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Enron Mail |
Calif Generators Say State Still Dodging Its Power Bills
Dow Jones Interactive November 2, 2001 USA: Stung Californians not crowing at Enron's troubles. Dow Jones Interactive November 2, 2001 Enron Portland Genl Sale Seen Going Smoothly This Time Dow Jones Interactive November 2, 2001 USA: Customer choice can boost 'green power' use-study. Dow Jones Interactive November 2, 2001 India ONGC Plans Enron Oil,Gas Field Bid If BG Deal Fails Dow Jones Interactive November 2, 2001 Calif Generators Say State Still Dodging Its Power Bills LOS ANGELES -(Dow Jones)- California power generators have complained to federal regulators that despite recent assurances, the state has yet to provide credit guarantees for electricity sold through California 's wholesale power market and is deliberately delaying payment for hundreds of millions of dollars in past power sales. In a filing this week with the Federal Energy Regulatory Commission, generators accused the California Independent System Operator, the state's wholesale market administrator, and the California Department of Water Resources, the state's power-buying arm, of engaging in a "shell game" to keep power flowing for free, despite a FERC order that payment be guaranteed. "It appears that the ISO's refusal to implement settlement and billing procedures consistent with the orders is simply part of a shell game to avoid compliance with those orders," the generators said in their filing. "This must be put to a stop." The filing - by Reliant Energy Inc. (REI), Duke Energy North America (DUK), Dynegy Inc. (DYN) and Mirant Corp. (MIR) - is an attempt to pressure FERC to hold hearings on the issue, one of the generators in the complaint said. The parties also want FERC to order the ISO to bill the water department for the power they've supplied. A FERC spokesman said the commission is looking into the complaints and expects to meet on the issue sometime in November. At issue is power sold through the California ISO, which is primarily responsible for keeping supply and demand in balance on the grid but which also operates a wholesale market to buy and sell power for that purpose. The state has paid $9 billion for electricity purchased directly from suppliers, but it has yet to pay at least $1.2 billion for last-minute power, reserve capacity and other services supplied to the ISO since January. The ISO has yet to bill the DWR for those services, both parties agree. Williams Has Booked Revenues Assurances by California earlier this month that it would back those power sales and work out the unpaid debt led Williams Cos. (WMB) to book $180 million in revenue from previous ISO power sales in the third quarter. Williams, which said it filed a separate complaint with FERC that "dovetails" with the other generators' filing, said it continues to believe it will be paid for the power sales it booked. Duke said it has taken reserves covering all its exposure to the ISO. Dynegy and Reliant said they have also taken reserves. A Mirant spokesman couldn't immediately respond to a request for comment. The ISO and the California Department of Water Resources, the agency handling the state's power purchases, denied there is any deliberate effort to keep generators from getting paid. Instead, complicated accounting and confidentiality issues have made it impossible for the ISO to bill the DWR for the purchases, delaying payment, they said. "Basically we can't send a bill to the DWR because it would include information that we're not supposed to share with other market participants," ISO spokesman Gregg Fishman said. "Unless the DWR can get permission from the suppliers, and it is my understanding that they have not been able to do that, we are between a rock and a hard place in our ability to provide the information needed to settle." The DWR wants a breakdown of individual transactions. The ISO, however, is prohibiting by federal rules from sharing confidential market information with other market participants unless the parties agree. Oscar Hidalgo, a spokesman for the DWR said the agency attempted to obtain approval from generators to have the ISO release the electricity sales data, but has so far been unsuccessful. The ISO has been working on a settlement procedure, but the parties can't agree on a single solution, Fishman said. "There are potential solutions out there, but not one that everyone can agree to," Fishman said. Generators called the claims ridiculous. "The ISO is bound to bill, and the CDWR is bound to pay for these ISO purchases," they said in the filing. In April, FERC ordered the ISO to find a creditworthy backer for power purchased to serve utility customers. In various filings, the ISO indicated the DWR was filling that role. In mid-October, the DWR spelled out which power purchases it would back. The generators criticized that list as incomplete. "Our understanding is the DWR picked up net short and they are responsible to pay for the net short," said Jan Smutny-Jones, executive director of the Independent Energy Producers Association, a trade group representing power suppliers that also filed a complaint this week with FERC. "A significant amount of money is in arrears, and we still have this 'Who's backing what' game." USA: Stung Californians not crowing at Enron's troubles. SAN FRANCISCO, Nov 2 (Reuters) - If there's one market that might applaud the mounting financial woes facing energy giant Enron Corp., it's California , whose power sector was shattered by the market deregulation that Enron tirelessly champions. Last summer, angry Californians tossed a pie at Enron ex-Chief Executive Jeff Skilling during a speech here in which he blamed state regulators for causing the energy crisis. California officials, led by Governor Gray Davis, blasted Houston-based Enron and other out-of-state power companies for creating the emergency, accusing them of manipulating the market and jacking up prices. But with Enron now facing a credit crunch and a full-scale probe by U.S. regulators into questionable financial dealings, California officials are holding back their harshest criticism, saying instead there are lessons to be learned from Enron's predicament. And some of Enron's toughest critics, among them Davis and Loretta Lynch, president of the state's Public Utilities Commission (CPUC), would not discuss the company's woes. "You reap what you sow, but I don't think anyone wants to pile on them right now," said a state government source. Many Californians cited ongoing business and creditor links with Enron as reasons not to hurl stones at the energy giant. Enron is by far the nation's largest trader of electricity and natural gas, with energy analysts estimating it is involved in some 25 percent of daily trade in those markets. Transactions on the company's widely watched Internet-based EnronOnline trading system are estimated currently to average $3 billion to $4 billion a day. 'BUSINESS CYCLES' "Business cycles come and go," said Greg Pruett, spokesman for San Francisco-based energy company PG&E Corp. , whose Pacific Gas & Electric unit, California 's biggest utility, filed for federal bankruptcy protection in April in the wake of the energy mess. "We are wrestling with our own situation, and you can appreciate what Enron is going through. We have done business with Enron for a long time and will continue to do business with them in the future," Pruett said. California 's power agencies, forced into buying emergency electricity for the state earlier this year when the state's investor-owned utilities ran out of credit and cash, said they have financial ties with Enron. "Their situation is not ringing alarm bells for us," said Gregg Fishman, a spokesman for the Independent System Operator (ISO), which manages the state power grid. The ISO owes Enron money for purchases of daily power supplies but Fishman declined to say how much. Aside from a 30-day supply contract earlier this year, Enron does not have any current power deals with the state's Department of Water Resources, said Oscar Hidalgo, spokesman for the agency which negotiates long-term agreements. One top California energy regulator, however, said Enron's troubles offer an important lesson for energy markets. Carl Wood, a CPUC commissioner, said the deregulation of markets for basic services like electricity "threatens as much financial volatility and instability as we have seen in the telecommunications and the dot-com industries." Wood said, "Enron is the flagship for deregulation, but there are definite dangers of venturing into unregulated market behavior. Enron itself apparently is becoming a victim of sorts. Our largest utility is in bankruptcy. One obvious conclusion is to keep the energy industry on a pretty short regulatory leash." "The unregulated energy industry rises faster, but it also falls further," said Doug Heller of the Foundation for Taxpayers and Consumer Rights, an advocacy group in Santa Monica, California . "It's okay for a free market to operate for things like computers and other goods but energy is different. Regulatory structures are needed to protect customers," he said. Enron Portland Genl Sale Seen Going Smoothly This Time LOS ANGELES -(Dow Jones)- Enron Corp's (ENE) current troubles won't jeopardize its $1.8 billion sale of utility Portland General Electric to Northwest Natural Gas Co. (NWN), analysts and the companies said. In contrast to Enron's previous attempt to sell the utility to Sierra Pacific Resources (SRP), which foundered earlier this year on regulatory issues, the sale to the Portland, Ore.-based gas utility is expected to go smoothly. It will need to, as Enron has said it is counting on sales of assets, including Portland General, to pay off $3.3 billion in notes coming due during the next 20 months. "Enron has wanted out of this asset for a very long time," said Susan Abbott, an analyst with Moody's Investor Services. "Right now, they need to sell some assets, and this would be a larger one that would give them some cash." The energy giant's shares have lost about two-thirds of their value in the past three weeks and its credit ratings have been downgraded to within two steps of noninvestment grade levels due to uncertainties about its extremely complex financial structure. Those uncertainties were sparked Enron's $1.2 billion reduction in shareholder equity related to transactions with entities headed by former Chief Financial Officer Andrew Fastow. The notes coming due are also related to those entities. Enron's dealings with those entities are the subject of an investigation by the Securities and Exchange Commission, and have raised investor hackles over a perceived lack of transparency. Analysts said none of this will change plans for the Portland General sale - which will bring Enron $1.55 billion in cash, $200 million in Northwest Natural Gas preferred stock, and $50 million in common stock. Earlier Problems Not Seen Repeated In April, a two-year old deal to sell the utility to Nevada company Sierra Pacific Resources (SRP) for $2 billion collapsed due to changes in that state's laws that would have forbidden the utility's recovery of power costs if the sale went through. The deal had already been doomed for months due to Sierra Pacific's tenuous financial position. But Northwest Natural's financial house is in order, and there is no apparent law or regulation that threatens to block the deal in Oregon or Washington, the two states where approval is needed, analysts said. "Northwest Natural is very well-regarded by regulators in both states, and I think there's quite a bit of interest on the part of regulators to have the utility in local hands as opposed to somewhere down in Texas," said Gerald Keenan, utility analyst for PricewaterhouseCoopers. Concerns about the quality of Enron's credit may encourage state regulators to act more quickly on the sale, an analyst said. "If I were a regulator, I'd be much more interested in having Portland General out from under Enron," the analyst said. The Oregon Public Utilities Commission hopes to expedite its review of the sale so that it is complete in six months, rather than the usual 10, commission spokesman Bob Valdez said. "Given the fact that we are familiar with the management and regulatory affairs of both companies and have dealt with them extensively, we hope it will take no longer than six months," said Valdez, adding that the commission expected to receive a filing on the sale Nov. 7. The Washington Utilities and Transportation Commission hasn't received a filing, but once it does there is no statutory time limit on review, a spokeswoman said. Federal Review Seen Uneventful In addition to Oregon and Washington utilities regulators, the sale must be approved by the Federal Energy Regulatory Commission, the U.S. Securities and Exchange Commission, the Federal Trade Commission, the U.S. Department of Justice and the U.S. Nuclear Regulatory Commission. None has received filings yet on the sale, which is slated for completion in the fourth quarter of 2002. "We are shooting for mid-November as far as submitting our request to the state commissions," Northwest Natural Gas spokesman Steve Sechrist said. "Those will be the first major hurdle, then we'll move on to the federal filings." Shareholders must also approve the acquisition. They will likely vote in spring of 2002, Sechrist said. Northwest Natural, Enron and analysts said they don't expect hangups at the federal level. The only thing that might create a problem for the sale, Keenan said, would be a "significant deterioration" of the natural gas or electricity markets harming the companies. Right now, however, things look good on that front. "The market is much more stable than it was when Sierra Pacific tried to buy the utility. And the deal is much more practical this time: the price is lower and the terms are better," he said. "Clearly it's important for Enron to be able to get this done, and I think they will." USA: Customer choice can boost 'green power' use-study. NEW YORK, Nov 2 (Reuters) - Giving consumers more energy supply choices could boost use of cleaner electricity sources by 40 percent by the end of the decade, regardless of whether the market is deregulated, a federal study said. But there's a catch. While 10 percent of U.S. electricity already comes from hydro and another 2 percent comes from wind, solar and geothermal sources, stimulating alternative energy demand to meet the 40-percent goal will require more so-called green pricing programs, which are often more expensive to the consumer. According to the study, pushing consumers to adopt electricity alternatives besides coal, oil, gas or nuclear will require utilities to offer green power choices. Indeed, the study showed some customers will 'go green' even if the price is higher than conventional sources. "Market research consistently shows that consumers prefer to receive their power from clean energy sources ... giving consumers energy supply choices can be a powerful mechanism for moving renewable energy into the marketplace," said Blair Swezey, co-author of the study. Swezey works at National Renewable Energy Laboratory, which conducted the study along with the Lawrence Berkeley National Laboratory. Both organizations are U.S. Department of Energy national laboratories. The study does not advocate competitive markets over regulated markets, but suggests utilities in states without competition should offer their customers green products. "If competitive retail markets fail to materialize, utility programs must pick up the slack," said Ryan Wiser of Lawrence Berkeley National Laboratory, another co-author of the study. CALIFORNIA CAVEAT Green power marketing had seen success in states with retail market competition, such as in California . But in the wake of California 's heavily publicized deregulation crisis, the state seems to have backed away from deregulation, and green power has been one of the victims. "The California experience shows that the transition to competitive retail power markets will not be smooth," Wiser added, noting that at least until California makes up its mind regarding the fate of deregulation, green power programs will remain on the back-burner. More than 85 utilities in 29 states out of more than 500 utilities nationwide give consumers the option to choose to buy power from renewable sources, meaning much of the potential growth for green power use has not yet materialized. Non-hydro renewables provide about 2 percent, or 16,500 megawatts (MW), of all the electricity used in the United States. Hydropower provides about 10 percent. With the expansion of customer choice, the study found the market could support about 6,000 MW of additional non-hydro renewables over the next decade. National Renewable Energy Laboratory, based in Golden, Colorado, is a research center for alternative fuels managed by Midwest Research Institute, technology developer Battelle and global engineering firm Bechtel. Lawrence Berkeley National Laboratory, of Berkeley, California , is a scientific research center managed by the University of California . India ONGC Plans Enron Oil,Gas Field Bid If BG Deal Fails SINGAPORE -(Dow Jones)- India's state-owned Oil & Natural Gas Corp. (P.ONG) said Friday that it would consider bidding for Enron Corp.'s (ENE) upstream Indian assets if U.K.-based BG Group PLC's (BRG) conditional acquisition of the assets collapses. BG paid $388 million for Enron's 30% stake in oil and gas fields offshore western India, but the sale is subject to a number of consents and conditions including confirmation from Enron and Gas India's joint venture partners - ONGC and Reliance Industries Ltd. (P.REL) - that BG will inherit field operator status from Enron. ONGC and Reliance Industries are challenging BG's goal of acquiring Enron's operatorship of the offshore Tapti gas field and the Panna/Mukti oil and gas field. BG have made it clear it would walk away from the deal if it didn't get outright operatorship. "If BG wants to walk away, we'll come up with a plan. If they (Enron) offer (an opportunity to bid again), yes, then we will think about it," an ONGC spokesman told Dow Jones Newswires, without elaborating further. Earlier this year, ONGC bid a reported $400 million for Enron's Indian oil and gas assets, only to have its bid rejected. Analysts at the time said Enron was unlikely to settle for anything less than $600 million for its stake in the venture. ONGC and Reliance Industries jointly hold a 70% stake in the assets. As reported Thursday, BG said it will extend the negotiation period on the operatorship of the fields for an unspecified period. However, analysts say BG's bid for operator status will continue to face stiff resistance from ONGC and Reliance. "We want the operatorship," the ONGC spokesman reiterated. Enron's upstream oil and gas assets in India hold proven and probable reserves of around 170 million barrels of oil equivalent.
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