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Why it pays to be green Kyoto Wallflowers
U.S. News & World Report, 08/06/01 Some Energy Executives Urge U.S. Shift on Global Warming The New York Times, 08/01/01 Calif. energy crisis gives Mirant a profit boost Daily Investing Report The Atlanta Constitution, 08/01/01 More Energy Advisors May Have Conflicts Disclosure: Two officials of a Pasadena consulting firm bought large amounts of Edison International stock just before landing contract with the state. Los Angeles Times, 08/01/01 COMPANIES & FINANCE THE AMERICAS: Enron powers ahead despite a big black mark: Poorly performing broadband unit has helped to halve group's share price, writes Julie Earle: Financial Times, Aug 1, 2001 Shock therapy The Economic Times, 08/01/01 US Exim set to move SC on Dabhol row The Times of India, 08/01/01 Reliance's Ambani on Enron's $3 Bln India Project: Comment Bloomberg, 08/01/01 Reliance Not Interested in Enron India Project, Official Says Bloomberg, 08/01/01 RIL not to pick up Enron pie Business Standard, 08/01/01 Embattled Rep. Condit continues fund-raising, campaign spending Associated Press Newswires, 07/31/01 Calif Gov Won't Fire Spokesman For Calpine Stock Purchase Dow Jones Energy Service, 07/31/01 Calif Power-Contract Negotiator Bought GE, Enron Stock Dow Jones Energy Service, 07/31/01 USA: Texas retail power deregulation starts slowly, smoothly. Reuters English News Service, 07/31/01 Northwest utilities seek millions in refunds - some from neighbors Associated Press Newswires, 07/31/01 PUERTO RICO: Mirant to buy Puerto Rican power plant, LNG terminal. Reuters English News Service, 07/31/01 Business & Technology; Sidebar Why it pays to be green Kyoto Wallflowers Kevin Whitelaw 08/06/2001 U.S. News & World Report 30 (Copyright 2001) When President Bush dismissed the Kyoto climate change treaty as "fatally flawed," he meant to spare American companies from paying dearly to control pollution. But now that about 180 countries have pushed ahead with the pact without the United States, American businesses with overseas operations are wondering if they'd be better off at the dance than on the sidelines. Under the treaty, companies that reduce their own emissions of greenhouse gases can sell credits--essentially "licenses to pollute"- -to other businesses. But the fine print is still unclear. So U.S. companies such as chemical giant DuPont, which is already cutting its greenhouse gas emissions, may never get to earn Kyoto credits for reductions inside U.S. borders. "The United States will now have less influence over the development of the protocol and the rules governing it," says Daniel Lashof, a climate-change scientist at the Natural Resources Defense Council. There may be other unintended consequences. The Kyoto treaty, without the United States, will become a giant commodity exchange, with companies and countries swapping emissions credits--but it might not end up cutting pollution. That's because the market for credits may tilt out of balance. Countries of the former Soviet Union, for example, will pocket extra credits because the post-Communist industrial collapse reduced emissions there. They'd be sellers. The brokers will be companies such as energy giant Enron, which hopes to dominate a new commodity market for emissions credits. Where are the buyers? David Victor at the Council on Foreign Relations doubts there will be many. Take away American industry, which spits the most carbon dioxide into the atmosphere by far, and there might not be enough polluters demanding the credits that excuse them from emissions targets. In this scenario, credits could become so cheap that companies would purchase them constantly, rather than clean up. "Without the United States in the system," says Victor, "the actual effect of the Kyoto treaty may turn out to be exactly zero." The United States may still participate, somehow. Bush has yet to decide whether he will propose a different approach or accept a parallel system. A future U.S. president could also decide to join Kyoto. The uncertainty unnerves American companies looking at making long-term investments in factories, power plants, or emissions- credit-swapping systems. Since last week's Kyoto deal, pressure is building on Capitol Hill to implement new restrictions on emissions of several pollutants. The fight will be over whether to include carbon dioxide. Key Republican legislators, despite White House opposition, favor a market-based system that's not as stringent as Kyoto. "We need something on carbon," admits a GOP aide. American businesses may need something, too. GRAPHIC:%9 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Business/Financial Desk; Section C Some Energy Executives Urge U.S. Shift on Global Warming By ANDREW C. REVKIN and NEELA BANERJEE 08/01/2001 The New York Times Page 1, Column 2 c. 2001 New York Times Company With President Bush continuing to oppose international or domestic restrictions on gases linked to global warming, among the losers are energy companies that favor government action and have already spent millions on voluntary efforts to cut emissions. Given little credence by the White House despite large expenditures on lobbying and longstanding ties to administration officials, these companies are shifting their focus to Congress, where several bills that would impose emissions restrictions are being debated or prepared. But in that effort, the companies face formidable opposition from other energy concerns and trade groups that are fighting against any limits. ''There's an enormous amount of lobbying going on,'' said Rob Long, vice president for government affairs at the National Mining Association. ''It's a three-ring circus.'' Among the companies that want the United States to embrace some form of greenhouse-gas limits are oil producers including the Royal Dutch/Shell Group and BP, as well as power-generating companies like Cinergy, AEP and Entergy, all of which have moved to reduce their own emissions. Another company holding this view is the Enron Corporation of Houston, whose chairman is Mr. Bush's friend Kenneth L. Lay. Enron was the largest contributor among energy companies last year to the Republican Party. These companies, which include some of the world's biggest producers and users of fossil fuels, have concluded that limits on carbon dioxide and other greenhouse, or heat-trapping, gases are inevitable. They say that by packaging reductions in greenhouse gas emissions with other environmental measures, like cutting other power plant emissions, they could win concessions on other pollution rules. And to plan long-term investments, they want the predictability that comes from quick adoption of clear rules, although more flexible ones than those agreed to in Bonn a week ago by 178 countries that have accepted the Kyoto Protocol, the worldwide climate agreement that President Bush rejects. Most of these businesses share Mr. Bush's view that the Kyoto agreement could hurt the United States economy and that it unfairly requires emissions reductions only of big industrial nations. But many officials of these companies said Mr. Bush had blundered by rejecting the agreement outright instead of trying to repair it. ''What businesses want is policy certainty,'' an environmental expert for a large international energy company said. ''Bush has injected only turbulence.'' For all their wealth, power and influence, though, these companies say they have been cut out of discussions at the White House. The only ideas that have risen to the highest levels there are those of companies staunchly opposing limits on emissions, according to lobbyists, government officials and executives. The Bush administration denied last night that it was excluding any options or ideas in trying to develop an approach to global warming. A White House spokeswoman, Claire E. Buchan, said: ''We are taking this issue very seriously. We're listening to constituencies who represent all perspectives.'' In contrast to executives of companies seeking limits on the gases, people representing companies opposed to restrictions, including Exxon Mobil and many coal companies, said they thought that their message was resonating. Fredrick D. Palmer, executive vice president for legal and external affairs at Peabody Energy of St. Louis, one of the world's largest coal producers, said it was not really necessary to lobby the Bush administration on the issue, because Big Coal's interests and the administration's views were in sync from the start. ''We don't need to be talking to the White House to know what they want,'' Mr. Palmer said. ''I understand the importance of fossil fuels to the American people. Dick Cheney understands that. The president understands that.'' For the moment, the two corporate camps -- which have dominated the discussion, with environmental groups largely locked out -- have turned to Congress, where an array of influential members from both parties is hoping to seize the initiative in policy making. Senator James M. Jeffords of Vermont, the independent and new chairman of the Environment and Public Works Committee, has said that global warming is his top priority. Senator Ted Stevens, Republican of Alaska, has joined with Senator Robert C. Byrd, the veteran Democrat from West Virginia, a leading coal-producing state, in introducing a bill aimed at controlling emissions. Mr. Stevens has recently expressed deep concern about the apparently growing damage in his state from climate change. The energy industry now is focusing its efforts on the energy legislation moving through the House. But company executives and lobbyists are also meeting with members of Congress and administration officials to shape the discussion over a variety of impending emissions measures and proposed changes in regulations. In mid-August, the Environmental Protection Agency is expected to make recommendations to the White House on how to reduce releases of nitrogen oxides, sulfur dioxide and mercury from power plants. And Mr. Jeffords plans to hold meetings with industry, environmentalists and agency officials in September to seek a consensus on a bill to control the three pollutants, along with ways to limit carbon dioxide, the dominant greenhouse gas. The one thing so far that unifies the energy industry is its opposition to the Jeffords emissions bill in its current form, mainly because it stipulates that old power plants install the latest technology to clean up emissions within five years. Power producers say that the timetable is too stringent and that such a change would disproportionately hurt the Midwest, where most of the power is generated by older coal-fired plants that are targets of the legislation. Beyond that, the industry separates into distinct camps. For energy companies willing to accept some limits on warming gases, one goal is to firm up a market for tradeable credits earned by companies that make sharp cuts in emissions or plant or protect forests, which absorb carbon dioxide. For such credits to have value, a limit on emissions must exist, the company officials say. Aware of corporate resistance to mandatory limits, some energy industry executives and lobbyists have proposed that the government sponsor a voluntary program to reduce emissions. Once enrolled, companies would have to meet mandatory goals on reductions of greenhouse gases. ''We haven't said there must be mandatory caps on CO2,'' said Jeffrey Keeler, director of environmental strategies at Enron. ''But it's been proven that voluntary programs don't work well; that's why we are where we are today. We can have limits from the top down and not endanger the economy.'' Whether the Bush administration will accept even voluntary limits remains to be seen. And later this year, the White House will again be the focus of policy making. Businesses that share the view Mr. Bush expressed in March, when he rejected any binding limits on the warming gases, whether in a global accord or federal legislation, say they are confident that there will be no big shifts. For example, Mr. Long, the mining association official, said he was perplexed by those companies that want to reduce carbon dioxide, which his group and its allies do not see as a pollutant or a threat to the environment. ''I think some of this is the hangover from the Clintonian era, when some of these emissions changes seemed inevitable,'' he said. ''And I think some people got locked into that mind-set. I think the world changed in January. It can't have escaped their notice that the new president won't support constraints on CO2 .'' One of the staunchest foes of limits on carbon dioxide is the Southern Company of Atlanta, whose nuclear and coal-fired plants span Georgia, Florida, Alabama and Mississippi, and whose donations to the Republican Party last year were second only to Enron's. The company recently enlisted Haley Barbour, a former chairman of the Republican National Committee, as a lobbyist. Mr. Barbour mainly works to loosen enforcement of environmental regulations affecting utilities, though other Washington lobbyists said that he had also argued against action on reducing carbon dioxide emissions. Mr. Barbour did not return phone calls yesterday seeking comment. Power companies trying to find a way to reduce carbon dioxide emissions think they have greater sway with Congress than they have with the White House. ''The closer we get to midterm elections,'' a utility executive said, ''both sides of the Hill will feel a high degree of vulnerability on environmental issues, and some will retreat from the White House if they feel they need to.'' In the meantime, opponents of emissions limits are not assuming that the Kyoto accord is dead, despite its having been greatly weakened by the rejection from the United States, the biggest emitter of greenhouse gases. Their lobbyists were out in force at last week's negotiations in Bonn, and they said they would keep working to defeat the international agreement, which is still subject to ratification in scores of countries. Among other things, they plan to keep pressure on the Bush administration to propose no alternatives -- particularly anything resembling a limit on greenhouse gases. ''The protocol is like the Titanic,'' said Glenn Kelly, executive director of the Global Climate Coalition, which has fought against the Kyoto agreement using contributions from industries that regard gas restrictions as a threat. Eventually, he said in an interview in Bonn, the Kyoto Protocol will hit an iceberg, but that will not be the end of the matter. ''After it sinks,'' he said, ''there are still going to be lifeboats that survive to be picked up by the next ship that comes along.'' Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Business Calif. energy crisis gives Mirant a profit boost Daily Investing Report MATTHEW C. QUINN STAFF 08/01/2001 The Atlanta Constitution Home F.9 (Copyright, The Atlanta Journal and Constitution - 2001) Mirant Corp. reported Tuesday that net income during the second quarter more than doubled, boosted by record electricity sales in North America that included California's deregulated power market. The global independent power company said earnings from operations totaled $181 million, compared with $86 million for the comparable year-ago period when Mirant was operating as a subsidiary of Atlanta- based Southern Co. The results exclude an after-tax write-off of $57 million related to Edelnor, its unprofitable Chilean power generator. Mirant's earnings of 52 cents per share exceeded the mean estimate of analysts surveyed by Thomson Financial/First Call of 46 cents per share and compare with 25 cents for the second quarter of 2000 when more shares were outstanding. Mirant, spun off by Southern Co. in April, forecast earnings of at least $1.90 per share for the year. Marce Fuller, chief executive of the Atlanta-based company, said diluted earnings per share grew 108 percent during the second quarter "largely because of our expertise in integrating generating assets with gas and power marketing in North America." Mirant said electricity sales rose 39 percent to a North American record. Gas sales rose 53 percent. Despite price controls imposed by the Federal Energy Regulatory Commission in California's troubled electricity market, Mirant's Americas Group reported earnings of $157 million, a 406 percent increase from $31 million a year ago. Mirant does not report California results separately. Mirant also announced a major power plant deal in Puerto Rico, a joint venture for the Southeast and a plant construction project in Washington state. Mirant said it has agreed to acquire a natural gas-fueled 540- megawatt power plant in Penuelas, Puerto Rico, for $586 million from Edison Mission Energy and Enron Corp., both Texas based. Mirant has other holdings in the Caribbean. A newly acquired Jamaican utility added 2 cents per diluted share during the second quarter. A new power plant development could put Mirant on track to compete with its former parent, Southern Co. Mirant and Cleco Corp., a Louisiana-based power company, have announced a joint venture to develop up to 2,000 megawatts of electric generating capacity across 11 Southern states. The partners are already developing a power plant in Pineville, La., and Fuller announced that development of two more Southeastern plants is in the works. Mirant's plan to build a 286-megawatt power plant in Longview, Wash., near high-growth Portland, Ore., is the company's first foray into the Pacific Northwest. Mirant shares closed at $30.93 on the New York Stock Exchange, down 75 cents. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. California; Metro Desk More Energy Advisors May Have Conflicts Disclosure: Two officials of a Pasadena consulting firm bought large amounts of Edison International stock just before landing contract with the state. JEFFREY L. RABIN; MIGUEL BUSTILLO; RICH CONNELL TIMES STAFF WRITERS 08/01/2001 Los Angeles Times Home Edition B-1 Copyright 2001 / The Times Mirror Company Newly released documents show that two officials of a Pasadena-based energy consulting company bought large amounts of Edison International stock before they were hired by the Davis administration to help rescue the state's beleaguered utilities. Vikram Budhraja, president of the Electric Power Group, and Mark Skowronski, an employee of the firm, bought multiple blocks of Edison International stock in January, just before landing a $6.2-million contract with the state. Key details of potential conflicts of interest among Davis administration energy consultants are only emerging now, six months after many were hired, because the consultants were never asked to provide basic information required under state law. "There seems to be real negligence here on the part of the governor's staff to not tell them the rules," said Bob Stern, president of the Center for Government Studies in Los Angeles and an author of the state's Political Reform Act. "Somebody dropped the ball. . . . That is a big problem." That problem has been expanding over the past two weeks as new details continue trickling out. Last Friday, aides to Gov. Gray Davis announced that five consultants hired to help the state purchase electricity were fired for possible conflicts of interests. Tuesday marked the first time the Davis administration released amended disclosure forms that included such important details as when the consultants bought and sold energy stocks. One form was from Skowronski. It showed that he had purchased far more Edison stock than he had previously revealed. In all, he owned six blocks of Edison stock, each valued between $10,000 and $100,000. He also disclosed buying for his wife's retirement account a similarly valued block of stock in PG&E Corp., parent of Pacific Gas and Electric Co., the state's largest utility. Skowronski divested those holdings on July 18 as part of an order by the governor, who had been stung by criticisms over secrecy surrounding his consultants. It was not immediately clear how Skowronski, who makes $150 an hour with the state, fared overall in the Edison transactions. In March, he sold stock in energy producer Reliant Inc. valued between $10,000 and $100,000. At that time, he had been made the state's lead contract negotiator with the Houston-based firm. Skowronski could not be reached for comment on Tuesday but said in a July 9 disclosure form that he "had no dealings with Edison and have not had a conflict of interest." His boss, Budhraja, also has come under scrutiny. Budhraja was singled out in a letter to the Securities and Exchange Commission by California Secretary of State Bill Jones as an example of possible insider trading. Jones estimated that Budhraja had made profits of more than 40% in January buying and selling stock valued at between $20,000 and $200,000 in the parent company of Southern California Edison, Jones said. According to state financial disclosure forms, Budhraja bought between $10,000 and $100,000 of Edison stock on the same day Davis declared an energy emergency and announced that the state would buy power for California's cash-starved major utilities. Budhraja purchased another block of Edison stock five days later. A former Edison executive, Budhraja also reported that he was paid more than $100,000 on a retainer to provide consulting services to the utility when needed. His services had not been requested since the third quarter of last year, according to the disclosure form. Budhraja, who is being paid $275 an hour by the state, reported selling his Edison stock Jan. 29, which he said was the first opportunity to divest after going to work for the state. Among his duties has been to negotiate power purchase contracts and provide strategic advice. Attorney Stephen Kaufman said Budhraja was simply a savvy investor. "Mr. Budhraja was observing what has happening in the marketplace at the time, reading the newspapers, and saw what he thought to be a good opportunity to purchase these stocks." The latest details on stock purchases by state energy consultants came as Davis spokesman Steve Maviglio defended his own energy investments. They include San Jose-based generator Calpine Corp. and Houston power trader Enron Corp. Maviglio was repeatedly questioned about the ethics of his holdings Tuesday during his traditional weekly media briefing with reporters, and remained defiant, insisting he had done nothing improper. Spokeswoman Hilary McLean initially took questions from the two dozen print, radio and television reporters in attendance, but Maviglio, who was standing beside the podium, eventually came to his own defense. "I can't help myself," he said as he approached the microphone. Maviglio reiterated his stance that he was not privileged with any inside information unavailable to the public when he placed his order for Calpine stock on May 31. He said he made the move after reading newspapers and analysts' recommendations. He said he would be willing to divest the stock if Davis asks him to, but maintained his belief that the transaction did not violate any laws. Reporters sharply questioned Maviglio's insistence that he was not privy to more information on the state's electricity purchases than the general public. Maviglio and McLean said they were out of the loop on such details. Maviglio blamed the press for making his stock an issue. "Perception is what you create," he said. The controversy, Stern said, underscores the importance of timely filing to safeguard the public interest. "I think as many high-ranking people as possible should be filing these so we know of potential conflicts," he said. Times staff writers Daryl Kelley, Mitchell Landsberg and Robert J. Lopez contributed to this report. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. COMPANIES & FINANCE THE AMERICAS: Enron powers ahead despite a big black mark: Poorly performing broadband unit has helped to halve group's share price, writes Julie Earle: Financial Times, Aug 1, 2001 By JULIE EARLE Ken Lay, Enron chairman, should have a lot to shout about. The US pipeline company turned energy trader saw second-quarter net income jump almost 40 per cent to Dollars 404m as revenue more than trebled to Dollars 50bn - fuelled by its dominant energy trading business, where it is three times as big as its nearest competitor. There is a black mark on Enron's balance sheet, however, in the shape of its poorly performing Broadband Services division. This trades bandwidth in much the same way as other Enron units trade gas and electricity - except that broadband is losing money. Telecommunications companies that invested heavily in fibre optic networks - including established carriers such as WorldCom, AT&T and Level 3 - are struggling with over-capacity and lack of demand. Investors have driven Enron's stock down from a high of more than Dollars 90 last August to the current level of about Dollars 46. Part of the issue, according to Mr Lay, is that Texas-based Enron - created in 1985 by the merger of natural gas providers Houston Natural Gas and Internorth - can be a difficult company to understand. "I am annoyed about it. I think the transparency argument is thrown out by people trying to confuse people who do not follow the company closely," he says. Those who do follow Enron closely know that broadband is unlikely to turn around any time soon, because of continuing weakness in the telecoms market. Enron has moved to scale back its broadband activities by announcing an unspecified number of job cuts and other cost-cutting after the division's second-quarter losses ballooned to Dollars 102m from Dollars 8m a year earlier. At the time of the results announcement last month, Jeff Skilling, Enron president, warned the unit was unlikely to make a profit by 2002, as the company had earlier predicted. Mr Lay, however, appears more optimistic. "With increased activity (and) increased transactions, we still have a good chance of breaking even in that business by year-end next year," he says. He maintains that Enron's foray into broadband 18 months ago was not a mistake. "With hindsight, we wouldn't have geared up as much as we did. We said from day one there would be a glut and we got a glut," he said. "The problem is that glut over the past 90 days or so has turned into a total meltdown of the marketplace and it will be more difficult to do business." In the meantime, Enron is cutting back its spending on bandwidth significantly, to Dollars 73m in the third quarter and to Dollars 40m by next year. It will focus on two areas, bandwidth trading and packaged services for business customers. Enron expects more pain ahead for broadband but does not plan to buy any more fibre. "We've got Dollars 1.2bn invested and Dollars 2bn by year-end. We have the network we need," Mr Lay says. While broadband is an immediate issue, transparency remains a niggling concern. Mr Lay insists that suggestions the company's profits are boosted by asset sales are "unfounded" (although in the last quarter, Enron raised as much as Dollars 1bn from the sale of three plants). "Analysts that follow us closely understand how we make money and where we make money," he says. Ray Niles, analyst at Salomon Smith Barney, believes Enron is getting punished for being too aggressive. The group is one of a number of energy traders - including rivals Reliant Energy and Duke Energy - being questioned in California over alleged manipulation of power prices. Mr Lay says volatile gas and electricity prices have little impact on Enron's earnings, with the company's profit being driven by higher trading volumes. "As long as we have the more extensive physical network to move product around, and have the greatest volume and liquidity, we will find ways to always buy or find the product cheaper than other people can and move it to the market place." The company's wholesale business unit, the group's main profit driver, derives 70 per cent of its business from North America. In the last quarter, Enron sold almost twice as much power in North America as it did a year ago; in Europe, it sold five times as much. Enron is also excited by signs that the US regional transmission grid for wholesale electricity could be opened up. It believes only 20 per cent of the market is currently open, and that this could increase to 90-95 per cent. Copyright: The Financial Times Limited Shock therapy 08/01/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) KENNETH Lay, the boss of Houston-based Enron Corporation, has said that his company has given up on India and is willing to pull out of Dabhol Power Company, in which it is the largest stakeholder. Dabhols power project in Maharashtra, the largest single overseas investment project that India has ever attracted, has been the focus of controversy since its inception in the early 1990s. Under political pressure, its power purchase agreement with the Maharashtra SEB was revised once. There are attempts to renegotiate the PPA yet again. The ostensible problem is that power from DPC is too expensive and MSEB cant afford it. Before getting into the nitty-gritty of numbers, ask yourself what is the rate that India can afford for electricity? Numbers show that India cannot afford power at any rate that is commercially viable even for state-owned utilities generating coal fired electricity in fully depreciated plants. About 40 per cent of the electricity generated in India is not paid for. Officially, nearly a quarter of all power generated is lost in transmission and distribution. A lot more is billed below cost because consumers who are supposed to pay do not. The government reckons that the cost of generating a unit of power is Rs 2.80. This sells for less than Rs 2.10 per unit on average. So, why blame Enron for wanting to pull out, when the numbers show that theres no money to be made producing power? Companies like AES, which ventured into Orissa have faced defaults. Cesco, a private distribution company, finds that it cannot disconnect consumers who dont pay. Cesco cant pay its own employees, nor can it pay AES. Who wants to do business here? Given this grim scenario, even if Enron wants to exit, it will find it hard to find a buyer for its equity stake. There is absolutely no guarantee that MSEB, which has driven itself to bankruptcy, will pay the new owner regularly for power. There are definite limits to how low the cost of power from a new, gas fired plant (as DPC is supposed to be in future) can go. And many Indians today seem unwilling to buy power at any cost. Without quick, drastic reforms India will plunge into the heart of darkness. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. US Exim set to move SC on Dabhol row Sanjay Dutta 08/01/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) NEW DELHI: The US Export-Import (Exim) Bank is set to move the Supreme Court in a day or two, challenging the Maharashtra Electricity Regulatory Commission's (MERC) eligibility to adjudicate on the tariff row between the Enron-promoted Dabhol Power Company and the Maharashtra State Electricity Board. The move, being seen as indirect US pressure to expedite resolution of the issue, is likely to bolster the special leave petition (SLP) filed by DPC and applications by its international lenders for the Supreme Court's intervention. US Exim, which is a lender, is likely to base its application on the premise that since the power purchase agreement between DPC and MSEB clearly stipulates international arbitration in case of any dispute, MERC has no role to play in its resolution. It may also cite Section 52 of the PPA that makes it clear the `conferral' of jurisdiction under Section 22 (1)(C) and (D) and Section 22 (2)(N) ``would override the provisions of all other substantive as well as procedural laws of India, including the provisions of the Arbitration and Conciliation Act, 1996''. It is also likely to take the stand that for a stable and predictable business environment, it is essential that arbitration agreements are upheld and any party should not be allowed to frustrate this through ``collateral proceedings''. Eleven international lenders on Friday had urged the court to hear DPC's petition against a Bombay High Court order referring the dispute to MERC. The international lenders have a Rs 2,088 crore ($444 million) exposure, based on a conversion rate of Rs 47 to a dollar, in the Rs 12,000 crore ($3 billion) power project. With their application, the international lenders have made it clear that they are running out of patience. They have said in their application that the Supreme Court should intervene to end the uncertainty over enforceability of arbitration pacts and pave the way for early resolution of the issue. Enron, DPC's main promoter, has about $700 million exposure, or 65 per cent equity, in the project. It is now looking for an exit over a demand for renegotiating the price for selling power. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Reliance's Ambani on Enron's $3 Bln India Project: Comment 2001-08-01 02:52 (New York) Mumbai, Aug. 1 (Bloomberg) -- Anil Ambani, managing director of Reliance Industries Ltd., India's biggest private company, comments on speculation it may buy Enron Corp's $3 billion India power project. Enron Corp., the world's top energy trader, last week told the Indian government to buy out its 65 percent stake in Dabhol. It's been fighting with the Maharashtra State Electricity Board, its sole customer, for seven months to recover $64 million in unpaid bills. ``Reliance Industries is not interested in Dabhol Power Co.'' Enron's India unit that owns the 2,144-megawatt power plant. ``Our intention is to focus on our existing businesses and the ones we have on hand. We have a presence in power and oil and gas.'' Reliance owns 30 percent of BSES Ltd., a power generator in Mumbai, and gets three percent of its sales from oil exploration. It runs the world's seventh-biggest refinery and has won 25 oil sites the past two years. Reliance Not Interested in Enron India Project, Official Says 2001-08-01 02:50 (New York) Reliance Not Interested in Enron India Project, Official Says Mumbai, August 1 (Bloomberg) -- Reliance Industries Ltd., India's biggest private company, doesn't plan to buy out Enron Corp.'s local unit, Dabhol Power Co., managing director Anil Ambani said. ``Reliance is not interested in a Dabhol stake,'' Ambani told reporters and analysts yesterday. ``Our intention is to focus on our existing businesses.'' Enron Corp., the world's top energy trader, last week told the Indian government to buy out its 65 percent stake in Dabhol. It's been fighting with the Maharashtra State Electricity Board, its sole customer, for seven months to recover $64 million in unpaid bills. The board stopped buying Dabhol's power in May, saying it's too expensive, prompting the generator to halt production. The plant can produce 740 megawatts of power and the company had planned to add another 2,184 megawatts of capacity this year. Reliance, which makes 10 million tons of petrochemicals a year, holds a 30 percent stake in BSES Ltd., owner of a 500- megawatt power plant about 60 miles north of Mumbai. Some analysts expected it Reliance may buy out Dabhol to strengthen its power business. Reliance has expanded into telecommunications with plans to build a fiber-optic network linking 115 Indian cities. The 37,000- mile network would cost $5.3 billion and carry calls for its local and overseas long-distance and cellular phone services. Reliance plans to expand its oil and gas business, currently three percent of total sales, by developing the 25 sites it's won the past two years for oil exploration. Reliance Petroleum Ltd., 64 percent owned by Reliance, runs the world's seventh-biggest refinery at Jamnagar in western India. RIL not to pick up Enron pie Our Corporate Bureau Mumbai 08/01/2001 Business Standard 4 Copyright © Business Standard The Reliance group is not interested in buying out Enron's 65 per cent stake in the Dabhol power project. "We are not interested in the Dabhol stake. We are keen on focusing on the existing businesses of the group like polyesters, polymers, oil & gas, petrochemicals and the existing power projects of the group," RIL managing director Anil Ambani, said today. There has been speculation in a section of the press that Reliance along with other corporates had evinced interest in buying out Enron's stake in Dabhol Power Company. Ambani's statement has scotched this speculation. Enron Corporation chairman, Kenneth Lay, had stated in an interview last week that the company was keen on getting out of the project. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Embattled Rep. Condit continues fund-raising, campaign spending By DON THOMPSON Associated Press Writer 07/31/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SACRAMENTO (AP) - U.S. Rep. Gary Condit continued raising and spending campaign money this spring at about his usual pace, despite the media and police frenzy over his romantic ties to a missing Washington, D.C., intern. Campaign records released Tuesday night show the Ceres Democrat raised $195,370 and spent $144,270 the first half of the year - including a previously disclosed $10,000 to the Chandra Levy reward account immediately after she disappeared in early May. The records show Condit also incurred a $206 in bills for in-flight telephone calls May 30, just as attention was shifting to the married 53-year-old congressman's alleged involvement with the 24-year-old Levy. He also spent $2,373 for a news clipping service June 15. Condit, whose congressional financial disclosure forms show little personal wealth, has hired a high-profile Washington lawyer to represent him during the Levy matter. That has led some to speculate whether he would pay his legal bills from his campaign funds, but this report shows no payments to either attorney Abbe Lowell or public relations specialist Marina Ein, who now represent Condit. He continued his practice of buying what are labeled gifts for constituents, including flowers, items from a Modesto camera store, and favors from a San Francisco shop named Rumors. Despite some Republicans' calls for Condit's resignation, his staff says he has no intention of stepping down. His campaign account also reflects no curtailment. Two years ago, when Condit was known just as a conservative Democrat from California, he raised a little more than $200,000 in the first six months of 1999, including $97,000 from individuals and $104,000 from political action committees. He spent $128,000 in the same period. This time he raised $121,645 from individuals and $73,725 from PACs. His contributions from PACs and Washington lobbyists were particularly large during June, including two apparent fund-raising events as the controversy swirled. At least seven Californians in Congress have campaign bank accounts of more than $500,000, including two with more than $1 million. Rep. Loretta Sanchez, D-Santa Ana, is sitting on $1.2 million in cash, while Rep. Jerry Lewis, R-Redlands, has $1 million in the bank. With the boundaries of congressional districts about to change in redistricting, the money could come in handy to scare off challengers or allow a politician to get to know new constituents. "It's insurance," said Gary Jacobson, a political science professor at the University of California at San Diego. "They don't know what's going to happen. They may not have to spend it all." Rep. Elton Gallegly, R-Simi Valley, has made some Democratic lists of potentially vulnerable incumbents. But Gallegly already has $780,000 in cash available for his reelection campaign. Other Californians with more than a half-million dollars in the bank are: Rep. Randy "Duke" Cunningham, R-Del Mar, with $771,000; Rep. Tom Lantos, D-San Mateo, with $723,000; Rep. Bill Thomas, R-Bakersfield, with $599,000; and Rep. Wally Herger, R-Marysville, with $522,000. Thomas, new chairman of the tax-writing House Ways and Means Committee, raised $342,000 in the first six months of the year, most of it from political action committees that reflect the broad range of industries with interests in tax legislation. Energy company PACs contributed to many members of Congress, including several in California. Among them, Rep. Anna Eshoo, D-Atherton, stood out in the midst of California's power crisis by returning $1,500 to the Dynegy PAC and $1,000 to the Enron PAC. --- Associated Press writer Mark Sherman contributed to this story from Washington, D.C. AP Photo under file art Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Calif Gov Won't Fire Spokesman For Calpine Stock Purchase 07/31/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- California Gov. Gray Davis "absolutely (does) not" intend to fire his senior press secretary because he bought stock in Calpine Corp (CPN) in June, Davis' senior political advisor Garry South said Tuesday. The press secretary, Steve Maviglio, revealed Monday that he bought 300 shares of Calpine stock on June 20, 2001. The disclosure came one day after sources at the U.S. Securities and Exchange Commission said they were investigating members of Davis' administration to see if they bought stock in energy companies using information that was unavailable to the public. California Secretary of State Bill Jones, who is running for governor against Davis, renewed calls Tuesday for Maviglio's dismissal at a press conference in Los Angeles. Maviglio said he bought the Calpine stock based on information he read in the newspapers. He also said he will not resign and will only sell his energy stocks if told to do so by his attorney or the governor. He has also owned stock in Enron Corp (ENE) since 1996. State conflict-of-interest laws say public officials can't negotiate contracts for companies in which they hold stock, and can't use their positions to influence any state decisions about those companies. Maviglio is not in a position where he could exercise a conflict of interest, said Davis senior political advisor Garry South. "He is not a policymaker. He says what it is decided that he will say," South said. "To make a statement about something is not a conflict of interest. If that were the case, every person in state government would have to divest every stock they have before they made a public statement." By law, state employees must file financial disclosure forms once a year and within 30 days of being hired. Jones demanded Tuesday that all members of Davis' staff, as well as consultants and contractors, file updated financial disclosure statements within 48 hours. Jones said the employees in his own office are current with their financial filings, though they haven't necessarily filed updates. "My office is involved in elections, not energy," Jones said. He added that the governor's staff needs to update financial disclosure forms for January through July in light of the state's taking on a power-buying role for insolvent utilities in January. Jones also said he did not accept gubernatorial campaign contributions from energy companies. Last week, five state energy consultants were fired by Davis' staff for potential conflicts of interest arising from their ownership of Calpine stock. The state has signed nearly half of its $43 billion in long-term energy contracts with Calpine. The consultants, who were hired by the state in January, didn't file economic interest statements until July, when Jones revealed that consultants and energy traders held stock in energy companies from which they were buying power. Davis has accused several power suppliers of price gouging, but has spared Calpine the invective, saying the San Jose-based generator has charged prices below that of other generators and has invested in California for the long haul. The California Independent System Operator, however, has listed Calpine as one of the generators that has racked up millions in overcharges for wholesale power. -By Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Calif Power-Contract Negotiator Bought GE, Enron Stock By Jason Leopold Of DOW JONES NEWSWIRES 07/31/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- A consultant hired by the state of California to help negotiate long-term power contracts made significant purchases of electricity-industry stock at a time when deals were still being hammered out, state financial disclosure forms show. Navigant Consulting Inc. Senior Managing Director Ronald Nichols, hired as a senior energy consultant by the state Department of Water Resources in January, purchased between $10,000 and $100,000 of stock in each of General Electric Co. (GE) and Enron Corp. (ENE) in April, according to documents obtained Tuesday by Dow Jones Newswires. GE Power Systems, a major GE unit, is the largest U.S. supplier of turbines for power generation. A number of GE turbines have been ordered by developers that signed power-supply deals with the DWR. Enron is the top trader of power and natural gas in the West and the country as a whole. California has signed $43 billion in long-term power contracts, the details of which weren't released publicly until mid-June. Nichols will likely have to sell his shares in Enron, which never signed power deals with the state, but the DWR has allowed him to keep his shares in General Electric, DWR spokesman Oscar Hidalgo said. "It was determined his holding in General Electric was not required to be divested, because GE is not considered an energy production company," Hidalgo said. Nichols, who the DWR said analyzes and negotiates power contracts and helps the agency calculate its revenue requirements, also said there was no conflict of interest. "That stock is not a power generator, and the generation equipment that they develop is but a small portion of what their business is," said Nichols, who was traveling with state Treasurer Phil Angelides in New York. "They're a multi-conglomerate these days. It's been determined by DWR and by me that it's not a conflict, and it's been upheld in the review" of the financial disclosure form. Moreover, he said, the decision whether to use GE turbines rested with developers of power plants. GE Big In Power GE Power Systems is the largest supplier of power-generation turbines in the U.S., and it has benefited directly from long-term deals power suppliers signed with the DWR. A 20-year contract signed with the DWR in February, for example, led developer Calpine Corp. (CPN) to order 11 GE peak-demand turbines worth about $150 million. Calpine won't place such orders for "peaking" units without contracts in place to back them up, the company said on a conference call last week. Calpine announced April 19 that it would buy 46 turbines from GE for power plants under development nationwide. "I'm not aware of any specific deal Calpine or any other generator had with a specific vendor," Nichols said. GE Power Systems was GE's fastest-growing unit in 2001. First-half revenues and profits at the unit grew three times as fast as they did at the runner-up unit. GE Power Systems racked up $1.23 billion in second-quarter profits - up 63% from the same period the year before - making it the second-largest contributor to GE's $3.90 billion in earnings for the period. Shareholdings in energy companies by members of Gov. Gray Davis' power-buying team have been the subject of a political battle pitting Davis against potential gubernatorial rival Bill Jones, the Republican secretary of state. Questions have been raised about the validity of power contracts negotiated by those with possible conflicts of interest. In addition to the scrutiny at the state level, the U.S. Securities and Exchange Commission is investigating members of the Davis administration and the state's energy traders to determine whether stocks were purchased using insider information. Forty energy traders and consultants with the DWR filed financial disclosure statements in July under pressure from Jones. Ten of those filings revealed financial interests in energy companies. Five of those filers have been fired, and one has resigned. Others remain on board. Link To AES Sumner White, a Navigant consultant hired March 6 to work on the long-term contracts, reported receiving annual income of between $10,000 and $100,000 from AES Corp. (AES) for his work with the company. The nature of that work wasn't immediately known. AES operates power plants in California under an arrangement with Williams Cos. (WMB), under which Williams takes almost all the risk and profit. AES hasn't signed any long-term supply deals with California, although Williams did. White wasn't available for comment. Thirty DWR consultants and traders reported having no stake in energy companies. They include ranking members of Davis' power-buying operation. Top energy trader Susan Lee, senior Davis energy adviser David Freeman and head of the DWR's power buying operation Pete Garris declared they had no financial interests at all, according to reports obtained by Dow Jones Newswires. In addition, reports filed in March show DWR Director Thomas Hannigan and DWR Deputy Director Ray Hart had no interests in energy companies in 2000, the year covered by the disclosures. California's Political Reform Act requires state employees to disclose their financial interests within 30 days of being hired and then every year. In all, 60 traders and consultants work for the DWR, not all of whom were required to file disclosure statements in July. On Monday, chief Davis spokesman Steve Maviglio disclosed that he purchased 300 shares of Calpine Corp. (CPN) stock on June 20. Maviglio hasn't been named by the SEC, which hasn't identified the subjects of its investigation. He said he made his purchases based on public information. -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com (Mark Golden and Andrew Dowell in New York contributed to this article.) Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: Texas retail power deregulation starts slowly, smoothly. By C. Bryson Hull 07/31/2001 Reuters English News Service (C) Reuters Limited 2001. HOUSTON, July 31 (Reuters) - The first steps toward a deregulated retail electricity market in Texas went smoothly but slowly Tuesday, as the first customers were switched from their utility to new power providers. The Electric Reliability Council of Texas, after two months of delays began moving customers over to their new providers, launched what will be a very closely watched transition to deregulation. "We're starting slowly, so we have had 75 switch-overs today and 75 tomorrow, and then we'll be ramping up as we test the systems," ERCOT spokeswoman Jennifer Taylor said. The full conversion should be finished by the end of August, she said. The pilot program hinged on the conversion of ERCOT's 10 control areas to a single control room in Austin. The pilot had been slated to start in June, but three delays related to power-scheduling software glitches held it back. Those small delays had led some in California, where a failed partial deregulation attempt led to blackouts and the near-collapse of the state's two biggest investor-owned utilities, to snicker at Texas' early obstacles. But California's fate has put the eyes of the U.S. squarely on Texas' transition to an unfettered marketplace. One big difference: the wholesale Texas power market has been operating smoothly since its deregulation in 1995. A major hang-up in California was its half-measure deregulation of the wholesale market, which led to massive price spikes because utilities were prevented from buying forward contracts to protect against volatile prices swings. For whatever reason, Texas customers did not exactly flock to join the pilot program, which ends when full deregulation begins on Jan. 1, 2002. Roughly 90,000 individual retail customers joined the pilot program, which offered 265,000 spots on a first-come, first-serve basis to try the test run. "This is a historic moment for electric customers in Texas. Texans can now choose their electric company the same way they choose other goods and services in their everyday lives," said Texas Public Utilities Commission Chairman Max Yzaguirre, the former head of Enron Corp.'s ENE.N Mexican division. The tepid response from individuals contrasted with the stampede of commercial and industrial customers who joined the pilot. The industrial pilot was completely subscribed well before its kickoff. Texas' deregulation law limited pilot participation at 5percent of both categories of customer. The new retail providers include the deregulated divisions of traditional utilities like Reliant Energy , Entergy Corp. , Texas-New Mexico Power Co. and TXU Corp. . Other entrants include Royal Dutch/Shell's Shell Energy and Green Mountain Energy, which uses renewable resources and other cleaner methods of power generation. The New Power Co., a joint venture of Enron, AOL/Time Warner Inc. and IBM , is also in the market. There are also 10 registered aggregators, who put together large groups of customers so they will have the bulk leverage to negotiate lower rates from retail providers. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Northwest utilities seek millions in refunds - some from neighbors 07/31/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. OLYMPIA (AP) - Half a dozen Pacific Northwest utilities are seeking nearly $700 million in reimbursements from energy suppliers they accuse of price gouging, but some of the accused gougers are actually other utilities from the region. The Federal Energy Regulatory Commission begins an inquiry into the charges on Wednesday. Papers submitted to the commission detail the allegations, and point fingers at national power producers such as Enron, Dynegy and Duke Energy. But they also name companies closer to home. For instance, Tacoma Power is seeking about $28 million in refunds from Spokane-based Avista Energy. "The legal standard, first, is that rates have to be just and reasonable," Phillip Chabot, Tacoma Power's attorney, told a group of Northwest public radio stations on Monday. California's failed power deregulation scheme combined with drought to tighten electrical supplies in the region in recent months, forcing utilities to pay record prices for power on the spot market. In some cases, the price jumped from less than $100 to more than $1,000 per megawatt hour. In general, changing the rates paid for power after the transaction is prohibited by law. But Chabot said the extremely high prices that suppliers charged for power in the heat of the crisis warrant the call for refunds. Federal law also requires just and reasonable rates. "It strains credulity to think that under normal circumstances people would willingly enter into contracts for purchases of energy at $2,000 or $3,000 a megawatt hour," he said. The accused power suppliers hotly dispute refund claims, saying the transactions involved willing sellers and willing buyers. "To impose retroactively refunds, you're penalizing the people or the entities that managed their supply-demand portfolio in a prudent manner and you're rewarding those that did not," said Avista Energy President Dennis Vermillion. "That seems unfair." If Avista were ordered to pay refunds, that could affect rates for its own customers in Eastern Washington and northern Idaho, Vermillion said. No utility came out of the West Coast energy crisis with completely clean hands, he noted. For example, while Seattle City Light claims it was overcharged by about $222 million, the utility was sometimes able to sell surplus power on the open market as well, filings with the FERC indicate. Idaho Power, Snohomish Public Utility District and Pacificorp also could owe refunds as well as collect them, according to the filings. Meanwhile, Puget Sound Energy, which sold energy when the market was high, wants the entire inquiry dismissed, arguing that the refund seekers made their claims too late. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. PUERTO RICO: Mirant to buy Puerto Rican power plant, LNG terminal. 07/31/2001 Reuters English News Service (C) Reuters Limited 2001. PENUELAS, Puerto Rico, July 31 (Reuters) - Energy giant Mirant Corp. said on Tuesday it will buy a 540-megawatt power plant and a liquefied natural gas (LNG) terminal operated by Puerto Rican-based EcoElectrica Holdings Ltd. Under the agreement, Mirant will acquire 100 percent of EcoElectrica Holdings Ltd. whose shares are currently owned by Edison International unit Edison Mission Energy and Enron Corp. , Mirant said. A Mirant spokesman said the company would pay around $586 million for the assets and assume liabilities of $600 million. No date was given as to when the deal would likely close. The spokesman said the deal was "technically" with Edison Mission and Enron because they own the shares of EcoElectrica. He added the Puerto Rican LNG terminal would continue to provide gas for the power plant and said there were no plans at this point to begin exporting LNG from the terminal to U.S., Caribbean or Latin American markets. Mirant said in the statement it began importing LNG into the United States in April 2001, but did not say where it was buying the LNG. LNG's costly transportation and liquefaction processes involve super-cooling and injecting gas into spherical high-pressure tanks onto special LNG carriers. LNG has seen a renewed wave of interest in the U.S. over the past year due to soaring gas prices, a surge in demand, especially from power plants, and the scramble for new supplies. Mirant's other Caribbean operations include the ownership and operation of power plants in Jamaica, Trinidad and Tobago, and the Bahamas. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.
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