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Houston Chronicle, 04/08/01 Enron Takes Indian Dispute to Arbitration Court, FT Reports Bloomberg, 04/08/01 Like it or not, DivX emerges as format of choice for online movies Associated Press Newswires, 04/08/01 DPC should reduce high tariff rate, NCP chief Sharad Pawar Press Trust of India Limited, 04/07/01 Mahashtra industrial output on a decline: Pawar The Times of India, 04/07/01 ENRON IS PLANNING TO ELIMINATE ABOUT 250 JOBS The New York Times, 04/07/01 THE CALIFORNIA ENERGY CRISIS Pacific Gas' Filing Hits Other Stocks Wall St.: Fear of exposure to the utility has investors reacting negatively to the shares of its major lenders, power suppliers and bond insurers. Los Angeles Times, 04/07/01 The convergence revolution can wait, but can investors? The Globe and Mail, 04/07/01 Hits of the Week Houston Chronicle, 04/07/01 ENRON ASKS POMPANO TO PUT OFF PLANT VOTE FOES CALL REQUEST A TACTIC TO STOP RALLY BY PROTESTERS South Florida Sun-Sentinel, 04/07/01 PG&E BANKRUPTCY TO BE COSTLY LONG, SERPENTINE PROCESS AHEAD FOR UTILITY; INVESTOR UNLIKELY TO SEE RETURNS ON INVESTMENTS ANYTIME SOON The Press Democrat Santa Rosa, CA, 04/07/01 PG&E Creditors Are Lining Up / BofA, local generators owed billions by utility The San Francisco Chronicle, 04/07/01 Enron to Cut 20% of Workforce at Broadband Unit, Reuters Says Bloomberg, 04/07/01 Maharashtra Won't Make Payment to Enron Venture, Paper Says Bloomberg, 04/07/01 BUSINESS The well The well Staff 04/08/2001 Houston Chronicle 2 STAR 16 (Copyright 2001) Enron Energy Services announced a long-term energy management agreement with J.C. Penney Co. valued at more than $600 million. Through the agreement, Enron will manage the supply of electricity at more than 1,250 Penney locations in 50 states. Enron also will replace or update energy equipment to reduce consumption. Anadarko Petroleum Corp. announced results from the Fife Unit No. 2 well in Central Texas. Located in the Navasota River field of Washington County, the well flowed at a rate of 51 million cubic feet of gas per day. The well reached a total vertical depth of 14,080 feet and was drilled laterally for almost 5,000 feet. Anadarko has a 100 percent working interest. Anadarko's net volumes in Central Texas have grown to more than 235 million cubic feet of gas per day and 14,700 barrels of oil per day. The company operates nine rigs throughout the region. ATP Oil & Gas Corp. acquired six producing properties in the Gulf of Mexico that will add about $1.4 million to its monthly cash flow. The properties were acquired from an international oil company. Financial terms were not disclosed. During January, the properties produced approximately 7 million cubic feet of natural gas per day and 340 barrels of oil per day. The properties have proven and undeveloped reserves. This is the second Gulf of Mexico property package acquired by ATP since its initial public offering in February. Renewable Energy Systems and Cielo Wind Power LLC completed a deal to construct a wind power facility on King Mountain near McCamey in West Texas. The companies are based in Austin. The project will consist of 214 wind turbines with capacity to produce 278.2 megawatts. The amount is enough to supply power to around 139,100 homes. It will save, over its 20-year life, the emission of nearly 20 million tons of carbon dioxide, the companies said. Bonus A/S of Denmark will supply the wind turbines, which produce 1.3 megawatts of power each. Electricity generated by the facility will be sold to Reliant Energy of Houston, under a 15-year contract for 198.9 megawatts of the capacity, to Austin Energy, under a 10-year contract for 76.7 megawatts of capacity, and to Texas-New Mexico Power for the remaining 2.6 megawatts. It will be owned and operated by FPL Energy LLC, the U.S. subsidiary of Renewable Energy Systems Ltd. Construction will begin immediately and the wind ranch will be fully operational before the end of the year. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Takes Indian Dispute to Arbitration Court, FT Reports 2001-04-08 20:10 (New York) Bombay, April 9 (Bloomberg) -- Enron Corp. is taking its dispute with India's Maharashtra state government to an arbitration court after the government decided not to pay a 1.02 billion rupee ($20 million) bill, the Financial Times said on its Web site. The government wouldn't pay the bill from an Enron venture for electricity charges until Enron pays penalties imposed by the Maharashtra State Electricity Board for ``certain technical violations,'' the newspaper said. Enron is confident it can resolve the penalty issue in its favor, saying the Indian electricity board is raising frivolous claims in an attempt to avoid payments, the report said. Enron's $3 billion power project in Maharashtra is the biggest foreign investment in India, the FT said. Like it or not, DivX emerges as format of choice for online movies By RON HARRIS Associated Press Writer 04/08/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. SAN FRANCISCO (AP) - For the movie industry, a small piece of software called DivX holds the same promise and peril that the MP3 audio format presented to the record labels. DivX has already shown the potential to become a de facto Internet standard - and the basis for a California startup that hopes to make it the compressed digital video format of choice. Thousands of film buffs have discovered that DivX can be a real alternative to paying for movies, just as Napster and MP3 allow music fans to trade millions of songs for free. "Sometimes I rent a DVD at a local rental store, I `rip' it and send it back," said Bruce Heller of Paris. "I know it's illegal, but I think it's better to rent a movie each week than buying a DVD or two each year." DivX compresses full-length movies into sizes small enough to be sent on the Internet and stored on a single compact disk. Using DeCSS software to crack the Content Scrambling System on DVDs, Heller copies movies using DivX onto his own CDs and loans them to friends. "We are only at the beginning of the movie piracy, and it's growing fast," Heller said. "Who would not be interested in it?" The challenge for Hollywood and technology companies is to create a popular, yet secure standard for online video delivery before the movie industry suffers the same losses that record labels have seen. Publicly, Hollywood is enthusiastic about a future in which movies can be delivered directly to personal computers over the Internet. DivX, like other video compression technologies, could provide the answer if coupled with strong security measures, said Jack Valenti, head of the Motion Picture Association of America. "I think the technology is wonderful," Valenti said. "I don't see it as a tool of piracy. I see it as a convenience to consumers who want to bring down legitimate licensed films." DivXNetworks, a small San Diego-based startup, hopes to make DivX the format of choice for Hollywood. It wants to negotiate revenue-sharing deals with companies looking to sell content online - but hasn't succeeded in cutting any deals with major studios. Jordan Greenhall, the company's chief executive and co-founder, said DivXNetworks' only legitimate customers so far use DivX to deliver video of monster truck contests and Japanese animation shorts. The company faces formidable challenges from Microsoft Corp., which showed the power of the Windows Media format last month by delivering a half-hour film starring John Cleese to a Pittsburgh theater via the Net. RealNetworks Inc. also offers a secure format for "streaming" video content online and can leverage MusicNet, its online music subscription venture with AOL Time Warner and Bertelsmann AG. Without major backers, DivXNetworks has turned to the power of the Internet, posting the DivX source code online and encouraging programmers to retool and improve it. DivXNetworks hopes DivX will become so popular that Hollywood will decide to make it the standard, in the same way that record labels have grudgingly accepted MP3s as the way to deliver music. But even if DivX becomes as popular as MP3, it faces other challenges. For one thing, although Greenhall says security measures can be incorporated into DivX, the code is already loose on the Internet, where unsecured versions may prove devilishly difficult to tame. Also, Microsoft claims DivXNetworks uses technology stolen from Windows Media. "It's our technology and they've essentially re-branded it," said Michael Aldridge of Microsoft's Digital Media division. "It's like taking a Volkswagen, taking the brand Volkswagen off the hood and putting DivX on it." Greenhall denied that his company lifted Microsoft's code, saying the latest version of the software was programmed from scratch. The notion of piping movies on demand straight to desktops over high-speed Internet connections stalled last month when video rental chain giant Blockbuster Inc. canned a deal with Enron Broadband Services. Each company blamed the other for a lack of commitment. Robin Diedrich, an entertainment industry analyst with Edward Jones, said eight to 10 years could pass before consumers have full catalogs of movies online, particularly because most consumers still connect to the Net through telephone wires. Downloading a full-length DivX movie using phone wiring could take days, compared with a few hours using high-speed T1 lines or cable modems. Diedrich also said studios would be leery of anything that could reduce revenues from theaters and video rentals. Valenti said online versions will likely appear only after films are delivered to theaters, airlines, home video and pay-per-view. He also said the studios he represents haven't endorsed any particular file format. They only urge that any movies delivered online be encoded with enough security measures to prevent unauthorized copying. But hackers aren't waiting. Both the DivX codec - techie shorthand for a software program used to compress and decompress video and audio data - and DeCSS software are freely available on the Internet. The Hollywood trade group is fighting back, cruising through newsgroups, Web sites and chat rooms for DivX movie traders. Hemanshu Nigam, the MPAA's director of Internet enforcement, expects to send 20,000 cease-and-desist letters to people who illegally trade copyrighted movies this year. That's 10 times the number sent out in 2000. And that's just the people actively trading movies. Any number of people could be building their own collections in secret, or trading DivX movies in less public ways. Daniel Lukis of Chicago uses the software to digitally store home movies and some of his favorite "Seinfeld" episodes. Keeping copies of sitcoms is legally permissible for personal home use, but if Lukis decided to share those files online he would run the risk of copyright infringement. He fears the pirates may hamper the development of DivX as a legitimate software tool. "Like with all new forms of technology, someone will devise a way to exploit it," said Lukis, who moderates an online DivX discussion forum. "These people give a bad name to DivX, as Napster did to MP3, and the honest users of the formats are suffering because of that." --- On the Net: http://www.projectmayo.com http://www.divxnetworks.com http://www.fm4.org http://www.mpaa.org With AP Photos FX101,102 of April 4. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. DPC should reduce high tariff rate, NCP chief Sharad Pawar 04/07/2001 Press Trust of India Limited © 2001 PTI Ltd. Mumbai, Apr 7 (PTI) Nationalist Congress Party (NCP) leader Sharad Pawar, during whose tenure as Maharashtra Chief Minister, the Power Purchase Agreement (PPA) with US-based Enron promoted Dabhol Power Company (DPC) was worked out, has demanded "the energy major should reduce its high power tariff charged to MSEB (Maharashtra State Electricity Board)". "It is a fact that Maharashtra will not be able to bear the financial burden on account of DPC's enormous bills when the PPA's second phase is implemented", he told reporters here. Pawar said there was a need of +a pragmatic approach+ to deal with the controversial project and his impression being that the Federal govt was willing to help the state government in finding a lasting solution to the problem. He also noted with concern that demand for industrialised power in Maharashtra was reducing, thus indicating a decline in production. Replying to a question, the NCP supremo informed that the high DPC tariff in state did not figure in his breakfast meeting with the former US President Bill Clinton. (THROUGH ASIA PULSE) 07-04 2001 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Mahashtra industrial output on a decline: Pawar The Times of India News Service 04/07/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) MUMBAI: Nationalist Congress Party president Sharad Pawar rang the alarm bell here on Friday by stating that industrial production in Maharashtra was on the decline. ``Consumption of power by the industrial sector has gone down from 56 per cent to 32 per cent which indicates a decline in industrial production," he told mediapersons. He said during the past four years not a single new project with foreign funding has been set up in Maharashtra even though there is a need to attract fresh investment in the state. "It is an alarming signal,'' he warned. His observations are quite candid considering the fact that his party is a major constituent of the ruling Democratic Front government in the state and has been in office for the past more than one year. Mr Pawar also expressed his displeasure over the manner in which the Enron power project issue was being handled by the parties concerned. Mr Pawar stated this soon after a breakfast meeting with former US president Bill Clinton. But, he emphasised that the Enron issue was not discussed with Mr Clinton. He said talks with the ex-President centered around the management of the post-quake situation in Gujarat. Breaking his silence over the controversial issue of payment to Enron's Dabhol Power Company by the Maharashtra State Electricity Board, Mr Pawar said ," We have to wait and see what the Madhav Godbole committee has to suggest in this regard.'' The state government has referred the issue to an expert panel led by retired bureaucrat Madhav Godbole. Mr Pawar had approved the first phase of the controversial power project. He said differences between Enron, MSEB and the state government should be resolved amicably through negotiations. ``The second phase of the Enron power project is not affordable. But we have no option since the previous Shiv Sena-BJP alliance which talked of drowning the entire project in the Arabian Sea entered into an agreement with Enron and approved phase II also. Now, we have to ensure that Enron's burden on consumers is minimal," Mr Pawar said. " We should tell Enron that we cannot purchase power at such a high rate and find out some solution. The Maharashtra state may not require power now but the demand is certainly going to increase in future . Till then, the Enron can sell power to the national grid and provide it to the regions where there is shortage of power,", Mr Pawar said. ``I was under impression that the Union government is agreeable to this proposal. But I read in the newspapers that the Centre is not going to foot the bill for Enron power ,'' Mr Pawar added. "I was under the impression that correspondence between a chief minister and the Prime Minister of the country is a confidential document. But I read (in the newspapers) about what the Maharashtra chief minister has written in his letter to the Prime Minister regarding the Enron controversy", he said. " There is talk of a commission of inquiry being set up. The commission of inquiry may take two years to complete its task and finalise its recommendations. But what about the monthly bills being submitted by Enron to MSEB? I think the need is to adopt a pragmatic approach and solve the problem,", Mr Pawar said. The Godbole committee has finalised its recommendation and the committee is scheduled to submits its anxiously awaited report to the state government by April 10. Asked whether he had given any advice to the state government since his party is a part of the ruling coalition, Mr Pawar said," I have not given any advice to anyone. I do not give advice unless it is sought. And so far no one has asked for my advice." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Business/Financial Desk; Section C COMPANY NEWS ENRON IS PLANNING TO ELIMINATE ABOUT 250 JOBS Reuters 04/07/2001 The New York Times Page 3, Column 1 c. 2001 New York Times Company The Enron Corporation, the energy trading company, said yesterday that it would eliminate about 250, or 20 percent, of the jobs at its broadband telecommunications unit. An Enron Broadband Services spokeswoman, Kelly Kimberly, said the company was cutting jobs at the unit, which now employs 1,150 people, because it had completed its 18,000-mile fiber optic network and because of slow demand for streaming media products delivered to personal computers. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Business; Financial Desk THE CALIFORNIA ENERGY CRISIS Pacific Gas' Filing Hits Other Stocks Wall St.: Fear of exposure to the utility has investors reacting negatively to the shares of its major lenders, power suppliers and bond insurers. JAMES F. PELTZ TIMES STAFF WRITER 04/07/2001 Los Angeles Times Home Edition C-1 Copyright 2001 / The Times Mirror Company Pacific Gas & Electric Co.'s bankruptcy filing sparked a sell-off in stocks of the utility's major lenders, power suppliers and bond insurers Friday, as investors feared that the companies' earnings would be hurt by the reorganization and that Southern California Edison might take the same route. Shares of the utilities' own parent companies, PG&E Corp. and Edison International, respectively, also were hammered, even though PG&E and its other subsidiaries did not join Pacific Gas & Electric in filing under Chapter 11 of the U.S. bankruptcy laws. PG&E plunged $4.18, or 37%, to $7.20 a share, and Edison tumbled $4.39, or 35%, to $8.25 a share, both on the New York Stock Exchange. Sempra Energy, California's other major investor-owned utility, was off $1.85 to $22.30, also on the NYSE. Under Chapter 11, Pacific Gas & Electric will keep operating, but its existing debts are frozen while the company works out a plan to pay its creditors. However, financial overhauls under Chapter 11 often result in creditors getting less than full payment. "There's a fear they will not be paid what they're owed up to this point," said Linda Byus, who follows power-generating companies for the investment firm Dresdner Kleinwort Wasserstein in Chicago. "There is the possibility they won't get 100 cents on the dollar." Robert Glynn Jr., chairman of San Francisco-based PG&E and Pacific Gas & Electric, said Friday that "our goal is to pay all our bills in full" under the reorganization. The presence of a U.S. bankruptcy judge should help finalize what have been unproductive negotiations between the utilities, state regulators and the companies' creditors, he added. But Wall Street was skeptical as investors pounded most of the stocks of Pacific Gas & Electric's bank lenders, bond insurers and power suppliers. Bank of America fell $2.26 to $49.59 a share, and J.P. Morgan Chase lost $2.11 to $40.39, Bank of New York--the utility's biggest creditor with $2.21 billion in outstanding loans--fell 96 cents to $48.34, and Bank One skidded $1.29 to $33.61 a share, all on the NYSE. "The stocks sold off in part due to the concerns of possible losses stemming from the bankruptcy filing," said Joe Morford, a bank analyst with brokerage firm Dain Rauscher Wessels in Minneapolis. "There could eventually be a hit to their earnings." Power generators supplying electricity to California also saw their stocks fall sharply. They included Duke Energy Corp., which lost $2.30 to $40.10 a share; Enron Corp, down $2.20 to $53.50; Dynegy Inc., off $3.42 to $47.50; and Calpine Corp., down $3.66 to $47 a share, all on the NYSE. But AES Corp. bucked the trend and rose 97 cents to $43.97 on the NYSE. Stocks of companies that provide bond insurance for certain of the utilities' credit investors also were hit hard. MBIA Inc. plummeted $7.69 to $75.10 a share on the NYSE, even though the company said, "MBIA-insured bondholders will receive all their principal and interest payments as scheduled." The company said its insurance exposure covers about $590 million of Pacific Gas & Electric bonds. Another insurer, Ambac Financial Group Inc., dropped $2.98 to $59.97 a share on the NYSE. The company said it's guaranteed $68.7 million of the utility's first mortgage bonds, which are secured by collateral. Although there's a risk that all of these companies with exposure to Pacific Gas & Electric could suffer some financial damage, Wall Street might have overreacted to the threat Friday, analysts said. Take the big banks, for instance. "In the grand scheme of things, their exposure is not that big relative to the size of their overall loan portfolios," said Morford of Dain Rauscher. In the short run, the banks "are likely to record these [debts] as nonperforming assets and their problem-loan numbers will rise," but those sums would not immediately be subtracted from the banks' profits, he added. It's also possible that a plan to repay the banks in full could be worked out in Bankruptcy Court before they have to write off the debts, he said. Also, several of the power generators already have set aside cash reserves in case Pacific Gas & Electric and Southern California Edison couldn't pay for power they had already purchased, noted Byus of Dresdner Kleinwort. Still, "there is the risk that the reserves are not sufficient" to cover the utilities' shortfalls, she said. "We will have to see in the companies' first-quarter results." One company that hasn't set aside reserves yet is Calpine, a San Jose-based power generator that's among Pacific Gas & Electric's largest unsecured creditors. Calpine has yet to be paid for nearly $300 million worth of power it has sold to Pacific Gas & Electric, said Calpine spokesman Bill Highlander. Calpine hasn't created a reserve yet because "we remain confident that PG&E will pay us the full amount" owed to the company, he said. And the debt-rating agency Standard & Poor's said Friday that the filing shouldn't impact Calpine's own credit ratings, because Calpine has several projects outside of California and $589 million in cash. * * POWER CRISIS California's largest utility, Pacific Gas & Electric, filed for bankruptcy. A1 . . . The effect is unknown, but the potential damage to suppliers and bond raters, among others, could hurt the state. A1 (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Energy Fallout Stocks of banks, power generators and bond insurers with exposure to Pacific Gas & Electric fell sharply after the giant utility filed for bankruptcy protection. Shares of PG&E, the utility's parent company, also fell Friday, as did the stocks of California's two other major investor-owned utility holding companies-- Sempra Energy and Edison International. But some analysts said Wall Street might have overreacted to the financial threat faced by the companies. PG&E PG&E Weekly closes for PG&E (ticker: PCG) on NYSE Friday: $7.20, down $4.18 Edison International Weekly closes for Edison (ticker: EIX) on NYSE Friday: $8.25, down $4.39 Sempra Energy Weekly closes for Sempra (ticker: SRE) on NYSE Friday: $22.30, down $1.85 Related companies Friday Point % Company close change change UnionBanCal $26.50 --2.74 --9.4% MBIA 75.10 --7.69 --9.3 Calpine 47.00 --3.66 --7.2 Dynegy 47.50 --3.42 --6.7 Duke Energy 40.10 --2.30 --5.4 J.P. Morgan Chase 40.39 --2.11 --5.0 Ambac Financial 59.97 --2.98 --4.7 Bank of America 49.59 --2.26 --4.4 Reliant Energy 43.55 --1.80 --4.0 Enron 53.50 --2.20 --4.0 Source: Bloomberg News GRAPHIC: Energy Fallout, Los Angeles Times; Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Report on Business Column TO THE POINT The convergence revolution can wait, but can investors? ERIC REGULY 04/07/2001 The Globe and Mail Metro B6 "All material Copyright © Bell Globemedia Publishing Inc. and its licensors. All rights reserved." Convergence, Take 1: In an interview in New York, BCE boss Jean Monty seems to express doubt that he is happy with the pace of and the reaction to the group's "convergence" strategy, the melding of content and distribution into a fabulous array of new profit-spewing services. "We know now that it will take years to run its course," he is quoted as saying in a Financial Times article. The story says BCE might break itself up in two years if the strategy comes up short. Convergence, Take 2: At a convergence conference in Toronto the day after the newspaper articles appeared, Mr. Monty, while not denying the accuracy of his quotations, says BCE is not backtracking on convergence. "We are determined to deliver on our convergence strategy," he says. "No one should doubt our conviction that we are on the right path." Confused? Don't be. Mr. Monty's behaviour -- tentative one day, confident the next -- is typical of the players in the formerly brave new world of convergence. It is possible to be both cynic and visionary at the same time. Something will come from convergence but no one knows what -- or when. Billions will be lost before billions will be made. Investors beware. The convergence strategy is stumbling in some cases at the same time as dot-coms vanish in droves and e-commerce strategies are rolled back or cancelled. Even the bricks-and-clicks strategy, the one convergence model with legs, is ailing. A few weeks ago, Blockbuster Video and Enron, an energy company with a vast broadband delivery network, killed their partnership. The plan was to use Enron's network to deliver movies, music and other services to millions of customers. A year after the venture started, there were only 800 customers. Each side blamed the other. Enron's network wasn't up to the job; Blockbuster's on-line movie library was too thin. Take your pick. It is far too early to say that convergence is failing, but the early go-around has certainly not been encouraging. The Old Economy boosters say convergence is dead because it can't make a profit, and businesses exist only to make profits. The New Economy boosters, among them Future Shock authors Alvin and Heidi Toffler, say give it time. The Industrial Revolution killed unimaginable numbers of new business models, destroying livelihoods across Europe. Then, after all the upheaval, the greatest wealth generation machine in history was created. The same, they believe, will happen as the digital revolution takes hold. But that's some time in the future. What about now? It's hard to generalize, but it's beginning to look like convergence will win or lose on a relatively small case-by-case basis. BCE appears to have all the right convergence components -- a big telecommunications network (Bell Canada), a Web portal (Sympatico-Lycos), a broadcaster (CTV), a newspaper (The Globe and Mail) and popular financial Web sites, including globeinvestor.com. On the editorial side, convergence so far means getting Globe reporters to stand in front of television cameras, which might be a logical first step but who knows where it may lead. While BCE has been at it for a few months, it's going to have to show some results fast. Royal Bank and AOL Canada,which is 20 per cent owned by the bank, seem to have had early success in their convergence experiment, which began in 1999. Then, Royal had 350,000 on-line customers; today the number is 1.5 million and rising. The Royal and AOL Canada sites promote each other. AOL users can flip over to Royal's on-line banking and brokerage services. More on-line customers translate into savings because it means fewer employees are needed in the bank's call centres. The longer-range plan is to make AOL and Royal full-fledged e-commerce partners. AOL will deliver the customers, Royal the end-to-end payments systems for anything the customers want. If it works, Royal, the bricks-and-mortar bank, will have converged with an on-line network. Since AOL now includes the Time Warner publishing empire, Royal, through AOL Canada, will be on the receiving end of a steady supply of new services and content developed south of the border. Mr. Monty is right. It is far too early to judge whether convergence, or at least BCE's notion of convergence, is working. There may be no material results for a couple of years, if ever. But revolutions take time. BCE has all the right parts. What it needs, and may not get, is patient managers and investors. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. HOUSTON Hits of the Week Hits of the Week Staff 04/07/2001 Houston Chronicle 2 STAR 2 (Copyright 2001) Earthy pleasures More than 35,000 Houstonians are expected to show their appreciation for their planet and good music today when 104 KRBE radio and Enron present the fifth annual Earth Day Festival at Eleanor Tinsley Park on Buffalo Bayou near downtown. Benefiting the Houston Parks and Recreation Department and the Citizens' Environmental Coalition, the festival is billed as the Southwest's largest Earth Day event. This year's musical lineup features Vertical Horizon and Collective Soul; contemporary R&B artists Wyclef Jean and Mya; the Canadian pop group soulDecision; and the Europop sensation ATC. More than 40 environmental organizations will set up shop in the festival's activity zones, where visitors will find environmentally friendly interactive booths; a 40-foot inflatable slide; moonwalks; carnival games; a rock wall; a flight simulator; face-painting; and an inflatable obstacle course. 10 a.m.-7 p.m. today at Eleanor Tinsley Park between Allen Parkway and Memorial Drive. Free parking will be available in the Enron parking garage, 1400 Smith, with a free Metro shuttle service to and from the festival site. Tickets are $20 (cash only), with a $5 discount for 104 Card holders. Children ages 10 and younger will be admitted free with a paying adult (one child per adult). Call 713- 266-1000. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. LOCAL ENRON ASKS POMPANO TO PUT OFF PLANT VOTE FOES CALL REQUEST A TACTIC TO STOP RALLY BY PROTESTERS DAVID FLESHLER Staff Writer 04/07/2001 South Florida Sun-Sentinel Broward Metro 1B (Copyright 2001 by the Sun-Sentinel) Facing massive opposition to its power plant proposal, Enron Corp. has requested a one-month delay on next week's vote by the Pompano Beach City Commission. The commission is scheduled to vote Tuesday on whether to rezone 28 acres east of Florida's Turnpike for the 510-megawatt plant. But Enron's attorney sent a letter to the city on Friday asking for a postponement until May 8, stating the company wanted first to obtain its air quality permit from the state Department of Environmental Protection. Opponents are furious. They see the request as a stalling tactic by a company that fears it's headed for a loss next week. And they said Enron is trying to wreck their plans to hold a protest rally and to pack the commission chamber with opponents. "We have buses ordered. We have hundreds of people that are going to be there," said Larry Lemelbaum, president of the Township Community Master Association in Coconut Creek, which would be downwind from the plant's 80-foot stacks. "I think this is totally, totally unconscionable. This was going to be a big rally. Now we'll have to get in touch with everybody and try to cancel it. I just hope the commission doesn't go along with it. " Many residents of his neighborhood will travel north for the summer, and wouldn't be able to attend the commission meeting in May, he said. "After Passover, everybody goes up north," he said. "Half the people will go home by then. That's why they're postponing it." Nonsense, said Eric Thode, the company's spokesman. The company isn't trying to thwart the opposition. And it remains "cautiously optimistic" about winning approval from the five-member commission. The request for the delay is simply to allow the company time to obtain the air quality permit, which it always prefers to have in hand before going before a city or county commission, he said. "We were ready, willing and able to go before the commission on Tuesday night," he said. "Our request for the continuance is because the surrounding cities have delayed the issuance of the air permit." The state has already announced a preliminary decision to issue the permit, having determined that the plant would not harm the region's air quality. State officials took public comments on its plans two weeks ago, at a meeting that drew more than 500 people. The final decision has been delayed because several cities west of the site, which oppose the project, have requested time to prepare petitions requesting an administrative hearing. If an administrative hearing is granted, however, it would be much more than a month before the company receives a permit, said Al Linero, the DEP administrator reviewing the permit application. It could take six months or more, he said. The City Commission vote may be close. Two commissioners are likely to vote against it, and the other three are keeping quiet about their views. The decision on whether to postpone the vote is up to the City Commission. The commission had originally scheduled an emergency meeting Friday afternoon to consider Enron's request. But the meeting was postponed until Monday at 9 a.m. to make sure there would be sufficient notice to all sides. Opposition to the plant has been mounting since the proposal became public last November. Hundreds of people have attended hearings to protest the plans. Margate, Coconut Creek and other cities have adopted resolutions in opposition. The power plant is one of three proposed for northern Broward County. The other two, one of which is also an Enron project, would go along the Turnpike in Deerfield Beach. The Deerfield projects are further behind in the approval process. Despite their irritation at the prospect of calling hundreds of people to cancel the rally, opponents took the company's latest move as a sign that the project was in trouble. "I sense that Enron thinks they're going to lose this thing," said George Cavros, a Sierra Club activist who has rallied the opposition. "There's no reason for this other than the fact they think they're going to lose." David Fleshler can be reached at dfleshler@sun-sentinel.com or 954- 356-4535. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. BUSINESS PG&E BANKRUPTCY TO BE COSTLY LONG, SERPENTINE PROCESS AHEAD FOR UTILITY; INVESTOR UNLIKELY TO SEE RETURNS ON INVESTMENTS ANYTIME SOON MARY FRICKER THE PRESS DEMOCRAT 04/07/2001 The Press Democrat Santa Rosa, CA CITY E1 (Copyright 2001) The Pacific Gas & Electric Co. bankruptcy will have a profound and lasting impact on the utility and its shareholders, costing millions of dollars and likely taking years to resolve, experts said Friday. "Every company that files bankruptcy tries to spin it in a positive way ... but it's very expensive and very complicated. It's the last resort," said Santa Rosa bankruptcy attorney Douglas Provencher. While the daily business of PG&E will continue, the company has given up control of its future in many ways, in exchange for protection from creditors while it reorganizes. Its executives will have to spend much of their time managing a bankruptcy case instead of a utility. The company will have to divulge private information to creditors. It will have to ask the court's permission for a variety of activities outside the normal course of business, like selling assets. It will have to pay for its own bankruptcy lawyers, creditors' committee lawyers, accountants and more. "I can't even imagine the cost. It'll be millions of dollars," Provencher said. At the same time, the shareholders of its parent company, PG&E Corp., now have little hope of seeing a return on their investment anytime soon -- even though Glynn said Friday that PG&E expects shareholders to view the bankruptcy filing more positively, as an action that stops the financial slide. "The bottom line for the shareholders is that the stock isn't going to get anywhere near its previous highs for a long time, in our view," said Brian Youngberg, senior utility analyst with Edward Jones brokerage in St. Louis, Mo. The stock's most recent high was $31.81 in September. It closed Friday at $7.20, down $4.18 on the New York Stock Exchange, after trading was halted for several hours because of the bankruptcy filing. Still, moving into the bankrupcty court arena has benefits, and PG&E executives decided those benefits outweighed the uncertainty and the ballooning deficits they otherwise faced. "The issue for PG&E Company is to get costs and revenues brought into line," chairman Robert D. Glynn Jr. said Friday. "The political process has been able to negotiate but not close the deal. We think the federal bankruptcy court will be a better venue to be able to close the deal." Daniel Bussel, a bankruptcy specialist at UCLA Law School and author of a widely used textbook on bankruptcy law, said the bankruptcy court provides a structure and a set of rules that can help the warring parties reach agreement. "I don't think it's the end of the world that they're in bankruptcy. It just means the negotiations will take place under the bankruptcy court," Bussel said. "It may well be the first step to the solution." "There's a structure and a focus, and everyone knows what the rules are," Bussel said. The core decisions that must be made are to find ways for PG&E to pay the $9 billion shortfall it says it has accumulated since June - when wholesale electricity costs soared and PG&E began having to pay more for electricity than it is permitted to charge its customers -- while still supplying energy to its customers in Northern and Central California. PG&E has been negotiating with state officials for months trying to find a solution to the crisis, but chairman Glynn said Friday it has given up hope of success. "The bankruptcy code provides a mechanism that can get people, hopefully, to coalesce around a plan," Bussel said. "It also has mechanisms to try to keep different constituencies in line, to the extent that their demands are undermining the ability of the company to successfully reorganize." The different constituencies in this case include the utility, its creditors, state regulators, state legislators, federal regulators, ratepayers and taxpayers. All will be represented in negotiations, under the oversight of U.S. Bankruptcy Judge Dennis Montali. "There is going to be a huge jurisdictional battle between PG&E, the feds, the state, and the PUC," Bussel said. "(The judge) will certainly be making his reputation on this case. We'll see how he handles it." Asked if he thought the bankruptcy judge would order PG&E to raise its rates more than permitted by the PUC, PG&E chairman Glynn said Friday "the bankruptcy court and the PUC will probably have some very interesting conversations on that subject." The filing eliminates any doubts among creditors that PG&E is in dire financial straits, and it could give them an incentive to negotiate settlements. The largest creditors listed in the PG&E filing Friday are Bank of New York, owed $2.2 billion, the California Power Exchange, owed $2 billion, Bankers Trust Co., $1.3 billion, and the state Independent System Operator, $1.1 billion. The leading power producer represented on the list of PG&E's top 20 creditors is Calpine Corp., a San Jose power generator and owner of most of The Geysers. Calpine officials said Friday they are confident PG&E will pay all of its bills, as it vowed to do Friday. Calpine particularly believes it will get the $267 million it is owed because the debt represents long-term contracts from The Geysers and other alternative energy sources that are cheaper than the wholesale market today, spokesman Bill Highlander said. Other power producers at the top of the list are El Paso Merchant Energy Gas, $40 million, BP Energy Co, $30 million, Enron Canada Corp., $28 million, Chevron USA Production, $25 million. A peculiarity in bankruptcy law will make it easier for PG&E to buy energy and find financing now that it's in bankruptcy. That's because the judge must approve and will require repayment. "Now that they've entered bankruptcy, the legal process says that going forward they have to pay any current bills they have to incur. So we will continue performing on our contracts and actually being paid going forth," Highlander said. This is not the first time a utility has filed bankruptcy. Two well-known cases involved Public Service Co. of New Hampshire, in 1988, and El Paso Electric in 1992. The two cases may give clues as to what lies ahead for PG&E. The New Hampshire case took two years to resolve, the El Paso case took four years. Jurisdictional issues among state and federal regulators and legislators were resolved by compromise. The New Hampshire case was resolved when the company was acquired out of bankruptcy by another utility company. In the El Paso case, the company reorganized and now operates outside bankruptcy-court protection. El Paso didn't pay a dividend or see price appreciation in its stock from 1989 to 1996. Information on New Hampshire stockholders was not available Friday. PG&E suspended its common stock dividend this year. "Bankruptcy has a lot of uncertainty ... and common shareholders are last in line to get the cash. We think long term it's an inappropriate investment for individuals," analyst Youngberg said. The Associated Press contributed to this story. You can reach staff writer Mary Fricker at 521-5241 or e-mail at mfricker@pressdemocrat.com CHART: b&w by The Press Democrat: PG&E stock price Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. BUSINESS PG&E Creditors Are Lining Up / BofA, local generators owed billions by utility Christian Berthelsen, Sam Zuckerman Chronicle Staff Writers 04/07/2001 The San Francisco Chronicle FINAL D.1 (Copyright 2001) A look at PG&E's creditors shows just how widely the ailing utility's tentacles reached into the U.S. economy. Virtually every sector of the institutional and investor public is exposed to its troubles. Pension funds, insurance companies, banks, energy concerns and government agencies are all said to be among those who extended their products and services to the utility, hoping for a return on their investment. That return was put in question yesterday when PG&E Corp.'s regulated utility subsidiary filed for bankruptcy protection. In its filing, PG&E said it had secured debt -- the kind that entitles creditors to the assets of the company if things go wrong -- of slightly more than $3 billion dollars. But it listed unsecured debt, which is not backed by assets, of nearly $6 billion. That unsecured money is the kind that is much harder to fully recover. Chief among the creditors were holders of more than $2.2 billion in medium-term, senior and floating-rate notes. Though the official creditor on that debt was said to be the Bank of New York, bank officials said yesterday that they are merely a fiduciary trustee and not the actual lenders. A source, who would only speak on condition of anonymity and would not identify specific note holders, said they were spread among an assortment of pension funds, insurance companies, hedge funds and banks. The same was the case for Bankers Trust Co., listed as an unsecured creditor to the tune of $1.3 billion, and U.S. Bank, with a debt listing of $310 million. "A large number of institutional investors chose to invest on optimism rather than arithmetic," said Jon Kyle Cartwright, a senior energy analyst with Raymond James Financial in St. Petersburg, Fla. "I have no idea what (PG&E's) assets are worth. What is the value of assets of a company that is legally mandated to lose money on every kilowatt hour it sells?" Investors are already punishing the stocks of companies who were exposed to PG&E's liability, and rising prices are sure to compound the problem. MBIA, a loan insurer backing more than $500 million in PG&E bonds, was punished by investors yesterday, who sent shares down $7.69, or more than 9 percent, to close at $75.10. Many of the lenders remained stoic yesterday in the face of PG&E's disclosure. But it may take some time before the fallout becomes tangible. "We regret that the collective actions to mitigate Pacific Gas & Electric's financial crisis were unsuccessful," Duke Energy, a power generator, said in a prepared statement. "However, the Chapter 11 filing provides a defined process to collect our past receivables and keep PG&E in business going forward." Bank of America helped underwrite a syndicated loan of $938 million to PG&E. The bank declined to say what portion of the loan it held or what percentage of its corporate lending portfolio it comprised. The bank issued a statement saying it was disappointed to learn of the filing but would be able to withstand some loss because it has $50 billion in reserves. BofA shares dropped $2.26 yesterday, or more than 4 percent, to end at $49.59. Other lenders knew better than to get involved with PG&E in the first place. John Moorlach, the treasurer of Orange County, said he avoided Pacific Gas & Electric Co., instead holding $20 million in debt securities issued by Edison International, the parent company of Southern California Edison. "I was worried about PG&E," Moorlach said. Another major sector of PG&E creditors are the power companies that have profited enormously in the state's energy crisis. The utility's debts to the California Power Exchange (PX) and the California Independent System Operator, which in this context are essentially billing agents for the merchant power concerns, total more than $3 billion. E. Jesus Arredondo, a spokesman for the PX, which itself declared bankruptcy last month, said Duke Energy Inc. and Reliant Energy Inc. were among the largest exposed creditors whose debt was attributed to the PX, with as much as $300 million and $400 million in unreimbursed power purchases. A Duke spokesman would say only that the Charlotte, N.C., firm reported more than $400 million in accounts receivable in January but would not elaborate on how much of that is owed by PG&E. Separately, PG&E listed debts of about $121 million to three subsidiaries of Calpine Corp. of San Jose, $28 million to a subsidiary of Enron and about $90 million to Chevron, El Paso and BP Energy Services for gas and power purchases. Even municipal utilities, which had long taken a sort of churlish pride in the fact that they were immune from rate shocks because of publicly produced power, will take the hit. Los Angeles, which was said to have spent $130 million of its own money generating electricity to sell to PG&E and Southern California Edison, may be out more than $100 million for power it provided. The city's Department of Water and Power may have to raise its own rates to cover that outlay. PG&E's Top 20 CreditorsCompany Amt. owed(x)Bank of New York $2,210California Power Exchange 1,970Bankers Trust Co. 1,300Calif. Independent System Operator 1,130Bank of America 938.46U.S. Bank, Corporate Trust Services 310.00Calpine Gilroy Cogeneration LP 57.93Calpine Greenleaf Inc. 49.45Crocket Cogeneration 48.40Calpine King City Cogeneration LLC 45.71El Paso Merchant Energy Gas LP 40.15GMF Power Systems LP 40.12Geysers Power Co. LLC 32.87BP Energy Co. 29.52Enron Canada Corp. 28.21Chevron U.S.A. Production Co. 24.72Sempra Energy Trading Corp. 23.85Calpine Pittsburg Power Plant 21.58Wheelabrator Shasta Energy Co. Inc. 21.51Sierra Pacific Industries 19.89 (x)In millions of dollars Source: U.S. Bankruptcy Court, Northern District of California GRAPHIC, CHART: SEE END OF TEXT Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron to Cut 20% of Workforce at Broadband Unit, Reuters Says 2001-04-07 17:10 (New York) Houston, April 7 (Bloomberg) -- Enron Corp. will cut 250 jobs, or 20 percent of the workforce at its broadband telecommunications unit, Reuters reported yesterday, citing spokeswoman Kelly Kimberly. Kimberly said Enron is cutting jobs because it completed its 18,000-mile fiber-optic network and demand has been less than expected for its streaming media products delivered to personal computers, Reuters said. Affected employees will be eligible for other positions at Enron Broadband Services or other units, though some people may be fired, she told Reuters. Houston-based Enron is the biggest energy trader. Maharashtra Won't Make Payment to Enron Venture, Paper Says 2001-04-07 01:30 (New York) Mumbai, April 7 (Bloomberg) -- India's Maharashtra state government decided not to pay a 1.1 billion rupee ($23.83 million) bill from an Enron Corp. venture for January electricity charges, the Business Standard reported, citing an unnamed government official. The government will tomorrow write to the venture, Dabhol Power Co., that it does not intend to honor its guarantee for the Maharashtra State Electricity Board, the report said, quoting the official. The state utility became unable to pay for power it ordered after Dabhol Power raised its rates to reflect soaring oil prices. Prices of naphtha, the fuel made from crude oil that fires Dabhol's plant, have more than doubled in two years. Dabhol Power is in arbitration over the federal government's refusal to pay a guarantee of 1.02 billion rupees toward electricity charges for December.
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