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Enron Mail |
India Min: Govt Likely To Pay Enron's Nov Bill - Report
Dow Jones, 02/07/2001 UAE Offsets Group Plans Yemen Power, Energy JV - Official Dow Jones, 02/07/2001 Energy News From The European Press Wednesday Dow Jones, 02/07/2001 Enron Broadband Services Connects Bandwidth Pooling Points at Three Interxi= on=20 Sites M2 Press, 02/07/2001 An Ideologue Looming Large,=20 Business Standard, 02/07/2001 'NTPC Should Also Absorb Some Part Of DPC Power' Business Standard, 02/07/2001 The California Energy Crisis Deregulation Didn't Foster Competition Los Angeles Times, 02/07/2001 Dabhol, Enron Unit in India, Invokes Payment Guarantee The New York Times, 02/07/2001 Texas Energy Company Thrives In California's Deregulationed Atmosphere Knight-Ridder Tribune, 02/07/2001 Taxing My Patience The New York Times, 02/07/2001 Natural-Gas Companies Discover California Is a Surprise Bonanza Dow Jones, 02/07/2001 California Power Crisis May Slow Asia Deregulation Bloomberg, 02/07/2001 My Kingdom for A Building Permit Forbes, 02/19/2001 India Min: Govt Likely To Pay Enron's Nov Bill - Report 02/07/2001 Dow Jones International News=20 (Copyright © 2001, Dow Jones & Company, Inc.)=20 NEW DELHI -(Dow Jones)- India's Power Minister Suresh Prabhu said Wednesday= =20 that the federal government cannot default on the counter-guarantee that th= e=20 Dabhol Power Co. invoked Tuesday and was likely to pay the company's=20 outstanding bills for November 2000, the Press Trust of India reported.=20 As reported, Dabhol, which is owned by Enron (ENE) of the U.S., Tuesday=20 invoked a federal guarantee on payment of overdue bills after its main=20 customer, the Maharashtra State Electricity Board, failed to pay its debt o= f=20 790 million Indian rupees ($1=3DINR46.37) on time. Prabhu also hinted at working out a new arrangement with the U.S. energy=20 giant to settle the issue.=20 "We are looking at options to resolve the current problem," he told PTI.=20 Prabhu is holding consultations with the Finance Minister Yashwant Sinha to= =20 resolve the present crisis and a possible reworking of the Power Purchase= =20 Agreement is on the cards, PTI quoted Power Ministry officials as saying.= =20 Under the existing contract with Enron, in the case of a payment default on= =20 the part of the government of Maharashtra, the federal government is oblige= d=20 to make the payment.=20 Apart from the November dues, the MSEB owes Enron's India subsidiary 1.52= =20 billion Indian rupees for December.=20 Enron Corp. Wednesday said it expected the Indian government to repay its= =20 debt of INR2.31 billion for the two months within the stipulated 30 days, a= =20 company official said.=20 "The government has 30 days to pay up and by all indications that will be= =20 done," said a Bombay-based Enron official on condition of anonymity.=20 Analysts said Dabhol's action was a "statement of a lack of confidence" in= =20 the state paying its debt. Guarantees from the Indian federal government to= =20 foreign companies are rare, and several observers believe this is the first= =20 time one has been invoked.=20 Neil McGregor, Dhabol's president, said in a statement Tuesday that the=20 government must "recognize the serious domestic and international=20 implications of contractual agreements not being honored."=20 The $2.4 billion Dhabol project, the country's biggest foreign investment,= =20 began in 1993 and went through a series of ups and downs following=20 accusations that it had bribed officials to win the contract. The project w= as=20 then stalled for more than a year in late 1995 when a new government went= =20 back on an agreement to let Enron produce electricity in Maharashtra state.= =20 A court later dismissed the bribery charges and the government renegotiated= =20 the deal.=20 In recent months, Dabhol has been criticized for the high cost of its=20 electricity. Politicians have called for a renegotiation of Dabhol's=20 contract, and a reexamination of whether the facility's second phase, which= =20 is now being built, should be completed.=20 -By Muneeza Arjuman, Dow Jones Newswires; 91-11-461-9427;=20 muneeza.arjuman@dowjones.com UAE Offsets Group Plans Yemen Power, Energy JV - Official 02/07/2001 Dow Jones Energy Service=20 (Copyright © 2001, Dow Jones & Company, Inc.)=20 DUBAI -(Dow Jones)- The United Arab Emirates' Offsets Group plans to initia= l=20 a joint venture energy and power deal with Yemen "very soon," Offsets Chief= =20 Executive Mohammed Saif al-Mazrou said Wednesday.=20 Al-Mazrou didnt give further details. Offsets was initially set up to leverage U.A.E. defense procurements into= =20 investments in the country, but has since expanded its role to a venture=20 capital organization as well as a government economic think tank.=20 In March 1999, the company launched the Dolphin project, a regional gas=20 project aimed at linking Qatar, the U.A.E. and Oman. A year ago, Offsets so= ld=20 49% of the project to TotalFinaElf SA (TOT) and Enron (ENE), which have bee= n=20 commissioned to implement the initial phase of the project, estimated at a= =20 cost of $4 billion.=20 Al-Mazrou said the new joint venture in Yemen won't be related to the Dolph= in=20 project.=20 -By Dyala Sabbagh, Dow Jones Newswires; 9714 3314260;=20 dyala.sabbagh@dowjones.com Energy News From The European Press Wednesday 02/07/2001 Dow Jones Energy Service=20 (Copyright © 2001, Dow Jones & Company, Inc.)=20 Securing more capital will be a key factor in furthering the expansion plan= s=20 of state-owned Swedish power company Vattenfall (S.VTF), reports=20 FinansTidningen. Vattenfall's Chief Executive Lars Josefsson said during a= =20 briefing Tuesday that the issue is being discussed by the board and there i= s=20 a dialogue with the company's owners, the paper says.=20 An accord between German utility HEW (G.HEW) - a unit of Vattenfall - and= =20 Mirant - formerly Southern Energy of the U.S. (SOE) - over the ownership of= =20 Bewag (G.BWG) could be reached within weeks, Vattenfall CEO Lars Josefsson= =20 told Welt. Czech electricity concern CEZ AS (R.CEZ) plans to restart the reactor at th= e=20 Temelin nuclear power plant Feb. 11, a day before a scheduled safety=20 inspection by the International Atomic Energy Agency, several newspapers=20 report. CEZ managers said repairs to faulty turbine pipes can continue whil= e=20 the reactor is running.=20 Alessandro Sala, CEO of Swiss power company Atel (Z.AAR) tells HandelsZeitu= ng=20 that the structure of Switzerland's power market liberalization law will=20 limit the reductions in prices for households. Industrial customers, though= ,=20 are already getting deep discounts. Atel plans to make acquisitions to doub= le=20 revenues from its installation business. It isn't interested in buying Sulz= er=20 Infra (Z.SLZ), however.=20 Hungary's six electricity distributors are seeking a lift of the import=20 monopoly of state-owned wholesaler MVM Rt. (R.MVM), as they are required by= =20 the government to buy MVM's electricity at a higher price then their retail= =20 prices, several papers say. Due to the new regulatory conditions, the=20 distributors' combined return on equity will drop this year to 3%, from 9.8= %=20 in 2000 and 7.8% on average over the past four years, they say.=20 Maersk Contractors, the drilling unit of the A.P. Moller (K.MAP) group, wil= l=20 be leasing a deep-water drilling rig for oil exploration in the Caspian Sea= ,=20 writes Borsen. Maersk already operates 50 rigs.=20 Swedish Prime Minister Goeran Persson is likely to discuss environmental=20 issues when he meets Polish Prime Minister Jerzy Buzek Wednesday, reports= =20 Dagens Industri. Swedish Foreign Minister Anna Lindh recently said a=20 potential problem to Poland's entry into the European Union is its poor=20 environmental record, the paper says.=20 The bidding war for Spanish utility Hidroelectrica del Cantabrico (E.HIC) s= aw=20 German giant RWE (G.RWE) top rival offers with a bid of EUR26 a share,=20 Expansion reports. Tuesday was the end of the bidding period, and Cantabric= o=20 shareholders must now evaluate the RWE offer as well as those made by Spani= sh=20 utility Ferroatlantica and the joint bid from Portuguese utility EDP and=20 Spanish savings bank Cajastur.=20 Spanish oil company Repsol (REP) and Gas Natural are "reviewing their=20 strategies for the electricity market," Expansion reports. Repsol could mak= e=20 a bid for Iberdrola (E.IBR), the newspaper says.=20 German utility E.On (EON) has taken the first steps in the planned sale of= =20 its VAW aluminum unit, FT Deutschland reports on the basis of information= =20 from unnamed investment banks. The sale price would likely be less than DEM= 5=20 billion (EUR1=3DDEM1.95583), the paper says.=20 Unions are angered by Italian power company Enel SpA's (EN) 11,000 planned= =20 lay-offs and will put up a tough fight. Enel promises, however, that the=20 staff cuts will be the result of not replacing retirees and of incentive=20 plans, reports Il Sole 24 Ore.=20 In the next three years, fuel distributor Shell (RD) wants to double the=20 number of fuel stations in Poland from 116 at present, Puls Biznesu reports= .=20 In 2001, Shell plans to spend $8.5 million on 17 new stations.=20 Turkish fuel retailer Opet Petrolculuk and Enron (ENE) are to sign a=20 partnership agreement, reports the Dunya. The report gave no other=20 Austrian oil companies have increased gasoline prices by 25 groschen a lite= r=20 (ATS1=3D100 Groschen, EUR1=3DATS13.7603), reports Die Presse. Enron Broadband Services connects bandwidth pooling points at three Interxi= on=20 sites 02/07/2001 M2 Presswire=20 Copyright 2001 M2 Communications, Ltd. All Rights Reserved.=20 LONDON -- Enron Broadband Services, a wholly-owned subsidiary of Enron Corp= .=20 (NYSE: ENE), and Interxion Holding N.V., a pan-European operator of=20 carrier-neutral Internet Exchange Centres (IECs), announced today an=20 agreement that provides Interxion's tenants in the Frankfurt, Brussels and= =20 Dusseldorf IECs access to Enron's bandwidth pooling points. The agreement= =20 gives bandwidth consumers and carriers greater control of their capacity an= d=20 the improved ability to deliver advanced applications.=20 Pooling points provide an interconnection and switching platform for buyers= =20 and sellers of bandwidth. They enable the dynamic provisioning and monitori= ng=20 of bandwidth at varying speeds, terms and qualities of service. Consumers a= nd=20 carriers of bandwidth gain an additional sales channel for excess bandwidth= ,=20 as well as the ability to secure bandwidth at short notice and for varying= =20 periods of time. In addition, access to the value-added services of the Enron Intelligent=20 Network creates business opportunities in the delivery of advanced=20 applications, such as streaming, digital media and e-commerce.=20 "This is an important step towards revolutionizing the bandwidth market,"= =20 said Steve Elliott, president of Enron Broadband Services Europe. "Until no= w,=20 the market has been characterised by a lack of liquidity and inflexible=20 contract terms. By leveraging our market-making and risk management=20 expertise, Enron is in a position to deliver more flexible bandwidth=20 solutions."=20 "Enron is a shareholder in Interxion and this commercial agreement is an=20 indication of the synergy that exists between the two companies," said Bart= =20 van den Dries, CEO of Interxion. "By adding the Enron pooling points to the= =20 choice of carriers already available on our sites, Interxion reinforces its= =20 position as one of Europe's leading carrier-neutral providers of managed da= ta=20 services. Enron Energy Services and Interxion have also signed a letter of= =20 intent outlining plans for an energy outsourcing partnership, which is=20 further evidence of the strong relationship between the two companies."=20 Editor's Notes=20 About Enron=20 Enron Broadband Services is a leading provider of high quality, high=20 bandwidth delivery and application services. The company's business model= =20 combines the power of the Enron Intelligent Network, Enron's Broadband=20 Operating System, bandwidth trading and intermediation services, and=20 high-bandwidth applications to fundamentally improve the experience and=20 functionality of the Internet.=20 Enron's Broadband Operating System allows application developers to=20 dynamically provision bandwidth for the quality of service necessary to=20 deliver broadband content. Enron is also creating a market for bandwidth th= at=20 will allow network providers to scale to meet the demands required by=20 increasingly complex applications. Enron Broadband Services can be found on= =20 the Web at www.enron.net.=20 Enron Energy Services serves commercial and industrial businesses by=20 providing integrated energy and facility management outsourcing solutions= =20 internationally. Enron's innovative approach to energy delivery and=20 management allows customers to focus critical resources on their core=20 businesses while Enron assumes the responsibility of managing their energy= =20 and facility costs.=20 Enron Energy Services can be found on the Web at www.ees.enron.com=20 Enron is one of the world's leading electricity, natural gas and=20 communications companies. The company, with revenues of $101 billion in 200= 0,=20 markets electricity and natural gas, delivers physical commodities and=20 financial and risk management services to customers around the world, and h= as=20 developed an intelligent network platform to facilitate online business.=20 Fortune magazine has named Enron "America's Most Innovative Company" for fi= ve=20 consecutive years, the top company for "Quality of Management" and the seco= nd=20 best company for "Employee Talent." Enron's Internet address is www.enron .com. The stock is traded under the ticker symbol "ENE."=20 About Interxion=20 Interxion, with headquarters in Amsterdam, operates a growing number of=20 carrier-neutral Internet exchange centers (IECs) across Europe. All of=20 Interxion's Internet exchange centers are connected to the networks of majo= r=20 national and international telecom carriers as well as to various European= =20 Internet exchanges.=20 Interxion's IECs are at the heart of all internet activities. In the=20 state-of-the-art IECs, Interxion offers integrated solutions for=20 connectivity, equipment housing, storage and maintenance needs of internet= =20 related companies including ISPs, ASPs, e-commerce companies, content=20 providers, media companies and web hosting companies. As the only neutral= =20 full-scale managed connectivity provider, Interxion enables customers to jo= in=20 forces and exchange services.=20 Interxion brings these companies together, creating partnerships that can= =20 benefit from the business opportunities which are offered by the Internet.= =20 Interxion currently operates IECs in Amsterdam, Brussels, Dublin, Dusseldor= f,=20 Frankfurt, Copenhagen, London, Madrid, Milan, Paris, Stockholm, Vienna and= =20 Zurich and is rolling out to Helsinki, Finland, and Hilversum, the=20 Netherlands, in the near future. For more information: www.interxion.com=20 ((M2 Communications Ltd disclaims all liability for information provided=20 within M2 PressWIRE. Data prepared by named party/parties. Further=20 information on M2 PressWIRE can be obtained at http://www.presswire.net on= =20 the world wide web. Inquiries to info@m2.com)). CONTACT: Ed Neale, Firefly Tel: +44 (0)20 7386 1435 e-mail:=20 Edward.neale@firefly.co.uk Anita Cullen, Enron Tel: +44 (0)20 7783 2384=20 e-mail: anita_cullen@enron.net=20 An ideologue looming large Ajay Singh 02/07/2001 Business Standard=20 10 Copyright © Business Standard=20 "You're all English-speaking. You are the opinion-makers of the country. Wh= y=20 don't you spend some time understanding Indian realities?"=20 His words fell on the audience like the staccato of an AK-47 assault rifle.= =20 They were dead on target some of Delhi's best-heeled businessmen, gathered= =20 together at the Ashoka Hotel convention hall. S Gurumurthy, Sangh Parivar's= =20 swadeshi ideologue, had been invited to deliver a lecture on a serious issu= e=20 `Challenges and opportunities before the country'. But also sharing the dai= s=20 with him, and speaking on the subject, were film stars Amrish Puri and Pooj= a=20 Batra. It was clear that he was not too happy about this. I was in the audience waiting for the conference to end. I had to take=20 Gurumurthy to lunch. His speech ended with muted but unmistakably snide=20 remarks from the audience. But, he also walked away with maximum applause. = To=20 me, this illustrated the most striking element about his personality: you c= an=20 love Gurumurthy or hate him; but you can't ignore him.=20 We walked to the neighbouring Samrat Hotel's Kamakshi restaurant, because= =20 Gurumurthy likes simple south Indian vegetarian food. Straightaway, we=20 ordered rasam and papad as starters. Gurumurthy was still upset. "The=20 organisers should have prepared the audience for such serious topics as=20 this," he said.=20 As the bowls of rasam and the papad arrived, I prepared myself for a sessio= n=20 with the man considered to be an influential link between the RSS and the= =20 BJP. He wields tremendous clout, but avoids displaying it on his sleeve.=20 "Were you always in the RSS?" I asked. "No, I was closely associated with= =20 Kamraj-ji's Congress till his death," he said, to my surprise. "Kamraj-ji= =20 used to like me a lot, and our approach was to de-Dravidianise Tamil Nadu= =20 politically," he revealed.=20 This figured! I know this is politically incorrect, but it must be said.=20 Gurumurthy is a Brahmin, and like most of his ilk, he was ideologically at= =20 the receiving end of the virulent anti-Brahmin movement which swept Tamil= =20 Nadu in the 1960s. That it has now waned, and even leaders of Dravidian=20 parties follow Brahminical rituals these days, says a lot about the=20 rethinking on the issue.=20 "Are you a practitioner of Brahminism?" I asked. This was a `Did you beat= =20 your wife last night?' kind of question. I wanted to provoke Gurumurthy, wh= o,=20 even his colleagues admit, symbolises traditional Brahminism. Gratifyingly,= =20 he rose to the bait. "Call me Brahminist or retrograde, it doesn't bother m= e.=20 If Dravidianism is good, then Brahminism is equally good," Gurumurthy said,= a=20 flash of belligerence flaring. He explained his political theory of=20 de-Dravidianisation of Tamil Nadu. "Dravidianism was political speculation= =20 which became political reality. It (Dravidianism) was poison injected by th= e=20 British," he said.=20 That Gurumurthy originally came from the Congress fold was news, but more= =20 revelations were to follow. He was most appreciative of Indira Gandhi's=20 efforts to de-Dravidianise Tamil Nadu by forging an alliance with the DMK i= n=20 the 1970s. "This was indeed a positive contribution of Indira Gandhi," he= =20 said. Coming from a Sangh stalwart, this was significant.=20 After Kamraj's death, Gurumurthy found himself in the company of the=20 legendary and irrepressible media baron, Ram Nath Goenka. From here began h= is=20 association with the RSS. "It was=20 a political assignment," he said,=20 recounting the past. This was=20 the time when Jayaprakash Narayan began his war against Indira Gandhi, and= =20 Goenka's=20 The Indian Express played a crucial role in the campaign. "Obviously, in=20 those circumstances, my job was more than a financial adviser's," he said.= =20 "But how did you get attracted to the RSS," I asked curiously. "It was the= =20 sincerity of people in the RSS that attracted me. They are the gentlest=20 people I have ever come across. Had I not come into contact with the RSS, I= =20 would have been a hundred times richer in terms of money, but I would have= =20 been a thousand times poorer in other respects," said the chartered=20 accountant who virtually reveres his association with the Sangh Parivar.=20 "But you're influential because you are associated with the RSS," I said. A= t=20 one or other time, many in the party and government have felt (and said) th= at=20 Gurumurthy and his Swadeshi Jagran Manch hold a brief for only some Indian= =20 industrialists and use their closeness to the RSS to camouflage this.=20 "Give me one example when I've used my influence in the government," he sai= d=20 flatly. "You have suggested to the Prime Minister indirectly that he should= =20 remove an officer from the PMO," I said. "Indirectly! No, you are mistaken.= =20 This was a direct suggestion. Such officers are a blot on a great leader li= ke=20 Atal Bihari Vajpayee, and I have never been circumspect on the issue," he= =20 said, adding that had he been influential, his suggestions would have been= =20 accepted. "My opinion may be powerful, but it does not mean I wield power,"= =20 he explained.=20 Gurumurthy asked for curd-rice for the main course, a dish all south Indian= =20 Brahmins swear by (it is also P V Narasimha Rao's favourite food). He=20 continued on the earlier theme. "It is unfortunate that in 50 years, the=20 system has produced very few Bhure Lals (an IAS officer who was one of V P= =20 Singh's favourite officers)."=20 What did he think about the present government? "The problem is that an=20 Anglo-Saxon class continues to rule the country. Such people have serious= =20 limitations in understanding Indian realities. They run the country like a= =20 Bishop runs the Church. In the process, elite India has become the real=20 India," he said. Being a believer in cultural nationalism, Gurumurthy=20 hastened to add, "This divide is only perceptional. What links them is even= ts=20 like the Kumbh. Culture and religion are the interface where elites and=20 subaltern meet. This is why secular parties are oblivious to real India," h= e=20 said.=20 "You have been consistent in opposing the government's economic policies. W= hy=20 is it that even Vajpayee, who belongs to the Sangh, is pursuing the same=20 course?" I asked. What I really wanted to know was his views on the=20 speculation about strained relation between the government and the Sangh=20 Parivar on economic issues.=20 "The government is not the sole arbiter of economic issues. This is=20 determined outside the government. Just as the atmosphere for socialism was= =20 determined by forces outside the government, the atmosphere needed to pursu= e=20 policies of globalisation is being decided outside the government," he said= .=20 "If this is such an obvious trap, why are people like Vajpayee and Yashwant= =20 Sinha falling into it?" I demanded. "They cannot function in isolation. Wha= t=20 we have is intellectual extremism of the English-speaking class," he said.= =20 "Extremism?" I asked, as we ordered coffee.=20 "They (the English-speaking class) are the one who espoused Enron's cause.= =20 They are the ones who suggested that billions of foreign exchange would pou= r=20 in once the insurance sector was opened up. Did they prove to be correct?"= =20 Gurumurthy asked triumphantly. "Are these people, including the financial= =20 newspapers, ready to accept that they were wrong in their assessment?" he= =20 said. "If the people who supported Enron accept that it was a mistake, the= =20 country would be 50 per cent more intelligent."=20 He continued: "This class never accepts that the past was=20 a mistake. Forgetting the past is=20 a typical characteristic, whether it is the issue of the Ram Temple,=20 socialism or Enron".=20 Perhaps, this was the closest Gurumurthy could come to admitting his growin= g=20 disenchantment with the present regime. On reforms, he said: "Policies are= =20 largely bureaucracy-led, and there is no political control over what is=20 believed to be reforms," he said. Another intriguing statement!=20 We finished lunch and prepared to leave. I mentally summed up all that=20 Gurumurthy had said. The one thing that came forcefully to mind was his=20 complete contempt for anyone (including those in his own party) who belongs= =20 to what he calls the "Anglo-Saxon class". As I bid him goodbye, I decided= =20 that to get to the bottom of that mystery will need many more lunches.=20 Gurumurthy's subconscious needs to be explored. It is a puzzle, wrapped in = an=20 enigma. `NTPC should also absorb some part of DPC power' Renni Abraham MUMBAI 02/07/2001 Business Standard=20 3 Copyright © Business Standard=20 Maharashtra finance and planning minister Jayant Rajaram Patil has said tha= t=20 invocation of the government of India counter-guarantee by the Dabhol Power= =20 Company has set the stage for the resolution of the Enron crisis. Talking t= o=20 Business Standard, Patil spoke on the state government's future course of= =20 action and several other issues.=20 Excerpts: Please comment on DPC invoking the Centre's counter-guarantee.=20 The move is aimed at resolving the crisis. We have made it clear that the= =20 high DPC tariffs have become unaffordable for the Maha-rashtra State=20 Electricity Board. Also, it is not financially prudent for the state=20 government to bail out MSEB in respect of the DPC payments every month. A= =20 logical solution has to be found within the MSEB itself which has to be abl= e=20 to absorb the DPC power. With the GOI counter-guarantee invoked, the state = is=20 set for resolving the whole issue. The solution has to involve the central= =20 government as it was the Centre that had invited the power major and=20 solicited others like Cogentrix to invest. Maharashtra, with a favourable= =20 industrial climate, became the testing ground for the setting up of first= =20 such power project.=20 What led to the present crisis and how is this being addressed to? Even the= =20 setting up of review committee has been inordinately delayed?=20 Maharashtra economy cannot sustain payments to DPC's phase II, which too ha= s=20 been sanctioned. I do not want to rake up the politics behind this. We have= =20 to look forward to resolving the problem on hand.=20 As far as Maharashtra is concerned, the eight-party Democratic Front=20 government has unanimously decided that the present high DPC tariff is not= =20 affordable and has to be rationalised. The Centre has to actively look into= =20 it.=20 As far as the delay in the review committee's constitution is concerned, th= e=20 task would be completed soon. We have shortlisted a number of experts and a= re=20 seeking to constitute an independent body of experts to look at the multifo= ld=20 aspect of the DPC project and suggest ways to resolve the present crisis. T= he=20 panel would probably be asked to immediately submit a set of recommendation= s=20 to resolve the issues at hand, while looking at the various other options= =20 before it and suggest multifold recommendations to the government.=20 What options does the government have?=20 There are several lines of thought with regard to resolving the DPC issue.= =20 The state government is clear that the DPC will have to make available=20 cheaper power. Another option could be staggering phase II. For instance,= =20 block B and C of phase II could be staggered. We know that once the jetty f= or=20 LNG is commissioned by DPC the tariffs would be reduced substantially.=20 Similarly, we would be keen to look into the possibility of restructuring t= he=20 rupee-dollar arrangement so that the risk of foreign exchange fluctuations= =20 are reduced. The panel would look into this aspect as well. MSEB has to be= =20 able to afford DPC power. Along with cheaper tariffs, it might also be=20 necessary for the National Thermal Power Corporation to absorb some part of= =20 the power generated by DPC. The Centre should take some component from Phas= e=20 I and II. We have to resolve the present crisis as a nation and a state.=20 Why did DPC not invoke the Letter of Credit before the GOM and GOI=20 guarantees?=20 The Rs 135 crore LC was not invoked for obvious reasons. By invoking the GO= M=20 and GOI guarantees, a dead-end has been reached as far as brokering pieceme= al=20 solutions are concerned. Now the issue has to be resolve in totality.=20 We want to reach a new understanding with DPC on the project in which the= =20 Centre will have to get into the picture. Union energy minister Suresh Prab= hu=20 has been stating that the Maharashtra government should forward a proposal= =20 for resolving the issue. We are in the process of doing just that. Metro Desk THE CALIFORNIA ENERGY CRISIS Deregulation Didn't Foster Competition NICHOLAS RICCARDI; STEVE BERRY TIMES STAFF WRITERS 02/07/2001 Los Angeles Times=20 Home Edition A-1 Copyright 2001 / The Times Mirror Company=20 The way people scrambled for a stake in California's power market three yea= rs=20 ago, you'd have thought it was the second coming of the Gold Rush.=20 Politicians and free marketers boasted that they were freeing millions of= =20 customers from their monopolistic utilities so they could shop for cheaper= =20 electricity. The state ordered an $87-million publicity campaign, promising= a=20 brave new energy world bustling with competition. But those dreams of capitalism unleashed never materialized, dashed by=20 provisions in the 1996 deregulation law that effectively undermined=20 competition and gave the utilities a substantial edge over newcomers. In th= e=20 end, only 1.7% of the utilities' residential users switched to other=20 providers, many opting to pay more for "green" energy.=20 Although the chaos swirling around California's electricity crisis has=20 chiefly focused on soaring wholesale prices, the virtual absence of=20 competition at the consumer level has played a key role in deregulation's= =20 undoing.=20 Had competition among retailers flourished, garnering the millions of=20 customers deregulators expected, prices might never have reached today's=20 unprecedented peaks and the turmoil might have been tempered, economists an= d=20 retailers say.=20 Retail competition "would not have prevented a crisis, but it would have=20 toned it down," said Richard Counihan, spokesman for Green Mountain Energy,= =20 which has returned most of its 50,000 customers to the utilities' ranks.=20 Now even the prospect of competition is gone. A measure enacted by the=20 Legislature last week, which made state government the biggest electricity= =20 buyer in California, suspended further retail competition, preventing anyon= e=20 from underbidding the state.=20 "That buries us," said Tony Wayne, president of UtiliSource of Brea, which,= =20 under the new law, can keep its relatively small number of customers but is= =20 barred from entering into new contracts.=20 Few thought it would come to this.=20 High Hopes Collide With Reality=20 Almost 300 firms registered with the state to sell electricity to consumers= .=20 Many of them, quick-buck hucksters or small-time operations, were scared of= f=20 by background checks, fingerprinting and the $25,000 deposit required to=20 enter the market.=20 But then there were the likes of giant Enron Corp., which predicted that th= e=20 new market would pull 700,000 customers from the utilities in the first few= =20 weeks. Another firm deployed 400 salespeople, nabbing residential and=20 business prospects by the thousands.=20 They quickly discovered that the structure of California's landmark=20 deregulation effort erected protective barriers preventing most retailers= =20 from beating the prices of the big three utilities--Southern California=20 Edison, Pacific Gas & Electric and San Diego Gas & Electric.=20 For example, deregulation law allowed the utilities to keep their 9 million= =20 customers until each took the initiative to switch. Any ratepayer who used = a=20 moderate amount of energy and wanted to change companies had to pay $600 fo= r=20 a new meter--unless the retailer wanted to eat the cost itself.=20 In contrast, Pennsylvania, where deregulation has been more successful than= =20 in California, requires most of its utilities to surrender some of their=20 customers. Last year, 300,000 customers of one utility were auctioned off t= o=20 the retailer who could promise them the most savings. All together, close t= o=20 1 million customers have switched from utilities to retailers, with savings= =20 estimates ranging from a few dollars to $15 per month.=20 In California, the next barrier was expressly designed by deregulation=20 architects to keep new retailers at bay, at least temporarily.=20 Before throwing utilities into a free-for-all, lawmakers felt obligated to= =20 give them time to pay off debts that would hurt their ability to offer=20 competitive prices. The Legislature froze customer prices at 1996 levels,= =20 well above what the utilities were then paying for electricity. The=20 difference would be used to pay their debts.=20 The hitch for prospective retailers was that their customers--like those=20 remaining with utilities--would be charged the extra amount too. That=20 seriously hurt the retailers' ability to shave prices for their customers= =20 without taking a hit themselves.=20 Utility executives say the so-called competition transition charge=20 accomplished its intent: providing some protection against new players unti= l=20 the utilities could shed their debt and compete on an even field.=20 According to those executives, the plan went awry when wholesale electricit= y=20 prices soared before the special debt charge was lifted and competition had= a=20 chance to flourish.=20 "We haven't had enough time for this market to work," said Denise Grant,=20 director of the Edison division that works with retailers. She said Edison= =20 expected to lose 150,000 customers annually--a far cry from what has=20 happened.=20 Retailers say they faced other obstacles that seemed designed to help the= =20 utilities keep as many of their customers as possible.=20 One of the biggest was a newly created energy marketplace called the Power= =20 Exchange.=20 Under the exchange's rules, all buyers--little guys with a few hundred=20 customers and mammoth utilities with millions--paid the same price for=20 electricity. Once again, retailers were stymied in their search for ways to= =20 cut their customers' bills.=20 Retailers had no place else to shop for energy because suppliers could make= =20 more money selling in high volume to billion-dollar utilities on the Power= =20 Exchange, rather than cutting small deals with upstart companies.=20 Wayne, the president of UtiliSource, learned the hard way. He was peddling= =20 electricity in California in early 1997, before the state created the Power= =20 Exchange. After arranging a good, but informal, deal with a Washington=20 generator, he sent out hundreds of salespeople, took to the road himself an= d=20 soon cornered 10,000 customers.=20 But the birth of the exchange caused the death of his deal, Wayne said. The= =20 generators pulled out when they realized how much money they could make=20 selling on the open market.=20 "That was an oh-my-god. They said, 'Why should we give you a discount when = we=20 can sell it to the Power Exchange ourselves?' " he said.=20 Retailers say the state protects the utilities in subtler but no less=20 damaging ways. That includes billing customers who switch companies for=20 certain overhead costs of their old utilities, such as weather forecasters= =20 and accountants involved in procuring electricity.=20 In late 1999, a coalition of retailers filed a complaint with the Public=20 Utilities Commission arguing that their customers should not be forced to p= ay=20 costs for utilities they had decided to leave.=20 Earlier this month, the PUC finally reached a decision that favors the=20 retailers' argument but accepts the utilities' calculations of the expenses= =20 borne by retailers, an amount critics say is far too low.=20 In dissenting, Commissioner Richard A. Bilas called the decision's paltry= =20 award to retailers another strike against them.=20 "We cannot keep stymieing retail competition if we are seeking rational=20 markets," he said. "Energy service providers [retailers] have left the stat= e=20 in droves. . . . They need all the encouragement we can give them."=20 Retailers Found Little Opportunity=20 Be they multinational giants or kitchen-table entrepreneurs, retailers are= =20 dismayed by their experiences with deregulation.=20 Enron spent $5 million trying to sell electricity in 1997 and the spring of= =20 1998. But, unable to offer enticing discounts, the firm picked up only 30,0= 00=20 customers.=20 In a recent meeting with reporters and editors at The Times, Enron Chief=20 Executive Kenneth Lay suggested that the framers of deregulation kept marke= t=20 forces pinned down in the retail sector. As a result, there was little mone= y=20 to be made and little incentive to stick around.=20 "The more customers you signed up," Lay said, "the more [money] you lost."= =20 Last week, Enron returned a number of its remaining electricity contracts t= o=20 PG&E. "In the end," Lay said, "we couldn't change the rules and we pulled= =20 out."=20 On the other end of the spectrum, Paul Oshideri is now a one-man operation= =20 since he laid off his seven employees during his unprofitable two years=20 trying to entice customers to Cucamonga Energy.=20 "You don't have that many options," said Oshideri, who is still holding on = to=20 his 250 customers and vows not to quit. "What can you do? You can't do=20 anything right now."=20 Only when it came to businesses and big institutions such as universities= =20 were retailers able to make a dent in the market. The small price reduction= s=20 they offered translated into huge savings for those large users of=20 electricity. The retailers also offered a variety of other services,=20 including aid to help businesses become more energy efficient.=20 Although fewer than 2% of all residential customers have switched to new=20 energy companies, 13% of industrial users have done so, according to the=20 Public Utilities Commission.=20 "If they'd structured this differently they would have had households able = to=20 make big savings just like industrials," said Cal State Fullerton economist= =20 Robert Michaels.=20 There is some dispute among deregulation critics over whether legislators= =20 designed the law to protect the utilities from an onslaught of competition,= =20 or it just turned out that way.=20 Jesse Knight, a former member of the Public Utilities Commission who=20 dissented on the panel's deregulation plan, said the law is biased against= =20 retail competition.=20 "But I don't think it was the legislation's intent to protect the monopoly,= "=20 Knight said.=20 There is general agreement, however, that not enough attention was paid to= =20 the mechanics of the retail market.=20 Much of the deregulation legislation deals with generation, transmission an= d=20 wholesale prices of electricity. The only provisions on the retail end simp= ly=20 allow consumers to shop for deals.=20 Lay, the Enron executive, recalled that the utilities fought hard to mainta= in=20 their customer base. The irony is that, with wholesale prices skyrocketing= =20 over the last six months, buying electricity for all those customers has=20 driven the utilities to the brink of insolvency.=20 "With 20-20 hindsight, I expect they wish they'd agreed to more choice at t= he=20 customer level," Lay said. "Then maybe they wouldn't be in the circumstance= s=20 they're in." Business/Financial Desk; Section C COMPANY NEWS DABHOL, ENRON UNIT IN INDIA, INVOKES PAYMENT GUARANTEE By P.J. Anthony 02/07/2001 The New York Times=20 Page 4, Column 1 c. 2001 New York Times Company=20 The Dabhol Power Company, the Indian subsidiary of the Enron Corporation,= =20 said yesterday that it was invoking an Indian government guarantee to cover= =20 bills for electricity totaling $50 million. Dabhol made the request after t= he=20 Maharashtra State Electricity Board failed to make the payments. The bills= =20 include electricity provided in November and December. Under an agreement= =20 with Enron, the governments of the Maharashtra state and India have=20 guaranteed they will pay Enron if the state utility defaults. P. J. Anthony Texas Energy Company Thrives in California's Deregulated Atmosphere Brandon Bailey 02/07/2001 KRTBN Knight-Ridder Tribune Business News: San Jose Mercury News - Californ= ia=20 Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World= =20 Reporter (TM)=20 Though it produces hardly any power for California consumers, a Texas energ= y=20 company is thriving in a deregulated energy marketplace that it helped shap= e.=20 Through a combination of business and political savvy, the Houston-based=20 company, Enron Corp., has become a leading trader in the state's little kno= wn=20 but increasingly important wholesale power market. And while critics contend Enron's soaring fortunes suggest too much influen= ce=20 over a badly flawed system, some analysts simply credit the company with=20 skillfully operating in a world that barely existed a decade ago, where=20 electricity is traded like soy beans or oil.=20 "The sellers have all the leverage and all the brains. And the buyers have= =20 been slow and stupid," said John White, an environmental lobbyist who track= s=20 energy issues. "What I wish is that the buyers' side of the California mark= et=20 had people as smart and clever and aggressive as Enron."=20 Even as California overhauls its market, Enron will likely play a big part = in=20 the state's energy future.=20 Partly as a result of state and federal policies that Enron has championed,= =20 wholesale trading is now a crucial link in the process of delivering=20 electricity to homes and businesses nationwide. Those policies are unlikely= =20 to change under President George W. Bush, who counts Enron chairman Ken Lay= =20 as a friend, campaign contributor and energy adviser.=20 Enron reported record operating profits of $1.3 billion last year, excludin= g=20 one-time adjustments. That's up 32 percent from 1999.=20 Most of its revenue came from wholesale operations. While Enron doesn't=20 provide financial results for each state, company CEO Jeff Skilling said th= is=20 week that California accounted for about 7 percent of the company's $100=20 billion in sales.=20 "We've probably bought and sold more power than any other market-maker in t= he=20 West," said Enron executive vice president Steven Kean.=20 Originally a gas pipeline firm, Enron now has many interests, from building= =20 power plants in India to trading wood products and telecommunications=20 bandwidth on-line. It recently launched a venture with Blockbuster to deliv= er=20 videos over a fiber optic network. But Enron's primary business involves=20 acting as a middleman between energy producers and the companies that deliv= er=20 power to consumers.=20 At the company's 50-story Houston headquarters, Enron traders use=20 sophisticated software to monitor supply and demand, often based on such=20 variables as weather, plant breakdowns and availability of fuel.=20 Traders buy power from sources all over the region -- independent generator= s,=20 local utilities, public agencies or other traders -- and assume the risk of= =20 finding someone willing to pay a little more. Or they will contract to sell= =20 electricity at a certain rate, betting on their ability to obtain that powe= r=20 more cheaply.=20 "They'll take positions based on where they think prices are going to go,"= =20 said Gary Ackerman of the Western Power Trading Forum, which has 30 member= =20 firms. "This is a guessing game. Enron does it better than most."=20 Enron's traders may buy from several sources to supply one customer. Or the= y=20 might purchase a large volume and sell it off in slices, either on the spot= =20 market or in long-term contracts.=20 "They understand financial markets and they understand risk management," sa= id=20 Jim Angel, a finance professor at Georgetown University. "That gives them a= =20 big competitive advantage over the old dinosaurs of the industry."=20 Enron pioneered such trading, he said, building on skills it developed in t= he=20 natural gas business. But today, most power companies are involved in simil= ar=20 deals.=20 "As a generator, my production cost might be 20 cents," Ackerman said. "If= =20 someone else is offering the same commodity for 18 cents, just for this wee= k,=20 I'll shut down my plant and buy their power and then turn around and resell= =20 it."=20 Some critics suggest a market based on such price changes is too risky for = a=20 commodity as essential as electricity. Attorneys have filed two consumer=20 lawsuits accusing generators and traders of manipulating supplies to drive = up=20 prices.=20 But traders deny those allegations. Enron's Kean said they help find supply= =20 to meet demand, while their long-term contracts protect buyers from price= =20 spikes. Kean said Enron makes a profit buying and selling, no matter if=20 prices are high or low.=20 Those transactions are increasingly integral to the energy industry as it= =20 tries to balance out surpluses and shortages around the region. Ackerman=20 estimated the volume of electricity sold back and forth on a given day is= =20 often ten times the amount actually delivered to consumers.=20 Such trading will continue, he said, even though the state is now negotiati= ng=20 long-term contracts with energy providers. "The traders will still try to= =20 beat the costs of serving those contracts."=20 And traders may benefit from the demise of the state's Power Exchange. The= =20 central spot market is closing because its largest customers, the utilities= ,=20 are insolvent.=20 Without the exchange to post an hourly rate, said James Bushnell of the=20 University of California Energy Institute, "there really isn't much in the= =20 way of meaningful price information any more. And that does advantage=20 marketers. The cynical interpretation is that if buyers and sellers don't= =20 have the information, the marketers can make money."=20 Enron was an outspoken opponent of the exchange when California first plann= ed=20 for deregulation.=20 Over the last decade, Enron has joined forces with manufacturers and=20 industrial interests in a number of states, as they lobbied for permission = to=20 bypass local utilities and negotiate for better deals with competing=20 suppliers.=20 In challenging the well-entrenched utilities, Enron has built its own=20 political clout. The company and its employees gave $2.3 million to federal= =20 campaigns in the last election cycle, according to the non-partisan Center= =20 for Responsive Politics. Enron donated $235,000 to California campaigns in= =20 1998, including $75,000 to Gov. Gray Davis.=20 The company also has deployed its own army of lobbyists and consultants. A= =20 few years ago, it hired former Christian Coalition leader Ralph Reed for=20 advice on building grass-roots support. In California, it recruited former= =20 staffers from the Public Utilities Commission to help make its case.=20 During California's early discussions, state regulators embraced a=20 utility-backed plan for a single agency to run the state's transmission gri= d=20 and operate a central exchange for wholesale energy transactions.=20 But Enron and its allies argued the agency would be dominated by the=20 utilities, which would discourage competition and make it harder to negotia= te=20 lower prices.=20 In the end, California adopted a compromise: It created the Power Exchange = --=20 mandatory for utilities and voluntary for others -- and a separate agency,= =20 the Independent System Operator, to run the state's transmission grid.=20 Critics suggest the complex, decentralized structure has made it easier to= =20 abuse the market, by withholding supplies or taking advantage of congestion= =20 on the transmission grid to drive up prices.=20 But no one has produced evidence tying any company to wrongdoing. And Enron= =20 denies taking any unfair advantage.=20 "The fact of the matter is it's easy to blame people from out of state," sa= id=20 Kean. "It tends to deflect attention from some of the real causes of the=20 problem. The real underlying cause was that you had rapid demand growth and= =20 you didn't have enough supply."=20 Enron has plans to increase California's supply. Though it currently has on= ly=20 has a wind-power facility near Tehachapi, it's planning a 750 megawatt=20 gas-powered plant in Kern County and has three more up for licensing.=20 The company also has sought to build a retail business aimed at industrial= =20 and commercial clients. It abandoned an earlier effort to sign up residenti= al=20 customers in 1998, after concluding that California utilities had succeeded= =20 in structuring deregulation to discourage competition for those customers.= =20 But Enron has contracts with commercial clients to provide a range of=20 services, from advising on energy efficiency to supplying power at a=20 guaranteed rate.=20 As Skilling recently told industry analysts, Enron's business is "packaging= =20 energy supplies for our customers."=20 It doesn't matter, he explained, if that energy comes from a plant that Enr= on=20 owns, or from a contract with another supplier. "It's all part of one=20 business model." Editorial Desk; Section A Liberties Taxing My Patience By MAUREEN DOWD 02/07/2001 The New York Times=20 Page 19, Column 1 c. 2001 New York Times Company=20 WASHINGTON -- At first, I had separation anxiety.=20 I missed all the chaos and intrigue, the lies and cover-ups and sweet talk= =20 and reconciliations and razzmatazz. I stalked my ex. I couldn't help myself.=20 I drove up to Chappaqua and stood around for hours in the cold and slush of= =20 Bill's driveway. I bought a box of Pepperidge Farm Double Chocolate Chunk= =20 cookies at his favorite deli, hoping the aroma would lure him out of the=20 house.=20 Bill still had trouble written all over him. I still wanted to cover a guy= =20 who had trouble written all over him.=20 I wasn't ready for Junior. I wasn't looking forward to a lot of=20 towel-snapping bonhomie, punctuality and discipline from the West Wing, and= =20 peace and quiet from the East Wing.=20 The future was looking depressingly like the past. Washington smells of=20 mothballs -- a tax cut, recession fears, a Star Wars shield, energy woes,= =20 abortion curbs, Christian right-eousness, a rumor of war in the Middle East= ,=20 the trio of Bush, Powell and Cheney saber-rattling at Saddam.=20 In this week of birthday homages to the Gipper, W. even resumed a Reaganesq= ue=20 theme-of-the-week to hawk a Reaganesque tax cut.=20 As Bill flew off to the Boca sunshine, I slunk back to rainy D.C. to face t= he=20 music.=20 W. was busy peddling his tax cut with a lot of photo ops featuring=20 working-class families.=20 To hear the Bush rhetoric, the tax cut was all about helping poor single=20 waitress moms, grannies who can't pay their heating bills, lower-middle-cla= ss=20 families that are maxing out credit cards for their kids' medical bills, an= d=20 small businesses owned by women.=20 On Monday, President Bush made like the host of a game show and displayed a= =20 big blown-up check made out to ''U.S. Taxpayer'' for $1,600, the average=20 benefit that he says the average family with two children would receive. He= =20 introduced three average families that would get anywhere from $1,055 to=20 $3,266 in savings from his plan.=20 On Tuesday Mr. Bush went to McLean, Va., to visit an adorable store, Tree T= op=20 Toys and Books, and make the pitch that his tax plan would create capital s= o=20 that other adorable businesses like this one, and trail-blazing female=20 entrepreneurs like its owner, could thrive.=20 Today the president planned to have a reunion with the ''tax families,'' as= =20 the families used as props on airport tarmacs during his campaign were=20 called. At the White House he will be welcoming Tammy, a waitress at the Pi= t=20 Stop Emporium; Ken, a repairman at Bennett's Garage; Joseph, a manager at= =20 Aldi Foods; Denise, a stay-at-home mom; and Michael, a driver for U.P.S.=20 I seem to recall President Bush vowing to restore integrity and honesty to= =20 Washington. Then shouldn't his photo ops this week have been a whole lot=20 different?=20 On Monday he could have gathered Jack Welch, Bill Gates and Kenneth Lay, th= e=20 chairman of Enron Energy Corporation, one of W.'s biggest corporate=20 contributors.=20 The president could have brandished a blown-up check made out to ''U.S.=20 Fatcats'' for $160,000 and come clean about who will make out like bandits,= =20 courtesy of his bill: not the blue-collar crowd but the golden-parachute=20 crowd, that elite 1 percentile that will get 40 percent of the cut.=20 Dick Cheney, lately of Halliburton, and Paul O'Neill, lately of Alcoa, coul= d=20 have been on hand to share inside tips about tax shelters, trust funds and= =20 stock option packages to defer income.=20 All the moguls' progeny could have smiled for the camera, since, if the Bus= h=20 tax cut passes, they won't have to pay any of those niggling inheritance=20 taxes on their parents' estates.=20 On Tuesday, instead of going to a toy store the president would have headed= =20 to the nearest Lexus dealership to show the sort of toys the wealthiest=20 Americans could buy with their humongous tax cuts.=20 Today, instead of a reunion of his tax families, he could have gathered the= =20 fur-clad and Gulfstream-riding Pioneers, the rich Republicans who pumped $9= 0=20 million, the biggest fundraising haul in history, into W.'s campaign, hopin= g=20 for a tax windfall.=20 Lastly, in the spirit of bipartisanship, W. could have ushered out to the= =20 cameras a new millionaire who could use a good tax cut now that he's raking= =20 in $100,000 a pop for his speeches: my ex. Commodities Natural-Gas Companies Discover California Is a Surprise Bonanza By Chip Cummins Dow Jones Newswires 02/07/2001 The Wall Street Journal=20 C1 (Copyright © 2001, Dow Jones & Company, Inc.)=20 Last quarter, Anadarko Petroleum Corp., a Houston oil-and-gas concern,=20 discovered an unexpected bonus from last year's acquisition of rival Union= =20 Pacific Resources Group Inc.=20 The purchase, it turns out, included commitments to transport natural gas= =20 along a pipeline running from the Rocky Mountains into California. For year= s,=20 those contracts weren't worth much. But late last year natural-gas prices= =20 skyrocketed, especially for gas delivered to California. Thanks to its hold on precious space in one of a handful of pipelines into= =20 the state, Anadarko booked about $135 million in extra profit in the fourth= =20 quarter. It may see more in the first quarter.=20 Call it a California bonanza for natural-gas companies. While wholesale=20 natural-gas prices have eased in some parts of the country such as in West= =20 Texas -- where prices are hovering around $5 to $6 per thousand cubic feet = --=20 the gas can fetch twice as much if it is delivered in California. Natural g= as=20 was recently changing hands at as much as $10 to $15 per thousand cubic fee= t=20 at Topock, Ariz., a pricing hub on the California border.=20 Regional gas prices often fluctuate because of unusual weather or pipeline= =20 disruptions. But California's gas premium has been remarkable for how wide = it=20 has grown and how long it has lingered.=20 "It's a pretty major change in market dynamics," says Art Gelber, principal= =20 at Gelber & Associates, a Houston energy-consulting and asset-resources fir= m.=20 The simple explanation for the difference: Natural-gas demand continues to= =20 outstrip the state's own modest production, and pipeline capacity for=20 out-of-state gas hasn't kept up.=20 According to the California Energy Commission, the state produced just 16% = of=20 the gas it consumed in 1999, the most recent year for which figures are=20 available. Of the nearly 5.15 billion cubic feet of gas a day California=20 imported, almost half came from the Southwest, an additional 28% came from= =20 Canada and 10% from the Rocky Mountain states. To get that gas from the wel= l=20 to users, gas marketers buy up capacity in a limited number of=20 California-bound pipelines. With a shortage of pipeline capacity,=20 transportation costs have climbed and are passed along to end users.=20 California's pain has turned into unexpected gain for a handful of companie= s.=20 Occidental Petroleum Corp., a big California gas producer, is finding its g= as=20 is suddenly much more valuable than it was just a few months ago. In a rece= nt=20 conference call with analysts, the company noted that prices in California= =20 have been more than $3 higher per thousand cubic feet of gas than elsewhere= =20 in the country, which the company said will be reflected in the first-quart= er=20 earnings.=20 Both Occidental and Anadarko have spent time explaining the unusual=20 California gains to Wall Street, and any windfalls this quarter are likely= =20 already priced into their shares, analysts say. In 4 p.m. composite trading= =20 on the New York Stock Exchange, Occidental rose 20 cents to $23.62 while=20 Anadarko rose $2.05 to $63.45.=20 Considering the companies' diverse oil-and-gas portfolios, California's=20 recent volatility wouldn't likely move stock prices much anyway. But the=20 experiences of Occidental and Anadarko in the state highlight what unforese= en=20 surprises can pop up in such an unbalanced commodity market.=20 California is serviced by four major pipelines. Transwestern Pipeline Co., = a=20 subsidiary of Enron Corp., operates a line from West Texas into Southern=20 California; El Paso Corp.'s El Paso Natural Gas Co. runs another pipeline= =20 largely parallel to Transwestern; PG&E Corp.'s PG&E Gas Transmission Co.=20 brings gas down from Canada; and Williams Co.'s Kern River pipeline brings= =20 gas in from the Rocky Mountains.=20 For years, the contracts on the Kern River line and other pipelines that=20 Anadarko inherited from Union Pacific were money losers as transportation= =20 rights into California traded at a discount. "There was plenty of gas going= =20 into California and California didn't need any more," says David Larson,=20 Anadarko's manager of investor relations. But by the end of last year, the= =20 contracts were soaring in value.=20 With California gas consumption ballooning to meet soaring=20 electricity-generation demand, the state's pipelines filled up quickly.=20 Normally, other suppliers would redirect gas to places where the price was= =20 highest, and the situation would work itself out. But capacity is so limite= d=20 that producers simply can't get more gas to California.=20 In its complicated contractual agreements involving a handful of gas=20 marketers, Anadarko was able to realize big gains, in essence agreeing to= =20 transport other producers' gas into California. Anadarko's contracts lay ou= t=20 fixed rates for slots in the pipelines, but the company can pocket gains if= =20 market rates for the transportation rise above the fixed rates. Anadarko=20 booked the fourth-quarter gain by valuing its contracts at current market= =20 prices, called marking to market.=20 The contracts stretch out over several years and with rates still volatile,= =20 Anadarko could book more profit should the market price of the contracts=20 continue to soar. Mr. Larson says the contracts could add $10 million to $2= 0=20 million to the company's bottom line in the current quarter, though their= =20 value could just as easily fall, resulting in a charge.=20 Meanwhile, Occidental, based in Los Angeles, produces and markets a little= =20 more than 300 million cubic feet of natural gas a day in California. The=20 higher prices that gas is currently fetching there is likely to show up on= =20 its bottom line this quarter.=20 Occidental's Elk Hills field is producing at about 10% above its stated=20 capacity, says John Allen, general manager for the operation, about 15 mile= s=20 west of Bakersfield in south-central California.=20 In other commodity markets:=20 COCOA: Prices on the Coffee, Sugar & Cocoa Exchange established a new peak= =20 for their seven-week old run-up, on persistent concerns over nearby supply= =20 availability. After conquering the Jan. 29 high of $1,084 a ton, the=20 most-active May contract established a new 181/2-month high of $1,097. It= =20 settled at $1,095 a ton, up $21.=20 GOLD: Prices fell on the Comex division of the New York Mercantile Exchange= =20 after news that two large producers will boost their forward sales, traders= =20 said. The April contract dropped $2 to $265.40 a troy ounce.=20 Enza Tedesco contributed to this article. California's Power Crisis May Slow Asia Deregulation (Update2) (Adds comment from government in paragraph seven that sale of Korea Electric Power Corp. will go ahead on schedule.) Sydney, Feb. 7 (Bloomberg) -- Asian officials are backing away from deregulating their electricity industries after bungled reforms in California caused power blackouts and pushed the state's two biggest utilities to the brink of bankruptcy. =20 Companies and consumers will have a longer wait for cheaper power as governments from Korea and Japan to Taiwan and Malaysia delay plans to break up or deregulate monopoly electricity companies. =20 Korea is reviewing plans to separate state-controlled Korea Electric Power Corp.'s coal and gas-fired power plants into five companies. The break up is scheduled for April. =20 ``Stable supply is our first priority,'' Shin Kook Hwan, Korea's commerce, industry and energy minister said last week. ``That's more important than leaving electricity supply in the hands of market rules, especially in light of California's power crisis.'' =20 Malaysia's biggest utility, Tenaga Nasional Bhd., last month asked the government to halt the opening of the power industry, while Australian companies are complaining their country's system, similar to that of California, needs an overhaul. =20 Asian governments are ``going to pause and take a deep breath before they dive into the next phase of deregulation,'' said Rob Booth, managing director of Bardak Group, an Australian energy consultancy. =20 While Korea is looking at the implications of the California power crisis, the government said this will not delay the sale of its stake in Korea Electric Power Corp. starting 2002. The government has 52.2 percent of Kepco, which will be sold off in stages. LA to KL =20 California's legislature last week voted to issue as much as $10 billion in bonds to help rescue PG&E Corp.'s Pacific Gas & Electric and Edison International's Southern California Edison, which ran out of money as the price they paid for power rose eight- fold in less than a year. =20 PG&E and Edison have run up more than $11.5 billion in debt from buying power. =20 Price-cutting was the goal in California, but it all went wrong. PG&E and Edison piled up debt because California's 1996 electricity deregulation law set no limits on the price they pay for power, but capped the rates they can bill consumers. =20 Producers and distributors of power were supposed to match their needs through a central ``pool'' where the price was set depending on supply and demand. As demand rose and environmental restrictions discouraged building of new power stations, supplies tightened and generators pushed the price above the rate the utilities could charge customers. =20 Power outages in California show the power pooling system hasn't benefited customers, said Fuad Jaafar, chief executive of Tenaga, which is two-thirds government owned and the b
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