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Enron Mail |
BANDWIDTH BEAT: Glut Or No Glut, Dynegy's Lighting Fiber
Dow Jones Energy Service, 09/21/01 INDIA: Enron Indian unit defaults on interest dues-source. Reuters English News Service, 09/21/01 India Crt Disallows MSEB's Appeal On Payment To Dabhol Dow Jones International News, 09/21/01 Kaiser Aluminum May Owe Refunds for Power Sales in Northwest Bloomberg, 09/21/01 Enron Accused of Infringing Electronic Trading Patent (Update2) Bloomberg, 09/21/01 BANDWIDTH BEAT: Glut Or No Glut, Dynegy's Lighting Fiber By Michael Rieke 09/21/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) A Dow Jones Newswires Column HOUSTON -(Dow Jones)- Never mind all the talk about a bandwidth glut, here comes more longhaul telecommunications capacity. Dynegy Corp.'s (DYN) telecom unit is bringing its domestic fiber-optic longhaul network online next month despite the fact that bandwidth prices have been falling for more than a year. Mark Stubbe, president and chief operating officer of Dynegyconnect, told Bandwidth Beat, "We're basically lit and we're going through the testing right now." Dynegy is lighting two of the four strands of fiber covered by a 20-year lease done earlier this year with Level 3 Communications Inc. (LVLT). "For the most part, it is the Level 3 footprint," Stubbe said about the network. That means it connects nearly 60 of the largest cities in the United States. Dynegy has added to that footprint by doing a few deals to control other capacity, he said. The U.S. network is connected to Dynegy's European network by leased subsea capacity. Transatlantic capacity is so cheap it doesn't make sense to own it, he said. The company is already moving data on the European network and both ways on the transatlantic routes. Although Dynegy could light the network at OC192, it's starting at OC48 capacity, allowing it to move 2.5 gigabits of data a second. Those circuits can be sold at lower capacities, he added. The network includes OC48 metropolitan area capacity thanks to a deal done a few months ago with Telseon Inc. That deal covers cities like New York, Chicago, San Francisco, Chicago, Dallas Atlanta, Seattle, Denver, Miami and Washington, D.C. Dynegy is spending about $700 million to light the U.S. and European networks. Those expenditures have been spread over 2000-2001. Next year it will spend more money in metro areas to improve connectivity to buildings with prospective customers. Recent financial problems in the telecom sector enabled the company to save 10-20% on some equipment needed to light the network. "And we had already budgeted low because we thought the equipment was going to come down," Stubbe said. With longhaul bandwidth prices off as much as 90% since early this year, why build a network instead of piecing together cheap routes bought from existing networks? "It's important to show (customers) you own your own capacity and control it," Stubbe said. Stubbe talked to a big customer in Dallas recently which had bought capacity from a number of companies that have gone under or are struggling financially. The customer wanted to know what Dynegy owns, what its balance sheet looks like and what its technical capabilities are, Stubbe said. If there's a problem, a customer doesn't want to hear that its supplier will have to call a number of other networks to find out what's wrong, he said. As more and more longhaul networks connect to each other and as metro connectivity improves, that won't be a problem. The telecom sector will look more like the energy industry where companies "lean on each other's assets." In the natural gas business, for example, Dynegy moves gas on pipelines owned by Enron Corp. (ENE), El Paso Corp. (EPG) and the Williams Companies (WMB) among others. Dynegy will fill its network by going after wholesale customers, Stubbe said. But that field will be wider than traditional telecoms might have thought. Big banks in New York need considerable capacity, he said. "They almost look like a small city. So (we) would go after those types of enterprises." -By Michael Rieke, Dow Jones Newswires; 713-547-9207; michael.rieke@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Enron Indian unit defaults on interest dues-source. By Sriram Ramakrishnan 09/21/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, Sept 21 (Reuters) - The Indian unit of U.S. energy major Enron Corp has defaulted on interest payments to international lenders, an industry source said on Friday. Citibank, Bank of America, U.S. Exim Bank and Japan's Overseas Private Investment Corporation are among the international lenders to Dabhol Power Company's $2.9 billion Indian plant. "The default happened early this week," the source, who declined to be identified, told Reuters. "DPC was supposed to repay interest on loans it had taken for the second phase of the power project but it could not pay." The source did not reveal the amount involved or the identity of lenders. A Dabhol spokesman declined to comment on the default, and the Enron Corp spokesman in Houston was not immediately available for comment. But the Dabhol spokesman confirmed that the company had asked foreign lenders for help in meeting its interest payments, some of which must be made by September 30. Dabhol has faced cash problems ever since it was forced to shut its 2,184 MW plant on the west coast of India in June after its sole buyer, a local state utility, stopped buying power and defaulted on earlier dues. Almost 70 percent of the power plant, built a cost of $2.9 billion, was funded by debt. Indian lenders - banks and financial institutions - have lent around $1.4 billion and foreign lenders have contributed the rest. Of the 30 percent equity, Enron owns 65 percent, the state utility owns 15 percent, General Electric Company and Bechtel Corporation each own 10 percent. DEALS A BLOW Analysts said the default deals a huge blow to efforts to find a solution to the dispute between Dabhol and a local utility, the Maharashtra State Electricity Board (MSEB). Foreign lenders are now likely to be less accommodating, they said, and will be under increasing pressure to invoke guarantees given by the Indian lenders. Besides lending money themselves, Indian lenders have guaranteed most of the loans given by the project's global creditors. Therefore, Indian lenders will be obliged to pay up whatever amount Dabhol defaults on. The gas-based power project, India's largest foreign direct investment, has been mired in controversy from the very start. This year, things came to a head as an ugly spat erupted between Dabhol and the state utility, which was the sole purchaser of the plant's power. The dispute centres around the terms of the power purchase agreement, the contract that governs Dabhol's sale and the utility's purchase of power. The state utility claimed the power was too expensive and it didn't need all the plant's power, which it had initially agreed to buy, while Dabhol accused the electricity board of reneging on its contractual obligations. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. India Crt Disallows MSEB's Appeal On Payment To Dabhol 09/21/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- India's Supreme Court has asked the Maharashtra State Electricity Board and U.S. energy major Enron Corp.'s (ENE) unit, Dabhol Power Co., to file a written submission within four weeks on the Letter of Credit issued by MSEB to DPC, Jimmy Mogal, a Dabhol spokesman, said late Friday. DPC had invoked the letter of credit from Canara Bank Sept. 11 accusing the MSEB for non-payment of April electricity bills. The encashment was withheld after MSEB appealed to the Bombay High Court and got an injunction, the report said. "The Supreme Court has not granted relief sought by the MSEB in its petition and has given four weeks time to both parties, the DPC and MSEB, to file written submissions to the Supreme Court. In the interim, their will be no attempts by DPC to encash the Letter of Credit," Mogal said. "However, other ongoing legal actions, including arbitration with the government of India and the state of Maharashtra in London will continue," he added. As reported, Enron has threatened to pull out of the project following long-standing payment disputes with its sole buyer, the Maharashtra State Electricity Board, and the failure of India's federal government to honor its payment guarantee for the project. Enron holds a 65% stake in the 2,184-megawatt Dabhol power project in the western Indian state of Maharashtra. Dabhol is the single largest foreign investment in India to date, at $2.9 billion. -By Himendra Kumar, Dow Jones Newswires; 91-11-461-9426; himendra.kumardowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Kaiser Aluminum May Owe Refunds for Power Sales in Northwest 2001-09-21 16:52 (New York) Kaiser Aluminum May Owe Refunds for Power Sales in Northwest Washington, Sept. 21 (Bloomberg) -- Kaiser Aluminum Corp. may have to repay some of the $60 million it collected from selling electricity to Clark County, Washington, last winter when the third-biggest U.S. aluminum maker decided it could make more money selling power than metals. The Houston-based company in December shut its smelter in Mead, Washington, and began selling power it had contracted to buy from the Bonneville Power Administration at $22.60 a megawatt- hour. A megawatt is enough to power about 750 California homes. Clark Public Utilities said the $325 per megawatt-hour it paid was in line with market prices. The county argues, though, that Kaiser took advantage of the region's dysfunctional power market. A judge in Washington, D.C., is set to tell Clark and other Northwest power buyers on Monday whether Kaiser Aluminum and dozens of other power sellers may owe refunds. ``Any kind of claim for a refund simply has no merit,'' Kaiser Aluminum spokesman Scott Lamb said. Power buyers, including the Washington cities of Seattle and Tacoma, say their bills were inflated by an electricity shortage in nearby California, where prices rose fourfold. They are seeking a total of about $2 billion in refunds. Willing Buyer The county was a willing buyer, participating in a competitive market, Lamb said. At the time of the sale, one commissioner said she was ``pleased to have negotiated such a reasonable price,'' he said. Clark Public Utilities, which supplies power to 153,000 customers in suburban Portland, Oregon, doesn't deny it willingly paid $325 per megawatt-hour. Of the $64 million the company paid, $4 million went to the Bonneville Power Administration. Clark said it signed a contract to buy power on Feb. 2 for delivery Aug. 1 through Sept. 30. ``At that time the market was predicting prices of $1,200 per megawatt-hour by August,'' said Mick Shutt, a Clark spokesman. ``It was perceived to be a good deal.'' The region's wholesale power prices have dropped dramatically, though, since the U.S. Federal Energy Regulatory Commission set price limits for California on April 25. The average price for a megawatt-hour at the California-Oregon border in August was $44.48, down from $313.70 in April. FERC expanded its price-control plan to include 10 other western states in June. Clark has raised rates about 20 percent to pay for a loan it took out to pay for power purchased from Kaiser and other suppliers late last year and early this year, as well as to offset increases in the amount charged by Bonneville, Shutt said. ``The people who were marketing power were manipulating the market, primarily through California,'' Shutt said. ``Kaiser took advantage of the situation of what was happening in the West.'' Refunds Enron Corp., Sempra Energy, El Paso Corp. and about 40 other power sellers have asked FERC Judge Carmen Cintron to throw out refund claims made by Clark and other power buyers. They argue they charged more for electricity because of a surge in natural gas prices and a drought that reduced production from the Northwest's hydroelectric plants. FERC ordered Cintron to gather evidence about these allegations during a Sept. 4-6 hearing and issue a recommendation on Monday whether refunds should be considered. The commission will ultimately decide if, or how much, is due in refunds. ``This is a case where five Pacific Northwest purchasers whose transactions didn't fare very well want out of their deals,'' said Jeffrey Watkiss, a Washington attorney representing the sellers group, which includes Kaiser. If FERC grants the refunds, it will have to consider the other 200 purchasers who bought electricity in hundreds of thousands of transactions between Dec. 25 and June 20, Watkiss said. Of the $2 billion in requested refunds, California is asking for $1.5 billion. In a separate proceeding, a FERC judge is hearing a request by California to recover $8.9 billion on power purchases it made in its own markets. The judge in that case is scheduled to issue a recommendation to FERC by Dec. 13. Kaiser had planned to restart some production at its Washington plants in October. The company's executives announced last week that they won't restart the Mead plant and another facility in Tacoma because of falling aluminum prices. Enron Accused of Infringing Electronic Trading Patent (Update2) 2001-09-21 16:39 (New York) Enron Accused of Infringing Electronic Trading Patent (Update2) (Adds company comment in seventh paragraph.) Marshall, Texas, Sept. 21 (Bloomberg) -- Enron Corp., the largest energy trader, and its online unit are accused in a lawsuit of infringing a Texas company's patent for an electronic trading system. Bid/Ask LLC of Baird, Texas, formerly called Auction Source LLC, said it is the sole rights owner of a patent issued in May 2000 for a ``Real-time Network Exchange with Seller Specified Exchange Parameters and Interactive Seller Participation.'' Houston-based Enron and its EnronOnline unit are improperly using that patented technology through its Internet-based electronic trading facility, according to the lawsuit filed Sept. 17 in federal court in Marshall, Texas. Enron trades commodities such as natural gas and electricity on that trading network. Bid/Ask seeks a court order blocking Enron from infringing the patent, and is asking for damages. EnronOnline began trading electricity and natural gas in November 1999. Between then and the second quarter of 2001, it's handled more than 1 million transactions valued at more than $685 billion, the company has said. Enron, which also trades space on fiber-optic networks, coal, paper and other commodities, had net income of $979 million on revenue of $100.8 billion in 2000. ``We have not reviewed the suit, so we can't comment on it,'' said Enron spokesman Vance Meyer. Shares of Enron fell 9 cents to $28.30 today.
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