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Wholesaler Switch Some Power Responsibility Back to Utilities
Associated Press, 02/02/2001 Energy Service Provider Switching Customers' Power Source Back to Utilities Associated Press, 02/02/2001 Calif May Issue 2nd Request For Pwr Bids As Terms Expire Associated Press, 02/02/2001 Capstone May Get Microturbine Orders Worth Up To $60M Dow Jones, 02/02/2001 FFBN Converts Wrap: Enron Prices $1.25B Zero Offering Federal Filings Newswire, 02/02/2001 Judge Recovering From Arsenic Poisoning Associated Press, 02/02/2001 Energy Service Provider Switching Customers' Power Source Back to Utilities Associated Press, 02/02/2001 CROATIA: Us Plans Croatia Investment Conference in Spring Reuters English News Service, 02/02/2001 Currency: The Business of Change God Speed: What's faster than Richard Norman's Petabit Router? Maybe the Frenetic Work-Junky Himself National Post, 02/02/2001 Gas Traders Seek Compromise Talks Between Enron and On-Line Rivals May End Lawsuit, Lead to 'Superindex' The Globe and Mail, 02/02/2001 Senators Spar On U.S. Role In Resolving Energy Crisis The New York Times, 02/02/2001 Power Exchange to Live On In Lawsuits Los Angeles Times, 02/02/2001 THE CALIFORNIA ENERGY CRISIS PG&E Ability to Buy Natural Gas Eased Energy: PUC Grants Firm's Request to Use Money Owed by Customers as Collateral. Suppliers had Threatened to Stop Deliveries. Los Angeles Times, 02/02/2001 Power Source Ends Direct Flow to California Businesses The New York Times, 02/02/2001 Democrats, Utilities Urge Price Controls to Aid West Pittsburgh Post-Gazette, 02/02/2001 Florida Energy Commission Recommends Deregulating Wholesale Electricity Knight-Ridder Tribune, 02/02/2001 Senate Powerless On Power / No Easy Answers to State Energy Crisis The San Francisco Chronicle, 02/02/2001 Deals & Deal makers: Burning Issues: Convertible Securities Are This Year's Big Model The Wall Street Journal, 02/02/2001 Hot, Dark Summer Ahead for California; Drought Worsens Power Crunch, Senators Told The Washington Post, 02/02/2001 Enron Award Should Have Been Through Competitive Bidding, Says Sarma Business Standard, 02/02/20001 Options Report Volatility Readings Hardly Move On News Of Federal Reserve's Cut In Interest Rates The Wall Street Journal, 02/01/2001 Wholesaler switching some power responsibility back to utilities By JAY JORDEN Associated Press Writer 02/01/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. DALLAS (AP) - As California's energy market continues to struggle, a major electricity wholesaler said it will stop funneling power directly to dozens of corporate clients there, instead shifting their needs to local utilities. Houston-based Enron Energy Services cited concern over losses by California's power companies and the move to shut down the state's electrical exchange, company chief executive Marty Sunde said Thursday. He said the switch won't affect the price paid by dozens of large customers, including Kaiser Permanente, though it may hurt the Enron Corp. subsidiary's bottom line. The company tries to help businesses cut their energy bills by, among other things, purchasing power wholesale and reselling it to clients at reduced rates. Like California's large utilities, Enron has been hurt by the state's soaring wholesale prices. Enron will have to pay the local utilities at the going rate but cannot pass on any higher costs to its customers because their contracts guarantee a price. "We are re-sourcing - choosing another sourcing alternative under an existing client relationship that we absolutely honor," Sunde said. "It seems like a better strategy to serve our customers directly from the utility" instead of canceling the contract. "There is a risk that our decision to honor our contracts will come with some cost." The New York Times, citing an unidentified source close to Enron, reported Thursday that the energy service provider might lose $1 billion if it fulfilled all its contracts. Sunde called the figure "absurd" but acknowledged that financial concerns and the quickly changing energy market in California played heavily in the decision. California has recently faced rolling blackouts because of a tight power supply that has been blamed on the state's 1996 deregulation, inadequate hydroelectric power, high natural gas prices, transmission glitches and power plant repairs. The state's two largest utilities, Southern California Edison and Pacific Gas and Electric Co., say they are $12.7 billion in debt because of soaring wholesale prices and the 1996 law, which blocks them from recouping those losses from their customers. --- On the Net: Enron Energy Services: http://www.ees.enron.com Energy service provider switching customers' power source back to utilities By JAY JORDEN Associated Press Writer 02/01/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. DALLAS (AP) - A subsidiary of the largest seller of wholesale electricity in North America says concern over losses by California's major power companies has prompted it to quit scheduling power to dozens of its customers, switching that job to one of the state's debt-ridden utilities. The decision, which would apparently affect companies like Cisco Systems, Genentech and Clorox, would not stop the flow of electricity. But it would potentially raise the rates these big customers pay, perhaps by as much as 35 percent, and could also increase the role of the state government as the major supplier of power in California, The New York Times reported Thursday. As a result of the decision, the customers would be switched from the Houston-based Enron Corp. unit, called Enron Energy Services, to the Pacific Gas and Electric Company. They would lose the discounts and low rates they had enjoyed. The chief executive of Enron Energy Services said the unit was taking the step because of financial turmoil in the state's power market, but emphasized the company will honor current contracts with the dozens of corporations affected. Many companies arranged five-year contracts with Enron in 1997 and 1998. "We are re-sourcing - choosing another sourcing alternative under an existing client relationship that we absolutely honor," said Marty Sunde, Enron Energy CEO. A source close to Enron told The Times that the energy service provider might lose $1 billion if it fulfilled all its contracts for the length of their terms. Sunde called the figure "absurd," but said financial issues played heavily in the decision. "Market forces, including legislation that is probably gone on in the last 12 hours, continues to change whatever the price or cost picture is going to be," he said. One person with knowledge of Enron's move told The Times that the customers being cut off use about 3,000 megawatt hours, equal roughly to the output of six major generating plants. The state would become financially responsible for covering that, potentially adding millions of dollars a day to its already heavy burden. Financially strapped utilities Southern California Edison and Pacific Gas and Electric Co., forced by California's deregulation law to sell their power plants, say they've been pushed $12.7 billion in debt by soaring wholesale prices that deregulation blocks them from passing on to their customers. The state Legislature has been forced to spend hundreds of millions of dollars to keep the lights on in California, and is debating passage of a bill that would rescue the crippled utilities by floating up to $10 billion in bonds to buy power. In another move to shield itself from the power woes threatening California, Enron's parent company on Wednesday sued the California Power Exchange, a nonprofit market where electricity was auctioned. The lawsuit was filed the same day trading was stopped on the exchange because of the deep debt of the state's two biggest utilities. The lawsuit seeks to prevent the market from using letters of credit that the company was required to file to trade on the exchange. The suit is a move to ensure the market could not tap Enron's assets to pay off other debts. Calif May Issue 2nd Request For Pwr Bids As Terms Expire 02/01/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) (This article was originally published Wednesday) LOS ANGELES -(Dow Jones)- The bids California received last week from 39 power suppliers who may provide the state with long-term contracts for up to 10 years expired at noon Wednesday, without the state signing a single contract for the 6.9-cent-per-kilowatt-hour weighted price, an adviser to Gov. Gray Davis told Dow Jones Newswires. The state will likely request that generators resubmit new bids, which could result in higher rates and less capacity, the adviser said. The terms of the request for bids issued Jan. 24 to generators states that "the bidder's price and quantity shall be held until 3:00 p.m. EST Jan. 31, 2001." Davis said the state was interested in signing contracts from six months to 10 years. A spokesman at Mirant (MIR), formerly Southern Energy Co., said he could not discuss the matter because of confidentiality reasons. Earlier this week, San Jose-based Calpine Corp. (CPN) and another power supplier met with David Freeman, general manager of the Los Angeles Department of Water and Power, and Michael Peevey, former head of Edison International, to negotiate long-term contracts with the suppliers. Neither side came to an agreement. But the governor's office said the deadline has been extended for a "few of the bids" that were promising. The governor hopes to sign those contracts if legislation is passed by the Senate and Assembly Wednesday night. The state received bids from Duke Energy (DUK), Reliant Energy (REI), Enron Inc. (ENE), Williams Cos. (WMB) and Dynegy Inc. (DYN), but contracts were not signed, the adviser said. State Pushes Forward Power Prices Up Traders said the announcement by Davis that the state would become the largest purchaser of electricity for up to 10 years pushed up prices in the forward power market, with many Northwest utilities scrambling to ensure they have enough supplies for 2002 to 2006. Forward power prices for Mid-Columbia flat for 2004 to 2006 traded at $55-$63 a megawatt-hour. Calendar year 2002 power at the California-Oregon border traded at $175/MWh last week. A month ago, it sold for $112/MWh. -By Jason Leopold; Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com Capstone May Get Microturbine Orders Worth Up To $60M 02/01/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) (This report was first published late Wednesday.) By Pat Maio Of DOW JONES NEWSWIRES LOS ANGELES -(Dow Jones)- Capstone Turbine Corp. (CPST) may have landed its biggest microturbine order to date from a consortium of public agency water suppliers in California - valued at up to $60 million, according to sources. The Association of California Water Agencies, which is made up of 440 members who supply water to 90% of California's farms and cities, has signed a deal with an energy consulting firm that is working to secure up to 2,000 microturbine unit orders for Capstone over the next two years. ACWA uses up to 7% of the state's electricity on pumping stations needed to irrigate farms, and many of its members have been hit hard financially by the energy crisis. Under the agreement, privately held Harza Energy LLC will buy the microturbines from Capstone, based in Chatsworth, Calif., and install them for ACWA's member water agencies. "For Harza, this will end up being our largest order ever," Steve Chippas, president of the Chicago engineering and energy consulting firm, said in a phone interview. Capstone marketing vice president Mark Kuntz, confirmed that his company has had discussions with ACWA regarding the potential to sell up to 2,000 microturbines. The 30-kilowatt units would cost up to $30,000 each - making the total deal worth up to $60 million. "We have every expectation that this will result in a large order," Kuntz said. "We have made this a high priority to secure a large number of orders" with the ACWA agencies. Representatives of about 30 of those agencies will visit Capstone on Thursday to get a firsthand look at how a microturbine works, he added. Capstone said it had produced about 1,000 microturbines through last November, its last publicly disclosed production number. Dan Smith, director of regulatory affairs for ACWA, said public water supply agencies are being devastated financially by California's energy crisis. "I've been here almost 26 years, and I've seen droughts, but I've never seen so much aggravation and concern as this problem has caused," Smith said. He pointed to one San Diego-area agency, the Valley Center Municipal Water District, that plans to increase its water rates 25% on Feb. 1, and another 25% on April 1. The district mainly supplies water to avocado growers, some of whom are saying them may be forced out of business because of the rate increases, Smith said. ACWA also is looking at reducing power costs to its members by picking a new wholesale supplier of electricity to replace AES Corp. (AES). Finalists are said to include Enron Corp. (ENE) and a joint consortium of Coral Energy, a unit of Royal Dutch/Shell (RD) and New West, an energy service supplier owned by Salt River Project, one of the nation's largest publicly owned energy businesses. Microturbines are primarily fueled by natural gas and can generate from 25 kilowatts to 600 kilowatts of electricity a day. They also run on propane, diesel fuel, kerosene, landfill gas and waste and water treatment gases. Microturbines use just one moving part - a shaft on which a compressor turbine and permanent magnet generator are seated. Microturbines also use airfoil bearing technology, which eliminates the need for oil bearings. This is why microturbines cost less to maintain than other power sources and produce less pollution and noise. Microturbines can be turned on during the middle of the day when power prices are most expensive or during blackouts caused by interruptible contracts with electric utilities. Interruptible contracts give utilities the legal authority to turn off electricity when shortages are imminent. In return, customers get discounted power bills. Shares of Capstone closed Wednesday at $41, up 69 cents, or 1.7%, on Nasdaq volume of more than 1 million shares, compared with average daily volume of 913,800. -By Pat Maio, Dow Jones Newswires; 323-658-3776; patrick.maio@dowjones.com FFBN Converts Wrap: Enron Prices $1.25B Zero Offering 02/01/2001 Federal Filings Newswires (Copyright © 2001, Dow Jones & Company, Inc.) ISSUER: FEDERAL FILINGS SYMBOL: X.FFI (This market wrap was originally published Wednesday evening.) WASHINGTON (FFBN)--Utilities and communications company Enron Corp. priced a $1.25 billion zero coupon convertible bond overnight in a Rule 144a private placement through Salomon Smith Barney. The securities include a yield to maturity of 2.125% and conversion premium of 45%, which according to Lehman Brother Chief Convertibles Strategist Ravi Suria, makes it "by far the richest priced zero that the convertibles market has absorbed so far. "Priced with such rich terms, upside participation on the bond should be limited, while the downside is less strong despite the existence of the put and the company's good credit profile," he wrote in a research note Wednesday. Suria said the most favorable elements of the deal are its massive size and its investment-grade credit rating, which will add to its liquidity. With five zero coupon convertibles entering the market in January alone, Suria wrote, "we would anticipate (or hope)that investor appetite will adjust somewhat and pricing terms will improve." In the secondary market, shares of convertible issuer Tekelec rose 10.6% after the company reported fourth quarter adjusted net income of 27 cents a diluted share, in line with expectations. The company also said it sees 2001 revenue growth of 23% to 27% and earnings growth of 25%. Tekelec's shares were up $2.69, at $28, while its 3.25% convertible notes were quoted at 167, or 9 points above parity. Based in Calabasas, Calif., Tekelec supplies signaling and control systems. Elsewhere, enterprise software maker PeopleSoft Inc.'s shares fell 16% Wednesday after Morgan Stanley downgraded its stock to neutral from outperform. The company's stock lost $7.94 to close at $41, while its 4.75% convertible notes due 2002 were quoted at 101.72, or 21 points above parity. Terayon Communications Inc. shares fell almost 12% after it said it expects a first quarter pro forma loss of 45 cents to 50 cents a share on revenue of $45 million to $50 million. A First Call/Thomson Financial survey of three analysts yielded an average first quarter loss estimate for Terayon of 33 cents a share. As reported, Terayon said its forecast reflects restricted spending within the telecommunications industry, product transitions, and the company's reorganization and capital spending plans. The company's stock lost 88 cents to close at $6.50, while its 5% notes due 2007 were quoted at 24.6, or 17 points above parity. Terayon develops broadband data access and distribution network systems for the satellite and cable TV markets. -Dan Lowrey; 202-393-7402 08:06 Judge recovering from arsenic poisoning 02/01/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. NACOGDOCHES, Texas (AP) - A retired judge is recovering from arsenic poisoning while the Texas Rangers investigate whether he might have been intentionally sickened with the element. Texas Ranger Tom Davis confirmed Tuesday that the Rangers and the Department of Public Safety are looking into whether District Judge Jack Pierce was poisoned in a criminal act. A DPS crime van has processed items in Pierce's house in Nacogdoches as potential evidence but Davis declined to give any details on the case. Pierce was treated for the poisoning earlier this month at a hospital in Dallas, and his family expects a full recovery. His daughter, Mary Elizabeth Pierce, said Pierce is feeling better, and his spirits are high. "He's working on getting his strength back," she told the Nacogdoches Daily Sentinel. "We're expecting a full recovery, because he's Jack Pierce." She declined to comment on the poisoning, or how it was treated. Arsenic is a naturally occurring element that can be found in tobacco and treated wood. But a toxicologist with a state Poison Control Center said most arsenic poisonings do not occur from exposure to the element in the environment. Wayne Snodgrass, a toxicologist, physician and professor at the University of Texas Medical Branch in Galveston, said if a person is normally healthy, suddenly becomes ill and receives an accurate diagnosis of arsenic poisoning, arsenic could have been added to something they ate or drank. --- Kelly, Brooks AFB stores to close as agency trims commissaries SAN ANTONIO (AP) - Commissaries at Kelly and Brooks Air Force bases will close this year in a move to pare down, officials said Wednesday. It was not immediately known how many workers would be affected by the closures. Mark Solheim, spokesman for the Defense Commissary Agency said the agency would try to place all workers at other stores. "Every effort is going to be made to slot those people in vacancies in the Fort Sam (Houston), Randolph and Lackland (AFB) stores," Solheim said. "That's certainly our first prerogative." Kelly's commissary is to close April 15, three months before the ordered shut down of the base. The Brooks' store will close Oct. 1. A Defense Commissary Agency press release encouraged customers at Brooks to shop at larger nearby stores at Lackland, Randolph and Fort Sam Houston. Officials at Brooks were said they fought the closure of the commissary. The last day of operation for the Kelly store will be April 13. The last day at Brooks will be Sept. 28. --- Bush plans to loosen charity regulations invite abuses, critics say WASHINGTON (AP) - Taking advantage of one of George W. Bush's experiments, Teresa Calalay sent her son to a Texas church home last year hoping to break his pattern of legal, behavioral and work problems. He returned weeks later, broken in other ways. The 18-year-old's feet were swollen from severely sprained ankles and his body was covered with hundreds of welts, bruises and bug bites that led a doctor to file an abuse report with police. The home's superintendent now awaits trial on a felony charge of unlawful restraint - and Calalay has sued the church for what she says was a substitution of abuse for Christianity. The home denies wrongdoing. "I don't know where in their Bible it says you've got to beat God into people," Calalay said. Bush as president is now promoting a plan to shift more federal social services to religious groups - as he did as Texas governor. The idea has early bipartisan support, though supporters of the separation of church and state are pledging to fight it. A review of similar state and federal initiatives shows that beyond the political debate, these experiments have generated allegations of financial and physical abuse, questions of lax oversight and lawsuits questioning whether the needy are being force-fed religion at public expense. Supporters, including Bush himself, offer stories of churches freed from bureaucratic constraints that have helped turn lives around. And they suggest religious groups are less prone to fraud and abuse because of their beliefs. --- UNT fraternity accused of using racial slurs DENTON, Texas (AP) - A diverse group of University of North Texas students protested peacefully Wednesday against a fraternity accused of using racial slurs and waving a Confederate battle flag at a group of mostly black football recruits. The Kappa Alpha Order chapter at UNT was temporarily suspended after accusations that members confronted about 30 mostly black football recruits who were touring the Denton campus with their parents over the weekend. A representative from the National Association for the Advancement of Colored People met with a group of students Tuesday night to organize the march, according to Adrienne Williams, a UNT senior. Williams, 22, is the president of Eagle Angels, the volunteer group that was escorting the recruits on the tour. The group marched to the administrative building carrying envelopes outlining demands. Colleen Murphy, an Angels officer, said the demands include an endorsement of the suspension, the assessment of a fine or possibly confiscation of the fraternity house, according the Denton Record-Chronicle. LaToya Royal, a member of the tour-leading Angels, said about 20 men wearing their Greek letters Saturday ran down the stairs of the student union with a dog wearing a Confederate battle flag bandanna and "stopped about 20 feet away and began chanting and singing." --- Airline: Discussions may involve merger talks HOUSTON (AP) - Continental Airlines Inc. has been in talks with industry officials about corporate moves that may involve combining with another carrier, executives say. Airline officials said Wednesday night in a written statement that it has had and anticipates that it will have further discussions with "third parties" about "strategic alternatives" that could include alliances or mergers. The statement preceded Thursday's planned hearing on industry consolidation, in which officials will consider whether planned deals will benefit consumers. Some lawmakers are concerned that the mergers will hurt fliers by reducing competition. As major industry mergers continue, speculation has focused on Delta Air Lines buying Continental. But the possibility also exists that the smaller Continental might want to buy Atlanta-based Delta, the nation's third largest airline. Gordon Bethune, Continental's chief executive and chairman, told the Houston Chronicle on Wednesday that although the airline wasn't in talks with Delta or another carrier, he wouldn't rule out the option. Analysts say a merged Delta-Continental would be a legitimate response to mergers between United Airlines and US Airways as well as American Airlines with TWA. Continental and Northwest already have a marketing alliance in which they feed each other passengers. Bethune has previously said that Continental is open to Delta joining the Northwest-Continental alliance. --- Energy service provider switching customers' power source back to utilities DALLAS (AP) - One of the largest sellers of wholesale electricity in North America says concern over losses by California's major power companies and the move to shut down that state's electrical exchange has prompted it to quit scheduling power to dozens of its customers, switching that job instead to the utilities. The chief executive of Houston-based Enron Energy Services says Thursday the move will not alter current contracts with dozens of corporations, whose rates will not change under those agreements, but likely will affect the power outsourcing company's bottom line. "It seems like a better strategy to serve our customers directly from the utility as opposed to turning them back - the normal procedure," said Marty Sunde, Enron Energy CEO. "There is a risk that our decision to honor our contracts will come with some cost." The subsidiary of Enron Corp., a major supplier of power to Californians, has gone to Kaiser Permanente and other major customers with the need to source power for delivery directly from utilities, instead of scheduling itself in a state hit by rolling blackouts amid electricity shortages. "We are re-sourcing - choosing another sourcing alternative under an existing client relationship that we absolutely honor," Sunde said. "A measure of that is what Enron means when it says the contract remains in place - our customers' expenditures will remain the same." A source close to Enron told The New York Times in Thursday's editions that the energy service provider might lose $1 billion if it fulfilled all its contracts for the length of their terms. Sunde called the figure "absurd," but added that financial issues played heavily in the company's risk management decision. --- Former POW has trouble convincing government he's alive LANSING, Mich. (AP) - It was last week when Staff Sgt. Christopher Stone discovered he was still dead. He tried to buy a car, but a dealer told him "`Sorry, but you have this black mark on your credit report,"' Stone said. "I guess they don't like lending money to a dead guy because they're hard to collect from." Stone, a former prisoner of war, first discovered his problem about a year ago while he was preparing his taxes. Ever since, he has been trying to convince the government that he is alive. "It all started the day I was captured," Stone told the Detroit Free Press for a story Thursday. "Somebody decided on that day to initiate a death claim for benefits. I don't know who or how, but that claim was passed on to the credit bureaus." The former Capac High School student was captured, along with two soldiers under his command, by about 20 Serb soldiers on March 31, 1999, while patrolling the Macedonian-Yugoslav border and imprisoned for 32 days. The Serb soldiers fired on the Humvee scout vehicle Stone, Staff Sgt. Andrew Ramirez of Los Angeles and Spc. Steven Gonzales of Huntsville, Texas, were riding in and set the engine on fire. The three prisoners of war were released more than a month later when Yugoslav authorities handed the soldiers over to the Rev. Jesse Jackson, who had negotiated their release. Elsewhere TEACHERS' INSURANCE: About 750 teachers and school employees rallied in front of the Capitol on Wednesday, calling on legislators for state-paid health benefits. Many of them waved signs and chanted "health care that's fair now!" Unlike state employees, public school workers do not get any state-paid health insurance. Although state law requires districts to offer comparable coverage - but not necessarily comparable cost - to that which state employees receive, some districts offer no plan at all because there is no penalty for failing to do so. ... STATE EMPLOYEES: A Texas workers' union on Wednesday called for an 8.25 percent pay raise for all state workers, which would cost the state about $1 billion. Lawmakers already have said there isn't enough money in the budget. ... ELECTION LAWS: Banning punch-card ballots in the 14 counties using them would cost at least $25 million and could financially strain local governments, Secretary of State Henry Cuellar said Wednesday. "I believe in eliminating the punch card," Cuellar said, outlining ways Texas might avoid some pitfalls Florida faced after the November presidential election. But Cuellar warned that doing away with punch-card ballots in favor of a more up-to-date voting technology still may not make for the most accurate vote count. TAX SEASON: Joe Hardie likes to cut it as close. That's why he made the trip to the North Dallas branch of the Dallas County Tax-Assessor Collector and pay his property tax on the last day possible without having to pay a penalty. He joined Texans statewide making the trek to their tax offices to pay property taxes. Energy service provider switching customers' power source back to utilities By JAY JORDEN Associated Press Writer 02/01/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. DALLAS (AP) - One of the largest sellers of wholesale electricity in North America says concern over losses by California's major power companies and the move to shut down that state's electrical exchange has prompted it to quit scheduling power to dozens of its customers, switching that job instead to the utilities. The chief executive of Houston-based Enron Energy Services says Thursday the move will not alter current contracts with dozens of corporations, whose rates will not change under those agreements, but likely will affect the power outsourcing company's bottom line. "It seems like a better strategy to serve our customers directly from the utility as opposed to turning them back - the normal procedure," said Marty Sunde, Enron Energy CEO. "There is a risk that our decision to honor our contracts will come with some cost." The subsidiary of Enron Corp., a major supplier of power to Californians, has gone to Kaiser Permanente and other major customers with the need to source power for delivery directly from utilities, instead of scheduling itself in a state hit by rolling blackouts amid electricity shortages. "We are re-sourcing - choosing another sourcing alternative under an existing client relationship that we absolutely honor," Sunde said. "A measure of that is what Enron means when it says the contract remains in place - our customers' expenditures will remain the same." A source close to Enron told The New York Times in Thursday's editions that the energy service provider might lose $1 billion if it fulfilled all its contracts for the length of their terms. Sunde called the figure "absurd," but added that financial issues played heavily in the company's risk management decision. "Market forces, including legislation that is probably gone on in the last 12 hours, continues to change whatever the price or cost picture is going to be," he said. "The driving force is that we started to connect the dots and saw a trend." Financially strapped utilities Southern California Edison and Pacific Gas and Electric Co., forced by California's deregulation law to sell their power plants, say they've been pushed $12.7 billion in debt by soaring wholesale prices that the same law blocks them from recovering from their customers. Meanwhile, Enron Energy customers shouldn't notice a change, said company spokeswoman Karen Denne. "The price our customers pay for their electricity is not changing," she said. "The only difference is that PG&E will now supply the physical power." INDIA: Indian state likely to miss Enron bill deadline. 02/01/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, Feb 1 (Reuters) - India's Maharashtra state government is likely to miss a Thursday evening deadline for paying 890 million rupees ($19.2 million) owed to the Indian unit of Enron Corp , leading the U.S. energy giant to demand payment from the federal government. "We have two options. Either invoke the counter guarantee of the federal government, or encash the letters of credit," an Enron spokesman told Reuters on Thursday. He said the company had not decided which option to pursue. Enron has invested more money in India's power sector than any other foreign company, and is also one of the country's largest overseas investors. Its struggle, and tactics, to obtain payment has attracted much media attention at a time when India is desperately trying to attract more foreign investment to feed a growing hunger for power. After numerous payment delays, Dabhol Power Company (DPC), Enron's Indian unit, last week decided to invoke the counter guarantee of the Maharashtra state government. The state government has until the close of business on Thursday to provide the cash-strapped state electric utility with the money it needs to pay for power purchased in recent months from an Enron-owned power plant. If that deadline is not met, Enron can demand payment from the federal government, which signed an agreement to guarantee the state utility's bills in 1996. Counter guarantees are designed to assure foreign investors that their bills would be paid by the federal or state governments in case state utilities default. A letter of credit is an instrument through which a bank stands guarantee for payment by its client. Senior state government officials could not be contacted for comment, but a government spokesman told Reuters that no meeting of the state cabinet is scheduled for Thursday to discuss the issue. CROATIA: US plans Croatia investment conference in spring. 02/01/2001 Reuters English News Service (C) Reuters Limited 2001. ZAGREB, Feb 1 (Reuters) - The United States plans to hold an investment conference in Croatia this spring to spur investor interest in the country after it undertook democratic and economic reforms. "One of my aims is to find ways to encourage more U.S. companies to invest in Croatia," new U.S. ambassador Lawrence Rossin told journalists on Thursday. "We are planning an investment conference in Croatia, sponsored by the Overseas Private Investment Corporation, probably in April," Rossin said, singling out tourism, agri business, information and technology as sectors of interest. "We need to educate U.S. companies about Croatia and its possibilities, political and security climate," he added. Rossin also said Croatia should work on improving the investment climate by cutting bureaucratic procedures, reforming its legal system and ensuring legal security for businesses. U.S. investment was scarce during the previous nationalist regime, which ruled Croatia from independence in 1991 to 2000, when it was replaced by a reformist coalition. One of the rare major U.S. players to venture into the Croatian market was energy giant Enron . It signed a number of deals on cooperation and purchase of electricity with state power board HEP last September, after a long dispute over agreements worth $1.6 billion it had signed with the previous government and which the new one disputed. National Post Business Magazine Currency: The Business of Change God Speed: What's faster than Richard Norman's petabit router? Maybe the frenetic work-junky himself Julie McCann National Post 02/01/2001 National Post National 19 © National Post 2001. All Rights Reserved. Richard Norman, president and CTO of Montreal-based Hyperchip Inc., powers from thought to thought at warp speed. His frenetic energy is countered only by his work environment (Feng Shui-master-approved). Mini-fountains, natural light and round-leafed plants wrap around the 250-odd employees fighting to get their product, a petabit router, to market. "Everybody here works ridiculous hours, they think fast, they drink lots of coffee," he says. "It's just adrenaline." At 43, Norman is the chief work-junkie. He started out programming computers when he was eight and, since co-founding the company back in 1997, he has averaged about 100 hours a week. "I want to get down to 70 or 80," he says earnestly. "But I haven't missed a day of work due to illness since Hyperchip was incorporated. Adrenaline just burns off those viruses." His efforts could soon pay off. Though the full capacity of Hyperchip's product (which directs Internet traffic 1,000 times faster than the terabit servers of today) won't be necessary until around 2003, the data-moving needs of tomorrow are calling. Norman wants to take on competitors like Cisco Systems, Inc. and Lucent Technologies Inc. For now, he says, California-based Juniper Networks, Inc. is the company's benchmark. "They're worth about $40 billion even in a down market," he explains. "And that's 18 months after their IPO. They're our role model so we'd like to go one step better." Having rounded up $147 million in investments as of September from major lenders like Enron Corp. and Morgan Stanley Dean Witter, among others -- the largest ever for a pre-revenue Canadian company -- they're off to a good start. The product is currently running in test labs, and customer product testing should begin by spring. "The financial goal here is to be a networking powerhouse," Norman says. He'd better stock up on those mini-fountains. Black & White Photo: Tshi / Richard Norman; Graphic/Diagram: Illustration by Aaron Leighton Report on Business: Canadian Gas traders seek compromise Talks between Enron and on-line rivals may end lawsuit, lead to 'superindex' DAVID PARKINSON 02/01/2001 The Globe and Mail Metro B7 "All material Copyright © Bell Globemedia Publishing Inc. and its licensors. All rights reserved." CALGARY -- A legal battle between two major on-line natural gas trading companies could lead to a more comprehensive index for tracking natural gas prices. Insiders said energy trading company Enron Canada Corp. and on-line trading firm NGX Canada Inc., along with energy newsletter publisher Canadian Enerdata Ltd., are holding talks aimed at settling a $101-million lawsuit Enron filed late last year against the other two companies. Enron has alleged that it suffered "irreparable harm" when NGX, operator of the on-line Natural Gas Exchange, purchased the rights to Enerdata's natural gas price indexes last September and immediately changed the way the indexes are calculated. Officials at NGX and Enerdata have countered that they struck their index deal for legitimate business purposes, with no intent to harm Enron's business, and that the new indexes are superior to the old calculations. Sources said the talks could lead to the establishment of a so-called "superindex," combining trading data from several on-line trading systems to create a more reliable and representative measure of natural gas prices in the open market. Calgary-based Enron, like many participants in the Canadian natural gas market, uses Enerdata's indexes as the price basis for its gas hedging contracts. In its lawsuit, Enron contends that the new method for calculating the indexes -- using only trades conducted though the Natural Gas Exchange -- isn't as neutral, reliable or broad-based as Enerdata's old method of surveying a wide variety of market participants. The dispute comes against a background of competition for market share in the fast-growing and increasingly competitive on-line gas trading business. Enron Canada's parent, Enron Corp. of Houston, competes with NGX for customers through EnronOnline, the dominant trading system in the on-line marketplace. Ownership of a reliable price index is considered a sure-fire drawing card to attract customers. "NGX now controls and otherwise generates the gas price indexes based upon a far more restricted basis of compiling source data based only on those trades consummated on the NGX trading system," Enron said in documents filed to the Alberta Court of Queen's Bench. "The effect of the new methodology is to coerce industry participants to transact through the NGX trading system." Participants in the natural gas market have generally applauded NGX's changes in calculating the gas price indexes, arguing that the data are more timely, transparent and accurate than under Enerdata's old survey method. But there are indications Enron wanted to establish a benchmark price index on its own Web site. In an affidavit, Richard Zarzeczny, the owner of Enerdata who is also named as a defendant in the lawsuit, says Enron actually offered to buy Enerdata and its price indexes last October, but Mr. Zarzeczny refused the offer. Enron declined comment. Sources close to the lawsuit said the mood surrounding the dispute has thawed considerably in the past week, opening the door for a possible settlement that could improve pricing information for the entire natural gas industry. Enron has dropped its request for an injunction that would have forced Enerdata of Markham, Ont., to revert to its old method of calculating the indexes. The injunction hearing had been set for Feb. 7. Enron is continuing its lawsuit, but the parties are holding talks for an out-of-court solution. "We have dropped the injunction in order to pursue a settlement," Enron Corp. spokesman Eric Thode said. "We're currently in some discussions to try to resolve this," said Peter Krenkel, president of Calgary-based NGX. Sources close to the talks confirmed that the superindex is on the negotiating table. "That's one of the possible solutions to this," Mr. Krenkel confirmed. National Desk; Section A Senators Spar On U.S. Role In Resolving Energy Crisis By JOSEPH KAHN 02/01/2001 The New York Times Page 16, Column 3 c. 2001 New York Times Company WASHINGTON, Jan. 31 -- Senate Democrats and Republicans clashed today over whether the Bush administration had done enough to help California extricate itself from an electricity crisis, suggesting that the politics of power are as volatile as energy prices. The administration ''has an obligation to find a solution before the crisis worsens,'' Senator Jeff Bingaman, Democrat of New Mexico, said in a Senate hearing on the problem. Mr. Bingaman criticized the administration for using the power shortages to promote its plan, made public in last year's presidential campaign, to drill for oil in an Alaskan wildlife refuge. ''All the oil in Alaska'' would do little to relieve electricity shortages, he said. But some Republicans firmly backed the new administration's relatively hands-off approach and its focus on what they called a long-term energy policy. Senator Frank H. Murkowski, the Alaska Republican who is chairman of the Senate energy committee, argued that a Clinton administration order forcing power producers and natural gas companies to sell supplies to California -- an order the Bush administration temporarily extended last week -- potentially made the federal government liable for billions of dollars in debt incurred by California utilities. ''In the event California cannot repay generators for this power, the federal government is going to have to meet that obligation, because this was an order of the federal government,'' Mr. Murkowski said. He has backed the Bush administration's decision to end the executive order next Wednesday, a step that will increase the pressure on California politicians to solve the state's problems quickly. The split on the energy panel suggests that there is no groundswell of support in Congress for tackling California's energy woes. Numerous lawmakers plan to introduce legislation that will address both electricity shortages and the long-term search for domestic sources of energy. But today's hearing gave no indication that the Republican-controlled Congress plans to challenge the administration's position that the federal government should have a relatively limited role in correcting imbalances in electricity supply and demand. The politics are more complex in the West, where Republicans and Democrats alike have pushed for the federal government to impose price caps on electricity in the region. Supporters of caps argue that the limits would curtail sky-high prices and buy time for California and other states to line up long-term supplies. Opponents say they would distort the market and remove an incentive for power companies to build more plants. The power to regulate prices on interstate sales of electricity belongs to the Federal Energy Regulatory Commission, a low-profile independent agency. The commission has shown little inclination to impose a regional price cap, but critics have urged Congress to force it to take action. Several Democrats, including California's two senators, backed price caps at today's hearing. Senator Dianne Feinstein of California cited a study predicting that her state's power problems would only increase this summer and that caps were needed to keep the state's two main utilities solvent and the lights on in the nation's most populous state. Ms. Feinstein was joined in the call by California utility executives. Fred John, senior vice president for Sempra Energy, the parent company of San Diego Gas and Electric, said his company had long opposed price caps. But, he said, ''You reach a point where enough is enough.'' But executives from companies that sell power to California, including the Enron Corporation and the Williams Companies, testified that price caps were harmful. They said that the solutions to California's problems were to allow consumer prices to reflect the market's supply, and to make it easier for companies to build new power plants. The Bush administration has tended to favor that position, as have some Republican lawmakers. Mr. Murkowski said California had to devise a way to encourage companies to build new power generation plants and transmission lines. ''You can't have the state take over the industry and try to run it,'' he said. Photo: Senator Dianne Feinstein of California greeted Steve Frank, chief executive of Southern California Edison, as hearings began yesterday. (Associated Press) Metro Desk Power Exchange to Live On in Lawsuits ROBIN FIELDS TIMES STAFF WRITER 02/01/2001 Los Angeles Times Home Edition A-19 Copyright 2001 / The Times Mirror Company The California Power Exchange may be passing from existence, but it's still a live target for litigation. Enron Corp. sued the market Wednesday to prevent it from using letters of credit that the company was required to file to trade on the exchange. Though Enron's collateral exceeds its liabilities to the exchange, the company moved preemptively to make sure the market could not tap its assets to pay off other debts, an exchange spokesman said. The Power Exchange has also sued Southern California Edison for failing to pay for $215 million of power it bought in December, asking to recoup the money by liquidating the utility's long-term power contracts. A Superior Court judge is scheduled to rule on the matter Friday. Pacific Gas & Electric, fearing that the exchange would file a similar action if it defaults on its January purchases, has sued to prevent the market from doing so. In all three cases, lawyers may still be arguing after the Power Exchange turns off its own lights. On Tuesday, the Power Exchange board voted to shut down its spot market, saying decisions by federal regulators had diminished trading activity to the point of futility. The exchange closed its "day ahead" market Tuesday and ended trading on its "day of" market at noon Wednesday. It will stay open indefinitely with a skeleton staff to handle long-term contracts. The Pasadena-based nonprofit was once a cornerstone of the state's deregulation plan, the principal market in which electricity was auctioned for delivery to Californians. But the exchange's demise was sealed by continuing credit problems at Southern California Edison and Pacific Gas & Electric, a federal ruling that the utilities could buy power elsewhere and changes in pricing policies that sent sellers to markets outside California. Trading volume on Tuesday, its last full day, was 24,176 megawatt-hours, compared with a daily average of 530,000 megawatt-hours last summer. One megawatt-hour is enough electricity to supply 1,000 typical homes for an hour. The exchange dismissed 15% of its 200 employees Jan. 19 and has fired 10 to 15 more since then as their jobs became unnecessary, spokeswoman Beth Pendexter said. "People are kind of down," Pendexter said. "We know the end is inevitable, but that doesn't make it any easier." Metro Desk THE CALIFORNIA ENERGY CRISIS PG&E Ability to Buy Natural Gas Eased Energy: PUC grants firm's request to use money owed by customers as collateral. Suppliers had threatened to stop deliveries. TIM REITERMAN TIMES STAFF WRITER 02/01/2001 Los Angeles Times Home Edition A-19 Copyright 2001 / The Times Mirror Company SAN FRANCISCO -- Moving to head off a "doomsday scenario" of widespread and prolonged natural gas outages in Northern and Central California, state regulators on Wednesday granted cash-strapped Pacific Gas & Electric Co. permission to use money owed to the company by customers as collateral for future gas purchases from suppliers. As the Public Utilities Commission took steps to ease California's natural gas shortage, PUC President Loretta M. Lynch unloaded on suppliers that have threatened to stop delivering gas to PG&E without advance payment or collateral. Calling the situation "egregious," Lynch accused the industry of taking advantage of the state's continuing energy crunch. "I believe PG&E is the victim . . . of predatory practices of the natural gas industry," she said. The commission did not act on an unusual request by PG&E to force Southern California Gas to sell emergency gas supplies to the utility, a step that the gas company feared would spread the crisis to its own 18 million customers. The matter was deferred to the commission meeting next week, but Lynch said she views the two PG&E proposals as an "either-or" proposition. "It is incumbent on PG&E to make this work," she said after Wednesday's 5-0 vote. In addition to allowing PG&E to use its unpaid gas customer accounts as collateral, the commission allowed the company to pledge its core gas inventory to secure additional gas supplies. However, the PUC said that action could be taken only if PG&E did not have enough accounts receivable to cover a particular gas purchase. The authorization, the PUC said, will expire once PG&E's financial condition improves. That could come within 90 days of any state bailout legislation or 15 days after certain improvements in the company's credit rating occur. "This is good news," said PG&E spokeswoman Staci Homrig. "We hope we can take this authorization to gas suppliers and make them do business with us. "This [decision] keeps the gas flowing for at least the next month," Homrig said, explaining that it takes so long to collect gas money from customers that the 90-day limit would cover only one billing cycle. The company, she said, could file for an extension if necessary. The company estimated, in filings with the PUC, that firms providing 71% of its core gas supply either have terminated or have threatened to terminate gas shipments. They are J. Aron & Co., a subsidiary of Goldman Sachs; Sempra Energy Trading; Duke Energy and partner Coastal Merchant Energy; and Western Gas Resources. Alex Hemerick, spokeswoman for Sempra Energy Trading of Stamford, Conn., declined to comment, saying the firm is studying the plan. Tom Williams of Duke Energy North America said, "We don't have any comment one way or the other. We are following developments hour by hour, day by day." Other suppliers did not return calls late Wednesday. PG&E made a series of urgent requests starting two weeks ago after gas suppliers threatened to halt sales to the utility, fearing it could not pay its bills. The crisis recently took on added urgency because a federal order requiring gas suppliers to sell to California expires at midnight Tuesday. Without emergency assistance, PG&E representatives said, many of the company's 3.9 million residential and business customers--and entire cities, from Sacramento to San Francisco and Fresno--faced potential shut-off of their gas. And, they said, dwindling supplies would have a ripple effect on many of the company's 4.8 million electricity customers, because gas-fired power plants are among the large "non-core" industrial customers that would lose gas supplies first. The company also warned that non-core customers farthest from pipelines would suffer "catastrophic effects. . . . Hospitals, government agencies and industrial users would have reduced gas supply and would have to limit or cease operations." The company appealed for help from the U.S. Department of Energy, gas suppliers, Southern California Gas and Gov. Gray Davis, who sent letters to the White House to seek assistance. The utility warned that, without a solution to its supply problems, it would have to start diverting gas from non-core customers by mid-February, with residential and small-business customers to follow shortly thereafter. On Jan. 18, PG&E asked the PUC to declare a gas supply emergency and to order Southern California Gas to come to the rescue. Four days later, PG&E asked the commission for permission to use unpaid customer accounts as collateral to help persuade its suppliers to keep gas coming. The PUC's order prohibits PG&E from providing collateral for any gas purchases from its own affiliates. A company spokesman said PG&E Energy Trading has provided the utility with gas but has not asked for any advance payments or security. Was the crisis averted? "I hope and expect so," said PUC Commissioner Carl W. Wood. "But these days we never know what tomorrow will bring." Times staff writer Chris Kraul contributed to this story. (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Power Points Background The state Legislature approved electricity deregulation with a unanimous vote in 1996. The move was expected to lower power bills in California by opening up the energy market to competition. Relatively few companies, however, entered that market to sell electricity, giving each that did considerable influence over the price. Meanwhile, demand has increased in recent years while no major power plants have been built. These factors combined last year to push up the wholesale cost of electricity. But the state's biggest utilities--Pacific Gas & Electric and Southern California Edison--are barred from increasing consumer rates. So the utilities have accumulated billions of dollars in debt and, despite help from the state, have struggled to buy enough electricity. Daily Developments * The state Senate put final touches on AB1X, which authorizes the state to enter long-term contracts for electricity and issues $10 billion in bonds to pay for that power. * * At a U.S. Senate committee hearing in Washington, senators complained that the power crunch is spreading throughout the West and that California brought its problems on itself by making it difficult for companies to build power plants. * * Enron Corp. sued the California Power Exchange to prevent it from tapping its assets to pay off other debts. * Verbatim "No more talking about leadership. Put up or shut up." --Assembly Republican Leader Bill Campbell (R-Villa Park) Complete package and updates at www.latimes.com/power National Desk; Section A Power Source Ends Direct Flow to California Businesses By JAMES STERNGOLD with MATT RICHTEL 02/01/2001 The New York Times Page 16, Column 3 c. 2001 New York Times Company LOS ANGELES, Jan. 31 -- In a sign that problems are deepening in California's overburdened energy market, a division of the Enron Corporation that sells power directly to large industrial and commercial concerns has decided to halt such service to dozens of its clients because of the potential for mounting losses. The decision, which would apparently affect companies like Cisco Systems, Genentech and Clorox, would not stop the flow of electricity. But it would potentially raise the rates these big customers pay, perhaps 35 percent or so, and sharply increase the role of the state government as the major supplier of power in California. Enron, based in Houston, is one of the largest companies -- if not the largest -- supplying low-cost energy to such big customers in California. As a result of the decision, the customers would be immediately switched from the Enron unit, called Enron Energy Services, to the Pacific Gas and Electric Company. But they would lose the discounts and low rates they had enjoyed. It was unclear whether Enron would compensate the customers, most of whom arranged five-year contracts with it in 1997 and 1998. Marty Sunde, chief executive of Enron Energy Services, confirmed late today that his unit was taking the step because of the severe financial turmoil in the power market in the state. But Mr. Sunde emphasized repeatedly that the company would honor in some way its contractual obligations. Enron Energy Services is a unit that seeks to help companies find ways to reduce their overall energy costs. One way is by selling power at reduced rates. To accomplish that, it has sought to buy power on the wholesale market at competitive rates, but just like California's large utilities, it has suffered from the rocketing wholesale costs. Mr. Sunde said two issues forced his company's hand. One was the enormous losses suffered by California's two major utilities, Pacific Gas and Electric and Southern California Edison, because of the soaring wholesale price of electricity. The other was the recent decision by the California Power Exchange, where Enron and other large energy companies buy and sell power at wholesale rates, to shut down because of the crisis. ''This actually threatened the financial mechanism of how electricity is supplied,'' Mr. Sunde said. A person close to Enron said the company had determined that it could lose perhaps $1 billion if it fulfilled all the contracts for the length of their terms. But Mr. Sunde denied that figure. Perhaps the most important result of Enron's decision was that switching those big customers to the utilities would sharply increase the amount of power that the State of California would be forced to buy on an emergency basis. With Pacific Gas and Electric and Southern California Edison saying they are on the verge of bankruptcy because of the soaring price of wholesale power, the state government has stepped in, buying huge amounts of power and selling it to the utilities. One person with knowledge of Enron's move said that, all told, the customers being cut off -- several dozen large corporations -- use about 3,000 megawatt hours, equal roughly to the output of six major generating plants. That means the state would become financially responsible for covering that, potentially adding millions of dollars a day to its already heavy burden. Mr. Sunde said he could not confirm that total. Generally, the large customers that Enron supplies cannot have power service stopped as long as they pay their bills. As a result of being dropped by Enron, the companies would become clients of Pacific Gas and Electric, which already operates the transmission lines to them. While Enron's decision does not suggest that another crisis has developed, it shows how quickly the private players in the once-thriving energy business here have been forced to pull out or curtail their involvement, even if it means harming relations with customers. It also suggests that, though the state government is already playing a major role on an emergency basis, it will probably have to continue that role for many years. Some Enron customers, contacted today, said they had not received any notice from Enron, and they expressed shock and dismay about the decision on withdrawal. One was Kaiser Permanente, the large managed care organization. Rich A. Seguin, senior energy manager at Kaiser Permanente, said late today that two weeks ago Enron had asked to modify its contract with Kaiser to allow for the switching of power sources. He said Kaiser's lawyers had reviewed the request and found no problem. ''If they stand behind our contract, which is what their stance is,'' Mr. Seguin said of Enron, Kaiser would not be harmed. But he said that if Enron was unable to supply power, Kaiser might have to pay $500,000 a month in extra costs, because it would be more expensive to get electricity from utilities at regular rates. Calvin Yee, an executive at Pacific Gas and Electric who deals with large clients that would revert to his company, said that if Enron withdrew, the impact could be handled by the utility without disruptions. ''It might mean a bubble of work,'' Mr. Yee said, ''but it would not be extraordinary. If it happens, we'll be prepared.'' At one time, several large energy companies arranged these contracts directly with large industrial users and other big companies as part of California's ambitious deregulation program. The idea was that these large energy users could shop around among power companies and choose the best deal, much as individuals can shop among long-distance telephone companies and pick the best plan. Among Enron's other clients here are GTE, Safeway, I.B.M., McDonald's and International Paper, a person close to the company said. WORLD DEMOCRATS, UTILITIES URGE PRICE CONTROLS TO AID WEST H. JOSEF HEBERT, THE ASSOCIATED PRESS 02/01/2001 Pittsburgh Post-Gazette REGION A-6 (Copyright 2001) Senate Democrats, joined by Western utility companies, urged federal price controls on wholesale power yesterday as fallout from California's power problems appeared to spread across the West. So far, President Bush has opposed the idea. At the same time, one of California's cash-strapped utilities came under criticism at a Senate hearing for diverting $4.5 billion to its parent company when it now is unable to pay its own energy bill and faces possible bankruptcy and a state bailout. "It seems to me the shareholders came first," Sen. Ron Wyden, D- Ore., told Southern California Edison chairman Steve Frank, who defended the legal transfer to SoCal parent Edison International. Frank rejected a suggestion by Wyden of "money laundering" and said the money was transferred over five years, reflecting proceeds from the state-mandated sale of the utility's power plants. "The money simply went back to shareholders and investors," Frank said, a "normal business practice." SoCal and Pacific Gas & Electric, California's two investor-owned utilities, owe about $12 billion to power suppliers and face possible bankruptcy because they have been unable to pass on additional costs to retail customers. During a five-hour hearing before the Energy and Natural Resources Committee, senators heard repeated requests, mostly from California and Northwest utilities, for federal price controls on wholesale power. Prices have soared not only in California but in many of the other 10 states connected in the Western power grid. Bush, while conceding that California's power problems are beginning to have widespread impact, has not allowed the Federal Energy Regulatory Commission to impose price controls. Power suppliers have been accused of price gouging and manipulating the California market, although no clear evidence of such activities has surfaced. Generating companies argued again yesterday that their prices simply reflect short energy supplies and market restrictions under California's now widely criticized attempt at deregulation. At one point during the hearing, Sen. Dianne Feinstein, D-Calif., asked some of the out-of-state power generators, who lined the witness table, for "a little cooperation" in addressing her state's electricity crisis. "All of you have made a lot of money off this," she said, scolding the executives for appearing "not to care what happens, not to care about the people that are being thrown out of jobs." Among power producers represented by witnesses at the hearing were Calpine Corp., Reliant Energy Wholesale Group, Enron and the Williams Cos., all major providers of power to California's utilities. Like m
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