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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Peggy Mahoney X-To: James D Steffes, Harry Kingerski, Richard Shapiro, Dennis Benevides, James M Wood, Martin Wenzel, Tom Riley, Greg Cordell, Karen Denne, Mark Palmer, Steven J Kean, Chris Hendrix, Gary Mirich, George Waidelich, Ronald G Mentan, Mona L Petrochko X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf FYI - not sure if you guys saw this! Still looking for a corporate customer to go on record. Peggy ---------------------- Forwarded by Peggy Mahoney/HOU/EES on 09/14/2000 06:06 PM --------------------------- Enron Energy Services From: Christopher Smith 09/14/2000 11:54 AM To: Peggy Mahoney/HOU/EES@EES cc: Subject: Enron Energy Services: With Dereg Under Fire,Enron Calif Elec Business Heats Up FYI ---------------------- Forwarded by Christopher Smith/HOU/EES on 09/14/2000 11:54 AM --------------------------- djcustomclips@djinteractive.com on 09/14/2000 12:41:56 PM Please respond to nobody@mail1.djnr.com To: 190852@mailman.enron.com cc: Subject: Enron Energy Services: With Dereg Under Fire,Enron Calif Elec Business Heats Up With Dereg Under Fire,Enron Calif Elec Business Heats Up By Jason Leopold 09/14/2000 Dow Jones Energy Service (Copyright © 2000, Dow Jones & Company, Inc.) LOS ANGELES -(Dow Jones)- While federal regulators try to find a way to stabilize soaring wholesale electricity prices in California, Enron Corp. (ENE) has been quietly striking up deals with some suburban communities to sell them fixed-price power at a lower rate. In the past month, the Houston-based electricity service provider entered into long-term fixed-rate contracts with the city of Roseville and is negotiating similar deals with the cities of San Marcos and Chula Vista. Both of those cities currently get their power from San Diego Gas & Electric Co, a unit of Sempra Energy Inc. (SRE), and pay market rates for electricity. Enron has also struck a deal with Starwood Hotels & Resorts Worldwide Inc. (HOT), one of the world's largest hospitality companies, to sell the company electricity at a fixed rate for the next 10 years. The company has four hotels in California, three of which buy their power from SDG&E. Sources close to the matter said Enron has contracted to sell the hotel power at about 6 cents per kilowatt-hour, compared with the 22.5 cents/KWh Starwood said it was charged by SDG&E in August. Neither company would disclose the terms of the deal. But Starwood said it expects to reduce its energy costs by more than $200 million over the next 10 years. Enron, the largest trader of electricity and natural gas in the U.S., will purchase power to cover such contracts on the wholesale markets and use its experience to manage the risks, while paying a fee to utilities like SDG&E for use of their distribution networks. "That really is our core strength," said Harold Buchanan, chief operating officer for Enron Energy Services North America. "We understand how to manage those risks." High Rates Driving Industrial Customers, Cities To Switch The growing interest in fixed-price supply contracts is fueling a comeback of sorts for Enron. The Houston-based company had tried to break into California's retail power market just after deregulation, even spending nearly $1 million to advertise the venture during the Super Bowl. But Enron gave up trying to win residential customers in 1998, citing disappointing response and lower-than-expected profits. That was when deregulation and competitive power markets were full of promise. Oddly enough, now that deregulation is coming under attack in California, soaring power prices are building demand for Enron's services. The company is fielding calls from large industrial customers in San Diego that have seen their utility bills triple in the past three months and are interested in signing long-term fixed-rate contracts, Buchanan said. "Overall, what Enron can provide is reliability pricing in San Diego that's written in stone," Buchanan said. "It's far cheaper than what they're paying now with the utilities." A number of large industrial customers negotiating with Enron declined to comment. The city of Roseville, near Sacramento, entered into a $114 million contract with Enron last month to purchase 50 megawatts of electricity for five years at $49 per megawatt-hour. Furthermore, the city has started talks with Enron about building and operating a 750-megawatt natural gas-fired power plant that city officials expect will contribute to lower costs for the purchase of electricity. Mayor Harry Crabb said the plant could protect residents from the price spikes that have plagued customers of SDG&E since June. San Marcos, in San Diego County, is proposing to switch electricity service for its 10,000 residents to Enron from SDG&E - a move the City Council said could shave about $12 million a year off the city's power bill. Enron has said it would offer the city terms nearly identical to those it offered Roseville. An SDG&E spokesman said last week that the utility supports such arrangements, saying they're one way deregulation is supposed to work. Enron offered earlier this summer to sell power to SDG&E itself for four years at a fixed rate of 5.5 cents/KWh, but the utility said the price was too high. California Gov. Gray Davis signed legislation two weeks ago to cap electricity rates for SDG&E's customers at 6.5 cents/KWh. -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com Folder Name: Enron Energy Services Relevance Score on Scale of 100: 80 ______________________________________________________________________ To review or revise your folder, visit http://www.djinteractive.com or contact Dow Jones Customer Service by e-mail at custom.news@bis.dowjones.com or by phone at 800-369-7466. (Outside the U.S. and Canada, call 609-452-1511 or contact your local sales representative.) ______________________________________________________________________ Copyright © 2000 Dow Jones & Company, Inc. All Rights Reserved
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