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California Cites Generators For Withholding Documents
The New York Times, 06/29/01 Senate Panel Lashes Out at 2 Energy Firms Hearings: Lawmakers hold Enron and Mirant in contempt for refusing to help in pricing probe. Los Angeles Times, 06/29/01 Calif Panel Cites Power Cos For Withholding Documents Dow Jones Energy Service, 06/29/01 California Senate committee cites power companies for contempt for withholding documents Associated Press Newswires, 06/29/01 INDIA: Buyers seek price cut from Enron India unit-paper. Reuters English News Service, 06/29/01 Fibernet upbeat on European progress The Independent - London, 06/29/01 ANOTHER US ENERGY CO MAY GET INVOLVED IN INDIAN DABHOL PROJECT Asia Pulse, 06/29/01 India: States willing to buy only 700 MW surplus from DPC Business Line (The Hindu), 06/29/01 ENRON GROUP DEVISES $US50MLN INDIA OILFIELD EXPANSION PLAN Asia Pulse, 06/29/01 Enron held in contempt in California Houston Chronicle, 06/29/01 Duke Energy to buy Enron power plant Houston Chronicle, 06/29/01 USA: Calif. Senate panel cites generators for contempt. Reuters English News Service, 06/28/01 Enron, Mirant Held in Contempt by Calif. Senate Panel (Update2) Bloomberg, 06/28/01 Duke Energy Agrees to Buy Mississippi Power Plant From Enron Bloomberg, 06/28/01 U.S. Power Suppliers' Second-Quarter Profits to Rise (Update1) Bloomberg, 06/28/01 National Desk; Section A California Cites Generators For Withholding Documents By LAURA M. HOLSON 06/29/2001 The New York Times Page 18, Column 5 c. 2001 New York Times Company SACRAMENTO, June 28 -- California legislators turned up the heat on power generating companies today, citing two of them for not handing over documents necessary in the state's continuing hearings on the spike in electricity prices. A special legislative panel, called the Senate Select Committee to Investigate Market Manipulation, unanimously passed a contempt motion this afternoon saying that the Mirant Corporation, based in Atlanta, and the Enron Corporation, based in Houston, had failed to respond to a June 11 subpoena asking for documents. The motion comes as the committee is trying to follow the paper trails to determine if power generating companies willfully manipulated the supply of electricity here last year in an effort to drive up prices. Several state agencies are investigating similar charges. Other companies, including Reliant Energy and Dynegy Inc., complied with the committee's requests for thousands of documents related to power sales and bidding procedures. Several other companies, which include the Williams Companies, the Duke Energy Corporation, the AES Corporation and NRG Energy Inc., are expected to hand over documents in two weeks. California's two largest utilities have racked up $14 billion in debt, forcing one to file for bankruptcy protection. Last week, three former employees of Duke Energy told the committee that they observed behavior that they believed was consistent with market manipulation. Duke denied the charge, saying there was no merit to the accusations. The chairman of the select committee, Joseph Dunn, a Democrat, said that if Enron and Mirant complied with the request by July 10, the contempt order would be expunged. ''We were not seeking to find contempt but to obtain compliance,'' he said today. ''Unfortunately, we had to find contempt.'' The documents were subpoenaed earlier this month by the Senate Rules Committee to obtain details on bidding, pricing and other aspects of power sales. The power companies have said that they have not complied because they have not been able to negotiate an acceptable confidentiality agreement. By seeking the contempt citations, the committee needs the full Senate to follow through. There are no set penalties, said Laurence Drivon, the committee's special counsel, adding that by law, ''the Senate can take such action as it deems necessary and appropriate.'' Patrick Dorinson, a spokesman for Mirant, said the company was seeking assurances that any information it handed over, which it considered proprietary, not be made public. He said the company had been negotiating with the committee up until today and hoped to resolve its concerns in the next few days. For Enron's part, a representative of that company sent a letter to Mr. Dunn outlining its objections to turning over documents. Michael Kirby, a San Diego lawyer, wrote that the documents the committee wanted were outside the state and thus out of the jurisdiction of the California subpoena. He also wrote that the committee was asking the company to reproduce documents that other state regulatory agencies already have. He called the subpoena's orders ''vague, unduly burdensome, often argumentative and beyond the scope and extent of both the subpoenaing party's legal and regulatory authority and subpoena power.'' Today's legislative action took place in an atmosphere of increasing attacks on the power generators. A poll by The Los Angeles Times this week found that 86 percent of Californians interviewed believed that power companies had manipulated the electricity market in the state. Duke Energy, based in North Carolina, opened a campaign this week to do something about this widespread public view, taking out full-page newspaper advertisements in California to defend itself against accusations that it cut production to drive up profits. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. California; Metro Desk Senate Panel Lashes Out at 2 Energy Firms Hearings: Lawmakers hold Enron and Mirant in contempt for refusing to help in pricing probe. CARL INGRAM TIMES STAFF WRITER 06/29/2001 Los Angeles Times Home Edition B-1 Copyright 2001 / The Times Mirror Company SACRAMENTO -- Angered by the refusal of electricity wholesalers to surrender information about suspected price gouging, a Senate committee voted Thursday to hold two big energy companies in contempt of the Legislature. It was uncertain what punishment, if any, may be in store for Enron Corp. of Houston and Mirant Corp. of Atlanta. But committee members said potential sanctions could include heavy fines and/or the jailing of corporate executives. "Jailing of an individual is an option and we intend to preserve all our options," warned state Sen. Joe Dunn (D-Santa Ana), chairman of the committee investigating whether the wholesalers had manipulated the market. "Could we impose, say, $9 billion in fines?" Sen. Debra Bowen (D-Marina del Rey) asked rhetorically. Enron reacted angrily. "This is a shakedown," charged spokesman Mark Palmer. "And if this is a shakedown, we're going to protect our legal rights." Enron had further enraged the committee by sending a letter saying the legislative panel had no authority to conduct its investigation because wholesale prices were the "exclusive jurisdiction" of the Federal Energy Regulatory Commission. A spokesman for Mirant said the company intends to keep talking to the committee to reach an agreement. The bipartisan committee had been prepared to find eight generators--mostly out-of-state companies--in contempt for refusing to produce the subpoenaed records. But by the end of the four-hour hearing, companies that said they would cooperate--AES, Duke, Dynergy, NRG, Reliant and Williams--escaped a citation, at least temporarily. Though the committee found Enron and Mirant in contempt, its action is subject to ratification by the full Senate. Dunn said contempt citations are so rare there are few guidelines to follow in determining a punishment. He said it "could be anything that the Senate believes is necessary and reasonable." The finding of contempt for failure to obey a legislative subpoena is rarely used in California. Sources said it last was done in 1929 when an officer of a cement company refused to cooperate in a price-fixing investigation. Late in 2000 and earlier this year, the profits of major electricity wholesalers soared astronomically, throwing the state's two biggest utilities, Pacific Gas and Electric Co. and Southern California Edison Co., into financial chaos. Edison is teetering on bankruptcy and PG&E is in Bankruptcy Court. The committee, which first asked the companies to provide the information voluntarily in April, encountered strong resistance from the energy companies. They complained that their trade secrets might be exposed to competitors, the public and government regulators. Frustrated, the committee two weeks ago issued subpoenas demanding the information, including whether the power sellers had destroyed any records. The committee set Thursday as the deadline for compliance and threatened to find violators in contempt, a tactic that appeared to turn around all but Enron and Mirant. "Let's move forward. We want to facilitate your investigation," said Duke attorney Joel Kleinman of Washington, whose company had objected to its subpoena. At the last minute, several sellers began sending urgent fax letters or witnesses to Dunn. Dunn said a quick scan of the letters showed wholesalers were pleading for a second chance and assuring that the subpoenaed data would be forthcoming. Kleinman told the committee Duke did not want to be held in contempt. "We will make tens of thousands of documents available for inspection," Kleinman said. But he said Duke and the committee staff still must settle on a confidentiality agreement, a matter he indicated was close to resolution. Other wholesalers appeared to fall into line. Dunn said he was concerned that "minor problems" in reaching a confidentiality agreement might become a tactic for further delay. The committee gave the six companies until July 10 to reach confidentiality agreements and turn over a vast assortment of records. The contempt finding against Mirant and Enron would be abandoned if they, too, provided the confidential documents by July 10, when the committee will review the companies' compliance. The wholesalers also are the targets of similar investigations by Atty. Gen. Bill Lockyer and the state Public Utilities Commission. Times staff writer Nancy Vogel contributed to this story. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Calif Panel Cites Power Cos For Withholding Documents 06/29/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) SACRAMENTO, Calif. (AP)--A Senate committee investigating possible price manipulation in California's energy markets cited two power generators for not turning over documents requested for the probe. The documents - which include details on bidding, pricing and other aspects of power sales - had been requested in subpoenas issued earlier this month to Enron Corp. (ENE), Mirant Inc. (MIR) and four other generating companies. On Thursday, the Senate Select Committee to Investigate Market Manipulation approved a contempt motion, citing Enron and Mirant for not producing the materials. The other four generators complied. The motion still needs approval by the full Senate. The Senate Rules Committee had subpoenaed the materials. Enron, based in Houston, said its documents are outside the committee's jurisdiction because they are kept in Texas. An attorney for Atlanta-based Mirant said the company wanted to comply, but didn't act quickly enough to avoid the contempt vote. California law doesn't specify penalties for a contempt finding, said Laurence Drivon, the committee's special counsel. "The Senate can take such action as it deems necessary and appropriate," he said. Enron's claim that the committee lacked jurisdiction outraged some senators, who said previous legislative investigations have sought documents from throughout the world. "If they've done nothing, if they've got nothing to hide, there's no reason" not to comply, said Sen. Debra Bowen. The committee has been negotiating with the companies to try to reach a confidentiality agreement for the release of the documents, and has asked the generators to sign agreements not to destroy any potentially relevant documents. So far, some companies have agreed verbally, but none has signed. Duke Energy (DUK) agreed to comply with the subpoenas and store documents in a repository in Sacramento, if the company and the committee can agree on how to keep the documents confidential. Lawyers for both sides said they could work out an agreement. Enron and Mirant can have the contempt citations withdrawn if they turn over the requested documents to the repository by July 10. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. California Senate committee cites power companies for contempt for withholding documents By JENNIFER COLEMAN Associated Press Writer 06/29/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SACRAMENTO, Calif. (AP) - A Senate committee investigating possible price manipulation in California's energy markets cited two power generators for not turning over documents requested for the probe. The documents - which include details on bidding, pricing and other aspects of power sales - had been requested in subpoenas issued earlier this month to Enron Corp., Mirant Inc. and four other generating companies. On Thursday, the Senate Select Committee to Investigate Market Manipulation approved a contempt motion, citing Enron and Mirant for not producing the materials. The other four generators complied. The motion still needs approval by the full Senate. The Senate Rules Committee had subpoenaed the materials. Enron, based in Houston, said its documents are outside the committee's jurisdiction because they are kept in Texas. An attorney for Atlanta-based Mirant said the company wanted to comply, but did not act quickly enough to avoid the contempt vote. California law does not specify penalties for a contempt finding, said Laurence Drivon, the committee's special counsel. "The Senate can take such action as it deems necessary and appropriate," he said. Enron's claim that the committee lacked jurisdiction outraged some senators, who said previous legislative investigations have sought documents from throughout the world. "If they've done nothing, if they've got nothing to hide, there's no reason" not to comply, Sen. Debra Bowen said. The committee has been negotiating with the companies to try to reach a confidentiality agreement for the release of the documents, and has asked the generators to sign agreements not to destroy any potentially relevant documents. So far, some companies have agreed verbally, but none has signed. Duke Energy agreed to comply with the subpoenas and store documents in a repository in Sacramento, if the company and the committee can agree on how to keep the documents confidential. Lawyers for both sides said they could work out an agreement. Enron and Mirant can have the contempt citations withdrawn if they turn over the requested documents to the repository by July 10. --- On the Net: Senate select committee: www.sen.ca.gov/ftp/sen/committee/select/INVESTIGATE/-home1/PROFIL .H TM Enron: http://www.enron.com Mirant: http://www.mirant.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Buyers seek price cut from Enron India unit-paper. 06/29/2001 Reuters English News Service (C) Reuters Limited 2001. NEW DELHI, June 29 (Reuters) - Enron's troubled 2,144-MW Dabhol power plant, whose only buyer has stopped purchasing electricity, can find customers for 700 MW if it cuts its price, a business daily said on Friday. The Hindu Business Line said the Central Electricity Authority submitted a report to the power ministry saying the southern state of Karnataka was willing to buy 300 MW from Dabhol Power Co in the western state of Maharashtra. It said Madhya Pradesh in central India could take 100 MW and Rajasthan in northwestern India wanted 150 MW while the western state of Gujarat and Haryana and Delhi in the north wanted 150 MW. Karnataka said it was willing to pick up power at under three rupees while others were willing to buy at around 2.8 rupees, the newspaper said. At peak capacity, Dabhol, which is owned 65 percent by Houston-based Enron, charged 4.75 rupees per kilowatt hour, more than the cost of electricity from state-owned plants. But after the Maharashtra State Electricity Board defaulted, Dabhol scaled down to 25 percent capacity and charged 7.1 rupees, more than triple the rate of other suppliers. Earlier this month, India's Junior Power Minister said Dabhol had offered to charge much less for power from the second phase of its $2.9 billion project. But a Dabhol spokesman said then it was too early to talk about specific tariff cuts as they would depend on the plant load factor, the exchange rate and the prevailing oil price. The plant's first phase of 740 MW began operations in May 1999. The second phase would have added 1,444 MW this year but its contractors stopped work this month as lenders were unwilling to support the venture. The federal government recently asked the Central Electricity Authority to talk to power-deficient states and find out if they were willing to buy power from Dabhol. Federal Power Minister Suresh Prabhu told Reuters on Thursday the CEA had prepared a preliminary report and another one looking at the price elasticity of demand would be sent later. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Business Fibernet upbeat on European progress Liz Vaughan-Adams 06/29/2001 The Independent - London FOREIGN 21 (Copyright 2001 Independent Newspapers (UK) Limited) FIBERNET, WHICH supplies and installs high-speed data networks to businesses, delivered an upbeat trading statement yesterday, saying it had made positive progress in the UK, Germany and France. The company, which has some pounds 100m cash in the bank, said in the light of the profitable growth of its UK business, it remained "confident" of continuing progress. Shares in Fibernet jumped 52.5p to 350p. At the height of the internet bubble in spring of last year, the stock had traded as high as pounds 27.87. The company, which was updating investors on trading in its third quarter to 31 May, said it had won new business from Credit Lyonnais, Thus and Enron, adding to a blue-chip client base that already includes the likes of JP Morgan, HSBC and Lloyds TSB. In the UK, the company said it was seeing a high rate of renewals on original three and four-year network service contracts that had expired. It also said it was continuing to develop new business in its service provider markets "and in spite of the current volatility within this sector both cash and collectibles remain to budget". Fibernet also said the costs of building telecoms networks in Germany and France should be less than originally budgeted. The company is building a 3,300km network in Germany and expects to start delivering services in Frankfurt "imminently" while national services should be available in August. Fibernet said it believed its performance there would be "in line" with market expectations. In France, Fibernet said its development activities were also progressing "as planned" and that it had also identified potential acquisition targets. In the six months to February, Fibernet reported Ebitda of pounds 9.9m, up 50 per cent from a year ago. Pretax profits more than doubled to pounds 3.2m. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. ANOTHER US ENERGY CO MAY GET INVOLVED IN INDIAN DABHOL PROJECT 06/29/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. MUMBAI, June 29 Asia Pulse - United States-based energy company AES has said that it would consider getting involved in the Enron-promoted Dabhol Power Company (DPC) if an opportunity presented itself. "We have not received any such proposals and as a global power company we have a long-term view of the Indian power scenario and will consider getting involved in DPC and other Indian power projects at an approriate time", AES (India) exective director Surender Singh told PTI here over phone from Delhi. AES had not made any former proposal in this regard to its stakeholders, Singh said adding the power utility considers important the commitment and willingness of parties to honour a contract for its investment decision in any project. +This is the basis of our current investment and for any future investment in India and any other country+, he said. Singh, however, denied media reports that the US energy major had offered to reduce DPC's +costly+ tariff to less than Rs three per unit including transmission cost. "We have never spoken about being interested in the project at this stage, let alone the reduced tariff part," he clarified. Currently, AES (India) holds 49 per cent stake in Orissa Power Generation Company and owns the distribution firm Cesco. The company was reportedly in trouble, similar to DPC's over non-payment of dues to the tune of Rs 209 crore from the state-owned distribution company GRIDCO in Orissa. (PTI) 29-06 1736 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: States willing to buy only 700 MW surplus from DPC 06/29/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire NEW DELHI, June 28. THE Central Electricity Authority (CEA) has told the Power Ministry that the neighbouring States will be willing to purchase only 700 MW of surplus power from the Dabhol project. Some States have said that they are interested in peak power. Karnataka, Delhi, Gujarat, Haryana and Madhya Pradesh have suggested an average contract period of two years. Karnataka is the only State which has shown interest in picking up power round the clock, throughout the year. While it has pitched for 300 MW of DPC power, Madhya Pradesh has indicated 100 MW consumption, Rajasthan 150 MW and Delhi, Haryana, Gujarat pitching in for the rest. These States have said that they would have nothing to do with Dabhol Power Company and that they would enter into a purchase contract only with Maharashtra State Electricity Board. Tamil Nadu and Andhra Pradesh have told CEA that they are not interested in picking up the surplus power from the Dabhol project. On the pricing front, while Karnataka has said that it was willing to pick up power at a price less than Rs 3 per unit, the others have suggested a marginally lower price in the range of Rs 2.80 per unit. The finding comes on the eve of the negotiating committee meeting on Friday. One of the crucial issues facing the Dabhol project was the offtake of power from the second phase having a capacity of 1,415 MW. Power trade picks up: Even as the Enron controversy continues, power trade in the country has picked with the Power Trading Corporation (PTC) structuring an innovative deal to purchase 150 MW power from West Bengal and sell it across to the northern States. This is unique since payment for power is to be made on a weekly basis as against the convention of monthly billing. According to the PTC Chairman, Mr T.N. Thakur, such an arrangement would disincentivise payment default. This is because longer payment cycles make room for larger defaults and result in negotiations relating to partial payment in order to restore power sale. To ensure that this commercial argument works, PTC's contract with the seller includes a clause whereby it is not bogged down by any take-or-pay arrangements. Hence, the purchasing States know that the threat to cut power supply is a reality with no attendant financial encumbrances for PTC. With regard to the seller, the lenders to the project in case of private sector have raised objections as in the case of the Bhilwara group-promoted Malana hydel project in Himachal Pradesh. In a deal similar to the West Bengal contract, PTC is selling power from the project to Delhi. - Balaji C. Mouli Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. ENRON GROUP DEVISES $US50MLN INDIA OILFIELD EXPANSION PLAN 06/29/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. NEW DELHI, June 29 Asia Pulse - A consortium of Enron, Oil and Natural Gas Corporation (ONGC) and Reliance is working on a US$50 million development plan to increase reserves in the Panna-Mukta oil and gas fields to 214 million barrels of oil and oil equivalent gas. The proposed expanded plan of development under consideration envisaged increasing reserves to 214 million barrels of oil and oil equivalent gas through drilling new wells and 3D modeling over the next two years, sources in the consortium said. Current estimates of the balance of recoverable reserves from the Panna-Mukta fields are 184 million barrels of oil and oil equivalent gas. The Panna and Mukta fields currently produce over 29,000 barrels of crude oil and 2.5 million cubic meters of gas per day, sources said. The development plan would increase the recoverable reserves by 16 per cent. ONGC has a 40 per cent interest in the unincorporated joint venture with Enron and Reliance to develop proven oil and gas fields at Panna, Mukta and Tapti. Enron and Reliance hold a 30 per cent share each in the $US900 million venture. From the Tapti field, 1,974 million cubic meters of gas was produced during 2000-01. Oil and gas produced from the Panna-Mukta and Tapti fields was at present being sold to the state-owned Indian Oil Corporation (IOC) and Gas Authority of India Ltd (GAIL), sources added. (PTI) 29-06 1021 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. June 29, 2001 Houston Chronicle Enron held in contempt in California Company: Assembly has no jurisdiction Bloomberg Business News SACRAMENTO, Calif. -- A California Senate committee voted to hold Enron Corp. and Mirant Corp. in contempt after they refused to turn over documents sought in an investigation of accusations that they manipulated power prices. Enron's attorney said in a letter to the committee that the company refused to comply because only the Federal Energy Regulatory Commission has jurisdiction over the wholesale electricity market. Mirant said it would attempt to comply by the July 10 deadline. The leader of the California State Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market said the committee won't back off its efforts to get the papers. "Our ultimate goal is the production of the documents," said Committee Chairman Joseph Dunn, a Democrat from Santa Ana, during the hearing in Sacramento today. "We've wanted it for three months, and we want it today." The full Senate will decide on fines or other punishments if the companies fail to comply by July 10, Dunn said. Six other generators agreed to honor the subpoenas after it became clear the committee would hold them in contempt if they didn't comply. They are AES Corp., Duke Energy, Houston-based Dynegy, NRG Energy, Houston-based Reliant Energy and Williams Cos. California has spent more than $7 billion this year buying power after its two biggest utilities became insolvent. State utilities have more than $15 billion in losses and debt from buying power at soaring prices over the last 12 months. June 29, 2001 Houston Chronicle Briefs: Houston & state Duke Energy to buy Enron power plant Duke Energy Corp., owner of the largest U.S. utility, agreed to buy a 400-megawatt Mississippi power plant from Houston-based Enron Corp. to expand its generating capacity in the southeastern United States. Duke spokeswoman Jennifer Pierce declined to disclose the price of the purchase, which is expected to close in October. The natural-gas-fired plant, capable of powering 400,000 homes, is in Union County. Duke has a 520-megawatt plant in Mississippi and is building two 640-megawatt plants there. One megawatt is enough power to light about 1,000 U.S. homes. USA: Calif. Senate panel cites generators for contempt. 06/28/2001 Reuters English News Service (C) Reuters Limited 2001. SACRAMENTO, Calif., June 28 (Reuters) - A California state Senate committee voted to cite Mirant Corp . and Enron Corp for contempt on Thursday after the energy generators failed to supply confidential documents as required by subpoena. The committee, which is seeking evidence of power price manipulation in California's chaotic energy market, voted unanimously for the contempt citations after Mirant and Enron did not produce the required papers. "The step we took today is historic," said state Sen. Joe Dunn, Democratic chair of the Senate Select Committee to Investigate Market Manipulation. "We haven't done this in 72 years." Dunn said his committee would draw up a contempt report which would be forwarded to the Senate by July 10. The full Senate, in turn, will be charged with determining what sanctions to impose - which could range from renewed orders for documents to fines to jail time for individuals determined to have obstructed compliance with the subpoenas. The committee postponed action on possible contempt citations for other energy companies, including Reliant , Dynegy , Williams Cos , Duke Energy , AES Corp and NRG Energy , giving them until July 10 to follow through on promises to provide the required documentation. Dunn said the citations against Mirant and Enron - which would be the first imposed by California's state Senate since 1929 - would be vacated if the companies comply with the subpoenas by the July 10 deadline. The companies have objected to providing the confidential materials, which they argue includes proprietary information on bidding and pricing for California energy purchases that, if disclosed, could damage their competitive ability. Enron, in particular, has rejected the committee's authority, saying it keeps its documentation in Texas and is therefore outside California jurisdiction. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron, Mirant Held in Contempt by Calif. Senate Panel (Update2) 2001-06-28 21:04 (New York) Enron, Mirant Held in Contempt by Calif. Senate Panel (Update2) (Adds details of hearing, comments in ninth through 11th paragraphs and in last two paragraphs.) Sacramento, California, June 28 (Bloomberg) -- A California Senate committee voted to hold Enron Corp. and Mirant Corp. in contempt after they refused to turn over documents sought in an investigation of accusations that they manipulated power prices. The Senate Select Committee to Investigate Price Manipulation in the Wholesale Energy Market, in the first contempt citation by a California Senate committee since 1929, said the companies had until July 10 to comply, or the full Senate would vote to impose fines or other sanctions. The committee is investigating allegations that energy generators withheld supplies or took other steps to boost prices for electricity in California last year, when soaring wholesale prices left the state's largest utilities insolvent. ``Our ultimate goal is the production of the documents,'' said committee Chairman Joseph Dunn, a Democrat from Santa Ana, during a break in the hearing in Sacramento today. ``We've wanted it for three months, and we want it today.'' Enron's attorney said in a letter to the committee that the company refused to comply because only federal regulators have jurisdiction over the wholesale electricity market, and that a state committee has no right to documents outside California. Mirant said it needs assurances the documents would not be made public before the company would turn them over. Six other generators agreed to honor the subpoenas after the committee threatened to hold them in contempt if they didn't comply. They are AES Corp., Duke Energy Corp., Dynegy Inc., NRG Energy Inc., Reliant Energy Inc. and Williams Cos. California has spent more than $7 billion this year buying power after its two biggest utilities became insolvent. State utilities have more than $15 billion in losses and debt from buying power at soaring prices over the last 12 months. Enron Objects Enron laid out its objections to the subpoena in a letter to the committee by its attorneys at Post Kirby Noonan & Sweat LLP released by the committee today. Enron's lawyers argued that the committee does not have authority to subpoena records from outside the state and said the committee already had access to much of the information from state regulators and the state's electricity grid manager. ``This is a shakedown. It's a witch-hunt. It's McCarthyism,'' Enron spokesman Mark Palmer said. ``We're going to protect our legal rights and say something's wrong when it's wrong, and this is wrong.'' State Senator Debra Bowen, chairwoman of the Senate's utilities committee, said that if Enron and the other power providers have done nothing illegal, they shouldn't be withholding the documents requested. ``This does not look like to me like folks who have nothing to hide,'' Bowen said during a break in the hearing. ``It's not just a thumb in the eye, it's a pie in the face of the Legislature.'' The committee's action was the first time in 72 years that a California Senate committee has held anyone in contempt, Dunn and Bowen said. The 1929 action involved market manipulation in the cement industry, Bowen said. Mirant wants the committee to provide guarantees that the ``millions of documents'' the company is collecting won't be made public, spokesman Patrick Dorinson said. ``These documents contain proprietary information,'' Dorinson said. ``We'll continue talking to the committee and see if we can get a resolution to this issue.'' Private Depository During the hearing today on whether to hold the companies in contempt, Joel Kleinman, a lawyer for Duke Energy, said the company would create a private depository where the committee could view the documents. Williams is also willing to turn over documents to the depository, company lawyer John Larrea said. Williams has an agreement to market and sell electricity produced by AES. Earlier today, Reliant Energy turned over 1,800 pages of documents requested by the committee, Dunn said, and Dynegy submitted 18,000 pages. He said the committee has not had time to review the documents. Dynegy spokesman John Sousa said the company is complying with the committee's subpoena. Reliant spokesman Richard Wheatley confirmed that the company had turned over some documents, and would give the committee others if the company received assurances they would be kept confidential. ``We need some guarantees of confidentiality,'' Wheatley said. Duke and Williams agreed to a confidentiality agreement offered by the committee that the companies had previously rejected. That was the most significant accomplishment in today's hearing, Dunn said. ``It took a hearing of this magnitude to force an agreement on confidentiality,'' Dunn said after the hearing. ``They said they want some minor tweaks. We'll see what those minor tweaks mean.'' Duke Energy Agrees to Buy Mississippi Power Plant From Enron 2001-06-28 16:51 (New York) Duke Energy Agrees to Buy Mississippi Power Plant From Enron Charlotte, North Carolina, June 28 (Bloomberg) -- Duke Energy Corp., owner of the largest U.S. utility, agreed to buy a 400- megawatt Mississippi power plant from Enron Corp. to expand its generating capacity in the southeastern U.S. Duke spokeswoman Jennifer Pierce declined to disclose the price of the purchase, which is expected to close in October. The natural-gas-fired plant, capable of powering 400,000 homes, is in Union County. Duke has a 520-megawatt plant in Mississippi and is building two 640-megawatt plants there. One megawatt is enough power to light about 1,000 U.S. homes. The North American Electric Reliability Council estimates that the Southeast will need an additional 40,000 megawatts of generating capacity in the next 10 years to meet demand, Charlotte, North Carolina-based Duke said. Duke shares fell $1 to $39.30. They had risen 40 percent in the past year. Shares of Houston-based Enron, the largest energy trader, rose $1.62 to $48.34. U.S. Power Suppliers' Second-Quarter Profits to Rise (Update1) 2001-06-28 14:36 (New York) U.S. Power Suppliers' Second-Quarter Profits to Rise (Update1) (Updates to adjust table with profit estimates.) Houston, June 28 (Bloomberg) -- Energy traders and power generators such as Enron Corp. and Duke Energy Corp. will have higher second-quarter profits because of rising electricity prices in the West, and the opening of new power plants. Efforts to lower western power prices didn't bear fruit until late in the quarter. California border prices averaged $236.89 a megawatt hour, up from $73.51 in the year-earlier period, boosting profit for anyone with power to sell. The future doesn't look as bright for traders. Federal regulators last week ordered them to negotiate refunds that California's Governor Gray Davis says should total at least $8.9 billion. Enron, El Paso Corp., Dynegy Inc. and Williams Cos. have lost $24.7 billion, or 22 percent, in market value in the past six months as a growing political backlash led investors to sell their shares. ``The market really hates uncertainty, and when the governor throws out a figure of $9 billion in possible refunds, that's a lot of uncertainty,'' said John Nichol, a fund manager at Federated Investment Management, which owns shares of generators. Soaring power prices have left California's two largest utilities insolvent and saddled with about $15 billion in power- buying losses and debts. Regulators have boosted rates by more than 50 percent for businesses and consumers in the most-populous state. Prices Rise The soaring prices benefited companies such as Enron, which sells both electricity and contracts that help limit customers' risk when energy prices rise or fall. Enron will make 42 cents a share, up from 34 cents a year earlier, based on the average estimate of analysts polled by First Call/Thomson Financial. Dynegy, which owns natural-gas pipelines and California power plants, made 40 cents a share in the quarter, based on First Call estimates, up from 29 cents a year earlier. The Houston-based company is 29 percent owned by Chevron Corp. of San Francisco. ``Companies with power plants in the West have done very well,'' said Greg Phelps, manager of the $1.1 billion Patriot Group of funds. ``The Pacific Northwest drought continues to crimp hydroelectric supply, which is keeping prices higher.'' In addition, companies opened new power plants across the U.S. Duke, Mirant Corp. and Calpine Corp. opened new U.S. plants with enough capacity to light almost 5 million homes in the last year, boosting sales. Regulators Act Strong earnings in the West are unlikely to last. Growing voter disenchantment with President George W. Bush's handling of the California crisis and a return of Democratic control of the U.S. Senate led the Federal Energy Regulatory Commission to impose price caps for 11 states on June 18. The caps apply to all electricity on the western power grid, the system of transmission lines that moves electricity through the region. FERC also ordered generators to negotiate refunds with officials from the states that could total as much as $15 billion. Talks began on Monday. Administrative Law Judge Curtis Wagner, who is overseeing the negotiations, told the Associated Press that ``in order to reach a settlement, there will have to be refunds.'' Davis estimates the generators overcharged California and its utilities by $8.9 billion or more. Enron, which earlier this year estimated it's owed $400 million to $500 million for California energy sales, is one of the companies in the talks. Shares of the Houston-based company, the largest energy trader, have fallen 44 percent this year and 20 percent this quarter. Enron's prospects also were hurt when it couldn't sell its Oregon utility, Portland General, and its plans for trading space on fiber-optic telecommunications networks grew less promising because of the collapse of many Internet companies. Also, while natural-gas and electricity prices in the West are up from a year ago, they are down from the first quarter. Investigations Continue El Paso, owner of the biggest U.S. natural-gas pipeline network and an energy trader, is being squeezed by falling energy prices, increased regulatory scrutiny and the decline in the prospects of its fiber-optic trading unit. The stock has fallen 28 percent this year. FERC is hearing arguments on whether the Houston-based company conspired to boost natural-gas prices in California last winter, and El Paso may have to pay refunds or fines. Gas fuels many of the California's power plants, and higher prices contributed to soaring electricity prices. The company will see second-quarter earnings of 77 cents, up from 69 cents a year earlier, First Call estimates show. Williams's second-quarter earnings were almost unchanged at 55 cents, based on First Call estimates, because of wider profit margins on refining and gas processing, and higher natural-gas prices. Williams, the second-largest U.S. gas pipeline company, has a 20-year agreement with AES Corp. to supply fuel for plants in Huntington Beach, Long Beach and Redondo Beach in California. Williams, an energy trader, also sells the power from the plants. AES, based in Arlington, Virginia, is one of the biggest U.S. power-plant developers. Boosting Capacity So far, Williams has agreed to refund $8 million to the state, though it admitted no wrongdoing. It's also taking part in the negotiations over bigger refunds. Mirant, an Atlanta-based power-plant developer, will see per- share profit rise to 46 cents from 25 cents a year ago, according to First Call. San Jose-based Calpine will earn 31 cents, up from 19 cents, and Charlotte-based Duke will make 52 cents, up from 44 cents, estimates show. Calpine opened plants in Arizona, Maine and Texas with a combined capacity of 1,545 megawatts. A megawatt is enough power to light about 1,000 U.S. homes. Calpine also bought two power plants in Canada. Most of the company's plants are in California. ``Calpine is a classic story,'' said Chris Ellinghaus, an energy analyst at Williams Capital Group. ``They'll get a double boost from more production and higher prices.'' Building Plants Calpine runs or is building plants in 29 U.S. states and Canada that provide enough power to light 29.9 million homes. It plans to boost its capacity to 70,000 megawatts, or enough to light 52.5 million homes, by 2005. The company's shares have fallen 31 percent this quarter. Duke, a power-plant developer and owner of a natural-gas pipeline network, opened five generating plants in the quarter with a combined capacity of 2,840 megawatts. ``Part of our growth is related to (California), but part comes from growth in our trading business, part comes from our plants overseas and part comes from natural gas,'' Duke spokesman Terry Francisco said. Duke shares have fallen 5.5 percent this year. Mirant opened two plants with a combined capacity of 546 megawatts. Southern Co., the owner of Atlanta's utility, spun off Mirant in April. Mirant's shares have climbed 54 percent since the stock began trading in September. Generators had to rely on new power plants to boost revenue during the quarter because electricity prices in New England, the Middle Atlantic states and the Southeast were little changed from a year earlier. Texas prices fell 19 percent. Prices Level Off Prices also are stabilizing in California. Davis last week released details on long-term contracts the state has signed to secure about one-third of its power needs. The contracts have reduced the state's dependence on the open market, driving down power prices in the West. The contracts guarantee energy companies a steady stream of revenue, though at lower prices than on the daily market. Still, wholesale electricity prices will surge this summer in any part of the U.S. where heat waves cause shortages, boosting generators' profits, analysts say. ``There is still enough volatility in the market,'' Credit Lyonnais Securities analyst Gordon Howald said. ``There are not a lot of groups out there able to generate the solid earnings growth you'll see in the power producers.'' *T 2nd-Qtr Year-Ago Number of Company Estimate EPS Analysts AES Corp. $0.30 $0.25 7 Calpine Corp. 0.31 0.21 9 Duke Energy Corp. 0.52 0.44 6 Dynegy Inc. 0.40 0.29 15 El Paso Corp. 0.77 0.69 11 Enron Corp. 0.42 0.34 14 Mirant Corp. 0.46 0.34 8 NRG Energy Inc. 0.22 0.28 6 Reliant Energy Inc. 0.73 0.83 12 Williams Cos. 0.55 0.54 10 Estimates provided by First Call/Thomson Financial. *T --Mark Johnson in the Princeton newsroom, (609) 279-4017 or mjohnson7@bloomberg.net, with Margot Habiby in Dallas/pjm/alp
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