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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Mara, Susan </O=ENRON/OU=NA/CN=RECIPIENTS/CN=SMARA< X-To: Dasovich, Jeff </O=ENRON/OU=NA/CN=RECIPIENTS/CN=Jdasovic< X-cc: X-bcc: X-Folder: \JDASOVIC (Non-Privileged)\Dasovich, Jeff\Deleted Items X-Origin: Dasovich-J X-FileName: JDASOVIC (Non-Privileged).pst -----Original Message----- From: Binns, Darran Sent: Thursday, September 27, 2001 1:08 PM To: Alamo, Joseph; Bradley, Rob; Briggs, Tom; Brown, Michael - COO London; Butler, Janet; Chan, Stella; Comnes, Alan; Corman, Shelley; Dasovich, Jeff; Decker, Larry; Denne, Karen; Dotson, Marcus; Fiala, Markus; Frazier, Lamar; Guerrero, Janel; Hartsoe, Joe; Holmes, Christopher; Hudler, Shirley A.; Hughes, Evan; Kean, Steven J.; Lindberg, Susan; Linnell, Elizabeth; Long, Chris; Mahoney, Peggy; Mandelker, Jeannie; Mara, Susan; Maurer, Luiz; Moore, Karen; Morrison, Andrew; Nersesian, Carin; Ness, Lowell; Neustaedter, Robert; O'Day, Nicholas; Palmer, Mark A. (PR); Parsons, Alex; Petrochko, Mona L.; Pharms, Melinda; Roan, Michael; Robertson, Linda; Schmidt, Ann M.; Schroeder, Mark; Seyfried, Bryan; Shapiro, Richard; Sharma, Ban; Shelk, John; Sherriff, John; Shortridge, Pat; Staehlin, Roberta; Steffes, James D.; Styles, Peter; Sublet, Cheri; Sullivan, Kathleen; Sullivan, Lora; Thome, Jennifer Cc: Barnes, Lynnette; Reyna, Margo; Gottfredson, Bryan Subject: California Energy Issues DRI-WEFA Announces Head of Global Energy Consulting Dow Jones Interactive September 27, 2001 <http://nrstg2p.djnr.com/cgi-bin/DJInteractive?cgi=WEB_FLAT_PAGE&GJANum=834612329&page=wrapper/index&entry_point=1< Calif. power bond delay may lead to large deficit Dow Jones Interactive September 27, 2001 <http://nrstg2p.djnr.com/cgi-bin/DJInteractive?cgi=WEB_FLAT_PAGE&GJANum=834612329&page=wrapper/index&entry_point=1< State cautioned on reliance on natural gas The SanDiego Union Tribune September 27, 2001 <http://www.uniontrib.com/news/reports/power/20010927-9999_1n27gas.html< Alternative to state's SDG&E plan in works The SanDiego Union Tribune September 27, 2001 <http://www.uniontrib.com/news/reports/power/20010927-9999_1b27sdge.html< Power Prices Splay Like Fingers on a $20 Hand Energy News Data.com September 26, 2001 <http://www.newsdata.com/cem/pricesindex.html<; PG&E'S TAX BILL WON'T GO DOWN; REORGANIZATION MAY BE GOOD NEWS TO SLO COASTAL Dow Jones Interactive September 26, 2001 <http://nrstg2p.djnr.com/cgi-bin/DJInteractive?cgi=WEB_FLAT_PAGE&GJANum=834612329&page=wrapper/index&entry_point=1< DRI-WEFA Announces Head of Global Energy Consulting Dennis Eklof Appointed Executive Managing Director, Global Energy Consulting LEXINGTON, Mass., Sept. 27 /PRNewswire/ -- DRI-WEFA, Inc., a subsidiary of privately held Global Insight, Inc., today announced the appointment of Dr. Dennis Eklof to the position of Executive Managing Director, Global Energy Consulting. In this position, Dr. Eklof will be responsible for leading DRI-WEFA's global energy consulting activities and will play an important role in guiding DRI-WEFA's future energy product development. Dr. Eklof joins DRI-WEFA from Cambridge Energy Research Associates (CERA) where he held the position of Senior Director. He joined CERA in 1988 and was responsible for launching CERA's Global Refined Products research practice. He also launched and directed its Asia Pacific Energy Research and consulting practice. In these positions, he advised clients on global energy issues and on corporate energy strategies with emphasis on energy geopolitics; developing energy markets, particularly Asia; global oil and LNG markets and strategies; downstream oil investment strategies; oil, gas, and power deregulation and their impacts on energy market developments; electric power development in emerging markets; and energy company strategies. Dr. Eklof was with Data Resources (DRI) from 1977 to 1987, where he held positions of increasing responsibility, culminating with his appointment as director of DRI's worldwide energy and chemicals forecasting and consulting practice. Dr. Eklof earned his degrees at John Hopkins University and holds a Ph.D. in Operations Research and a B.E.S. in Operations Research and Industrial Engineering. "Dr. Eklof's appointment underscores DRI-WEFA's commitment to build a 'world-class' consulting business," stated Dr. Joseph E. Kasputys, founder and chief executive officer of Global Insight, Inc. and president of DRI-WEFA. "Dr. Eklof is uniquely qualified as a leading energy expert who can effectively leverage DRI-WEFA's databases, models and analyses to provide our clients with insights and solutions," Kasputys added. DRI-WEFA's economic information services are packaged to meet the planning and decision-making needs of its clients, covering the world outlook, major regions, individual economies and industries. These services monitor economic events around the globe, analyze their impact and produce forecasts and scenarios that are regarded as "must have" information by clients in industry, finance and government. About DRI-WEFA DRI-WEFA, (http://www.dri-wefa.com), a subsidiary of privately held Global Insight, Inc., provides the most comprehensive economic coverage of countries, regions and industries available from any source. DRI-WEFA brings a unique combination of expertise, models, data and analytical software together with a common analytical framework and a consistent set of assumptions. DRI-WEFA collects and delivers financial information to clients and also provides a broad range of consulting capabilities covering market analysis, business planning, investment strategy, risk assessment, infrastructure analysis, policy evaluation, and economic development. The company has over 3,000 clients in industry, finance and government around the world with $70 million in revenues, over 500 employees and 20 offices covering North and South America, Europe, Africa, the Middle East and Asia. Calif. power bond delay may lead to large deficit NEW YORK, Sept 27 (Reuters) - California state Treasurer Philip Angelides said Thursday the state could face a $9.3 billion budget deficit in the 2002-2003 fiscal year if $12.5 billion of power bonds are not sold before July 2002. The treasurer is certain the bonds will be sold, but he released the figures in an attempt to pressure the California Public Utilities Commission (PUC) into actions it must take in order to sell the bonds. "What I am concerned about is the fact this law has not been effectuated eight months after it was passed," Angelides said in a telephone news conference in Sacramento, referring to a law passed in February setting the biggest municipal bond sale ever in motion. The state depleted its general fund by at least $6.2 billion buying electricity to keep power flowing and must sell the bonds in order to refill the state's general fund and make future power purchases. "There can be no schedule (for the bond sale) until the PUC completes its work," Angelides said. Earlier this week the PUC said the much-delayed meeting is now set for Oct. 2. Angelides said PUC Commissioner Jeff Brown, one of five, is on board to make the vote, but President Loretta Lynch and other commissioners, "are not ready to act." Lynch said earlier this week that she wants more time to work out details with Angelides and the Department of Water Resources concerning the money and terms of the rate order and rate agreement. How the money from rate increases approved in May will be split up to pay for the bonds and to reimburse troubled power utilities and giving the Department of Water Resources the authority to sell the bonds, still need to be decided by the PUC. Angelides is projecting a $3.1 billion budget deficit for the 2002-2003 fiscal year, even if the bonds are sold in time, due to reduced revenues as the overall U.S. economy slows. In a worst case scenario, Angelides added that with the bond sale, the $3.1 billion gap may grow to $4 billion, while a late sale would push the $9.3 billion number to $10.2 billion. The treasurer painted a dire picture of California 's budget if the bonds are not sold, likening it to the state's budget problems of the early 1990s. Angelides warned a 2 percent sales tax increase might have to be put in place, or possibly a $1,574 per student cut in state K-12 education spending. Or, the state could drop all spending on the University of California and California State University and save $6 billion. Eighteen percent of the state's non-education budget would need to be cut if the bonds are not sold, he said. State cautioned on reliance on natural gas SACRAMENTO -- California could face another energy crisis by relying too heavily on new natural gas-fired plants to boost electricity production, said the author of a study released yesterday. After a year of volatile natural gas prices, the state shouldn't depend too much on gas and should instead invest more in renewable energy, according to "Predictably Unpredictable," a study by the California Public Interest Research Group. "By putting all of our eggs in one basket, California is setting itself up for another energy crisis," said Susanna Churchill of CalPIRG. Even before the start of California's energy crisis, the state depended on natural gas for more than one-third of its energy needs, the report said. Eighty-five percent of that gas came from out of state. "Because the state is so dependent on this one fuel source, the price spikes had a tremendous impact on our energy markets," the report says. Increasing that dependence will only cause future price spikes, said Brad Heavner, a CalPIRG policy analyst and author of the report. About 95 percent of the plants that have been built or are under construction are fired by natural gas. Natural gas "is being treated as a magic bullet in this state and around the country," Heavner said. Natural gas is cleaner than coal and less expensive than nuclear, and the state's new fleet of peaker plants -- small gas-fired power plants that come online when demand is highest -- can be built quickly. But Heavner said California's demand for natural gas is rising faster than the federal Department of Energy forecast that calls for a 2.3 percent annual increase in the next 20 years. "This just means California is particularly vulnerable to any supply disruptions nationwide," Heavner said. As demand is rising, natural gas production is waning, he said. There are 2 1/2 times the number of natural gas wells nationwide as there were in 1973, but each well produces a third as much gas, Heavner said. To stabilize the state's energy supply, CalPIRG recommends that officials encourage a broader mix of fuels by requiring utilities to buy 20 percent of their power from renewable resources. The new California Consumer Power and Conservation Financing Authority has set a goal of increasing the state's renewable energy output to 20 percent by 2006, said Amber Pasricha, spokeswoman for the authority. The authority has signed 14 letters of intent for new renewable power plant projects, including 12 wind and two bio-fuel projects, she said. CalPIRG also recommends that state energy regulators deny any pending applications for natural gas-fired plants and offer government subsidies to renewable power providers and customers. The report also recommends the state review all contracts that the Department of Water Resources has signed with natural gas-fired power producers and explore canceling contracts that involve the construction of new gas-fired plants. Alternative to state's SDG&E plan in works Approval of the state plan to eliminate the $747 million debt SDG&E says it is owed by its customers could be headed for delay or derailment. Consumer advocates and others say they will gather Monday in Sacramento to develop an alternative to the deal, which was announced by Gov. Gray Davis and the utility in June. Consumer groups have criticized the governor's plan to eliminate the so-called balancing accounts as costly to consumers and a windfall to the utility. The alternative proposal, which one consumer advocate says would save ratepayers more money, will be submitted to the California Public Utilities Commission for review. The commission had been set to complete its review of the governor's plan by the end of October. Utilities Commissioner Carl Wood, who crafted the timetable for the review, acknowledged yesterday that his schedule did not anticipate the need to consider an alternative proposal. Wood said it was unclear how long that might take. "Much will depend on the perceived quality of the (alternative) plan," Wood said. SDG&E, meanwhile, said it had not decided whether it will participate in the Monday meeting -- called a "settlement conference" under PUC rules -- and criticized the scheduling of the event. "We believe this is a delaying tactic designed to hijack this process," said Ed Van Herik, a spokesman for SDG&E, a unit of San Diego-based Sempra Energy. "This is designed to undermine the authority of the utilities commission and the governor." Van Herik noted that components of the utility's plan have already been approved, while others remain on track. But a key issue -- whether customers or shareholders are entitled to hundreds of millions in profits SDG&E earned from selling power to the state -- has yet to be voted upon by the commission. Steve Linsay, a supervisor for the Office of Ratepayer Advocates, a state office charged with representing consumers, noted that PUC regulations require a settlement conference in cases such as this. "By reaching a settlement with broad sponsorship, we hope the commission will give it the serious consideration it warrants," Linsay said. Michael Shames, executive director of the Utility Consumers' Action Network, said an alternative proposal could eliminate the $747 million debt, lower customer rates and reduce "windfalls" for SDG&E at the same time. Consumer groups have been particularly critical of revelations that SDG&E earned hundreds of millions in profits from the sale of electricity during the power crisis. They've also been critical of the profits they say Sempra will earn from future power sales. The governor and SDG&E say their plan contains significant concessions by the utility and eliminates the balancing accounts without raising rates. Under their proposal, the company agrees to return about $200 million in profits from the sale of electricity and pay $100 million to close an investigation into its electricity procurement practices. The utility says the balancing account arose when it paid more for electricity than it was able to collect from customers. The $747 million account amounted to a debt of $400 from each residential customer and higher sums from businesses. But in computing the debt, SDG&E has declined to fully credit the profits it earned from power sales to the state. The utility says those gains are the exclusive property of its shareholders Power Prices Splay Like Fingers on a $20 Hand From top to bottom, there was not much difference between prices at Western hubs, with just about all peak transactions spread in a range from 20 mills/KWh to 27.5 mills/KWh midweek. Ranking prices at hubs from north to south nonetheless showed striations and marginal locational distinctions. The Wednesday prices were a little bit higher in the pacific Northwest and slightly lower in California and the Desert Southwest than they were at the start of the week, as a burst of warmer weather added some load to utilities' systems. The California Independent System Operator has been revising its forecasts downward so far in the week, but that might change as temperatures rise. The peak so far was just shy of 35,000 MW on Tuesday. Unit outages continued to swell, hitting as much as 7,500 MW in California on Tuesday. The balance between scheduled and unplanned maintenance varied each day. Major facilities that were all but out of service included El Segundo, Alamitos, Etiwanda and Encina-all reporting multiple units out for servicing. The new Sutter station was at half load and the Crockett cogeneration plant topped the short list of QF outages. Mid-Columbia and California/Oregon Border prices had a hard time dragging out of weekend pricing floors of about 18.5 mills/KWh on Monday and Tuesday. By Wednesday's dealings, the northern prices splayed in this fashion: Mid-C, 20 mills to 20.5 mills/KWh for peak and 16.7 mills to 17 mills/KWh off peak; COB, 21.5 mills/KWh at peak and 18 mills/KWh off peak; NP15, 24.5 mills to 25 mills/KWh and 18 mills to 18.75 mills/KWh off peak. In the southern parts, SP15 was 25 mills to 25.5 mills/KWh in the daytime and 16.75 mills/KWh at night while Palo Verde rose to 26.5 mills to 27.5 mills/KWh for peak and 18 mills/KWh for off peak in sparse trading. The Alberta Pool showed surprising volatility, with single-hour prices spiking to 223 mills/KWh on Tuesday as pool loads crossed 7,000 MW [Arthur O'Donnell]. <mailto:aod@newsdata.com< Western Electricity Prices Mid-Week September 26, 2001 Hub Peak (heavy) Off-peak (light) Alberta Pool (C$) 26.75-222 15-25.6 Mid-Columbia 18.5-20.5 16.7-17 COB 18.5-21.5 17-18 NP 15 22.5-25 18-18.5 SP 15 22.5-25.5 16.75-18 Palo Verde 24.75-27.5 16-18 Archives of the Western Price Survey for the past year are also available online. <http://www.newsdata.com/cem/prarchive.html<; PG&E'S TAX BILL WON'T GO DOWN; REORGANIZATION MAY BE GOOD NEWS TO SLO COASTAL San Luis Obispo -- Pacific Gas and Electric Co.'s proposed bankruptcy reorganization should not cause a further erosion of property tax revenues in San Luis Obispo County, top company officials said Tuesday. "The tax base shouldn't change,'' said Gordon Smith, president and chief executive officer of PG&E. "If anything, it should go up.'' That would be good news to both San Luis Obispo County and the San Luis Coastal Unified School District, which have taken budgetary hits in recent years as the company's Diablo Canyon nuclear power plant was devalued. The power plant was devalued as part of the state's electrical deregulation. It has cost the county, schools and other agencies $10 million a year, said Gere Sibbach, county auditor-controller. Property tax revenues from Diablo Canyon are divided with a third going to the county, a third to schools and a third to other governmental agencies. The county has been able to replace the lost utility taxes with other property taxes and has not been as hard hit as the school district, which has seen its annual budget go down $3 million, or 6 percent. PG&E officials don't expect property taxes to decrease because the reorganization plan calls for Diablo Canyon and the company's hydroelectric plants to be valued at market rates, which are likely to be higher than its present valuation. The process is very similar to refinancing a home and should allow the utility to retire its $13 billion debt without selling off any assets, Smith said. "Basically, we have taken a second mortgage on our house to keep our house," he said. Under the company's proposed bankruptcy plan, the company now known as PG&E will split up. The gas and electric distribution part of the company will retain the PG&E name while the corporation and the company's electrical generation arm -- which includes Diablo Canyon -- will be given a new name. The plan must be approved by a bankruptcy judge and various regulators before it becomes final. If all goes as planned, the reorganization could take effect at the end of 2002. Auditor-Controller Sibbach was more cautious in his assessment of the effects of the reorganization on county finances. County officials will be carefully tracking the reorganization plan as it wends its way through the approval process. "I hope he (Smith) is correct," Sibbach said. "It could be significant."
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