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Markets Utility Stocks May Stall Amid Tech Rebound
Los Angeles Times, 12/12/00 INDIA: Enron India unit local lenders to cut rates. Reuters English News Service, 12/12/00 Three Firms to Sell Natural Gas Instead of Selling Products That Use It KRTBN Knight-Ridder Tribune Business News: The Dallas Morning News - Texas, 12/12/00 Activate ''Year-In-Review'' Factsheet Business Wire, 12/12/00 Enron Sheds No Light on Consumer The Times of India, 12/12/00 Enron deal can be nullified: Retd SC judge The Times of India, 12/12/00 Green Mountain Applies To Be 10th Texas Elec Supplier Dow Jones Energy Service, 12/11/00 The New Power Company Certified As A Retail Natural Gas Marketer In Georgia PR Newswire, 12/11/00 USA: Big names dominate in Internet energy trading race. Reuters English News Service, 12/11/00 Dynegy's New E-Commerce Site Had $1.5 Bln in November Trading Bloomberg, 12/11/00 Business; Financial Desk Markets Utility Stocks May Stall Amid Tech Rebound THOMAS S. MULLIGAN ? 12/12/2000 Los Angeles Times Home Edition Page C-4 Copyright 2000 / The Times Mirror Company NEW YORK -- Electric utility stocks, driven by strong power demand, falling bond yields and defensive-minded investors, have had a remarkable year so far. The Dow Jones utility stock index is up 36% year to date, while most U.S. blue-chip indexes are in the red. But in recent weeks many utility stocks have flattened. California's current power crisis notwithstanding, analysts note that we are headed into the part of the year when electricity demand slackens. Is the utility sector played out for now? Is it time to take profits and move on? Experts who follow electric utilities say much depends on the rest of the stock market. It's no accident that major utility indexes hit bottom in the second week of March, just as the tech-dominated Nasdaq composite index was soaring to its all-time high. Now, if tech stocks continue to recover from their spring and summer collapse, that could divert money from utility shares, analysts say. When a traditionally exciting sector like tech is red-hot, nobody wants to hear about utility stocks, said Doris Kelley-Watkins, portfolio manager of the Evergreen Utility Fund. Many investors who initially piled into utility issues in winter and spring were seeking a safe haven as Nasdaq plunged: With their high-dividend yields, big utility companies have long been favorite defensive plays. But then came the summer peak power-use season, and the country woke up to the reality of an electricity shortage. Utility stocks zoomed. The terrific gains "were a real boon to investors who came here thinking they were going to be bored," Kelley-Watkins said. Indeed, stocks of firms such as Dynegy (ticker symbol: DYN), Calpine (CPN), Reliant Energy (REI) and Duke Energy (DUK) are up more than 70% so far this year. Kelley-Watkins, like a number of Wall Street analysts, believes that the "easy money" in utility stocks already has been made. Nevertheless, there will still be opportunities in the sector as long as generating capacity stays tight--which it is sure to do for at least two or three more years, she said. Some new power plants will be coming online toward the end of 2002, Kelley-Watkins added, but the current supply squeeze has been more than a decade in the making and will not be quickly solved. Hence, some of the biggest gainers this year are utilities that have extensive energy-trading operations--Duke and Reliant, for example. They could continue to take advantage of soaring demand and unusual volatility, Kelley-Watkins said. Dynegy and Houston-based Enron (ENE), the nation's biggest wholesale power marketer as well as a major trader of natural gas and other commodities, are among the Evergreen fund's biggest holdings. Kelley-Watkins also thinks that Sempra Energy (SRE), parent of San Diego Gas & Electric, has made a good transition from a heavily regulated owner of power plants to an energy distributor and transmitter. But she shies away from Sempra's giant California cousins, PG&E (PCG) and Edison International (EIX, parent of Southern California Edison), which she considers too debt-burdened. Nobody welcomes a recession, but Timothy M. Winter, analyst at A.G. Edwards in St. Louis, said an economic downturn probably would help utility stocks, as many remain relatively cheap in terms of price-to-earnings ratios, and would continue to be viewed as a defensive haven. The presidential election outcome also matters, Winter said. Most Wall Streeters think a George W. Bush victory would be a plus for the sector because he probably would be more open than Al Gore to new power plant construction. Winter likes Progress Energy (PGN), formerly Carolina Power & Light, because of its dominance in the fast-growing Southeast. His firm also recommends American Electric Power (AEP) and Xcel Energy (XEL). Michael S. Worms, analyst at Gerard Klauer Mattison in New York, said although electric-utility earnings should continue strong into next year, it will be hard to duplicate this year's 20% average profit gains. "We had a phenomenal year because of tight capacity and high prices," Worms said. Utility stocks probably would have done well on such business fundamentals, but they also received a strong tail wind from the stumbling tech sector, said Worms. If tech shares have bottomed, and if the Federal Reserve speeds the market's recovery with interest-rate cuts, that will hurt the performance of utility stocks, Worms said. His top pick is Calpine, even though shares of the San Jose-based energy generator and marketer already have had an amazing two-year run, up 200% so far this year, on top of a 400% surge in 1999. (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Running Low on Power? Utility stocks surged in spring and summer, but the group has stalled in recent weeks. Dow Jones index of 15 major utility stocks, weekly closes and latest Monday: 386.41 Source: Bloomberg News GRAPHIC-CHART: Running Low on Power?, Los Angeles Times; Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Enron India unit local lenders to cut rates. 12/12/2000 Reuters English News Service (C) Reuters Limited 2000. BOMBAY, Dec 12 (Reuters) - The Indian unit of U.S. energy giant Enron said on Tuesday that four local lenders have agreed to cut their rates on loans to its project which is under fire from critics for producing costly power. ICICI , Canara Bank, State Bank of India and Industrial Finance Corporation of India have all agreed to cut rates by 450 basis points to 16.5 percent, a spokesman of Dabhol Power Company told Reuters. Dabhol Power Company is 65 percent owned by Enron and is implementing a two-phase 2,184 MW power project in Maharashtra. Phase one of the project is already in operation. The cuts will help in lowering the tariff at which Enron sells power to the Maharashtra government, he said. The spokesman said the firm is considering a reduction in tariff but did not reveal details. Last week, Industrial Development Bank of India agreed to drop rates by a similar margin. The spokesman did not specify when the cuts by the financial institutions would come into effect. The state government wants the project to be reviewed but is yet to take a final view. Enron says the high tariff would come down next year when it switches over to the cheaper fuel of natural gas from naphtha. The project cost of $1.9 billion is financed 70 percent through debt. Enron's project is among the few foreign power projects to have begun operations since India opened up its power sector in 1992. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Three Firms to Sell Natural Gas Instead of Selling Products That Use It Terry Maxon 12/12/2000 KRTBN Knight-Ridder Tribune Business News: The Dallas Morning News - Texas Copyright (C) 2000 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM) Here's how expensive natural gas has become: Three companies decided Monday they could make more money from selling their natural gas than from selling products using natural gas. Natural gas prices hit yet another all-time high Monday, closing at $9.413 per million British thermal units on the New York Mercantile Exchange. That represented an 83-cent increase from Friday's close, up 9.6 percent. Two fertilizer manufacturers, Terra Industries Inc. and Mississippi Chemical Corp., said they were selling natural gas that normally would go to make nitrogen, ammonia or other products. And oil company Seneca Resources Corp. said gas normally used to boost heavy oil production in a California field would be sold instead. Jeff Shorter, vice president of TXU Energy Trading in Dallas, said he's not surprised to hear companies are selling their natural gas rather than using the gas to make their products. "I don't think that's the last of them either," Mr. Shorter said. He said he expects other companies to come to the same decision as Terra. There are a number of companies that have fully hedged their natural gas purchases at lower prices, and can make a profit that "far exceeds" what they can earn from selling their core business products, he said. He noted that the prices in spot markets Monday were even higher than in NYMEX trading. Gas for Midwest delivery ranged from $11 to $13 and $14, and New York gas was at $12 and higher. "Typically, in the winter time we have a great deal of volatility which you don't see in the futures market," Mr. Shorter said. Spot prices have been much higher in the West, where restricted natural gas supplies, shut-down generators and low levels of water for hydroelectric plants have contributed to skyrocketing electricity prices. Terra, based in Sioux City, Iowa, said it closed one of two ammonia plants in Verdigris, Okla., and its Blytheville, Ark., plant this month, so it could sell the natural gas used by those plants. It is profiting about $2 to $3 per MBtu on the gas it is reselling. "The natural gas price increase since our December requirements were purchased for Verdigris permitted us to sell a portion of those purchases and generate higher gross profits than could be realized from selling the products manufactured with the natural gas," said Michael L. Bennett, Terra executive vice president and chief operating officer. On Nov. 30, Terra said it was closing its Beaumont plant because it couldn't make a profit at current gas prices. Terra said then that its production costs would exceed selling prices when natural gas prices climbed above $6. When the decision was announced Nov. 30, NYMEX gas prices closed at $6.673 an MBtu. Since then, the prices have risen nearly $3. Terra said it would re-evaluate the situation toward the end of December. Mississippi Chemical said it was selling all of its futures contracts for natural gas to lock in the current prices. It said it would post a $16 million pre-tax gain by selling the gas contracts. The company's president and chief executive officer, Charles O. Dunn, said selling the natural gas was in Mississippi Chemical's "best interests." "We remain committed to the nitrogen business and our customers, but we also have to take advantage of opportunities to optimize cash flow during these challenging times," Mr. Dunn said. "It is our belief that the current unprecedented natural gas prices are unlikely to be sustained during the intermediate term." Seneca Resources, based in Buffalo, N.Y., said Monday it would sell the natural gas it had been using for its steam injection project at a California oil field. It expects to post a pre-tax profit of about $31,000 a month, it said. "In light of the current natural gas shortage in California, we felt it was important to curtail our steaming operations and allow that gas to be used to heat homes and generate electricity," Seneca president James Beck said. In at least one case, high electricity prices have induced a company to sell off the electricity for which it has contracted rather than continue operations. On Sunday, Kaiser Aluminum & Chemical Corp. said it would close its Pacific Northwest smelters until at least Oct. 1, 2001, and was selling the electricity those plants would have used. Although it must pay laid-off employees a portion of their salaries, the power sales from December alone will bring Kaiser $52 million. Mr. Shorter of TXU and Mark Palmer, spokesman for Houston energy company Enron Corp., said the arrival of cold weather and the sharply higher natural gas prices have brought more companies to their doors asking for help in managing their energy costs. "Volatility is good for us," Mr. Palmer said. Mr. Shorter said the price of natural gas has justified a switch from natural gas to fuel oil for a number of their customers. Supplies of natural gas have remained adequate, but companies that didn't prepare for winter energy costs will feel a financial hit, Mr. Shorter said. "You're going to see a real economic strain in a lot of geographic regions -- if not nationally -- on the economic viability of a lot of these companies" that had no program to manage energy risks or had plans that were "ill-advised or improperly timed," he said. Terra senior vice president Mark Rosenbury said Monday the company will look at gas prices between Christmas and New Year's to see if it can profitably buy natural gas and reopen the shuttered plants. Mr. Rosenbury said he sees the current spike in natural gas prices as "an aberration" and expects prices to fall to historical norms of $2 to $3 fairly soon. "Maybe it's longer than I think. But the cost of finding, producing and selling natural gas doesn't command the price it's at today," he said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Activate ''Year-In-Review'' Factsheet 12/12/2000 Business Wire (Copyright © 2000, Business Wire) SEATTLE--(BUSINESS WIRE)--Dec. 12, 2000--Activate emerged as a leading digital media services company, Webcasting a record number of live events and winning two industry awards to cap a year of dramatic growth. A majority-owned operating company of CMGI, Activate's business has grown 15-30X across all key metrics, both in volume and scope of work. Over 8,000 businesses employed Activate's broad range of digital media services, including production and distribution of online live and on-demand events for both business communications and consumer events. In addition, Activate experienced over 100 million streams in 2000. "This has been quite a year for Activate," said Jeff Schrock, CEO and founder of Activate. "We've been fortunate to be involved in this industry from the very beginning and it has been exciting to see the digital media explosion over the last year. Activate's goal continues to be providing our customers with high-quality, cost-effective digital media solutions and we were fortunate to end the year on a high note, receiving two industry awards from Computerworld and Network World for our network performance and service offerings." Notable Activate milestones for 2000 include... NETWORK -- Recognizing the broadband evolution, Activate focused on key network innovations, including cell-based server architecture. Activate's advanced network boosts bandwidth efficiency, increasing the company's peak capacity and refining Activate's load balancing and caching techniques. These enhancements contributed to Activate's Blue Ribbon win in Network World's Streaming Media Review, beating Akamai, iBeam and Digital Island. -- Coordination and cross-connection with other content distribution networks (CDNs), including Mirror Image, Enron, Digital Island, and AT&T. These skills led to a significant role in MSN's multi-network Webcast of Madonna's London concert, which was produced by sister company Navisite. AUDIENCE REACH -- With over 40,000 Webcasts in 2000, Activate streamed more live events than any other service provider, including Akamai, iBeam and Digital Island. Live events ranged from concerts for the Backstreet Boys and corporate announcements for Compaq, Amway and Microsoft to Seattle Seahawks game Webcasts and a political rally for Ralph Nader. -- Activate experienced new peaks in bits-per-second simultaneous transmission, total simultaneous viewers and total bytes transferred. These peaks resulted from combined audiences of hundreds of simultaneous events during Activate's highest traffic periods, averaging over 25 million streams per quarter. -- Acknowledging the impact of the World Wide Web, Activate partnered with European streaming media provider Unit.net to ensure global reach. BUSINESS EXPANSION -- Activate expanded into a 60,000 square foot production and operations center in Seattle, and additional operational and sales locations in New York, San Francisco, Los Angeles, Boston and Chicago. This growth complements the continued growth of Toronto-based Activate Canada, the leading streaming media provider in the Canadian market. INDUSTRY REACH -- Financial: Since Regulation FD went into effect, Activate established a 75 percent market share in the financial space, broadcasting nearly 4,000 earnings calls in the third quarter. -- Entertainment: Activate's digital media solutions were a breakthrough hit with the entertainment industry, including partnerships with BMG, MTVi and Miramax. From pop and rock to jazz and hip-hop, Activate provided digital media services for today's hottest artists including Jay-Z, P!NK and Christina Aguliera. -- Advertising: Activate partnered with AdForce and Engage to expand streaming advertising, developing live and on-demand ad insertion solutions. About Activate Activate is a leading digital media infrastructure services company. Activate's services include: event Webcasting for business communications and consumer live events, live 24x7 Webcasting for radio, TV and Internet-only programming, and on-demand Webcasting of audio and video content to enhance any Web site. Major clients include Microsoft, Dell, Unocal, AIMR, Rivals.com, National Public Radio, and CTV Sportsnet.com. Activate received the Blue Ribbon award from Network World's Streaming Media Review and has been named by Computerworld as one of the top 100 emerging companies to watch in 2001. A majority owned operating company of CMGI, Inc., Activate is based in Seattle with offices in New York, San Francisco and Toronto. For more information about the company or its services, please visit www.activate.net or call 206/830-5300. CONTACT: Activate Brooke Davis, 206/830-5716 brooked@activate.net or The Weber Group Rachel Dressler, 503/552-3742 rdressler@webergroup.com 07:01 EST DECEMBER 12, 2000 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron Sheds No Light on Consumer DARRYL D'MONTE 12/12/2000 The Times of India Copyright (C) 2000 The Times of India; Source: World Reporter (TM) BY any reckoning, the ongoing controversy over the price of electricity produced by the US multinational, Enron, in Maharashtra, demonstrates how the power elite in this country has been guilty of waiving all normal checks and balances in its haste to favour this single producer. Indeed, as Abhay Mehta, the author of the incisive expose of the project titled Power Play says, there is little point berating the American company for taking us for a ride when politicians from parties across the spectrum and a galaxy of bureaucrats and public agencies vied with each other in rolling out the red carpet. Maharashtra energy minister Padamsinh Patil has now contradicted his coalition chief minister's assurance that the second phase of the project would be reviewed. This is not the customary double-talk of politicians but the tacit acknowledgement that Mr Patil's National Congress Party mentor Sharad Pawar was responsible as chief minister for pushing through Enron's first phase despite countless objections to what is simply the biggest purchase contract in India's history and one of the largest in the world. In 1993, Mr Pawar went on record that issues such as the import of fuel, total foreign exchange outgo and presumably the power tariff were minor issues to be clarified and that the Foreign Investment Promotion Board would take a decision on them at the time of final review. These are precisely the issues that are coming home to roost. With the built-in escalation clauses in the infamous power purchase agreement, which permits increases in tariffs with a hike in the dollar exchange rate among other factors, the price of power is now over Rs 7 per unit and it is certain to rise further. This will impose a crippling burden on consumers not only householders but, ironically enough, industries, negating the very economic growth that private producers like Enron were supposed to foster. When Mr Pawar capitulated to virtually every demand of the US company, the capital cost was already over twice that of comparable projects elsewhere in the world. Although Enron is often described as one of the world's leading power companies, it is mainly engaged in distributing gas. In 1993, only one per cent of its revenue was earned on producing power. Its use of imported liquefied natural gas as fuel for the Dabhol plant was some four times more expensive than coal, of which India has an abundance. The World Bank, itself an ardent votary of privatisation, criticised the project on several grounds. Since it would amount to one-fifth of the Maharashtra State Electricity Board's capacity, it was likely to have an adverse financial impact, the Bank stated. Consumers would not be willing to pay such a high price and it concluded, on economic grounds, that the project was not viable. The Central Electricity Authority (CEA) also pointed out that the project departed from the norm, especially in denominating prices in US dollars. However, Mr Pawar decided to bypass the CEA and overcome the objections of the World Bank and others. At the time, the opposition parties in Maharashtra, the BJP and Shiv Sena, accused Mr Pawar of corruption in shepherding the project through. Mr Gopinath Munde of the BJP made his famous boast that they would throw the project in the Arabian sea. When they came to power in 1995, they appointed a committee to examine whether the project served the state's interests. The committee accused the previous government of committing a grave impropriety under circumstances which made the Enron/MSEB arrangement on Dabhol lack transparency. It came to the irresistible conclusion that several unseen factors and forces seem to have worked to get Enron what it wanted. On this basis, the state government cancelled the first and second phases. The cancellation raised several protests. Manmohan Singh claimed that it could not be done. Then US ambassador Frank Wisner warned of the consequences (he joined Enron as a director the very day after he finished his stint in India). However, the redoubtable Rebecca Mark of Enron flew down to meet Bal Thackeray, the self-proclaimed remote control of the BJP-SS coalition, for a second time. On this occasion, she must have used her considerable persuasive powers to convince the Sena leader to backtrack on the cancellation and the government announced renegotiations. The total payments to Enron under the new agreement was a staggering $35 billion over the project's lifetime and in a blatant misrepresentation, the government claimed it had lowered the tariff. The final straw was in May 1996 when Mr Vajpayee's 13-day minority government ratified the Centre's counter-guarantee to Enron on its very last day in office. When the CITU and Abhay Mehta filed a public interest petition in the Mumbai high court against the project, the arguments given by Enron's lawyers and those representing the government were tendentious to the point of being farcical. Chief minister Manohar Joshi filed an affidavit to make out that his government's earlier allegations of fraud were made on the basis of newspaper reports. Enron got its way and the project went on stream. Even granting that several states were bending over backwards to attract foreign investment in the early nineties, the concessions which were extended to Enron were not merely extravagant but unconstitutional. The financial and legal guarantees committed the Indian state in a manner which no self-respecting country would endure. Much of the political-bureaucratic class connived at this subversion of the rule of law. The power purchase agreement in particular violated the Electricity Supply Act. The Maharashtra government's finance department had admitted in 1994 that if the central government paid the company any sums by way of its guarantee, these would be deducted from the state's RBI account. It is this unconstitutional agreement which ought to serve as the basis for questioning the entire Enron agreement in court. It is obvious that it is against the public interest and it could conceivably be demonstrated that the power elite has acted in its own interest and against that of the Indian people. There is already a precedent in Pakistan where a power purchase agreement with Enron which had a substantially lower cost per MW than Dabhol's was cancelled. Two MoUs which the Karnataka government signed with another US power company, Cogentrix, were also terminated. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron deal can be nullified: Retd SC judge 12/12/2000 The Times of India Copyright (C) 2000 The Times of India; Source: World Reporter (TM) MUMBAI: Retired high court judge Hosbet Suresh has stated that the agreement signed between the Maharashtra State Electricity Board (MSEB) and the Dabhol Power Company (DPC), a subsidiary of US-based Enron, can be nullified. The DPC spokesperson was not available for comment. The state government would be within its rights to cancel the 1993 Power Purchase Agreement on grounds of protection of public interest, he said. ``The power that the Enron plant produces is twice as expensive as its nearest competitor and seven times as expensive as the cheapest electricity available in Maharashtra. The fixed charges, whether MSEB buys electricity or not, alone works out to Rs 1,000 crore a year for Phase I and nearly twice the amount for Phase II and the amount is to be paid for the next 40 years ! What public interest does it serve ?'' Mr Suresh asked in his opinion given to the Enron Virodhi Andolan. The implications of this agreement is to ``exploit'' the people, he said in his five-page statement, adding that ``the government has an obligation to end such exploitation''. Questioning the erstwhile Shiv Sena-BJP government's decision to withdraw the court case against the DPC, Mr Suresh sought to bring forth the inconsistencies during the alliance rule. The Sena-BJP had challenged the PPA declaring it as a ``fraud'' as it was not in keeping with public policy, consumer interest and interest of the state. ``This suit was withdrawn without any of the contentious issues on law and on facts being decided. The government renegotiated without complying any of the requirements under the law,'' Mr Suresh observed. ``The concealment of relevant facts from the public, the unsatisfactory explanation for withdrawing the suit .... all lead to one thing namely that the government at no time had any regard for public welfare...,'' he said. Mr Suresh also pointed out to the earlier petition filed by BJP leader Ramdas Nayak who had challenged the contract to Enron as it was awarded without the process of competitive bidding. Mr Nayak's petition, however, was dismissed on August 19, 1994 and all subsequent petitions which sought to challenge the PPA were also given similar treatment, he said, adding ``without the courts going into he validity of the agreement''. ``Electricity is not a matter of commerce. It is a necessity like light, water and air. There can be no monopoly in this. If someone wants to trade on these elements, he may do so provided he does not exploit the people,'' Mr Suresh said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Green Mountain Applies To Be 10th Texas Elec Supplier 12/11/2000 Dow Jones Energy Service (Copyright © 2000, Dow Jones & Company, Inc.) HOUSTON -(Dow Jones)- Green Mountain Energy Co. said Monday it has filed an application with the Texas Public Utility Commission to become a retail electric provider when Texas launches retail electric competition Jan. 1, 2002. At least nine other companies also have filed applications, but Green Mountain said it is the first energy company to apply for a Texas license to sell renewable power, such as wind, sun or hydropower. "We are looking forward to the prospects of doing business in Texas, and we are excited to see regulatory rules being put in place to promote competition, creativity and innovation in the marketplace," said Gillan Taddune, Green Mountain's Texas regional manager. The PUC has approved one REP application from a large industrial company, but the Dallas-based firm, TXI Power Co., only wants to buy electricity to supply its own plants. Other non-utility companies that have filed applications to be certified as Texas retail electric providers, or REPs, include: Sempra Energy Solutions, a unit of Sempra Energy (SRE); Enron Energy Services and Enron Power Marketing, both units of Enron Corp., (ENE); New Power Co., formed this year by Enron, International Business Machines (IBM) and America Online Inc. (AOL); and Shell Energy Services Co., a unit of Royal Dutch/Shell Group (RD). Affiliates of existing Texas utilities have also filed to become REPs. First Choice Power, a subsidiary of TNP Enterprises Inc. has filed. TXU Corp. (TXU), the state's largest investor-owned utility and Reliant Energy (REI), the second largest, also recently filed two applications to create two REPs, one to sell power to large commercial and industrial customers and one to sell power to smaller customers. More companies are expected to begin the certification process in Texas before the end of the year as market rules are finalized. Independent suppliers watching the Texas market include: AES NewEnergy Inc., a unit of AES Corp. (AES); and Exelon Energy (EXC). To be certified, an entity must hold an investment grade credit rating, have $50 million of net worth or have cash resources of $100,000. REPs will be subject to PUC enforcement actions, including penalties, suspension and revocation for violations. A pilot program involving 5% of the state's power customers will begin in June. -By Eileen O'Grady, Dow Jones Newswires; 713-547-9213; eileen.ogrady@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. The New Power Company Certified As A Retail Natural Gas Marketer In Georgia 12/11/2000 PR Newswire (Copyright © 2000, PR Newswire) PURCHASE, N.Y., Dec. 11 /PRNewswire/ -- TNPC, Inc. (NYSE: NPW), parent of The New Power Company, the first national residential and small business energy provider, today announced it had received its certificate as a retail Natural Gas Marketer from the Georgia Public Service Commission. The New Power Company will begin to serve natural gas consumers in Georgia in 2001. The New Power Company was formed by Enron, the largest trader and marketer of electricity and natural gas in North America. In June, the Company acquired approximately 300,000 natural gas and electricity accounts in eight states from the Columbia Energy Group, which includes approximately 83,000 natural gas customers in Georgia - roughly 6 percent of the market. The New Power Company began acquiring electricity customers in select utility markets in Pennsylvania and New Jersey in October 2000. In addition, the Company has been awarded 299,000 electricity customers by PECO Energy Company under its "Competitive Default Service" program. About TNPC, Inc. TNPC, Inc. (NYSE: NPW), through its subsidiary, The New Power Company, is the first national provider of electricity and natural gas to residential and small commercial customers in the United States. The Company offers consumers in restructured retail energy markets competitive energy prices, flexible payment and pricing choices, improved customer service, and other innovative products, services and incentives. /CONTACT: Investors - June Filingeri, Vice President, Investor Relations, Jfilinge@newpower.com, 914-697-2431, or Media - Gael Doar, Director of Communications, gdoar@newpower.com, 914-697-2451, both of TNPC, Inc./ 17:29 EST Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. USA: Big names dominate in Internet energy trading race. By Gelu Sulugiuc 12/11/2000 Reuters English News Service (C) Reuters Limited 2000. NEW YORK, Dec 11 (Reuters) - All bar the biggest of the much-heralded online energy exchanges are struggling to generate liquidity as the oil community sticks with tried and trusted trading habits, analysts and traders said. While most of the 30 online energy exchanges that have sprung up over the last year keep liquidity figures close to their chest, analysts say that the big names - IntercontinentalExchange (ICE) and EnronOnline - are pulling clear. "You can juice up numbers any way you want, but the one that's succeeding today is ICE," said Peter Fusaro, president of energy e-commerce consultants firm Global Change Associates. "The others are floundering because they have no liquidity." ICE which enjoys the backing of such industry heavyweights as BP, Royal Dutch/Shell and TotalFinaElf, traded a total of 200 million barrels of crude and products in the month after it began operating in October. Like all the new energy platforms - which mainly host "over-the-counter" contracts traded outside regulated exchanges, - this is dwarfed by volumes posted on the New York Mercantile Exchange (NYMEX). Volumes on Friday alone on NYMEX crude for January delivery reached almost 40 million barrels of crude oil and almost 25 million barrels of heating oil. Smaller online exchanges such as RedMeteor.com and HoustonStreet Exchange hosted online trades of just 3.5 million barrels and 2.5 million barrels respectively of heating oil in the entire month of October, industry sources said. TIED TO TRADITION Oil volumes have taken time to pick up because many traders are reluctant to give up brokers and switch to the internet, afraid of making costly mistakes trading online. "There are brokers that have been around for a long time and have established personal and business relationships with traders," said Tom Knight, an independent online trading consultant. Oil's recent dizzying price volatility has also deterred traders from using online exchanges, fearing that a swift market move could turn a profitable Web trade into a ruinous one in a matter of minutes. "You can't take your trade off (the online exchange) fast enough," a trader who uses EnronOnline and Altra said. Old habits dying hard in the oil community means the younger markets of natural gas and power hold the key to the new platforms' liquidity growth. Leading the way is EnronOnline, which boasts an average daily volume of $10.5 billion and 35,000 transactions in more than 30 commodities, smashing initial targets of a $30-$40 billion yearly trading volume. Main competitor Dynegydirect has posted a total transaction volume of only $1.5 billion since it began trading Nov. 1. Traders and analysts said that EnronOnline is already becoming so big that it can set the tone for the natural gas cash market by itself. "On the ICE, players don't want to make a better offer than Enron," a trader said. "The only thing that's still not swayed by Enron numbers is NYMEX." THREE MODELS Among three competing business models, Dynegydirect and EnronOnline provide a market where players can only trade with the company that operates the site. Other platforms, like ICE, act like an intermediary, but provide only financial products such as swaps and options. A third group that includes RedMeteor.com, Altra and HoustonStreet focuses on physical markets and acts as a clearinghouse for oil, natural gas and electricity trading. Despite the slow start for some sites, analysts agree that more energy trading will migrate online as commission costs go down. Knight predicted that within five years more than 50 percent of crude and refined products trading will be done online, with gas and power shifting to the Web even faster. Yet only a few Web exchanges will enjoy the windfall. Analysts forecast that a wave of mergers and consolidations will leave only a small number of profitable online exchanges. NYMEX hopes its own online exchange, enymex, will be part of that group, but it will face stiff competition when it finally launches in the second quarter of 2001. "It will be difficult for enymex to compete six months for now with ICE and EnronOnline," Fusaro said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Dynegy's New E-Commerce Site Had $1.5 Bln in November Trading 12/11/0 17:37 (New York) Dynegy's New E-Commerce Site Had $1.5 Bln in November Trading Houston, Dec. 11 (Bloomberg) -- Dynegy Inc., a U.S. electricity and natural-gas trader, said its Internet trading site, Dynegydirect, had more than $1.5 billion in transactions in in November, its first month of business. More than $1 billion of the business came from new customers, Dynegy spokesman Steve Stengel said. Dynegydirect's customers trade exclusively with Dynegy, not with each other. The Web site has more than 400 companies buying and selling North American power, natural gas and natural gas liquids. Dynegydirect plans to start trading coal, emission allowances and weather derivatives in the first quarter. International energy products and bandwidth are scheduled to be added in the second quarter. Shares of Houston-based Dynegy rose $4.19 to $53.75. EnronOnline, the 1-year-old on-line market owned by Enron Corp., the world's biggest energy trader, trades about $2.4 billion a day, or about $12 billion a week. IntercontinentalExchange, an Internet market for energy and precious metals backed by 85 energy and financial companies, traded about $6 billion in oil, natural-gas and electricity in its first week in mid October. ICE brings buyers and sellers together to negotiate trades. On EnronOnline, only Enron trades with other companies. Bloomberg LP, the parent of Bloomberg News, competes with ICE and others with its PowerMatch trading system. --Margot Habiby in Dallas, (214) 740-0873 or mhabiby@bloomberg
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