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USA: FERC judge says Calif power refunds are likely.
Reuters English News Service, 06/22/01 EOTT Butane Trader Indicted For Bilking Co.On Gas Trade Dow Jones Energy Service, 06/22/01 INDIA: CMS says India LNG project now stalled. Reuters English News Service, 06/22/01 LME Base Metals:End Mixed As Mkt Awaits Fed Rate Decision Dow Jones Commodities Service, 06/22/01 Indian Foreign Invest Climate Good Despite Enron Dispute Dow Jones International News, 06/22/01 USA: FERC judge says Calif power refunds are likely. 06/22/2001 Reuters English News Service (C) Reuters Limited 2001. WASHINGTON, June 22 (Reuters) - The Federal Energy Regulatory Commission administrative law judge, who is overseeing refund settlement talks in California's power market, said Friday that generators that sold electricity in the state will probably have to pay back overcharges of "several billion dollars." In an interview with Reuters, Judge Curtis Wagner, the head FERC administrative law judge who will preside over the 15-day conference starting Monday, said California Gov. Gray Davis' claim the state is owed $9 billion is too high. "I think that's high," Wagner said when asked to comment on Davis' request for that amount in refunds. "I'm hoping to come up with a settlement of the issue of a refund of overcharges - if there are overcharges. My sense is that there probably are," Wagner said. Enron Corp. , Mirant Corp. , Duke Energy Corp. , Williams Cos. , Reliant Energy Inc. , and Dynegy Inc. are among the producers that FERC could compel to make the refunds. The companies have said they did nothing wrong. Davis, the California Public Utilities Commission and the state's investor-owned utilities will join in the negotiations at FERC headquarters in Washington. If no agreement is reached, Wagner will have seven days to make a recommendation to the five FERC commissioners on the refund issue. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. EOTT Butane Trader Indicted For Bilking Co.On Gas Trade By Roy R. Reynolds Of DOW JONES NEWSWIRES 06/22/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) HOUSTON -(Dow Jones)- A Houston-based federal grand jury indicted Steven Gary Todoroff, former trader for Enron Corp.'s (ENE) EOTT Energy Corp. (EOT), late Wednesday on charges he funneled 100,000 barrels of butane gas meant for EOTT into a company of his own for later sale to a third party at just under $1 million. EOTT terminated Todoroff for the alleged malfeasance in 1999. "There was apparently concealment of other natural gas trading activity," said EOTT spokeswoman Gina Taylor. According to Assistant U.S. Attorney Cedric Joubert, Todoroff is accused of bartering a deal in which Petrogas Inc. would have supplied EOTT with butane for a repayment of butane a year later. Todoroff then allegedly steered the Petrogas butane to Monarch Media Resources Corp., which he owned, and sold the gas to the Oklahoma office of Gas Producers Liquids Inc. for $996,187.50. EOTT took a $3 million charge to earnings in the fourth quarter of 1999 to cover the cost of purchasing additional butane to deliver to Petrogas, Taylor said. Todoroff's attorney, Wendell A. Odom, Jr., doesn't deny his client made the trade, but said it was a side trade that had nothing to do with EOTT operations, and therefore shouldn't be a criminal offense. "From the onset of this, we've always contended that this is a civil debt," Odom said. "This was a personal investment." Odom said Todoroff was following a generally accepted practice of side trading on the deal, and EOTT got involved by the confusion of other players in the trade. "Everybody just assumed it was an EOTT deal, even though it wasn't," he said. "EOTT made the decision to belly up to the bar and pay off when it came time to deliver." Joubert said Todoroff will more than likely appear before a judge late next week for an arraignment on the charges. The judge will then schedule a trial date, to begin within 70 days of the arraignment. The nature of the deal, which took 13 months, kept EOTT from discovering the action until late in the process. "The way he allegedly set up the contracts, we didn't know about it until it was time to pay Petrogas," Taylor said. "When Petrogas calls us and said they needed payment, that's when we started looking at the transaction." Petrogas, which Joubert said is a Canadian company with an operating arm in Texas, couldn't be contacted Friday. Joubert said Natural Gas Liquids isn't suspected of any wrongdoing in the case, though he noted Todoroff used to live in Oklahoma. "I assume he still knew some people there," Joubert said. Natural Gas Liquids owner Greg Stiman, based in Houston, wasn't in the office Friday and unavailable for comment. News Article On EOTT Charge Aroused Suspicions EOTT took total charges of $9.8 million, or 35 cents a diluted unit in the fourth quarter of 1999, explaining in a press release that the amount covered "the cost to exit mid-continent natural gas liquids activities that are no longer needed as a supply function for crude oil blending activities on the West Coast; severance costs for work force reduction due to operating efficiencies from recent acquisitions; implementation of a new marketing and accounting system; and a theft of NGL product, concealment of NGL commercial activities and other unauthorized NGL actions by a former employee." The company reported losses that quarter of $7.48 million, or 27 cents a unit after the charge. By contrast, EOTT reported earnings for 2000's fourth quarter of $3.71 million, or 13 cents a unit. According to Joubert, EOTT had to buy butane from Amoco Inc. - now BP Amoco PLC (BP) - to replace the butane owed Petrogas. "The real loss has to do with the replacement costs with the gas - a year after (Todoroff) got his money," Joubert said. Odom maintains that Todoroff was making a legal trade through Monarch Media, but simply didn't have the funds to cover the cost of replacing the butane when it came due. "(Todoroff) did not have the financial resources, he just got caught short on the deal," Odom said. "He did not tell (EOTT) they had to honor that deal." Although Plains All American Pipeline LP (PAA) uncovered rogue trading by one of its executives in 1999, fraud among the energy trading world is rare, said both Joubert and Taylor. "It's not a common problem," Taylor said. "We have controls in place to take care of this kind of thing." Joubert began sniffing around the case after a news article regarding the company's fourth quarter charge aroused suspicions. Odom said the close-knit and fast-paced world of energy trading helped lead to a misunderstanding of his client's deal. -By Roy R. Reynolds, Dow Jones Newswires; 713-547-9208; roy.reynolds@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: CMS says India LNG project now stalled. By Suresh Seshadri 06/22/2001 Reuters English News Service (C) Reuters Limited 2001. MADRAS, India, June 22 (Reuters) - U.S. firm CMS Energy Corp's LNG-based power project at Ennore in southern India is now completely stalled for want of a credit support mechanism from the Indian government, a top firm official said on Friday. Rodney E. Boulanger, CMS Generation Co's president, said in a statement e-mailed to Reuters that the firm though "not threatening to withdraw" from the project was "losing heart". The firm's statement comes against a backdrop of a bitter payment row between U.S. energy giant Enron Corp's $2.9-billion, 2,184-MW Indian unit, the Dabhol Power Co, and the state-run utility in India's western Maharashtra state. CMS, along with India's Grasim Industries , leads a consortium to build a $1.6-billion LNG-terminal-cum-1,850 MW powerplant at Ennore port, just north of Madras. "The Ennore project is essentially stalled until the government can design and implement a solution that will cause lenders to provide loans to the project," the statement quoted Boulanger as saying. "In the meantime, we must simply wait for these government actions to occur without which the project cannot go forward." In May, a CMS spokesman said the firm was disappointed with delays in getting a promised bankable guarantee from the Indian government and said that it was evaluating its options. GET MONEY BACK Boulanger said the credit support mechanism or lenders pledge, guaranteeing that project lenders would be able to get their money back if the project cannot collect payments for power produced, was absolutely vital for the project's progress. In January, India's finance ministry indicated it may scrap a plan to extend sovereign guarantees to three mega power projects, including the Ennore LNG project. The Ennore project has been promoted by the Dakshin Bharat Energy consortium which also includes Germany's Siemens , Australia's Woodside and Unocal Corp . India opened up its generation sector almost 10 years ago but investment has been scarce as most of the country's power distribution is done by cash-strapped, state-owned utilities. The CMS-led consortium won the LNG project from the Tamil Nadu state government in 1998 and plans to build a 2.5-million tonnes a year LNG import, storage and regasification terminal. The LNG is to be imported from Qatar's RasGas and the electricity from the power plant will be sold to the federal government-owned Power Trading Corp of India. CMS' other projects in India include ownership of a 49 percent equity stake in a 200 MW diesel-fired G.M.R. Vasavi power plant at Basin Bridge in Madras and construction of a lignite-fuelled 250 MW plant in the southern town of Neyveli. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. LME Base Metals:End Mixed As Mkt Awaits Fed Rate Decision 06/22/2001 Dow Jones Commodities Service (Copyright © 2001, Dow Jones & Company, Inc.) LONDON -(Dow Jones)- London Metal Exchange three-month base metals ended the late kerb mixed Friday compared with Thursday, in a day characterized by cautious trading and book squaring as the market awaits the U.S. Federal Reserve's interest rate decision, dealer and analysts said. (LME three-month prices in dollars a metric ton at 1600 GMT, with the previous late kerb close in parentheses. Comex copper at 1632 GMT in cents a pound, with the previous close in parentheses.) Copper 1,599.50 (1,593.50) Tin 4,705.00 (4,722.50) Aluminum 1,477.75 (1,468.50) Zinc 909.50 (906.50) Nickel 6,255.00 (6,305.00) Lead 452.50 (449.75) Comex July Copper 72.00 (71.75) The possibility that the Fed could cut rates next week has staunched any further selling by funds, who are already holding large short positions, a LME dealer said. "It would be madness for them (funds) too extend their shorts at the moment because if rates are cut there is no doubt that prices will be in line for a rally," he said. "But, once that's out of the way I still don't think there is anything to (lift) the current sentiment and I wouldn't be surprised to see new lows being set in the next few weeks," he added. Aluminum was caught between $1,460/ton and $1,480/ton, with news of production increases not causing a significant price reaction. Mitsubishi Corp., the U.K.'s Billiton PLC and the Industrial Development Corp. of South Africa Ltd. will expand Mozambique's Mozal aluminum smelter, the companies said Friday. The project will add a further 253,000 tons a year of smelting capacity, at a construction cost of $860 million, bringing capacity up to 506,000 tons. "This sort of thing has been expected and is already factored into prices," a London-based analyst said. Copper was also caught in a tight range but the market's main focus continues to be the tightening technical supply situation which has pushed the nearby spreads from contango to flat and occasionally to a backwardation. The analyst said that the tightness is not set to last much longer, suggesting that if the cash-for-a-week spread increases much more from the current level of around $20/ton backwardation then heavy lending would probably emerge and the spread would be reduced. Although fund short positions have been highlighted as the likely cause of the situation, there is talk that major trade house Enron is holding most of the shorts, having anticipated the market's recent decline. -By David Elliott, Dow Jones Newswires; 44-20-7842-9353; david.elliott@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Indian Foreign Invest Climate Good Despite Enron Dispute 06/22/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- Foreign investment in India won't be damped by the current dispute between Enron Corp.'s (ENE) Indian unit Dabhol Power Co. and its sole buyer the Maharashtra State Electricity Board, the external affairs ministry spokeswoman told Dow Jones Newswires Friday. Reacting to U.S. Undersecretary of State for Economic, Business and Agricultural Affairs Alan Larson's recent statement in Washington that the payment dispute between Dabhol and Maharashtra state was clouding India's investment climate, Nirupama Rao said: "The evidence of our good investment climate is the fact that several global companies are here and are implementing key projects all over the country." "A single instance (Dabhol) cannot turn the clock back. Foreign investments into India are coming in, and they will continue to come. As far as Enron is concerned, the government would like to see the dispute between Dabhol and MSEB resolved quickly," she added. Foreign direct investment flows into India were worth $4.5 billion in 2000, compared with inflows of $4.02 billion in 1999. During the first four months of 2001, foreign direct investment inflows amounted to $1.24 billion, according to the figures from the commerce ministry. The U.S. energy company Enron holds a controlling 65% stake in the $2.9 billion Dabhol project, to date the single largest foreign investment in India. MSEB stopped drawing power from the Dabhol plant May 29, saying the cost of electricity supplied by Dabhol was "unaffordable." Since Sunday, Dabhol Power Co. has stopped all construction work on the second phase of the project because of "continuing (payment) defaults by MSEB." The Dabhol project has the federal government's counter-guarantee. Separately, Indian Power Secretary A.K. Basu said the government was inundated with fresh foreign direct investment proposals in the power sector. "We have 20 international projects on hand which will collectively add 5,000 megawatt to the country's generation capacity," Basu said. -By Himendra Kumar; Dow Jones Newswires; +91-11-461-9426; himendra.kumar@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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