|
|
Enron Mail |
FOCUS Utilities selling to California pressured by re-regulation, FERC talks
AFX News, 06/26/01 BANDWIDTH BEAT: Enron's Keen On Asia's Young Market Dow Jones Energy Service, 06/26/01 CANADA: Enron goes after Alberta power users, eyes Ontario. Reuters English News Service, 06/26/01 European Traders To Launch Crucial Gas Trading Contract Dow Jones Energy Service, 06/26/01 Enron Direct Cda Enters Alta. Retail Electric, Gas Mkts Dow Jones News Service, 06/26/01 India Court Dismisses Enron Petition On MERC - Report Dow Jones International News, 06/26/01 INDIA: Enron's Dabhol suffers legal blow in India row. Reuters English News Service, 06/26/01 Indian State Ministers Defer Decision on Utility Dues to July 6 Bloomberg, 06/26/01 FOCUS Utilities selling to California pressured by re-regulation, FERC talks 06/26/2001 AFX News © 2001 by AFP-Extel News Ltd ---- by Ben Morgan-Sanjurjo ---- NEW YORK (AFX) - Shares of utilities with significant market exposure to California are expected to remain under pressure from fears that re-regulation could chip away at company revenues, dealers said. There are also concerns that federally supervised talks, begun yesterday, designed to address allegations that electricity sellers overcharged California for power, may result in a 9 bln usd bill, they said. Power marketers involved in the negotiations with utilities and state legislatures include Enron Corp, Calpine Corp, Duke Energy Corp, Williams Companies Inc, Reliant Energy and Dynegy Inc New. Fulcrum Global Partners analyst Mike Barbis said that the Federal Energy Regulatory Commission's (FERC) proceedings to mediate between California's power buyers and sellers will end "unfavourably for the sellers." California Governor Gray Davis is seeking a 9.0 bln usd refund from western utility groups it claims inflated power bills. "In our view, the political playing field for power generators and marketers has shifted," said Barbis. "We would avoid those companies with the largest exposure to California including Mirant, Reliant Resources and Dynegy," said Barbis. Negotiators have 15 days starting yesterday to come to an agreement. If the talks fail, FERC commissioners will render a final ruling. Morgan Stanley analyst Kit Konolidge said: "We think these numbers are way overstated and any real refunds will be far less." "Realistically, we might never see the real number," said Konolidge. Power generators will likely agree to a smaller figure they can "live with to put this behind them." Additionally, FERC's decision last week to reintroduce price controls in California and eleven other Western states could also affect power marketers profitability, analysts said. CIBC World Markets analyst William Hyler said that "FERC's latest measures have to be viewed as a step away from a purely market-based solution." Power marketers will not be allowed to sell at a price of more than 85 pct of the cost of natural gas needed to serve the electricity load during non-emergency hours. The wholesale price will be derived from the price of gas either in northern or southern California. However, Hyler also said the "current initiative appears much more palatable than hard price caps, which ignore the impact of fuel cost and emission credits or cost-base pricing." Hyler further explained that the key issue is whether FERC's decision will attract or take away from additional investment in electricity production needed to moderate the supply/demand balance in California. "In the event new plant investments are curtailed, the validity of the price mitigation plan will obviously come under question," said Hyler. While Hyler does not expect much impact on power generators, "those companies with more of a trading focus on the western markets could be effected by the declines in regional volatility we might expect from the mitigation plan." The crisis began last year when Pacific Gas & Electric Corp, Southern California Edison Co and San Diego Gas & Electric Co, operating in a semi-deregulated market place were forced to buy wholesale power at ten times average costs. Power marketers increased wholesale power prices due to high natural gas prices, strong demand and tight supply, forcing them to highs of 202 usd per megawatt hour from 29 usd in less than one year. However, while utilities bought power at such high prices they were only allowed to sell to customers at lower fixed rates. Eventually, utilities stopped paying their bills for the power they were purchasing, said Barbis. One result was the declaration of bankruptcy of PG&E. Analysts estimate that more than 14 bln usd is owed to power generators by utilities. At 2.30 pm, Enron shares were trading 50 cents lower at, Calpine Corp fell 36 cents to 38.61, Duke Energy Corp lost 20 cents to 39.30, Williams Companies Inc gained 9 cents to 32.45, Reliant Energy fell 40 cents to 30.15, Dynegy Inc declined 5 cents to 42.87 and Mirant Corp was up 7 cents at 31.07. The DJIA gained 16.37 points to 10,520.50, the S&P 500 fell 0.75 to 1,217.85, while the Nasdaq composite rose 7.34 points to 2,058.21. blms/cl/lj For more information and to contact AFX: www.afxnews.com and www.afxpress.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. BANDWIDTH BEAT: Enron's Keen On Asia's Young Market By Michael Rieke 06/26/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) A Dow Jones Newswires Column HOUSTON -(Dow Jones)- If the U.S. market for bandwidth is nascent, the market in Asia is still in the conceptual stage. But if a market is underdeveloped and the potential is attractive, Enron is probably interested, and it is. Enron knows margins are usually very high in the early stages of any market. The company also wants to get established early to capture big market share, as it's done in energy markets in the U.S. and Europe. Enron is focused on Asia's four least-regulated markets - Japan, Hong Kong, Singapore and Australia - which account for 70% of the region's wholesale leased-line revenue, said Fred Cohagan, director of global wholesale services in Asia for Enron Broadband Services. Enron began operating a Tokyo pooling point for trading in March, the same month it opened an office in Singapore, said Cohagan, speaking recently from Singapore. The trading giant will begin operating pooling points in Hong Kong, Singapore and Sydney next quarter. Enron has a desk of five traders divided among Singapore, Sydney and Tokyo and has commercial people on the ground in Seoul and Hong Kong. Soon, the company will be willing to buy or sell bandwidth in markets for minimum three-month contracts, followed by six-month and one-year quotes. It will quote spot and forward markets - initially for STM1 capacity, then for STM4 and DS3. Potential players are well defined. About 50 companies have capacity in one form or another, whether through leases, indefeasible rights of use or equity ownership, Cohagan said. Because the cost of entering the Asian telecom capacity market is high, there are fewer companies of questionable financial status than in the U.S. and Europe. Prices for transpacific data capacity are four to six times higher than transatlantic prices, said Alan Mauldin, a researcher for Telegeography, a telecommunications research and data firm in Washington, D.C. Ron Banaszek, director of TFS Telecom, a bandwidth brokerage in New York City, gave a still greater spread between transpacific and transatlantic prices. An STM1 between Los Angeles and Tokyo is probably $90,000 a month, compared with $10,000 for an STM1 from New York to London, he said. That's because there's about three times as much capacity in the transatlantic market as in the transpacific market, Mauldin said. Growing Room The Asian market, however, needs some foundation work done. Standard contracts need to be developed, and players need to understand the idea of liquidated damages for nonperformance. There's also the challenge of introducing market prices in an area accustomed to basing prices on costs, said Ciara Ryan, head of Arthur Andersen's bandwidth trading team. Carriers deployed the Asian and transpacific networks according to five-year market forecasts. They projected how much demand there would be for capacity in five years, built networks to handle that much demand and are trying to sell capacity at prices based on the cost of laying and lighting the networks. Carriers, which have walked away from deals to sell below cost in the past, are reluctant to lower prices while waiting for demand to rise to the level of supply. But the weak financial state of many carriers has forced them to think again about the revenue they could be earning now from their invested capital. "I'd definitely say I've seen lots of interest," Cohagan said. He wouldn't name specific companies, but said all the global and regional carriers are interested. Enron has already done deals with global companies, Internet service providers, corporations and regional carriers for capacity in Asia, he said. Corporate interest comes from energy and software companies. Some regional carriers are interested in seasonal wholesale markets for capacity to the United States on a weekly basis, he said. He wouldn't disclose the reason for the demand for seasonal capacity, indicating that it was proprietary information. Demand is coming from companies wanting capacity to the United States from Asia, rather than capacity between individual countries in Asia, said Lionel Guerrara, a consultant with Arthur Andersen in London. Some of that demand comes from European companies, he said. Because there's little capacity available directly from Asia to Europe, companies on the Continent buy capacity from Asia to the U.S., across the States and then across the Atlantic to Europe. It's a less direct route, but it can be lower-priced. -By Michael Rieke, Dow Jones Newswires; 713-547-9207; michael.rieke@wsj.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. CANADA: Enron goes after Alberta power users, eyes Ontario. 06/26/2001 Reuters English News Service (C) Reuters Limited 2001. CALGARY, Alberta, June 26 (Reuters) - Corp. , one of the largest energy companies in the world, is entering Alberta's retail electricity and natural gas markets and hopes to expand into Ontario's large and lucrative power market, company officials said on Tuesday. "Alberta stands on its own. But if the regulatory environment is one that is conducive to competition, we'd certainly like to scale this model into other provinces as they open up for competition, " Rob Milnthorp, chief executive of Enron Direct Canada Corp, said in an interview following a news conference. "It (Ontario) is a logical extension." The Canadian subsidiary of Houston, Texas-based Enron Corp. is targeting about 100,000 commercial and light industrial users of electricity, and an equal number of gas users, in Alberta. The province's gas market has been deregulated for years while competition for electrical customers began in January. The incumbent city-owned utilities, Enmax Corp. in Calgary and Epcor Utilities Inc. in Edmonton, currently dominate Alberta's retail energy scene. Ontario, the most populated province and source of the majority of Canada's industrial electrical demand, is tentatively scheduled to deregulate its power industry next May. The process has been delayed several times in efforts to avoid problems such as those seen in California, where deregulation has been blamed for skyrocketing prices and rotating blackouts. Milnthorp declined to comment, citing confidentiality agreements, on whether Enron was negotiating to buy retail gas and power divisions recently put on the block by Atco Ltd. , a large Alberta-based utility. At its annual meeting in mid-May, Atco executives said they hoped to sell the units by the end of this month. Enron is already a player in Alberta's electrical market. It paid C$300 million ($199 million) last August to secure a 20-year contract to market 706 megawatts of power, part of the provincial government's plan to encourage competition. ($1=$1.52 Canadian). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. European Traders To Launch Crucial Gas Trading Contract By Germana Canzi Of DOW JONES NEWSWIRES 06/26/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) LONDON -(Dow Jones)- Opening up Europe's gas market is slowly getting underway. One crucial element is lacking - a standardized short-term trading contract that will help large customers to pick and choose the best offer in the market, rather than remain shackled to a traditional long-term supplier. Energy company representatives are gathering in Amsterdam Wednesday to thrash out such a contract. "Due to the development of gas markets in Europe, especially in Germany, the time is ripe for creating a standard European contract," Joerg Spicker, a spokesman for the European Federation of Energy Traders, told Dow Jones Newswires. Spicker is managing director of the German subsidiary of Aquila Energy, a Utilicorp United Inc. (UCU) unit. EFET members will create a "template" that could be used in all the trading hubs around Europe, which are emerging as delivery locations for gas sold on a short-term basis, Spicker said. An attachment to the standard contract would specify which hub will be used for physical delivery of the gas. "One hurdle to liquidity (in these hubs) is the lack of a standard contract," Steve Asplin, director for Benelux operations at energy firm Enron Corp. (ENE) said, adding that he sees the EFET initiative as a positive step forward. The standard contract is likely to be in euros per gigajoules and will enable counterparties in the trade to choose which domestic law - German, Dutch or English - should apply to the contract. By creating such a contract, EFET aims to replicate in the gas sector the success of its two standard contracts for European electricity trading, which were launched in 1999 and 2000 and are now widely used for the wholesaletrade of electricity on the continent. The standardization of contract terms is deemed essential for development of spot markets in mainland Europe, following the blueprint set by the U.K. since the 1980s and in Belgium since 1999. In addition, the EFET initiative comes just one week ahead of another industry-wide meeting in London, when representatives of European gas industry will discuss the creation of U.K.-style trading hubs in northwest Europe. Since earlier this year, small amounts of gas sourced from the U.K., the Netherlands and Norway have been sold on a short-term basis - instead of through traditional long-term contracts - for delivery in places such as Emden and Lampertheim in Germany and Oude Statenzijl and Bunde on the Dutch/German border. The development of short-term trading there been made possible by the gradual opening up of pipelines through the so-called third party access measures imposed by the European Union's gas directive, which most member states implemented by the August 2000 deadline. Developments in the German market, which is estimated at 82 billion cubic meters a year, have been closely watched by foreign companies wishing to sell gas to large industries, which are now free, at least on paper, to move away from their traditional long-term suppliers. Wednesday's meeting in Amsterdam will be largely attended by lawyers representing EFET members, such as Germany's RWE AG (G.RWE), the U.S.'s Mirant Energy Corp. (MIR), Dynergy Inc. (DYN) and Enron Europe Ltd. (U.ENE). Traders and lawyers will attend a joint meeting scheduled for early July. Some of those participating in the meeting are also part of the European Hub Steering Committee, which will meet July 4 to discuss steps to be taken for the creation of a North-West European hub. "There is an efficient overlap (with the EFET group) and no efforts are being duplicated," Spicker said. -By Germana Canzi, Dow Jones Newswires; 44 20 78429283; germana.canzi@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Direct Cda Enters Alta. Retail Electric, Gas Mkts 06/26/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) CALGARY -(Dow Jones)- Enron Corp.'s (ENE) Enron Direct Canada Corp. unit has entered the retail electricity and natural gas markets in Alberta, targeting all commercial and light industrial businesses. In a press release, Enron Direct said it will provide large and small businesses in Alberta with "predictable term pricing" for electricy and natural gas. Company Web Site: http://www.enrondirect.com -Stephanie Thomas, Dow Jones Newswires; 416-306-2100 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India Court Dismisses Enron Petition On MERC - Report 06/26/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) BOMBAY -(Dow Jones)- India's provincial High Court in Bombay Tuesday dismissed Dabhol Power Co.'s petition challenging the jurisdiction of Maharashtra State Electricity Regulatory Commission, or MERC, to adjudicate on the payment dispute between Maharashtra State Electricity Board and the company, the Press Trust of India reported. Dabhol Power is the Indian unit of U.S. energy major Enron Corp. (ENE), which holds a controlling 65% stake. Further, the Bombay High Court has directed MERC to decide on this issue within six weeks, the report said. According to the report, the High Court said MERC was an expert body and competent enough to decide its own jurisdiction. However, the court has stayed the order until July 10 to enable Dabhol Power to petition the Supreme Court in an appeal. An official at Dabhol Power said it is too early to comment on the step the company would take and that any comments will be made after studying the High Court decision carefully. Dabhol Power hasn't come to any settlement yet on payment disputes with its sole buyer the MSEB. Dabhol Power supplies power to MSEB from its 740-megawatt plant in the western Indian state of Maharashtra. Since May 29, MSEB has stopped drawing electricity from Dabhol Power, saying the company's tariffs are "unaffordable". -By Raghavendra Upadhyaya, Dow Jones Newswires; 91-22-2884211; raghavendra.upadhyaya@dowjones.com -0- 26/06/01 14-45G Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Enron's Dabhol suffers legal blow in India row. 06/26/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, June 26 (Reuters) - U.S.-based energy giant Enron Corp suffered a legal setback on Tuesday when an Indian court declined to intervene in a long and bitter wrangle between its subsidiary, Dabhol Power Company (DPC), and an Indian power utility. The Dabhol spokesman declined to comment on the Bombay high court's rejection of its petition, which had asked the court to help settle a dispute with the Maharashtra State Electricity Board (MSEB). The two sides are locked in an acrimonious row over a 2,184 MW power plant that DPC is building in two phases on the western coast of India. Dabhol has already approached the International Court of Arbitration in London claiming that the state utility had reneged on its contractual obligations by defaulting on payments. The state utility, for its part, has taken its case to the provincial regulator citing its own clauses in the contract that it claimed Dabhol had failed to honour. Acting on a plea from the state utility last month, the Maharashtra Electricy Regulatory Commission ruled that the dispute fell within its ambit and that Dabhol could not proceed with the arbitration. Dabhol, in turn, argued that according to the power purchase agreement, disputes between the two signatories could only be settled by the International Court of Arbitration in London. COURT RULING In early June, Dabhol petitioned the Bombay high court, asking it to clarify the Commission's jurisdiction. On Tuesday, Dabhol's counsel requested the court to reverse the Commission's ruling that it could not take the dispute to the London court. But the high court replied that the Commission was an expert body which was empowered to decide on the issue. The court requested the regulator to hear both sides of the argument again within the next six weeks. But it stayed the ruling for two weeks to give Dabhol time to appeal to India's highest court. The dispute has brought Enron bad publicity and hurt India's image among foreign investors, since the $3 billion that has been committed to the high-profile project is now in danger of going down the drain. ($1=47.01 Indian rupees). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Indian State Ministers Defer Decision on Utility Dues to July 6 2001-06-26 11:24 (New York) New Delhi, June 26 (Bloomberg) -- Indian provincial ministers deferred a decision on the steps they should take to repay about $8.5 billion of dues owed by state power companies to generators, to July 6, as ministers disagreed on the terms of the payback. The ministers today met to discuss a report submitted by a government panel in May on how to repay the debt. The report suggests state governments take on the liability by issuing tax- free bonds at 8.5 percent. Not all the ministers agree with the conditions mentioned in the report. State electricity companies supplying power to ``rural areas is a social obligation, it's not only the state government's obligation and all these issues have to be seen in the macro view,'' Digvijay Singh, chief minister of Madhya Pradesh said. ``We have asked for some more time to come to a consensus.'' Most of the state electricity boards in the country are loss- making as they sell electricity to farmers at highly subsidized rates. The accumulated losses of these boards, is about 400 billion rupees ($8.5 billion), and the inability of these boards to repay their dues may hinder further foreign investment in the sector. ``It has become necessary to take a hard look at the power sector to make sure whoever generates power gets paid for it,'' Krishna Chandra Pant, deputy chairman of India's planning commission told reporters. ``This is coming in the way of foreign direct investment in the sector.'' Enron Enron Corp.'s Indian unit, Dabhol Power Co., stopped generating power in May after the Maharashtra State Electricity Board refused to pay 3 billion rupees in dues to Dabhol. Enron is the country's biggest foreign investor and has spent $3 billion on building its power plant. The board has refused to pay, saying Dabhol's price is more than double the rate charged by other Indian generators, and has stopped buying power from Dabhol. It also charged Dabhol an 8 billion-rupee penalty for not supplying power at full capacity on three days between January and March. The dispute is also a concern for rating agencies such as Moody's Investors Service. Kristin Lindow, vice president and lead analyst at Moody's said she was concerned about the dispute, which is widely seen as a litmus test for foreign investment in India. ``Foreign investors are becoming wary because of Enron's problem and the government's failure to honor its contractual obligation,'' Lindow said. ``It has put up several red flags.''
|