An attachment to the standard contract would specify which hub will be used for physical delivery of the gas. "One hurdle to liquidity (in these hubs) is the lack of a standard contract," Steve Asplin, director for Benelux operations at energy firm Enron Corp. said, adding that he sees the EFET initiative as a positive step forward. The standard contract is likely to be in euros per gigajoules and will enable counterparties in the trade to choose which domestic law -- German, Dutch or English -- should apply to the contract. By creating such a contract, EFET aims to replicate in the gas sector the success of its two standard contracts for European electricity trading, which were launched in 1999 and 2000 and are now widely used for the wholesaletrade of electricity on the continent. The standardization of contract terms is deemed essential for development of spot markets in mainland Europe, following the blueprint set by the U.K. since the 1980s and in Belgium since 1999. In addition, the EFET initiative comes just one week ahead of another industry-wide meeting in London, when representatives of European gas industry will discuss the creation of U.K.-style trading hubs in northwestern Europe. Since earlier this year, small amounts of gas from the U.K., the Netherlands and Norway have been sold on a short-term basis -- instead of through traditional long-term contracts -- for delivery in places such as Emden and Lampertheim in Germany and Oude Statenzijl and Bunde on the Dutch/German border. The development of short-term trading there been made possible by the gradual opening up of pipelines through the so-called third-party access measures imposed by the European Union's gas directive, which most member states implemented by the August 2000 deadline. Developments in the German market, which is estimated at 82 billion cubic meters a year, have been closely watched by foreign companies wishing to sell gas to large industries, which are now free, at least on paper, to move away from their traditional long-term suppliers. Today's meeting in Amsterdam will be largely attended by lawyers representing EFET members, such as Germany's RWE AG, the U.S.'s Mirant Energy Corp, Dynergy Inc. and Enron Europe Ltd. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Data Centre bubble bursts amidst dotcom meltdown Saikat Chatterjee 06/27/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) NEW DELHI: The birth pangs for the barely year-old domestic Internet data center (IDC) industry have been painful, to say the least. The industry has gone through enough euphoria and depression to last other industries a lifetime. IDCs --which house thousands of servers in which companies borrow space to host their websites -- are now grappling with few clients, empty racks and missed targets. Bucked up by the dotcom frenzy, companies pumped in thousands of dollars to build IDCs only to find out that the market for webhosting services have suddenly evaporated. A classic example is Exodus itself--the company that pioneered the IDC business. It took $3.5 billion in debt to go on a massive expansion plan only to find out later that demand had dried up as its main clients, the dotcoms were falling like ninepins. Fortunately, Indian companies in this category remained relatively unscathed as most of them had just started their business or were giving final touches to their business plans when the ``irrational exuberance'' in the dotcom arena came to an end in April last year. Though some did burn their fingers they haven't been scarred. However, not everyone was spared. EXATT, a start up that planned to offer IDCs among other offerings, is reported to have shut down. Similarly, Enron and Reliance which announced aggressive plans in this area are learnt to have put a brake on their expansion plans. Even though there are only a handful of players, the Indian IDCs are working with grossly underutilised capacity ranging from 10-20 per cent depending on the operator. Despite the advantages of hosting your site in India, many Web hosting companies still advise their clients to host abroad. ``Today a client has to pay more for hosting in India as the bandwidth costs are astronomical compared to the US. There is also a risk of losing traffic/business as the response time is higher in India-based hosting in the absence of peering arrangements between the major ISPs including VSNL,'' states Atul Gupta, CEO of Pugmarks. Contradicts Sify's Avinash Jayapraphu, VP hosting services, ``When the traffic is India-centric it is best to host your site in India. We also have peering agreements with VSNL in place.'' Explains Gupta, ``We (India) are burning a lot of premium bandwidth in double circuit data flow in the absence of peering. Internet users of an `X' ISP would need to go all the way to US and come back to India to fetch data from a data center not connected to that ISP. It adds to the delays.'' Though churn rates are still low compared to US levels, almost every data centre, especially the older ones have faced it. Says Sanghi, ``Our only casualty has been Chaitime.com. But we've recovered our dues from eVentures, which funded us as well as Chaitime.'' Similarly, Satyam acknowledges that so far two customers has dropped out but argues it is small compared to its client base of 150 odd companies. With most data centers crowding the corporate space business has been hard to find. ``Given the market condition, it is difficult to win new clients. Even corporates are delaying technology spending until the market looks up,'' says Amit Goenka, CEO of Cyquator Technologies. Nobody is thus talking about expansion plans. Not until the market looks up. Will it be six months, one year? Your guess is as good as mine. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron plans to enter steel trading in India Rumi Dutta & S Ravindran MUMBAI 06/27/2001 Business Standard 9 Copyright © Business Standard The US-based power giant Enron Corp is planning to get into the steel trading business in India. The decision comes at a time when it has been reviewing its India plans and when the global steel industry is in the grip of a recession. Enron is actively looking out for steel traders in Asian countries like India, China, Thailand, Japan and Korea, the company said through a recent advertisement. The company at present is into the power, gas, broadband, oil, coal, pulp and paper, credit and equity derivatives businesses. Enron is seeking to "change the way in which the global steel industry transacts", steel industry sources added. The company plans to focus on expanding the Asian market besides introducing risk management and financial hedging products in the steel industry. At the same time, to facilitate online business, a network platform is being put in place. However, the Enron spokesperson was unavailable for comment. The energy giant has put most of its India plans on the backburner except the 2184 mw Dabhol power project. The continuance of the project is under cloud, too, as the Maharashtra government has set up a committee headed by former Union home secretary, Madhav Godbole, to renegotiate the 1,444 mw second phase of the project. The future of another company, Metropolitan Gas, which laying gas pipelines for transporting liquefied natural gas (LNG), too, is in doubt. Earlier, Enron had pulled out of its joint venture with the Maharashtra State Electricity Board (MSEB) and Global Tele-Systems to lay an optic fibre network across the board's transmission lines. Enron Oil and Gas is also planning to exit its operations in operations in the Cambay basin and Panna Mukta oilfields. Although it is not clear why Enron is planning to get into steel in the wake of a global recession industry analysts say that it will not encounter one problem faced by its power sector operations_an ailing state electricity board. Over the last few months Maharashtra State Electricity Board and the Enron -promoted Dabhol Power Company which is setting up the controversial power project in the state have been locked in payment disputes. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. New York Electricity Supplier Tests Gadget that Controls Heat Via Internet Akweli Parker 06/27/2001 KRTBN Knight-Ridder Tribune Business News: The Philadelphia Inquirer - Pennsylvania Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM) Ah, the 1990s: Sport-utilities ruled the roads. Computers, printers and other office gadgets invaded homes. Energy to feed them was cheap and plentiful. Conservation fell casualty to Americans' increasingly energy-dependent lifestyles. But indulgence came at a price: As consumers have discovered via soaring gasoline prices and winter heating bills, payback time has arrived. And deregulation of the electricity industry could lead to similar sticker shock in coming years. Now, New Power Co., a competitive electricity supplier based in Purchase, N.Y., is giving consumers a way to prepare for that day. In Philadelphia and Houston, it has begun testing an electronic gizmo that lets the utility control home heating and cooling systems, plus some lights and appliances, via the Internet. Postal worker Bill Dobbins, who lives near the Franklin Mills Mall, is among the 300 Philadelphia-area volunteers trying out the high-tech devices. One, a remote temperature control, lets New Power adjust Dobbins' thermostat via signals sent over the Internet by two to six degrees, so that his heating and cooling system conserve power. Dobbins said he joined the experiment because he's "interested in that type of thing." Plus, "there's the monetary reward." New Power is paying volunteers $25 to $75 to participate in the program through September. For New Power, which is backed by Enron Corp. of Houston, the money is a pittance compared with the juicy customer data the test program should reveal. "What we're really interested in is consumer behavior," said Tim Vail, New Power's vice president of energy technology solutions. "How does the consumer use [the new system]? Do they use it?" New Power and other electricity providers think the setup can save them big bucks when supply on the electric grid is tight. Vail said the company is examining how to share some of those savings with customers when and if the program is delivered to a wider audience in coming years. The company has divided this summer's test into three parts. The first uses an automated electricity meter, which will keep tabs on a household's daily energy use and help New Power understand typical consumption patterns. The second part is a heating and air-conditioning control pilot, like the one installed in Dobbins' home. It commandeers a consumer's thermostat and adjusts it two to six degrees as directed by New Power. The consumer can override the automatic commands. "You can't give them a widget and ask them while they're in the middle of a dinner party to sweat," said Lou Budike, president of Powerweb Technologies, an energy software company in Media that is negotiating with New Power to provide more-detailed usage information to consumers online. Part three of the test lets consumers remotely change their thermostats or switch lights on and off using any Internet device -- a trick, the company says, that could come in handy for discouraging burglars and for conserving power while away on vacation. The centerpiece of New Power's experiment -- giving a utility the ability to control customer devices when needed -- is actually a twist on an old theme in the electricity business: Get enough large customers off the power grid when demand is highest, and you greatly reduce the risk of blackouts. Power on the wholesale market is also most expensive at times of day when demand is highest. So getting big users off the system can save money for the power company. In New Power's experiment, a "big user" is actually a bunch of small customers who have agreed to let New Power automatically adjust their thermostats based on conditions in the regional energy market. New Power calls the plan "joint energy management." It remains to be seen, though, whether companies such as New Power can corral enough small customers in this manner to turn a profit. Even with small business customers, "the margin on that size of account is not tremendous," said Jean-Louis Poirier, an energy analyst with PA Consulting Group in Washington. "The residential market is very difficult," Poirier said, because the cost to sign on a residential customer can range from $200 to $700. Still, he said these "demand-side management" programs have great potential for savings. "In the industrial and commercial market, many times you can save 15 to 20 percent with both changes in customer behavior and capital investment," Poirier said. Under state law, retail prices for electricity in Pennsylvania are capped for several years. For Peco Energy Co.'s customers, the cap lasts through 2006 for transmission and distribution charges and through 2010 for generation charges. After this safe harbor for consumers expires, utilities can pass along more costs to their customers. In a deregulated environment, this could mean alarming price increases if consumer demand cannot be quickly reconciled with supply. That, in simple terms, explains California's electricity crisis of the past several months: Retail customers had no incentive to respond to the turmoil in wholesale power markets until it was too late. But generally speaking, customers on alternative plans that adjust rates based on demand or time of day can receive big discounts or rebates over plain vanilla rates -- if they use electricity at the right time. For instance, consumers willing to dry clothes late in the evening instead of during peak electricity use hours could pay less for the electricity they use. Conversely, they could wind up paying more by running the dryer during peak times. It's an idea regulators want to see more of. The Pennsylvania Public Utility Commission this year ordered all utilities serving the state to implement programs that deal with the customer, or demand, side of the energy equation. While Peco has a time-of-use rate available for residential and other customer classes, spokesman Michael Wood said it is not heavily marketed. The company is, however, starting its own pilot program this month with 50 Delaware County customers, offering a "smart thermostat" similar to New Power's. Peco will offer a discount to customers who let it raise their thermostats two to four degrees for up to four hours at a time, when demand for electricity is high. "Without that, there's no strong incentive for consumers to conserve, when they don't see the benefit on a real-time basis," Wood said. Vail said New Power hopes to offer homeowners throughout its territory a product based on the technologies in its pilot program by next summer. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Coal Cos Take Cautious View Of Nymex Coal Futures By Christina Cheddar Of DOW JONES NEWSWIRES 06/26/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- The July 12 debut of a long-awaited coal futures contract on the New York Mercantile Exchange has the potential to increase the liquidity of the spot market for the commodity and the volatility of coal prices. However, some coal suppliers are cautious not to overestimate the impact the event will have on the industry. Still, analysts say the futures contract could attract more investor interest to coal company stocks because it may increase the amount of information investors have about the direction of coal prices. Currently, about 20% of the nation's coal is sold in the over-the-counter spot market, which includes trading exchanges run by Enron Corp. (ENE), Williams Cos. (WMB) and Aquila Energy Corp. (ILA). While an over-the-counter market existed for decades, it has gotten much more volatile in recent years as supplies of coal tightened. Some company officials and industry analysts believe the coal market has never been in a better position for the introduction of a Nymex contract than it is now because the current supply-demand balance is much more healthy for the industry. Years of a supply glut, and the low prices that followed, forced many coal companies to shut down high-cost mines. Also, industry consolidation made the surviving companies more efficient. Over the past year, high natural gas prices and short supplies of electricity in some regions further strengthened industry trends by increasing the demand for coal from power producers, which can use coal to generate electricity. Despite these favorable industry trends, vast differences in the properties of coal will make it more difficult to trade than many other commodities, analysts said. Types of coal are typically separated by region - for example, East, West and Appalachian. The amount of sulfur, ash, moisture and volatile matter in the coals also has an impact on how the fuel is priced. "Coal is not a homogenous product by any means," said Michael Dudas, an analyst at Bear Stearns & Co. Also complicating the trading of coal contracts is the lack of flexibility about where coal can be physically moved, said David Khani, an analyst at Friedman Billings Ramsey & Co. "It will take an industry behind the scenes to (make it work)," he said. Another constraint is the industry's practice of signing long-term supply contracts, which can sometimes stretch more than a decade. Some fear that if too much supply remains locked into contracts, it will stall the building of liquidity in the futures market. In recent years, however, buyers have opted more often for supply contracts that average three to five years in length. Often, these agreements include options that allow the deals to be renegotiated if there is a dramatic change in prices. In order for coal to trade successfully, it will need to clear these hurdles. Dudas warned that not every contract the Nymex launches succeeds, and said he will be among those waiting to see how things develop. "I'm not sure how much liquidity we might see in the start," he said. Peter Ward, an analyst at Lehman Brothers Inc., also raised concerns about liquidity. He said his initial perception is that it will be tough to trade a coal contract because so little coal currently is traded in the spot market. Others were more optimistic. It may take a while to take off, said Morgan Stanley Dean Witter analyst Wayne Atwell, but Nymex trading should make for a deeper market. Khani said the contract is important for the industry because the equity market needs to see easily where coal prices are trading. "The price of coal is somewhat of an enigma to a lot of people," he said. "(Investors) are making the judgment that coal prices fall with oil and gas prices, but coal prices are holding very firm," he said. Coal Suppliers See Futures As New Industry Tool Some coal suppliers are less doubtful about the contract's ability to be successful. However, they expect it will take some time before there is enough interest to affect their earnings significantly. Arch Coal Inc. (ACI) views the Nymex contract as a tool that it can use to hedge its exposure in the market, said Henry Besten, vice president of strategic marketing. Although Besten expects the exposure on Nymex will increase the liquidity of the current spot market for coal, he also said it is a natural extension of the trading activity that already exists. Besten also expects the exposure on Nymex will introduce financial players into the market, which may increase the volatility of coal prices. Although Arch will take advantage of trading opportunities to try to increase its profits, the St. Louis company doesn't think of trading as a separate revenue stream. The event may ultimately be more significant for Peabody Energy Corp. (BTU), which is a more active trader of coal. About 3% of Peabody's revenue, and roughly 3% to 5% of its earnings, come from its trading activities, said Vic Svec, a company spokesman. He added that Peabody, the largest private-sector coal company in the world, doesn't provide specific segment detail. According to Svec, the St. Louis company began expanding its coal-trading business once it saw the market was moving toward real-time trading. Coal trading provides Peabody with an additional tool through which it can fulfill its contracted orders, sell its uncontracted coal and produce a sales-trading book of business, he said. Svec said it was too early to determine what impact the Nymex contract may have on its revenue growth. "It has the potential to improve the liquidity in an emerging trading market," Svec said. It also may be too soon for others to judge as well. An official at Massey Energy Co. (MEE), a Richmond, Va., coal company, declined to comment on the upcoming contract and said the company was still "studying the situation." Officials from several other coal companies didn't return phone calls asking for comment. The upcoming futures contract also will give large industrial users of coal the ability to hedge their exposure to price swings in the market. Some large coal consumers may decide to employ a variety of purchasing techniques, including signing long-term contracts for a portion of their needs, while fulfilling the remainder of their needs in the spot market. -By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Oregon Vote on Electricity Deregulation Delayed by Partisan Dispute 06/26/2001 Dow Jones Business News (Copyright © 2001, Dow Jones & Company, Inc.) SALEM, Ore. -- Oregon's final vote on a bill setting a March 1 start date for partial electricity deregulation may be delayed several more days because of an unrelated partisan dispute, the bill's sponsor said. Oregon's House of Representatives was originally scheduled to vote Monday on the bill that would give large business customers the option of retaining regulated rates until July 2003 or buying power from competing electricity suppliers beginning March 1, 2002. But Democrats have boycotted the state's Capitol since Monday in protest of a Republican-backed redistricting plan, said Representative Betsy Close (R., Albany). "It's unlikely we will get to the [deregulation] bill Wednesday, though it could happen any day now," she added. Since the redistricting plan lapses if it isn't acted upon by Sunday, Rep. Close said a vote on the deregulation bill isn't likely to be postponed beyond this week. "My guess is we'll vote by Friday. ... Once it comes to a vote, the bill should pass easily," she noted, adding that she believed Gov. John Kitzhaber supports the measure. If the restructuring bill passes, state regulators will determine by late July which customers of Enron Corp.'s (ENE) Portland General Electric Co. unit and Scottish Power's (SPI) PacifiCorp qualify as "large businesses," said Bob Valdez, Oregon Public Utilities Commission spokesman. Residential and small-business customers will continue to have regulated rates. Large customers were originally slated to be allowed electricity-generator choice on Oct. 1, but Mr. Valdez said legislators want to revise the date to ensure the state gets through its high-demand winter months without the possibility of glitches caused by the new system. The new date also ensures customers won't mistakenly attribute an unrelated rate increase, also planned for Oct. 1, to the start of deregulation. The rate increase is necessary because the Bonneville Power Administration, a federal hydropower marketer which sells to the state's utilities, must buy more power than usual in the high-priced spot market to meet burgeoning customer demand. Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. El Paso: Calif Supply Constraints Keep Gas Prices Up 06/26/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) HOUSTON -(Dow Jones)- Natural gas prices, at six-month lows across most of the country, are still influenced by pipeline constraints in California, El Paso Corp. (EPG) contended Tuesday. "Demand for natural gas in California has exceeded available supply," said Norma F. Dunn, El Paso's senior vice president of communications and government affairs. Dunn said a gas supply-demand imbalance "still exists in California," but not because of transportation tariff agreements on the El Paso pipeline system. El Paso's response to the high gas prices in California came a day after the Federal Energy Regulatory Commission said it will investigate California's gas infrastructure to determine why gas prices into the state are so much higher than in other parts of the country. "If you look at the map to see where prices are unusually high, you'll see one place is northern California and the other is southern California," said FERC Commissioner Pat Wood on Monday during a meeting with California regulators and state officials. Wood singled out gas transportation into and within the state as "something of concern." But reduction in demand and increases in supply, along with moderating weather nationwide, have led to a fall in gas pricing nationally, according to a press release from El Paso on Tuesday. Dunn said because California doesn't have a sufficient pipeline infrastructure, demand for gas in the state is still higher than the available supply. In June 2000, when El Paso Natural Gas Co.'s El Paso Merchant Energy unit held transportation rights on the system, the natural gas price differential between Texas and New Mexico producing regions and California was 27 cents, only 5% of its present differential, Dunn said. The differential from the producing region to New York on Transcontinental Zone 2 Pool was 38 cents a year ago, and 45 cents this month, the company said. In the Midcontinent, El Paso said the price differential on NGPL-Midcontinent pipeline, ANR-Oklahoma and Northern Natural Gas pipeline ranged from 25 cents a year ago to 29 cents in June. The company based its figures on industry pricing data. El Paso Merchant Energy is one of about 30 companies that own capacity on the El Paso line, including Enron Corp. (ENE), Dynegy Inc. (DYN), Duke Energy (DUK), PG&E Corp. (PGC), Williams Energy (WMB), San Diego Gas & Electric Co., and Sempra Energy (SRE) units Sempra Energy Trading Corp. and Southern California Gas Co. Also, Dunn said, gas prices have fallen considerably in California since the winter, with more electricity available from non-gas-fired generation, including nuclear and hydroelectric facilities, cutting back a need for gas-fired plant fuel. Energy conservation efforts have eased power demand, and storage facilities across the country are filling at a record pace. Recently, El Paso offered open seasons on lateral pipelines within California and intends to expand its system in the state. -By John Edmiston, Dow Jones Newswires; 713-547-9209; john.edmiston@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Corp. Dives Into Retail Canadian Power, Gas Markets 06/26/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) CALGARY -(Dow Jones)- Enron Corp. (ENE), the Houston-based energy marketing company, launched Tuesday a Canadian retail natural gas and power subsidiary in Calgary, looking to cash in on the deregulated electricity market in Alberta. The new unit, Enron Direct Canada Corp., is targeting about 100,000 industrial and commercial consumers in Alberta, seat of Canada's only fully deregulated power market. Enron Direct competes against two dozen established power marketing firms and four natural-gas retailers already operating in the province, including incumbents Epcor Utilities of Edmonton and Enmax Corp. of Calgary, which Enron Canada Corp. President and Chief Executive Rob Milnthorp likened to corner grocery stores. "Being the largest wholesaler of natural gas and electricity in Canada gives us tremendous strength that allows us to compete in the retail sector," Milnthorp said at a press conference Tuesday. "Volume buyers can offer better prices than a small grocery chain on the corner." Lisa Doig, manager of energy procurement with Calgary-based Optimum Energy Management Inc., called Enron's entry into Alberta refreshing, particularly for the smaller commercial consumer who has largely been ignored in terms of contract options by most of the energy marketers. "When you bring someone with a completely different perspective on to the playing field, it brings competition to a new level," Doig said. Enron has been participating in Alberta's deregulated market since April, having laid the groundwork last year when it secured a 20-year contract for 700 megawatts from the coal-fired Sundance generation plant in northcentral Alberta. The C$300 million power purchase arrangement was part of the provincial government's plan to increase market competition in Alberta, which was opened in January. Calgary-owned Enmax bought a 760-MW, 20-year contract in the same electricity auction, and an undisclosed amount of power during a subsequent power auction in the autumn. Spokesman Tony McCallum said the utility feels quite comfortable with its electricity portfolio and position in the market. "Competition is a fact of life," McCallum told Dow Jones Newswires. "Enron coming in shows deregulation is working in Alberta." Enmax's first-quarter revenue of C$400 million was almost triple its revenue for the same quarter in 2000, with a 25% increase in volume of power sold. About two-thirds of Enmax's customer base is commercial and industrial. Optimum Energy's Doig said she hopes Enron Direct enters Alberta's residential market soon to shake up incumbents' complacency. While the province is admittedly one-eighth the size of the Ontario market, Alberta is a good stepping stone for Enron, she said. That would put Enron in place to buy Alberta's ATCO gas and power retail outfits, put on the block early this month, representing the bulk of the province's residential customers. But ATCO Group's communications director, Catherine Drever, flatly denied Monday the utility was being acquired by Enron. Darren Cross, Enron Direct's chief operating officer, said the company might look at targeting residential customers in the future, but is focussed on commercial and industrial power needs - representing businesses' largest expense after payroll - for present. "The idea of being able to lock your commodity in and be able to budget around what you're going to pay for that commodity, on a go-forward basis, for 1-5 years is invaluable for businesses," Cross said. Enron Direct's plans to enter Ontario have been put on hold until a fixed market opening date is announced by the provincial government. Milnthorp previously said the building of an Enron-proposed co-generation plant in Ontario is being threatened by the lack of government commitment to deregulation. "We want an unconditional market opening date," he said. Enron has no immediate plans to add to Alberta's generation mix, Milnthorp said. -By Dina O'Meara, Dow Jones Newswires; 403-531-2912 dina.omeara@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron to Start Commercial Power, Gas Sales in Alberta (Update1) 2001-06-26 16:26 (New York) Enron to Start Commercial Power, Gas Sales in Alberta (Update1) (Closes shares.) Houston, June 26 (Bloomberg) -- Enron Corp., the biggest energy trader, has started selling electricity and natural-gas supply contracts to companies in Alberta, the Houston-based company's first direct sales effort in Canada. Enron, already Canada's biggest wholesale marketer of gas and electricity, will offer long-term, flexible contracts to businesses in Alberta, said Rob Milnthorp, chief executive of Enron's Canadian unit. The company has already started marketing the energy contracts to Alberta's 100,000 businesses. The company said Alberta businesses use about 120 million gigajoules of gas a year and about 2,800 megawatts of electricity an hour. A megawatt is enough to light about 1,000 average U.S. homes. Alberta opened its energy markets to competition this year, the first of Canada's provinces to do so. It later placed price caps on retail electricity prices that are set to expire next year. Enron Direct won't immediately sell energy to retail customers in the province, Milnthorp said. ``Right now we're in the commercial marketplace. The residential market will be evaluated,'' he said. Enron bought the output of a central Alberta electricity plant for C$294.8 million ($194.6 million) in a province-run auction of power generating plants in August. Milnthorp said Enron will spend a further C$1 billion to operate the plant over the life of the 20-year contract. The Sundance B plant, owned by TransAlta Corp., produces about 706 megawatts, enough to light 706,000 average U.S. homes. Enron has been selling power from the plants on a wholesale basis through Alberta's power grid. Since 1990, the company has been buying natural gas from producers in Alberta, the biggest exporter of the fuel to the U.S. Under the government's deregulation plan, it can to sell gas directly to customers using existing pipeline. Shares of Enron rose 12 cents to $44.19. Enron Says Indian Court Defers Decision on Jurisdiction 2001-06-26 18:35 (New York) Enron Says Indian Court Defers Decision on Jurisdiction Houston, June 26 (Bloomberg) -- Enron Corp. said an Indian court deferred a decision on whether a regulatory agency has the jurisdiction to rule in a dispute between the company and a regional government that is refusing to pay its power bills. The Mumbai High Court gave the Maharashtra Electricity Regulatory Commission, the regulatory agency, six weeks to decide whether it has jurisdiction to settle a dispute on termination of the seven-year-old power-purchase agreement. Enron called the ruling ``positive.'' Enron owns Dabhol Power Co., owner of a $3 billion power plant in Maharashtra state. The project's sole customer is the Maharashtra State Electricity Board, which said May 24 that it's canceling an agreement to buy power from the Dabhol plant. The cancellation came after Dabhol Power started proceedings to end the contract. The board owes 3 billion rupees for power supplied in December and January. Dabhol Power argued that the board didn't have the right to terminate the contract, and the Maharashtra board referred the dispute to the commission. Dabhol Power sued, arguing that the commission was created in 1999, after the power purchase agreement was signed, and therefore doesn't have the authority to decide the dispute. ``We are pleased that the court saw the need for timely action,'' Enron spokesman John Ambler said. ``We continue to have confidence in the fairness of the court system in India and will take the steps necessary to satisfactorily resolve the issue.'' Shares of Houston-based Enron, which owns 65 percent of Dabhol Power, rose 12 cents to $44.19.
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