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Performance Reviews: Perilous Curves Ahead Grading employees via forced
rankings is a valuable management tool, say many companies. A slew of employees beg to differ. Fortune Magazine, 05/28/01 UAE: Enron to pull out of Dolphin project Middle East Economic Digest, 05/18/01 Bush Energy Text Associated Press Newswires, 05/17/01 Williams Capital Group's Ellinghaus on Energy Policy: Comment Bloomberg, 05/17/01 Enron's Maurer on Brazil's Power Regulation Problems: Comment Bloomberg, 05/17/01 Enron to Provide Gas Prices to NGX, Drops Lawsuit (Update1) Bloomberg, 05/17/01 Venezuela to Award 11 Gas Tracts June 28-29, First Since 1975 Bloomberg, 05/17/01 USA: U.S. green groups pummel Bush energy plan. Reuters English News Service, 05/17/01 INDIA: Enron India unit lenders put off cancellation vote to Friday. Reuters English News Service, 05/17/01 UK: Global Coal website starts e-trading coal. Reuters English News Service, 05/17/01 CHINA: India tells Enron to renegotiate Dabhol contract. Reuters English News Service, 05/17/01 Common Cause Statement On Cheney Energy Panel's Report; Recommendations Seen As Payback For Big Time Donors U.S. Newswire, 05/17/01 FORTUNE Advisor/On The Job Performance Reviews: Perilous Curves Ahead Grading employees via forced rankings is a valuable management tool, say many companies. A slew of employees beg to differ. Matthew Boyle 05/28/2001 Fortune Magazine Time Inc. 187+ (Copyright 2001) Sanaa Taraman taught at the University of Michigan at Dearborn shortly after getting her Ph.D. in industrial engineering, so she knows all about grading on a curve. But she never thought she'd be the victim of one. A 25-year Ford veteran and the mother of three, Taraman was told last December that she had received the rank of C, the lowest grade under Ford's new performance-evaluation system. Employees who get a C are not eligible for bonuses that year. Two C's in a row are grounds for dismissal. Those in the double-C group will "not necessarily" be fired, says Francine Romine, a Ford spokesperson. Taraman, 54, a senior technical specialist, says she had never before received a poor performance evaluation. She claims that her manager signed off on a B ranking after she successfully completed a demanding assembly-plant project, but that the ranking mysteriously changed to a C a week later. Now on medical leave to treat depression, Taraman joined eight other Ford employees in filing a class-action lawsuit in February, alleging that the auto giant's evaluation system discriminates against older workers. "I felt I was a scapegoat," she says. Romine maintains that Ford's ranking system "is fair and nondiscriminatory." In companies across the country, from General Electric to Hewlett- Packard, such grading systems--in which all employees are ranked against one another and grades are distributed along some sort of bell curve--are creating a firestorm of controversy. In the past 15 months employees have filed class-action suits against Microsoft and Conoco as well as Ford, claiming that the companies discriminate in assigning grades. In each case, a different group of disaffected employees is bringing the charges: older workers at Ford, blacks and women at Microsoft, U.S. citizens at Conoco. Forced ranking systems, also known as forced distribution or "rank and yank," have been around for decades. Adherents include several of FORTUNE's Most Admired Companies, like Cisco Systems, Intel, and GE (see sidebar). But thanks to the slowing economy and an increased focus on pay for performance, more companies--a quarter of the FORTUNE 500, by one estimate--have instituted such forced rankings or gotten tougher with their existing systems. For example, Enron recently expanded its ranking system to cover most U.S. employees, and last fall Hewlett-Packard decreed that a full 5% of its work force would receive HP's lowest grade, rather than the fuzzy 0 to 5% of years past. Proponents of forced rankings argue that they facilitate budgeting and guard against spineless managers who are too afraid to jettison poor performers. "Managers want to live in a Lake Wobegon, where all the children are above average, but that's not the truth," says Dick Grote, an HR consultant who has designed ranking systems for GE and Texas Instruments. Forced rankings, the thinking goes, force managers to be honest with workers about how they're doing. But critics say they compel managers to penalize a good but not great employee who's part of a superstar team. Conversely, a mediocre employee on a struggling unit can come out looking great. "In many cases, the lowest performer might not be that much lower than the highest," says Paul Spector, a professor of industrial psychology at the University of South Florida. Most companies guard against this problem by refraining from rigidly applying the distribution to smaller teams--but that means the spread has to be made up somewhere else. The result: Different managers spend hours haggling with one another to meet the overall distribution requirements. This horse-trading process can be frustrating and time-consuming, one Microsoft middle manager says. While Bill Zolna, a Microsoft spokesperson, denies that the company requires managers to assign a certain percentage of employees to each level, the middle manager says that there is unspoken pressure to do so. Another area of contention is the ranking criteria. In a manufacturing-based economy, it was easy to figure out who was up to snuff: Just see whether Joe is pumping out (or selling) more widgets than Bob. But today organizations use a slew of fuzzy qualitative criteria to evaluate employees. And while there's no doubt that teamwork and communication skills are vital, they are tough to gauge. After all, one manager's team player is another's sycophant. Enron's ranking criteria are "very subjective," admits Mark Palmer, a company spokesman, adding, "There aren't easy labels for what type of person someone is." There's also the danger that forced rankings can become a crutch for poor management. "Good managers should have the capability to make these difficult decisions without a system forcing it upon them," argues Chris Michalak, who designs such systems at Towers Perrin. Of course, one reason employees are up in arms about forced rankings is that they suspect--often correctly--that the rankings are a way for companies to more easily rationalize firings. In his latest message to GE shareholders, CEO Jack Welch said, "Not removing that bottom 10%...is not only a management failure but false kindness as well." This year Sun Microsystems will use a forced-ranking system to identify its worst-performing 10%, who will be given 90 days to shape up, find another job inside Sun, or ship out. So is Sanaa Taraman's situation an anomaly or a taste of things to come? The latter, according to New York City employment lawyer Lorraine Ahlers-Mack. "There's going to be a lot of litigation surrounding this issue," she warns. Managers had better get ready. FEEDBACK: onthejob@fortunemail.com [BOX] PLUS: FAT CEO PENSIONS | NEW OUTSOURCING DANGERS | INTELLECTUAL CAPITAL REVISITED [BOX] Making the Grade ENRON Divides employees into six categories: superior (5% of employees), excellent (30%), strong (30%), satisfactory (20%), needs improvement, and issues (combined, 15%). FORD Last year gave 10% of employees A's, 80% B's, and 10% C's (the lowest grade); will give only 5% C's this year. GENERAL ELECTRIC Divides employees into top (20%), middle (80%), and bottom (10%) categories. HEWLETT-PACKARD Uses a 1-to-5 scale, with 15% of employees getting 5's (the top grade) and 5% getting 1's; the percentage of 2's, 3's, and 4's varies. MICROSOFT Ranks employees from 1 to 5; most fall between 2.5 and 4.5. COLOR PHOTO: PHOTOGRAPH BY JOE VAUGHN Sanaa Taraman recently charged Ford with discriminatory grading. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. UAE: Enron to pull out of Dolphin project 05/18/2001 Middle East Economic Digest Copyright (C) 2001 Middle East Economic Digest; Source: World Reporter (TM) The US' Enron Corporation is to relinquish its stake in Dolphin Energy (DEL), the joint venture company formed to develop the Dolphin gas project. DEL is a Jersey-registered company, 51 per cent owned by the Abu Dhabi-based UAE Offsets Group (UOG). The remaining 49 per cent is split equally between France's TotalFinaElf and Enron. In March 2000, the three partners signed a project development agreement (PDA), which stated that TotalFinaElf would be responsible for the upstream element, which would involve developing a block in Qatar's North field, and Enron would be the midstream partner, responsible for building a gas pipeline to Abu Dhabi, Dubai and Oman, gas marketing and project management (MEED 10:3:00). Industry sources say that Enron's plan to give up its stake in DEL is part of a new business model developed by the company. The sources suggest that there is another factor affecting Enron's decision to pull out of DEL. "The profit margin for Enron would be low. At present, the Dolphin project is being developed primarily as an upstream initiative," says one. The fate of Enron's stake in DEL remains unclear. UOG has not been forthcoming with explanations, but an official statement is expected by the end of May. Some sources suggest UOG will take over the stake of Enron in DEL, but the possibility remains that another company might be invited into the joint venture. "There is talk of new partners," says a TotalFinaElf official. "But whatever happens, we are staying." Enron officials declined to comment. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Bush Energy Text By The Associated Press 05/17/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. Text of President Bush's speech unveiling his energy policy in St. Paul, Minn. on Thursday, as transcribed by eMediaMillWorks, Inc. BUSH: Thank you for that warm welcome. First, I want to thank my friend Norm Coleman. What a great leader he is for St. Paul. He's a very good friend. I think it's very important for you all to know that when Norm calls over there to Washington, I'll answer the phone. Traveling with me today are two of my Cabinet officers. First, from the state of Michigan, the Energy Secretary Spence Abraham. And the EPA Administrator Christie Todd Whitman. I appreciate John's invitation to be here and I want to thank the Capital City Partnership for giving me the chance to come and deliver a major policy address to the nation. I'm also pleased to be in the home of the mighty Minnesota Twins. Their cost per win is astounding. It serves as a good example of what frugality can do for the nation. But I'm not here to talk about baseball. The Twin Cities are a great place to discuss America's energy challenge. Minneapolis-St. Paul grew up as a mighty milling and transportation center because of the power of the Mississippi River. Your history was built on energy that was abundant and affordable and reliable. So too will be this nation's energy future. I invite you to think with me about that future. I had an early look at the future this morning right here in St. Paul. I toured a plant that harnesses the best of new technology to produce energy that is cleaner and more efficient and more affordable. The plant boils enough water to heat 146 major office buildings in downtown St. Paul. Not a bit of energy is wasted, not even the waste. The excess heat generated as the water boils is captured and used to create steam, which generates still more electricity to power pumps and to deliver heat. The plant is a model of energy efficiency. It is also a model of energy diversity. It uses conventional fuels like oil and natural gas and coal, and renewable fuels like wood chips. And the plant is a model of affordability. While other energy prices rise, District Energy has not raised its heating and cooling rates in four years. We're beginning to see the power of the future, not only in office buildings, but also in our homes and our cars. This spring the Sustainable Buildings Industry Council showcased a solar powered home so advanced that it actually produces more energy than it uses. And some Americans are already driving hybrid cars that can convert to battery power to reduce emissions and get up to 70 miles a gallon of gas. These are our early glimpses of a future in which Americans will meet our energy needs in ways that are efficient, clean, convenient and affordable. The future is achievable if we make the right choices now. But if we fail to act, this great country could face a darker future, a future that is unfortunately being previewed in rising prices at the gas pump and rolling blackouts in the great state of California. These events are challenging what had become a fact of life in America: The routine, everyday expectation that when you flick on a light switch, the light will come on. Californians are learning, regrettably, that sometimes when you flick on the light switch, the light does not come on at any price. I'm deeply concerned about the impact of blackouts on the daily lives of the good people of the state of California, and my administration is committed to helping California. We're helping right now by expediting permits for new power production and by working as good partners to reduce our electricity at federal facilities, especially during the peak periods this summer. My administration has developed a sound national plan to help meet our energy needs this year and every year. If we fail to act on this plan, energy prices will continue to rise. For two decades, the share of the average family budget spent on energy steadily declined. But since 1998, it has skyrocketed by 25 percent, and that's a hardship for every American family. If we fail to act, Americans will face more and more widespread blackouts. If we fail to act, our country will become more reliant on foreign crude oil, putting our national energy security into the hands of foreign nations, some of whom who do not share our interests. And if we fail to act, our environment will suffer, as government officials struggle to prevent blackouts in the only way possible, by calling on more polluting emergency backup generators and by running less-efficient old power plants too long and too hard. America cannot allow that to be our future, and we will not. To protect the environment, to meet our growing energy needs, to improve our quality of life, America needs an energy plan that faces up to our energy challenges and meets them. Vice President Cheney and many members of my Cabinet spent months analyzing our problems and seeking solutions. The result is a comprehensive series of more than 100 recommendations that light the way to a brighter future through energy that is abundant and reliable, cleaner and more affordable. The plan addresses all three key aspects of the energy equation: demand, supply and the means to match them. MORE First, it reduces demand by promoting innovation and technology to make us the world leader in efficiency and conservation. Second, it expands and diversifies America's supply of all sources of energy - oil and gas, clean coal, solar, wind, biomass, hydropower and other renewables, as well as safe and clean nuclear power. Third and finally, the report outlines the ways to bring producers and consumers together by modernizing the networks of pipes and wires that link the power plant to the outlet on the wall. Our new energy plan begins with a 21st century focus on conservation. The American entrepreneurial system constantly invents ways to do more with less. We pack more and more computing power on to a chip. We carry more and more messages over a cable and we squeeze more and more power out of a barrel of oil or a cubic foot of natural gas. A new refrigerator you buy today, for example, uses 65 percent less electricity than one that was made 30 years ago. Overall, we use 40 percent less energy to produce new goods and services than we did in 1973. But this steady improvement slowed in the 1990s. Our energy plan will speed up progress on conservation where it has slowed and restart it where it has failed. It will underwrite research and development into energy-saving technology. It will require manufacturers to build more energy-efficient appliances. We will review and remove the obstacles that prevent business from investing in energy-efficient technologies like the combined heat and power system I toured this morning. Conservation does not mean doing without. Thanks to new technology, it can mean doing better and smarter and cheaper. Innovation helps us all make better choices. Smart electric meters can tell homeowners how they're using power and how they might reduce their monthly electric bill. Sensors can turn off lights when people leave a room. And innovation is bringing us transmission wires that waste less of the electricity they carry from plant to home or to office. Conservation on a wide scale takes more than good ideas. It takes capital investment. Outdated buildings and factories have to be upgraded or replaced to consume less and pollute less. And here, some well-intentioned regulations have created a catch-22. Procedures intended to protect the environment have too often blocked environmental progress by discouraging companies from installing newer and cleaner equipment. Wise regulation and American innovation will make this country the world's leader in energy efficiency and conservation in the 21st century. Our goal is to use less additional energy to fuel more economic growth, and I know we can do so. I also know that conservation is the result of millions of good choices made across our land on a daily basis. Yet even as we grow more efficient, even as this nation achieves the objectives in conservation, we will always require some additional energy to power our expanding economy. We learned that from the California experience. California has been an impressive conservation leader. It is the second most energy efficient state in the union, but California has not built a major new power plant in a decade. And not even the most admirable conservation effort could keep up with the state's demand for electricity. So the second part of our energy plan will be to expand and diversify our nation's energy supplies. Diversity is important, not only for energy security, but also for national security. Over-dependence on any one source of energy, especially a foreign source, leaves us vulnerable to price shocks, supply interruptions and, in the worst case, blackmail. America, today, imports 52 percent of all our oil. If we don't take action, those imports will only grow. As long as cars and trucks run on gasoline, we will need oil, and we should produce more of it at home. New technology makes drilling for oil far more productive, as well as environmentally friendly than it was 30 or 40 years ago. Here is the result of one study. And I quote, "Improvements over the past 40 years have dramatically reduced industry's footprint on the fragile tundra, minimized waste produced and protected the land for resident and migratory wildlife." Those aren't my words. Those are the words of the Department of Energy study conducted during my predecessor's administration. Advanced new technologies allow entrepreneurs and risk-takers to find oil and to extract it in ways that leave nature undisturbed. Where oil is found underneath sensitive landscapes, rigs can stand miles away from the oil field and tap a reservoir at an angle. And Arctic sites like ANWR, we can build roads of ice that literally melt away when summer comes and the drilling then stops to protect wildlife. ANWR can produce 600,000 barrels of oil a day for the next 40 years. What difference does 600,000 barrels a day make? Well, that happens to be exactly the amount we import from Saddam Hussein's Iraq. We're not just short of oil, we're short of the refineries that turn oil into fuel. So while the rest of our economy is functioning at 82 percent of capacity, our refineries are gasping at 96 percent of capacity. A single accident, a single shutdown can send prices of gasoline and heating oil spiraling all over the country. The major reason for dramatic increases in gasoline prices today is the lack of refining capacity, and my plan gives the needed flexibility and certainty so refiners will make the investments necessary to expand supply by increasing capacity. And America needs to generate more electricity. The Department of Energy estimates that America will need between 1,300 and 1,900 new power plants over the next two decades. A high-tech economy is a high electricity consumption economy. Even the sleekest laptop needs to plug into an electrical outlet from time-to-time. More than half of the electricity generated in America today comes from coal. If we weren't blessed with this natural resource, we would face even greater shortages and higher prices today. Yet coal presents an environmental challenge. So our plan funds research into new clean coal technologies. It calls on Congress to enact strict new multi-pollutant legislation to reduce emissions from electric power plants. My administration's energy plan anticipates that most new electric plants will be fueled by the cleanest of all fossil fuels, natural gas. Our nation and our hemisphere are rich in natural gas resources, but our ability to develop gas resources has been hampered by restrictions on natural gas exploration. Our ability to deliver gas to consumers has been hindered by opposition to construction of new pipelines that today are more safe and more efficient. MORE I will call on Congress to pass legislation to bring more gas to market while improving pipeline safety and safeguarding the environment. America should also expand a clean and unlimited source of energy, nuclear power. Many Americans may not realize that nuclear power already provides one-fifth of this nation's electricity, safely and without air pollution. But the last American nuclear power plant to enter operation was ordered in 1973. In contrast, France, our friend and ally, gets 80 percent of its electricity from nuclear power. By renewing and expanding existing nuclear facilities, we can generate tens of thousands of megawatts of electricity at a reasonable cost without pumping a gram of greenhouse gas into the atmosphere. New reactor designs are even safer and more economical than the reactors we possess today. And my energy plan directs the Department of Energy and the Environmental Protection Agency to use the best science to move expeditiously to find a safe and permanent repository for nuclear waste. Our energy plan also supports the development of new and renewable sources of energy. It recommends tax credits to homeowners who invest in solar homes and to utilities that build wind turbines or harness biomass and other environmentally friendly forms of power. It removes impediments to the development of hydroelectricity. It proposes incentives to buy new cars that run on alternative fuels like ethanol that consume less oil and, therefore, pollute less. It supports research into fuel cells, a technology of tomorrow that can power a car with hydrogen, the most common element in the universe, and emit only steam as a waste product. In all of these ways, we will expand the diversity or our energy supply. But as with conservation, new energy supply alone is not the whole answer. There is a third element we must address: modernizing the network that delivers the supply to the point of demand. In 1919, a young U.S. Army officer was ordered to lead a truck convoy westward across our country. He was astonished to discover that the journey took 62 days. His name was Dwight David Eisenhower. And the memory of this bumpy, transcontinental ride led to the creation of a modern transportation system. Today, our electrical system is almost as bumpy as our highways were 80 years ago. We have chopped our country into dozens of local electricity markets, which are haphazardly connected to one another. For example, a weak link in California's electrical grid makes it difficult to transfer power from the southern part of the state to the north, where the blackouts have been worse. Highways connect Miami with Seattle, phone lines link Los Angeles and New York, it is time to manage our interstate highway and phone systems with an interstate electrical grid. And here, too, technology will make a big difference. Electricity markets used to be localized because wires could not carry electrical current over long distances. More and better wires can efficiently ship power across the country, reducing the threat of local blackouts or outages. And it's just not our electricity delivery system that has fallen behind. The energy report projects that natural gas consumption will rise rapidly as electric utilities make greater and greater use of this environmentally friendly fuel. We will need newer, cleaner and safer pipes to move these larger quantities of natural gas - up to 38,000 new miles of pipe and 263,000 miles of distribution lines. We'll also need to recognize the energy potential of our neighbors, Canada and Mexico, and make it easier for buyers and sellers of energy to do business across our national borders. And finally, we must work to build a new harmony between our energy needs and our environmental concerns. Too often Americans are asked to take sides between energy production and environmental protection, as if people who revere the Alaska wilderness do not also care about America's energy future; as if the people who produce America's energy do not care about the planet their children will inherit. The truth is, energy production and environmental protection are not competing priorities. They're dual aspects of a single purpose: to live well and wisely upon the earth. Just as we need a new tone in Washington, we also need a new tone in discussing energy and the environment; one that is less suspicious, less punitive, less rancorous. We've yelled at each other enough. Now it's time to listen to each other and to act. And it's time to act. The energy plan I lay out for the nation harnesses the power of modern markets and the potential of new technology. It looks at today's energy problem and sees tomorrow's energy opportunity. It addresses today's energy shortages and shows the way to tomorrow's energy abundance. I have great faith in our country's ability to solve the energy problem, and our energy plan shows the way. But most of all, I have great faith in the American people, our land's ingenuity, our innovation. Our entrepreneurial spirits is this country's greatest of all resources. And thank God, they are never in short supply. God bless. END Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Williams Capital Group's Ellinghaus on Energy Policy: Comment 2001-05-17 12:30 (New York) New York, May 17 (Bloomberg) -- Chris Ellinghaus, energy analyst for New York-based investment bank Williams Capital Group LP, comments on the U.S. energy task force report. President George W. Bush released the report today in Minnesota. ``The Bush plan includes a courageous, pragmatic and long- term strategic policy that prepares for a sufficient future energy supply. Many investors believe that the energy commodity markets will quickly correct to over-capacity over the next one or two years. (However) we firmly believe that sufficient energy supplies will be constrained without new energy policy.'' ``The Bush plan avoids the politically popular but short- sighted temptation of curtailing demand and capping prices.'' ``Price controls of the early 1970s contributed to stagflation in the late 1970s and early 1980s that we would not care to see repeated.'' Affect on energy stocks: ``We expect the debate over energy policy to be heated and controversial.'' ``The plan overestimates the political will of the country to embrace new coal and nuclear power generation but does envision the need for greater fuel diversity. Yet, the Bush plan relies heavily on natural gas for as much as 90 percent of new electric generating capacity. In addition, without a sound policy for nuclear spent fuel shortage, we doubt significant new nuclear construction is likely over the near term.'' ``As the debate unfolds over the next several months, we believe the stocks of the energy sector participants could be jostled periodically with condemning rhetoric. However, we expect extremely strong realized earnings over the course of the summer and growing expectations for next year to provide momentum for power generators, utilities and wholesale energy marketers. We encourage investors to be patient with these stocks.'' Enron's Maurer on Brazil's Power Regulation Problems: Comment 2001-05-17 15:39 (New York) Sao Paulo, May 17 (Bloomberg) -- Luiz Maurer, regulations superintendent for Enron America do Sul Ltda., comments on regulation problems in Brazil that have prevented companies from investing in power generation. Maurer is also vice president of the Brazilian association of electricity trading companies, known as Abracel. On price controls: ``There are many barriers in the contracts that must be signed between the generators and distributors. In the contracts to purchase natural gas, it still hasn't been determined who will pay for the foreign exchange losses. The distribution companies do not have the assurance that they will be allowed to transfer to their customers all the costs'' beyond their control. The ceiling rate for distributors to buy energy from generators ``has been increased twice but it still does not cover some types of costs such as changes in the electricity transmission costs. There is a proposal in which the ceiling rate would be defined by the market'' and not by the power regulator. On Petrobras taking over currency costs for distributors: ``We will be creating an anti-competitive situation. Another natural gas distributor will be in disadvantage against Petrobras. It would not be a measure that would foster competition in the next four years. The best measure is to let the consumer pay for the foreign exchange losses.'' Abracel and other industry associations ``have proposed the creation of a tracking account that would accumulate the losses and gains with the currency plus the financial cost over time so that this would be transferred to the final consumer in the next annual rate adjustment.'' Enron to Provide Gas Prices to NGX, Drops Lawsuit (Update1) 2001-05-15 16:26 (New York) Enron to Provide Gas Prices to NGX, Drops Lawsuit (Update1) (Adds closing share price.) Houston, May 15 (Bloomberg) -- Enron Corp., the world's biggest energy trader, agreed to provide natural-gas pricing information to NGX Canada Inc. and drop a C$100 million ($64.7 million) suit against the Canadian gas exchange. Enron sued NGX in November after the Internet exchange, a unit of the company that owns the Stockholm Stock Exchange, changed providers of its gas-pricing data and didn't include trades on EnronOnline, Enron's Internet exchange, when calculating gas-price indexes. Calgary-based NGX agreed to include EnronOnline trades in calculating its Alberta Gas Price Indices by August, Enron spokesman Eric Thode said. NGX, owned by Stockholm's OM Gruppen AB, is used by about 90 percent of Canadian gas traders, and many traders use EnronOnline to sell gas from western Canada, the biggest supplier of the cleaner-burning fuel to the U.S. Houston-based Enron fell $1.76 to $56.99. Venezuela to Award 11 Gas Tracts June 28-29, First Since 1975 2001-05-17 13:36 (New York) Caracas, May 17 (Bloomberg) -- Venezuela said it will award 11 potentially rich natural gas tracts in a June 28-29 auction expected to clear the way for over $1 billion in investments. Thirty-four companies, the majority foreign, qualified to participate in the auction, the first since the country's natural gas industry was nationalized in 1975-1976. The auction is expected to generate between 8,000 and 10,000 jobs, said an Energy and Mines Ministry spokeswoman. Venezuela, with about 147 trillion cubic feet in reserves, is counting on private companies to spur development. Venezuela is preparing distribution and transmission projects, which would also tap private investment. Among the expected bidders are Enron Corp. and Perez Companc SA. USA: U.S. green groups pummel Bush energy plan. By Patrick Connole 05/17/2001 Reuters English News Service (C) Reuters Limited 2001. WASHINGTON, May 17 (Reuters) - Environmentalists expressed deep dissatisfaction with the energy crisis plan which President George W. Bush unveiled on Thursday, calling it wrongheaded and dangerous to forever seek increasing supplies of oil, coal, natural gas and nuclear power. Activists from the full spectrum of America's environmental lobby took issue with at least some of the expansive $10 billion plan. Many claimed the plan would harm public health by dirtying the air or destroying designated wilderness areas in the west or in Alaska. The long-term measures would be costly and offer no short-term relief to consumers facing power shortages and record-high gasoline prices this summer, green groups said. "The president's plan won't produce affordable energy for Americans now, or ten years from now," said Philip Clapp, president of the National Environmental Trust. "What the president's plan will do is drive up air pollution in our cities and turn the last 5 percent of our public lands that we've protected for future generations over to the oil and coal companies." GREENPEACE DUMPS COAL Coal was the theme of protests by members of the Sierra Club and Greenpeace, who used the fuel as props to disparage the White House plan to use vast domestic supplies of coal. Greenpeace activists dumped five tons of coal and five fake drums of oil and nuclear waste outside Vice President Dick Cheney's residence on Thursday. Cheney, the former top executive of oilfield services giant Halliburton Co , headed the task force which wrote the energy plan. The drums were labeled with the logos of Exxon/Mobil, Chevron, Texaco, BP and Enron. Sierra Club protesters trailed Bush as he swung through Minnesota and Iowa, holding news conferences at coal-fired power plants to offset what they termed misleading appearances by Bush at environmentally friendly facilities used to promote the White House recommendations. "It would be more honest for President Bush to stand in front of the dirty and dangerous coal and nuclear plants that his plan promotes," said Carl Pope, executive director of the Sierra Club, which claims some 650,000 members. Environmentalists portrayed the crisis report as the work of the energy industry, which has close ties to the Bush administration, and out of touch with the pro-conservation, pro-efficiency sentiments in the nation. "If they are so enamored with dirty power, they can have it, because the American people don't want it." said Andrea Durbin, Greenpeace Campaigns Director. WILDERNESS AREAS THREATENED Other green groups criticized the White House energy plan for proposing a review of federal lands that ban oil and gas development. The vast majority of federal lands in the west are already open to oil and gas drilling, leaving mostly designated federal wilderness areas and national monuments off limits to development, according to Susan Daggett, an attorney with Earthjustice Legal Fund in Denver. "These areas have been protected for a reason, and typically they have very little in the way of recoverable oil and gas reserves," Daggett said. The National Audubon Society said the search for energy in "wild" lands would mean small amounts of new production at the cost of wrecking what were once unmolested places. "The energy policy encourages the blowing off of mountaintops in West Virginia, destroying endangered cerulean warbler habitat for a small amount of coal," said John Flicker, president of the Audubon group. Although the White House plan backs drilling in the Arctic National Wildlife Refuge, that provision lacks Senate support to go forward, according to congressional sources. NO CLIMATE CHANGE HELP One gaping hole in the Bush plan, according to global warming experts, is the lack of new initiative to help solve the problem of carbon dioxide emissions, which many scientists blame for worsening climate change. "It costs less to include carbon dioxide as part of a comprehensive system of pollution reductions now, rather than putting it off into the future," said John Stanton, vice president of the National Environmental Trust. Bush has rejected U.S. participation in international talks to finalize the Kyoto Protocol. The treaty sets targets for industrialized nations to cut, on average, by 5.2 percent the amount of carbon emitted under 1990 levels by 2010. The new White House plan instead seeks legislation to cut other pollutants like nitrogen oxide, sulfur and mercury. Cheney has said if people are worried about carbon emissions, they should back nuclear power generation. Green groups scoffed at the idea of nuclear power as an environmentally friendly fuel, citing the hazardous waste from plants and public fears of a major "Chernobyl" style disaster. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Enron India unit lenders put off cancellation vote to Friday. 05/17/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, May 17 (Reuters) - Local and foreign lenders to Enron Corp's troubled Dabhol Power Company (DPC) squabbled on Thursday, forcing the postponement of a vote that would decide whether DPC will pull the plug on a controversial deal to sell power to an Indian state, a source close to the deal said. Indian lenders, led by State Bank of India, , the country's largest commercial bank, opposed allowing DPC to terminate its contract as it would affect their finances, the source added. Foreign banks, whose exposure comprises only 30 percent of the project's total debt of around $2 billion, wanted to give DPC the go-ahead to cancel the contract. The lenders, who discussed the issue in a conference call on Thursday evening, have now decided to vote on the issue on Friday, the source added. The lenders' dispute once again highlights the controversy surrounding the $2.9 billion, 2,184 MW power project that was promoted in 1991 to bring electricity to one of India's most backward regions. The project's first phase of 740 MW was completed in May 1999 while the second phase of 1,444 MW is slated to begin generation next month. Dabhol, which is 65 percent owned by Houston-based Enron, signed a contract with Maharashtra State Electricity Board (MSEB) to sell all the power produced. But MSEB reneged on the contract by refusing to buy power from the second phase citing high costs. It has also not paid Dabhol $48 million for electricity purchased in the past months. Last month, Dabhol issued a notice of arbitration to MSEB and also got its board approval for issuing a notice to terminate the contract. Such a move, analysts say, would hit India hard and affect foreign investment flows into the country's power sector. ($1=46.93 Indian rupees). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. UK: Global Coal website starts e-trading coal. 05/17/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, May 17 (Reuters) - London-based internet coal trading platform Global Coal, set up by some of the world's biggest mining groups and commodity trader Glencore, said on Thursday it was pleased with its first two days of live trading. "On our first day (Wednesday) 60,000 tonnes of coal traded representing $2.26 million and already today (Thursday) 120,000 tonnes has traded," Global Coal's head of marketing John Loewen told Reuters. "We are pleased with the way it is going." Among Global Coal's main backers are miners Rio Tinto Plc/Ltd , Anglo Amercian Plc and Billiton Plc , and utilities utilities TXU Europe and Enel . Loewen said Global Coal's e-platform, wwww.globalcoal.com, was allowing parties to contract business using the Standard Coal Trading Agreement (Scota). "There is a real need to have a standard contract, since coal is not homogeneous", Loewen said. Loewen said there was vast potential for business as coal trading liquidity improves. "We have already seen the success of Enron, although EnronOnline differs substantially from Global Coal in that it (Enron) is the counter-party". Loewen said he did not want to put a number on future transaction levels. "Lets just say we would like to see millions of tonnes trading". Global Coal acts as a platform for buyers and sellers to conduct trade and the company takes a commission on each deal. While coal may no longer enjoy the dominance it had 100 years ago in the west during the "King Coal" era, it still accounts for over a quarter of world energy use and generates over a third, 38.4 percent of global electricity, according to the International Energy Agency. Spot coal trading has become increasingly popular in Europe over the last 18 months or so as the European electricity market liberalises and utilities seek out the cheapest fuel in a competitive market. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. CHINA: India tells Enron to renegotiate Dabhol contract. 05/17/2001 Reuters English News Service (C) Reuters Limited 2001. HONG KONG, May 17 (Reuters) - India has told U.S. energy company Enron Corp that it should renegotiate its contentious power purchase agreement with the Maharashtra state government, Finance Minister Yashwant Sinha said on Thursday. "We have suggested to Enron that they should seriously renegotiate the power purchase agreement with the government of Maharashtra, because there are certain elements in that power purchase agreement which can undergo a change," Sinha said at a business luncheon in Hong Kong on Thursday. Enron and India have been sparring for six months over payment defaults by the Maharashtra State Electricity Board (MSEB) for power purchased from Enron 's Indian unit, Dabhol Power Company (DPC). A Dabhol spokesman on Thursday declined to comment on Sinha's statement. He reiterated the company's previously stated position that it is ready for a dialogue to resolve all issues, but a renegotiation of the contract is not on offer. DPC has already held a meeting with a Maharashtra government committee and is slated to meet them again on May 23. "Since the purpose of the meeting is only to hear out the committee and understand their thoughts, we will not present any proposal," Dabhol said in a statement on May 3. DPC is building the world's largest natural gas fired power plant on India's western coast. The 740 megawatt (MW) first phase of the facility began operating in 1999. The plant's generating capacity will triple to 2,184 MW when phase two is completed next month. MSEB agreed in 1995 to buy all the power produced by the plant, but now says the power is too expensive, and is refusing to take the additional second-phase capacity. Its change of mind has sparked concern over the fate of the project. DPC has already issued a notice of arbitration, and last month its board authorised management to terminate the contract. A vote on Thursday by lenders to the project is expected to endorse the board's decision, a source close to the matter told Reuters. Sinha said he had no comment on the vote. He also declined to reveal the federal government's opinion of MSEB's refusal to buy the second-phase power. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Common Cause Statement On Cheney Energy Panel's Report; Recommendations Seen As Payback For Big Time Donors 05/17/2001 U.S. Newswire (Copyright 2001) WASHINGTON, May 17 /U.S. Newswire/ -- Following is a statement by Common Cause President Scott Harshbarger on the Cheney Energy Panel's Report: While energy consumers are subjected to rolling blackouts in California, all Americans are subjected to a permanent blackout when it comes to the closed-door activities of the National Energy Policy Development Group headed by Vice President Cheney. According to press reports, not even Congress has full knowledge of who is serving on this task force, or a full accounting of this secretive body's activities. The task force's modus operandus does not inspire confidence and many of the task force's recommendations -- like easing environmental protections to benefit the oil and gas industry -- are what you would expect. Big time donors get major league payback, non-donors get higher energy bills and a dirtier environment. The President and Members of Congress have been very successful at drilling for political contributions from the energy sector. In the 2000 election cycle, the oil and gas sector contributed $15.4 million in soft money contributions to the national political party committees; electric utilities contributed $10.1 million more. One company alone, Enron, gave more than $1.4 million in the last cycle and recently sponsored a major party fundraiser. It certainly raises questions about Vice President Cheney's contention that conservation is "not a basis for a sound, comprehensive energy policy." And these big donors must have been really pleased by President Bush's dubious claim that the best way to meet the energy crisis is to cut taxes, so that Americans will be better able to pay their higher energy bills! The much-vaunted tax cut is, after all, just a revenue shift to the energy sector with the taxpayer playing the role of middle-man. Taxpayers or anyone else who may feel left out of this secretive process may have another chance, however: Energy Secretary Spencer Abraham will be holding a private, closed-door briefing on energy policy next Thursday. This being Washington, all you need is a big check made out to the National Republican Senatorial Committee to attend. KEYWORDS: ENERGY, POLICY, CAMPAIGN REFORM Contact: Jeff Cronin or Susan Quatrone, 202-736-5770, both of Common Cause Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.
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