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The State Power Regulators to Determine State Refunds Energy: Generators and
California officials will work together for 15 days to solve the huge mathematical problem. Los Angeles Times, 06/25/01 THE ENERGY CRUNCH / $9 billion showdown over power / State delegation seeking refunds The San Francisco Chronicle, 06/25/01 California Power Suppliers May Have to Refund Billions. The Oil Daily, 06/25/01 Californians Get Rude to Enron Executives. The Oil Daily, 06/25/01 Power Plays: Beaten-down energy stocks look attractive Barron's, 06/25/01 SURVEY - POLAND - Why overseas energy investors are failing to generate high returns. Financial Times, 06/25/01 India: L&T seeks 51 pc stake in Vijaynagar power project Business Line (The Hindu), 06/25/01 Rolls charged up on power generation The Economic Times, 06/25/01 California; Metro Desk The State Power Regulators to Determine State Refunds Energy: Generators and California officials will work together for 15 days to solve the huge mathematical problem. MEGAN GARVEY TIMES STAFF WRITER 06/25/2001 Los Angeles Times Home Edition B-7 Copyright 2001 / The Times Mirror Company WASHINGTON -- Starting today, federal power regulators will begin trying to solve one of the riddles of the energy crisis: How much of a refund will California get? One thing seems clear: The reduction will be a lot more than the $125-million refund ordered to date, in all likelihood soaring to more than $1 billion. Over the next 15 days--the Federal Energy Regulatory Commission is mandating no weekends off--warring representatives from power companies and the state of California will sit at the same table in a government conference room while a FERC task force wrestles the question to the ground. The task is to determine the price that power would have cost if FERC's decision to impose soft caps had been made not last week, but last fall. It is a daunting mathematical problem, factoring in hourly charges during the last eight months. To come up with a total, federal regulators, state electricity officials and power generators must determine what the highest price for a megawatt should have been under the soft price caps now in effect. Then they have to figure out which companies--if any--were charging more. Under the recent FERC ruling, the price of electricity during any given hour cannot exceed the actual cost of generating the least efficient--or most expensive--power coming into the grid. Curtis L. Wagner, the 72-year-old chief judge for FERC who is overseeing negotiations on California's overcharges, said of this morning's events: "It will be a zoo." Wagner, who headed into the weekend with three inches of documents to sort through, explained that Gov. Gray Davis wants $9 billion knocked off the amount the power generators charged California. "I don't really think it's that high," said Wagner, predicting the refund will be more than $1 billion but probably far from $9 billion. "We have folks trying to do some adding now and some work on what the number should be," he said. Wagner said the money at stake will be the most he has worked on in his nearly three-decade career at the agency. Until recently, the likelihood of massive refunds seemed nil. Although California lawmakers--led by Davis--had demanded relief for costs that ran as high as 10 times or more than the rates a year ago, FERC officials had not agreed. And their minds seemed set. When FERC first proposed remedies for the California price increases late last year, commissioners said: "Refunds may be an inferior remedy from a market perspective and not the fundamental solution to any problems occurring in California markets." To date, FERC has ordered $125 million in refunds for alleged overcharges in January and February. But with the recent appointment of two new commissioners by President Bush--Republicans Patrick H. Wood III of Texas and Nora M. Brownell of Pennsylvania--FERC's position softened, leading to the price mitigation ordered last week. Now FERC is taking a closer look at the prices already charged. California lawmakers have pegged overcharges at nearly $9 billion since the California market went haywire last summer--a number that comes from a study done by Cal-ISO, the operator of California's electricity grid. Cal-ISO officials acknowledged last week that the study might have significant flaws. Among companies that may be required to reduce their bills are energy giants Enron Corp., Mirant Corp., Duke Energy Corp., Williams Cos. and Reliant Energy Inc.--all of which are expected to have representatives at the negotiations. The companies have hotly disputed the amount of overcharges alleged by Davis and other California lawmakers and point out that they have yet to be paid for the vast majority of electricity sold in the state in recent months. Today, Wagner said he plans to make opening statements to the media. After that, he said he hasn't determined how much of the wangling will be done behind closed doors. If the parties don't come to an agreement in 15 days, Wagner will have seven days to make a recommendation on refunds to FERC's five commissioners. It is a process that may be repeated down the road if Sen. Barbara Boxer (D-Calif.) and other California politicians get their way. Boxer has introduced legislation that would give FERC retroactive power to order refunds--all the way back to July 2000, when San Diego first faced huge spikes in electricity costs. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. NEWS THE ENERGY CRUNCH / $9 billion showdown over power / State delegation seeking refunds Lynda Gledhill, Christian Berthelsen Chronicle Staff Writers 06/25/2001 The San Francisco Chronicle FINAL A.1 (Copyright 2001) A critical showdown in California's energy crisis starts this morning, as state officials meet with energy companies to demand $9 billion in refunds. A 15-day settlement conference, ordered as part of the Federal Energy Regulatory Commission's decision last week to put price controls on wholesale electricity prices, will bring together the parties that have been squabbling for the past year. "We are going to Washington with one goal, and that is to bring back $9 billion," Gov. Gray Davis told reporters yesterday. "The fact is that people have taken advantage of the market, gamed the system and ripped people off." But Davis' crusade may be dampened by challenges to the study the state used to arrive at the $9 billion figure and by a FERC mediator's prediction that California will walk away with less than it is demanding. The Democratic governor's figure is based on an update of a March study by the California Independent System Operator, which manages the sate's power grid. Some energy experts argue the study is flawed, but the ISO stood firm behind its methodology yesterday. Curtis L. Wagner Jr., the FERC administrative law judge who will oversee the meeting, said in an interview with The Chronicle yesterday that he was optimistic a settlement would be reached. Wagner said the $9 billion "seems a little high. And the generators' numbers seem low. We'll probably come out somewhere in between." The veteran mediator, who spent yesterday reviewing spreadsheets submitted by the parties, said he will look at applying last week's commission price control order back to October. "I think we should put the refund issue to rest," Wagner said. "I'm sure we can agree on a structure that is fair to everybody." Enron Corp, Reliant Energy Inc., Duke Energy Corp., Williams Cos., Dynegy Inc. and Mirant Corp. are among the companies facing allegations of illegally overcharging California. The companies say the high prices were a result of the high costs of natural gas used to generate power. "There has been no evidence to suggest that suppliers bilked anyone," said Mark Stultz, a vice president of the Electric Power Supply Association, which represent the generators. But Davis insisted that the state will recover the full amount it is asking. "Under the law, FERC has no discretion," he said. "It is mandated to refund excessive charges, if prices were found to be unjust and unreasonable, which they were." The governor, however, acknowledged that some of the money he is demanding may be owed by municipal utilities that do not fall under FERC's jurisdiction. Davis adviser Nancy McFadden said municipal utilities such as Los Angeles Department of Water and Power and BC Hydro that sold electricity to the state have been invited to join the talks as well. "We need the FERC to lay the basis to seek refunds from private generators, and use that as a basis to seek refunds from public generators," she said. California could face an obstacle in its case for the full repayment it seeks. Under FERC rules, overcharges can only be authorized after a formal investigation is ordered, which in this case started on Oct. 2, 2000. If Wagner sticks to that time frame, it eliminates the summer 2000 months when prices first began to spike. "There is no question we can order refund from that (October) date forward," Wagner said. "Legally, there may be some question before that date." But Wagner said a FERC regulations may not necessarily rule out broader refunds. "That's the great thing about a settlement -- you can do anything," he said. If no settlement is reached in 15 days, Wagner will forward his recommendations to the full commission for its approval. California will then have the option of pursuing the matter further in court. California's delegation will be led by Michael Kahn, a San Francisco lawyer who chairs the ISO. Davis also meets today in Sacramento with new FERC Commissioners Patrick Wood and Nora Brownell to discuss the refunds and the high cost of natural gas in the state. Wood, who is expected to be named chairman of the commission in the fall, has expressed his support for finding solutions to California's power woes. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. California Power Suppliers May Have to Refund Billions. 06/25/2001 The Oil Daily © 2001 Energy Intelligence Group. All rights reserved. Power marketers providing electricity in California may have to refund several billion dollars to customers to compensate for overcharging, a Federal Energy Regulatory Commission (FERC) administrative law judge said Friday. The potential refunds, however, will be no where near the $9 billion claimed by California Gov. Gray Davis, Judge Curtis Wagner said. Wagner is to oversee hearings on the alleged overcharges that begin Monday in Washington, D.C. Industry sources have expected such action from federal regulators, who already have acknowledged that the power suppliers had overcharged by several hundred million dollars. One issue that may complicate the matter is the amount of money that the same power providers are owed by California utilities for electricity they supplied, but for which they have not been paid. The California governor last week said that power generators and marketers including Duke Energy, Dynegy, Enron, Reliant Energy, Mirant, and Williams Cos. may be due $2.5 billion just by Pacific Gas and Electric, which is in bankruptcy. This does not include funds owed by Southern California Edison or San Diego Gas & Electric. Wagner's comments were not released until after the close of the New York Stock Exchange on Friday. The shares of the natural gas and electricity trading companies have been battered in recent weeks, in part because of fears they would be required to make refunds. © Copyright 2001. The Oil Daily Co. For more infomation, call 800-999-2718 (in U.S.) or 202-662-0700 (outside U.S.). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Californians Get Rude to Enron Executives. 06/25/2001 The Oil Daily © 2001 Energy Intelligence Group. All rights reserved. Californians are being downright rude to Enron executives these days. First, California Attorney General Bill Lockyer suggested that Enron Chairman Kenneth Lay ought to be forced to spend some time in a prison cell with a tattooed character named Spike who was looking for "companionship." Thursday, an angry electricity consumer threw a cream pie in the face of President and Chief Executive Jeffrey Skilling as he was preparing to address a civic and business group in San Francisco. According to wire service reports, the pie thrower was a woman from the Biotic Baking Brigade, an organization that makes a practice of "creaming" controversial figures. Past recipients include Microsoft Chairman Bill Gates and San Francisco Mayor Willie Brown. Skilling went ahead with his speech to the Commonwealth Club of California, telling them that Gov. Gray Davis was not responsible for the current crisis because he had inherited the regulatory morass from the prior administration. Davis was elected in 2000, succeeding Republican Pete Wilson. Skilling, an ardent Republican, couldn't let the Democratic governor escape without some criticism. He said that Davis had exacerbated the problem by not addressing it promptly when the first signs appeared last year. Enron Vice President Karen Denne said that company executives anticipated some sort of demonstration by disgruntled electricity consumers. "Obviously, this is a very emotional issue," she said. "There was risk in our coming to the state, but we feel strongly enough about the issue that we felt it was important to talk about the situation and what could be done to fix the problem." Denne maintains that listeners received Skilling's remarks favorably. "They did seem to be receptive to the message," she said. Wall Street also has been rather impolite to Enron of late. The company's common stock continues to take hits, last week falling to a 52-week low of $42.35. This is less than half the year's high of $90.75, reached in August. Friday it was trading at around that same level. The most recent decline came after the Federal Energy Regulatory Commission issued an order imposing "price mitigation" rules on electricity sold to California and 10 other states in the western power grid (OD Jun.15,p6). The pounding prompted Skilling to issue a statement pledging that Enron would make its earnings targets. Barbara Shook. © Copyright 2001. The Oil Daily Co. For more infomation, call 800-999-2718 (in U.S.) or 202-662-0700 (outside U.S.). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. MARKET WEEK Commodities Corner Power Plays: Beaten-down energy stocks look attractive By Cheryl Strauss Einhorn 06/25/2001 Barron's MW19 (Copyright © 2001, Dow Jones & Company, Inc.) The Federal Energy Regulatory Commission last week voted to extend controls on California power prices to 10 other Western states and to keep them in force every day, rather than just during shortages. The news sent share prices tumbling, not only for energy trading and marketing companies, such as Enron, but also for alternative energy providers, such as Plug Power, and outfits that build and operate power plants, such as Calpine and NS Group. The decision dampened expectations for the profitability of these industries, in part because capped prices will reduce incentives to build power plants and to find new energy sources. While regulators' decision to "mitigate" prices is popular with consumers, it does nothing to fix the underlying energy problem. For the companies being vilified are exactly those that need the most investment to expand energy supplies. Their shares' selloff may make them ripe for picking. With their services a necessity, these companies should find politicians willing to come up with tax breaks and other incentives to offset the price caps and boost the supply of electricity. Donato Eassey, a Merrill Lynch analyst who follows electric, natural-gas and other energy companies, thinks the stocks are "now well oversold." For "while there still remains a long road ahead to navigate through the California chaos, we believe the crushing political pressures, which have helped decimate over $45 billion in energy merchant market cap since the beginning of the year [for an average decline of 27%], may be in an ebbing mode." Which companies look best? Perhaps Sempra Energy, which signed a preliminary agreement last week with the State of California to settle its $750 million in undercollected power costs. The settlement should not have any earnings impact, in part because the company is well reserved. This company is one of the very few energy trading and marketing shops that hasn't suffered a big stock setback in the past month. Eassey describes it as "holding in there like a rock." Sempra's share price is unchanged during the past month and is actually up 18% this year. Eassey says the stock has held up well, in part because it has been undervalued as investors have failed to recognize that the company does much more than generate energy: "It has a sizable trading and marketing arm." Now, though, he thinks it will benefit from being the largest combination U.S. gas and electric utility; its assets, he says, mean the company "has a lot of shock-absorbing capacity." In addition, the surge in electric and gas prices is expected to move states and companies toward long-term, fixed-price energy contracts, which provide better margins to the energy companies than selling at volatile spot-market prices. As a result, Sempra, which trades at 11 times expected earnings and five times expected cash flow, while posting a return on equity of 20.5%, could "conservatively see 43% total-return potential" in the next 12 months, Eassey says, for a price target of 36.35. He likes the prospects for shares of Dynegy, El Paso Energy and Williams, which have been crushed in the past month. Indeed, after being the second-best-performing stock in the S&P 500 last year, Dynegy is off 26% in the past month alone, while shares of El Paso are down 19% and those of Williams are off 16%. All these companies' businesses are diversified; they're not only in exploration and production, but also in pipeline and refining, as well as in coal and natural-gas liquids. Each owns some generating capacity and trades and markets energy products. Eassey sees the companies also benefiting from their business mix and from the greater certainty that long-term, fixed-price contracts offer. He looks for 30%-40% price appreciation for the group in the next 12-24 months. Yet for Enron, often considered the premier trader and marketer, Eassey is less optimistic, even though its shares have taken a hefty 17% hit in the past month. Enron doesn't own much generation capacity. Moreover, although energy prices may continue to be volatile, there is a perception that price peaks and troughs may grow less pronounced because the market is more heavily regulated and there are fewer spot -- or cash market -- transactions. Thus, profits from Enron's trading may shrink. The company is in a "show-me" state, he says. After posting its biggest daily fall in 2 1/2 years Wednesday, gasoline slumped to a six-month low at week's end, after the nation's biggest pipeline stopped accepting new shipments from the Gulf Coast to the East. This is a signal that the market is well- supplied for the peak summer-driving months. July futures fell to 77.50 cents a gallon, or nearly 12% on the week. Happy motoring. --- KEY COMMODITY INDEXES CRB Group Indexes 6/22 6/15 Yr. Ago CRB Futures 205.38 211.62 227.08 Industrials 156.58 161.98 199.03 Grain/Oils 152.93 158.51 167.89 Livestock 256.50 258.10 249.71 Energy 239.41 261.61 271.07 Precious Metals 253.48 258.62 268.88 BARRON'S/Bridge-Telerate Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. SURVEY - POLAND - Why overseas energy investors are failing to generate high returns. By JOHN REED. 06/25/2001 Financial Times © 2001 Financial Times Limited . All Rights Reserved SURVEY - POLAND - Why overseas energy investors are failing to generate high returns - POWER by John Reed - With liberalisation yet to find the correct model and energy consumption half the EU average, most foreign companies have to be there for the long-term. As California's power crisis demonstrates, there is no handy single template for privatising the energy sector. Small wonder, then, that Poland's effort to liberalise its energy market and find new owners for its power plants and distributors has a mild air of improvisation about it. When the government approved an "integrated timetable" to privatise the sector a year ago, its experts looked at reforms in Norway, Britain, Australia and - sure enough - California, says Wojciech Tabis of the energy department. Last April, less than a year into the programme, the government amended the strategy. The shift reflected in part changes on the ground - including the creation of Poludniowy Koncern Energetyczny, a powerful group of seven generators in southwestern Poland - and partly the view, promoted by economy minister Janusz Steinhoff, that Poland should sell its investment-starved power plants first. This was on the grounds that distribution companies are natural monopolies and certain to attract investors. Now Poland plans to accelerate the sale of power plants, while continuing to privatise two distribution companies already underway: Warsaw's Stoen, and the so-called G-8 group of northern power distributors. "In most EU countries, the power sector is either partly or wholly state-controlled," explains Professor Marian Milek, deputy treasury ministry responsible for energy. "Poland is opening up, so we need to be careful that there will be a guarantee of the security of our power market." For foreign investors, Poland holds the lure of a deregulating market where power consumption per head is only about half the EU average. With EU membership in sight this decade, Poland could also serve as a conduit for the transit of cheap power from ex-Soviet countries to the West. French utilities Electricite de France and SNET, Poland's Elektrim and Sweden's Vattenfall have invested to date. The Swedish state-owned utility owns 32 per cent of the southern GZE distribution group and 55 per cent. Warsaw's district heating plant in Siekierki, and hopes to increase both stakes to a majority within two years. Vattenfall is targeting Poland, alongside Germany, as prime territory to expand. "In the European market, it's a question of eat or be eaten," says Hannu Kostiainen, general manager for Poland. "We have to grow and increase the value of the company, and the only way to do this is to invest." Poland's power market is expected to get an added fillip on July 1 when, if the country's energy regulator keeps its earlier promises, the country will begin moving away from tariff controls while Polskie Sieci Elektroenergetyczne, the power-grid company, initiates the operation of an hourly balancing market. Both measures will contribute to the creation of a fully-fledged wholesale market for power, a prospect attractive to both foreign and local market players. One is US power giant Enron, which invested in a gas-fired plant a year ago with the explicit aim of gaining a foothold for future business in power trade. Some of the early investors have complained of a difficult time from regulators, officials, and the strains of working on a still-unliberalised market. One publicly-held foreign energy company that failed in a bid for a power plant last year complains the going is so hard that only state-controlled companies like Vattenfall and EdF can afford to tough it out. "They're determined to get into Poland regardless of the short-term costs," he says, declining to be quoted because of pending business at other energy companies. "Unfortunately, we have to satisfy shareholders." Vattenfall's Mr Kostiainen disputes the view. "Financing our operations is much more difficult than for private companies," he says. "We can't use new emissions to do it, so we're dependent on bank financing and our own cash flow." Yet he and other company officials, while noting the market's promise, have also complained of tough going in the initial phase. Some of the issues are familiar to veterans of Polish state sell-offs in other sectors, including the need to sign a "social pact" with the plant's powerful unions. At Vattenfall's Elektrocieplownie Warszawskie power plant in Siekierki, its talks with unions yielded a five-year guarantee of employment for workers, plus a "privatisation bonus" of 15,000 zlotys ( $3,750) per head. The company was lucky to negotiate the unions down from their demand to match a seven-year guarantee paid by a rival investor at another Polish plant, says Jan Reutergardh of Vattenfall. Zealous regulation of tariffs by the Bureau of Energy Regulation, Poland's sectoral watchdog, has also squeezed the operation's bottom line. Last year, says Mr Reutergardh, the body approved a3 per cent tariff for Siekierki, though inflation was about 10 per cent. The plant reported a 16m zloty profit last year, but the gains were eaten up by "social funds" reserves made, and other costs relating to the privatisation process, he says "Poland has to go into the EU, and has to privatise companies," Mr Kostiainen says pointedly. "But if they want foreign companies to participate, they have to make sure the investors are satisfied." The tariff liberalisation promised starting in July should silence some of the investors' complaints. So will a planned move away from long-term offtake contracts. The contracts account for about two-thirds of the existing market and, as a side-effect, give generators little incentive to lower their prices. They were bestowed on power plants to provide them with collateral for bank loans to finance their development. One reflection of the resulting distortion is the slow trading at Poland's wholesale power exchange. It trades barely 1-2 per cent of the total market turnover, below the 4-5 per cent deputy minister Mr Milek says it needs to become viable. The contracts are now being phased out, says Mr Tabis of the economy ministry. Government officials belittle investors' complaints, noting they will be more than compensated in future for having occupied an early foothold in the Polish market. Foreign power companies concur with the view, albeit from a different perspective: "I don't think anyone is here for the near-term future," says one. © Copyright Financial Times Ltd. All rights reserved. http://www.ft.com. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: L&T seeks 51 pc stake in Vijaynagar power project 06/25/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire BANGALORE, June 24. LARSEN and Toubro has sought a 51 per cent stake in the 500 MW Vijaynagar thermal power project. The project is being taken up as a joint venture with Karnataka Power Corporation Ltd (KPCL). KPCL sources said the shareholders' agreement would be finalised with L&T once some of the issues such as restricted tenure of power purchasing agreement (PPA) were addressed. KPCL had originally shortlisted PowerGen International and Enron along with L&T as the joint venture partners for the project. But both Enron and PowerGen pulled out of the financial bids, leaving L&T as the lone bidder. The original proposal had envisaged a 25 per cent stake for the joint venture partner, with 26 per cent with KPCL and the remaining equity to be raised through the participation of financial institutions, banks, equipment suppliers and the public. The sources said that among the issues that have been raised by L&T included the State Government's restriction on PPAs. As per the new power policy adopted by the State Government, the validity of the PPAs has been restricted only to five years. This was not acceptable to either KPCL or L&T. Such a policy framework, the sources said, would result in front-loading of tariffs, which in turn would imply high tariffs. This was because the entire debt recovery period would have to restricted to this period. Accordingly, what is now being sought is a longer duration PPA, on the basis of internationally-recognised 30-year contracts. This would allow the tariff to be kept to optimum levels, even after factoring in a minimum of 16 per cent return on equity as is permitted by the Electricity Supply Act. Besides, the sources said, the Government's policies regarding tariff indexing also needed to be clarified. The Government wants a flat rate of tariff indexing of five per cent per annum, whereas generating companies would ideally prefer to have a tariff indexed to actual prevailing costs of operations or inflation-linked. It is only after these issues are sorted out that KPCL is prepared to proceed with the finalising of the PPA. Along with these issues, the project cost has also been quietly revised. The new cost per MW has been worked out to Rs 4.62 crore per MW, which is in line with the estimates made for two of the 1000 MW stations - CLP-Tata and Nagarjuna Power - proposed in the State. The original cost estimate was Rs 2,099 crore or Rs 4.1 per MW. Accordingly, the revised project cost is now about Rs 2,400 crore. This is to be funded through a 70:30 debt equity ratio, with the equity component comprising of at least Rs 692 crore. But KPCL has already tied up fuel linkage with Talcher. The coal requirement for the project is estimated to be in the region 2.8 million tonnes per annum assuming a plant load factor of 80 per cent and a calorific value of 3,000 kilo calories per kg. This coal is to be brought by sea to the newly corporatised port of Ennore and evacuated by the Railways to Vijaynagar. - C. Shivkumar Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Rolls charged up on power generation Soma Banerjee 06/25/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) ROLLS Royce India Private has drawn up expansive plans to enter the captive power generation market in a big way. The company which has been associated with the Indian power sector for the past few years has already identified some states and is in negotiation with private developers to set up such power plants. In an exclusive interview to ET, Mr Rod William managing director of Rolls Royce power who looks after the companys entire energy operations in Asia said: ``We want to establish ourselves as one of the players in the captive projects category where projects would be from 4 to 6 mw to a maximum of 100 mw. He recently met the union power minister to appraise him of the companys plans. The union power ministry has taken up a major drive to refurbish the image of the power sector following the Enron debacle. In its bid to get attract customers from the industry, the company is organizing the first road show of its kind in Gujarat next month. The company has already approached industrial consumers who are in need of reliable power. ``We have got very favourable response and consumers from a wide range of industries from glass, textile cement have shown interest, William said. What is interesting is that Rolls Royce has also been interacting with financial institutions and lenders and they are willing to lend to projects that are realistic. The road show will be held in Surat, Vadodhara and Mumbai in the first phase and taken to other southern states in the second phase. The company has zeroed in on Tamil Nadu, Andhra Pradesh Gujarat and Maharashtra as their target destinations for the gas based captive power projects. Apart from offering to set up plants, the company will also offer other services like energy service, or operation and maintenance of the plant, and even take up distribution for specified regions. The idea behind taking up distribution would be to feed the excess power into the grid. In fact, since most industrial consumers would prefer to have reliable power such captive power plants are likely to find enough takers, he said. The government is also opening up special schemes to attract such investments into the export processing zones. Setting up power plants for these zones would take care of the industrial needs and allow the extra power to be fed into the grid. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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