|
|
Enron Mail |
California Dimming
The Times of India, 01/26/2001 Investors Decide to Stick with Safer Bets on Wall Street Yesterday While... Pittsburgh Post - Gazette, 01/26/2001 I'll BE SEEING YOU IN 4 MONTHS, The Boston Globe, 01/26/2001 The President's First Message Buainess Standard, 01/26/2001 Your Friday Night Lamorinda Dems Share Laughs, Rally Troops After Loss The San Francisco Chronicle, 01/26/2001 As Demands for Energy Multiply, Farms Stage a Comeback--- Phalanxes of Whirring Turbines could be a Partial Antidote for Blackouts in California the Wall Street Journal, 01/26/2001 International World Watch The Wall Street Journal, 01/26/2001 Houston Chronicle Working Column 01/26/2001 California Dimming 01/26/2001 The Times of India Copyright (C) 2001 The Times of India; Source: World Reporter (TM) Those of us who couldn't conceal their glee at the world's most advanced and powerful democracy taking weeks to count a few thousand ballots and not getting it right, now have something more to gloat over. California, America's largest state and "that advance post of our civilisation" as J B Priestley called it, is in the grip of an acute power crisis. The two companies which distribute power over most of the state are on the verge of bankruptcy and the state government has had to come to their rescue and disburse funds for payment to wholesale power suppliers - shades of our own Maharashtra State Electricity Board and Enron. A state of emergency has been declared and millions of homes and businesses are being subjected to "rolling blackouts", or staggered power cuts. The authorities are not putting out a loadshedding schedule for fear that it might encourage looters and arsonists who would know that burglar alarms would be off. The clockwork-like economy has been seriously disrupted as traffic lights, ATMs, petrol pumps and electronic checkout counters go on the blink and Californians stock up on flashlights, candles, generators, wood-burning stoves and firewood. At the Folsom headquarters of Intel, the company whose chips are powering most of the world's computers, people are carrying on gamely with their work under dim lights. As the saying goes, "What California is today, we shall all be tomorrow" - hence it is instructive to understand how the state got into this mess. The deregulation law of 1996 attempted to create a market for wholesale power by "unbundling" the generation, transmission and distribution functions - something that is on the anvil in India too. However, the market was hamstrung from the beginning by various flawed policies, including a "cap" placed on the retail power tariff and a decision by the authorities to disallow power companies the freedom to enter into long-term contracts for power purchase. Also, the tough environmental regulations in the state and the attitude of many local communities ("Not in my backyard") meant that old power plants shut down, no new ones came up, and the generation within the state actually went down over the last ten years. As the demand increased steadily, particularly in the Silicon Valley with its power-guzzling "data hotels" and "server farms", the state became ever more dependent on external sources particularly from the Pacific Northwest. Rapid economic growth in the northern states, and low water levels this season in the hydro-power dams, meant less surplus to California, leading to a sharp increase in wholesale power rates. The lessons are clear - for California, and for us in India. First, you can't legislate away economic laws - supply and demand have a way of catching up with you. Second, as power is a capital-intensive, long-gestation industry, the policy framework has to provide for adequate capacity to come up over the long-term. Third, regulation can and should smooth out price volatility, but tariff caps will only distort the market and pave the way for systemic crises. And lastly, power is a key infrastructure for a modern economy and there is really no alternative to a smooth changeover to deregulated markets - the UK and many other states in the US have successfully accomplished this. BUSINESS [ Investors decided to stick with safer bets on Wall Street yesterday while ... ] HED: DOW RISES, NASDAQ FALLS,INVESTORS EYE EARNINGS, FEDBY AMY BALDWIN, THE ASSOCIATED PRESS 01/26/2001 Pittsburgh Post-Gazette REGION B-15 (Copyright 2001) Investors decided to stick with safer bets on Wall Street yesterday while they contemplated the future of earnings and the economy. The market bid blue chips higher, but cashed in recent gains in the battered tech sector. Although big-name companies reported fourth-quarter results largely in line with expectations, analysts said investors kept their focus on forecasts for 2001. "Fourth-quarter earnings have really left the radar screen for most investors," said Richard E. Cripps, chief market strategist for Legg Mason of Baltimore. The Dow Jones industrial made a solid advance, closing up 82.55 at 10,729.52. Broader market indexes declined. The Nasdaq composite index fell 104.87 to 2,754.28, and the broader Standard & Poor's 500 index slipped 6.79 to 1,357.51. The market is so focused on corporate performance during the first half of this year that even Federal Reserve Chairman Alan Greenspan failed to move stock prices. Greenspan testified before Congress, speaking mostly about longer-term tax cuts but also signaling that interest rates are likely to drop further. While investors are cautious, the mood on Wall Street is slightly more upbeat than in recent months, analysts said. The market is hopeful that earnings and the economy will soon improve, particularly as interest rates decline. The Fed is expected to cut rates for the second time this month when it meets next week. That expectation factored into some of yesterday's tech sector selling, said Cripps of Legg Mason. "There's some gamesmanship going on in advance of the Fed meeting," Cripps said, noting that investors who have been buying on expectations of a rate cut are likely to sell if and when the Fed takes that action. Dell, which earlier in the week rebounded from a poor first- quarter earnings outlook, lost 69 cents to close at $26.44. Computer equipment maker EMC fell $2.94 to $76.50 after rising earlier in the week on earnings that were 2 cents a share higher than expectations. While past earnings are important, the market typically is most concerned about companies' future profitability. That was evident yesterday in a sharp decline among companies that make fiber optic and other networking equipment. Corning skidded nearly 20 percent, finishing down $13.88 at $56.25. The maker of fiber optic cables warned late Wednesday that its customers had cut back their orders through the first half of the year. "People are spooked by the guidance given by Corning" said Charles White, portfolio manager for Avatar Associates. JDS Uniphase, which tumbled $7.88 to $55.19, recouped 74 cents in extended-hours trading. The fiber optic maker announced after the market closed that it beat second-quarter predictions by 2 cents a share. The company also said it expected third-quarter sales to rise as much as 10 percent. Meanwhile, blue chips got a lift from so-called defensive issues such as drug and energy stocks that tend to do better in bearish markets. Eli Lilly, which met expectations and said the first half of the year should be strong, gained 31 cents at $83.06. Investors rewarded Enron for saying 2001 profits likely will surpass analysts' predictions. The energy company rose $2.25 to $82. Op-Ed I'LL BE SEEING YOU IN 4 MONTHS DAVID NYHAN, GLOBE STAFF 01/26/2001 The Boston Globe THIRD A15 (Copyright 2001) THE GOING RATE FOR A RUN-OF-THE-MILL CAMEL IN THE GOBI DESERT IN 1996 WAS $250, FOR A WEARY ANIMAL WITH THE MONGOLIAN CAMEL-DRIVER'S EQUIVALENT OF A DENTED FENDER, AND IT MIGHT GET A LITTLE WHEEZY BETWEEN WATER HOLES. BUT IF YOU WANTED A GOOD ONE, WITH LOW MILEAGE, SOUND OF HOOF AND LUNG, IT WOULD COST YOU $500. WHO TOLD ME THAT? MY FRIEND AMAR, A FELLOW NEWSPAPERMAN FROM ULAN BATOR, THE METROPOLIS OF MONGOLIA. AND HOW DID HE COME TO BE MY FRIEND? BECAUSE WE WERE BOTH ESCAPED NEWSPAPERMEN, COOLING OUR JETS AND RECHARGING THE OLD BRAIN PAN AS FELLOWS AT OXFORD'S REUTERS FOUNDATION. WHY DO I BRING THAT UP? Because as of Monday I take up another fellowship, at Harvard's Kennedy School of Government, at the Joan Shorenstein Center on Press, Politics and Public Policy, where I expect to learn some equally interesting things. Like Oxford, it's another crossroads of the planet. So for the spring semester I'll be sequestered. No columns from yours truly for four months. Since I last sojourned in Cambridge as a skinny undergraduate, I've added several notches on the beltline, a few zeros in the bank book, and many miles on the odometer. I stood with the mob in front of Dillon Field House the day McGeorge Bundy introduced Fidel as "Dr. Castro," and the doctor is still running Cuba, but just about everything else has changed. As a 17-year-old I sat in the Harvard Club's baronial banquet hall when a bronzed Senator Jack Kennedy dashed off a witty speech to the Crimson football banquet. He got elected president when I was a sophomore. Now I'll have an office, a phone, and something Kennedy never dreamed of - a computer wired to something called the Internet - at a school named after him. Speaking of the Internet, I apologize in advance for my absence to you folks in wired-land. It is not an unmixed blessing to receive as many as 1,000 e-mails a week urging this or that, praising this or that, damning this or that. Through change of season, fashion or administration, I understand that you are not unanimous by any stretch, but you are passionate, sometimes beyond belief (or reason, in a few cases). But I know some of you - the lady married to the diplomat in Islamabad, the hardy souls bucking the Sun Belt mentality in the great South and West, the Meridian, Miss., correspondent who urged me to "reload and charge on with our support," the gal from Black Mountain, N.C., the keep-your-outrage-going man from New York, ditto for the Madison, Ala., fellow - some of you will miss your Dave. "It is now 26 years since I left Boston and you remind me how I miss those terse tart tongues," says Susan of "So much for civility." From Royal Oak, Mich., Maia says "please keep calling 'em as so many of us see 'em." Demurs "a lady in Washington state": "My goodness, you are either a very angry individual or a poor loser . . . why don't you write about something uplifting and heartwarming?" Good point. I'll mull that over for the next four months. By that time, our new president will have had his 100 days, and he'll have had time to "restore honor and integrity to the White House." And, "sit back, have a tax cut on us, and enjoy the ride," says one happy Bob from Nashville. Go for it, Roberto. "You should be ashamed to author such divisive . . . ," scolds J.G. from British Columbia. A Filipino woman living here worries that tolerance may be in jeopardy. A daughter of German refugees writes from Florida that "big corporations are now controlling the government." Jason, a shrewd observer of the oil patch, details exploding oil company profits, urging a column on big oil's influence with the new gang in charge. Sorry, Jason; if I wasn't out of here today, I'd be banging away at Enron Corp., the Houston outfit that wholesales more electricity and owns more gas pipelines than anyone. Enron scores monstrous profits off California's energy shortfall, and Enron executives comprise the biggest bundled contributor to President Bush's political campaigns, reports the watchdog Center for Public Integrity, including $550,000 for last week's inaugural bash. But the Bush-watch will proceed without me for the next four months. I am outta here! I go back to brick halls where I sat, totally consumed by David Riesman's dissection of "The Lonely Crowd," Walter Jackson Bate's unfurling of English literature, Erik Erikson ushering in a redoubtable woman wearing a cape and leaning on a hefty walking staff: Margaret Mead. I'll be checking in on Ken and Kitty Galbraith, and some Sundays I'll be in the back pews listening as the Rev. Peter Gomes uncorks some of the best sermonizing you find on any Sunday anywhere. Nights might find me at the American Repertory Theater, waiting for one of Jeremy Geidt's comic turns. There's lots to see and do; they have everything but camels. With my new fellow fellows, I'll soak up every scrap and come back with a better attitude and more humility, a course of action urged upon me by many of my conservative friends. Good luck; see you on D- Day. David Nyhan's e-mail address is nyhan@globe.com. The President's first message Our Editorial 01/26/2001 Business Standard 9 Copyright © Business Standard The government of George W Bush, America's new President, has sent a message. It was for the Prime Minister, whose name Mr Bush once could not remember when asked in an interview. But Enron must have forcefully brought to his attention the name of Vilasrao Deshmukh, the chief minister of Maharashtra. After watching the chief minister's gyrations for months, Richard Celeste, the US ambassador, called on him on Tuesday, and offered to mediate between him and Enron. If Mr Deshmukh in his innocence thinks that this was a samaritan's offer of good offices, he is sadly mistaken. For Mr Celeste represents and speaks for the US government even when he offers to mediate. What he conveyed was the interest of the US government in an amicable solution and its potential displeasure if, as Mr Deshmukh is tempted to do, his government reneges on its contractual obligations to Enron. For Mr Deshmukh has stressed in recent weeks that the Maharashtra government cannot honour the contract. Now he should be under no doubt that if he proves as good as his word, he will involve his country in a major contretemps with the US government for which he will earn no thanks from Delhi. Mr Deshmukh is reported to have told Mr Celeste that he proposed to set up a high-powered committee, and that it was delayed because there were too many candidates. He was not telling the entire truth _ which is that this committee will carry no credibility since it will be appointed by the party that wants to break the contract. To get around this, Mr Deshmukh has been putting enormous pressure on Mumbai's most respected banker to accept the chairmanship; but public-spirited as he is, the banker is obviously reluctant to step into Mr Deshmukh's parlour. For the chairman will only be a name; the hatchet job will be done by the other members of Mr Deshmukh's choice. And their job will be to invent reasons why the Maharashtra government should breach the agreement. Nor will they have to go far to invent the reasons, for Mr Deshmukh gave Mr Celeste his own - which is that because power users in Maharashtra are used to paying low tariffs, they cannot really be expected to pay enough to compensate Enron . In other words, he does not want to let MSEB raise tariffs, for that would land him in political hot water. The irony is that the first contract with Enron was signed by the Congress government of Sharad Pawar; although the two parted ways, both are supporting Mr Deshmukh's government. So the latter is, in a sense, the former government's political and legal successor, and has absolutely no grounds for raising doubts on the contract. Its problem arises because the intervening BJP-Shiv Sena government gave power tariff concessions to farmers which made MSEB bankrupt, and raising them would make Mr Deshmukh unpopular. But governments are not simply instruments politicians can use to buy popularity; they are institutions to take decisions in a country's or state's interests on issues that divide the people. Mr Deshmukh should for once consider putting the interests of Maharashtra over those of his party, bite the bullet and allow MSEB to charge the tariffs as determined by the State Electricity Regulatory Commission from time to time. CONTRA COSTA FRIDAY Your Friday Night Lamorinda Dems Share Laughs, Rally Troops After Loss Sam McManis 01/26/2001 The San Francisco Chronicle EDITION: ZONE = 2 (Copyright 2001) Inauguration eve for the man whom liberals call the "President Select" coincided with the monthly meeting of the Lamorinda Democratic Club last Friday night, so visitors expected either a wake or a festival of whining and teeth gnashing. What wasn't expected was . . . laughter? Hearty, infectious belly laughs spilled out of the meeting room and out into the hallway of the Orinda Community Church. Deep concern and calls to action would come later, of course, but during the potluck and gab session before the meeting, a gallows humor reigned. "You heard this one?" asks 84-year-old Lafayette resident Jop Van Overveen. "Einstein, Picasso and George W. die in a plane crash and go to the Pearly Gates. St. Peter says you got to prove who you are to get in. Einstein says, 'Give me a chalkboard.' And he does mathematical calculations. Peter says, 'OK, you're Einstein. Go in.' Picasso's next. He says, 'Give me an easel and paint.' And he paints a masterpiece. Peter says, 'OK, you're Picasso.' "Then, George W. steps up. Peter explains that he has to prove his identity, just like Einstein and Picasso. And W. says, 'Einstein and Picasso? Who are they?' Peter says, 'Yup, you're Bush. Go on in.' " A gaggle of Contra Costa Democrats twirling pasta at the table erupted in guffaws. Sure, they've heard that one before. In fact, they may have used the same joke years ago when President Bush's father was in power. But, to them, it was better than crying in their casserole over the acrimonious, ballot-bickering election. "After tomorrow night, I guess we'll be saying 'Hail to the Thief,' " says Betty Lou Kasnoff, president of 20-year-old this partisan group which has close to 100 members. "Yeah, that's why I'm dressed all in black," says Richard Johnson, who also is sporting a "Clinton '92" button smack dab in the middle of chest. Here comes another member passing out freshly minted bumper stickers reading, "Don't Blame Me . . . I Didn't Vote For Jeb." Valerie Sloven has picked up a few and is telling anyone who will listen that she's protesting the inauguration by staging a voter- registration campaign at the SunValley Mall. "You know," boasts Barbara Boyle, "except for (Assemblywoman Lynne) Leach, we've almost gotten rid of all the Republicans." Louise's husband, John Clark, is thumbing through the club's January newsletter. In it is an anonymous poem, titled "Bipartisan Cooperation." The last stanza reads: Humor, apparently, proved therapeutic for the group of about 50, because the mood is anything but downcast. Perhaps "festively sarcastic" better describes it. "I was depressed, really depressed after the election," says Sloven of Orinda. "But, after a while, you pick yourself up and fight back." Boyle certainly seems ready to do battle. She had brought a back- issue of Mother Jones magazine, which included an article about then- Texas Gov. Bush's interests in Enron's controversial deal to put a pipeline in Argentina. She reads aloud two paragraphs, then condemns what she calls a "blatant conflict of interest." Social hour over, Kasnoff brings the meeting to order. The guest speaker is Severin Borenstein, director of the University of California Energy Institute. Before Borenstein talks about energy deregulation and presents his solutions to the crisis, Kasnoff introduces two women who are lobbying for passage of Measure B, the Acalanes High School District parcel. The women want the club's endorsement. Borenstein speaks for an hour, outlines how California got into its current energy mess and how he and his colleagues at UC Berkeley propose to ease the long-term burden. Deregulation is not a popular word among Democrats. But Borenstein is not anti-deregulation across the board, which doesn't please the hard-core Dems. "The big mistake was policy by analogy," he begins, "saying, 'Well, it worked for the airlines, so it'll work for electricity." Borenstein proposes varying electricity prices depending on the time of day, charging up to 50 cents per megawatt hour during peak periods and lower rates at other times. So people who consume the most power during peak periods pay the most. "That makes it cost-effective to conserve energy," Borenstein says. "It has an attractive environmental benefit, too. It would reduce the number of view-destroying, property-value decreasing energy plants." The crowd murmurs its assent. Borenstein knows his audience. But, during the post-speech question-and-answer period, he did rankle a few liberal feathers when he suggested that homes that augment energy needs with solar panels do not save much money. Folks pepper Borenstein with questions for nearly a half-hour, until Kasnoff intervenes and closes the meeting. People linger for a few more minutes, chatting up Borenstein and each other. But most make sure to grab that anti-Bush bumper sticker on their way out. As Demands for Energy Multiply, Windmill Farms Stage a Comeback --- Phalanxes of Whirring Turbines Could Be a Partial Antidote For Blackouts in California By Jim Carlton Staff Reporter of The Wall Street Journal 01/26/2001 The Wall Street Journal B1 (Copyright © 2001, Dow Jones & Company, Inc.) SAN FRANCISCO -- The rolling blackouts in the San Francisco Bay area are creating new demand for a long-overlooked source of power that is cheap, plentiful and close by -- the wind. One of the world's largest concentrations of wind turbines, some 7,000 of them, are situated in the Altamont Pass, which separates the bay from California's arid Central Valley. The windmills generate electricity at less than half the cost of natural-gas-generated power, which has been running as high as 15 cents to 20 cents per kilowatt-hour. Passersby have for years poked fun at the windmills, which were built in the wake of the last energy crisis in the 1970s. Then, the state and federal government backed the plentiful power source with tax credits and price guarantees that proved lucrative to investors and provided the state with an alternate source of cheap electricity. But when natural-gas prices fell in the late 1980s, and the tax credits were pulled out, the windmill industry collapsed from 12 turbine manufacturers to one and most power companies turned back to cheap fossil fuels. Now, with California utilities struggling to keep the state lit, this alternative energy source is making a comeback as one, albeit slight, solution to the West's energy crisis. "It's not a full answer, but it's part of the answer," says Robert Morrison, vice president of renewable generation for "windmill farm" developer FPL Energy LLC, a unit of big energy provider FPL Group Inc., based in Juno Beach, Fla., which also owns Florida Power & Light Co. Indeed, as energy providers scramble for alternatives to fossil fuels like natural gas, which has soared in price, windmill farms are sprouting up from the plains of West Texas to the badlands of the Northwest's Columbia Gorge. There are 13,000 of the windmills in all -- 1,000 of them built over the past five years. On the Washington-Oregon border, FPL Energy is building a 470-windmill farm atop ridges overlooking the Columbia River. When completed by the end of this year it will be the world's biggest wind-generation plant, though its output of 300 megawatts of electricity will be only about half the capacity of a comparable coal or gas plant, industry officials say. And the so-called Stateline project is one of the first new wind farms that is expected to turn a profit without relying on government tax credits. By using newer technology, Stateline is likely to be far more efficient than wind farms of the past. While the windmills are far fewer in number than at places like Altamont Pass, where they are densely placed, they have bigger blades and can generate significantly more electricity. With the project coming online in the midst of the West's energy crunch, participants say the timing couldn't have been better. "We're lucky, and we're smart, in that we have been planning for wind energy the past five years," says Barrett Stambler, director of renewable business development for a unit of PacifiCorp, a Portland, Ore., company that has agreed to buy the power in its development agreement with FPL. Elsewhere, Enron Corp. has recently deployed about 200 windmills in Southern California and West Texas, along with 500 more in Minnesota and Iowa. Those come on top of the 2,000 windmills Enron has operated for several years in the Tehachapi Mountains north of Los Angeles. Also in Texas, Enron and some other companies are building wind farms that will generate about 700 megawatts of power when completed this year, quadrupling that state's wind-generation capacity. "Wind indeed is ready for prime time," says Ralph Cavanagh, energy program director for the Natural Resources Defense Council, an environmental group based in New York. But wind isn't likely to displace oil and gas anytime soon. In California, where they are most abundant, wind farms account for roughly 1.5% of the state's electricity production, according to the American Wind Energy Association, an industry trade group in Washington, D.C. The group is pushing for federal legislation that could boost wind power to about 5% of the nation's overall power generation over time, from the current three-tenths of a percent. The intermittent nature of wind gusts means wind farms can never be as reliable as a traditional fuel source. But the flip side to that, say wind proponents, is that the wind farms are so easy to build -- essentially hoisting the towers and running cables to a substation -- that it takes only a year from start to finish to put one in operation. Coal and gas plants, by contrast, can take as long as five years to complete. And of the other major renewable energy sources -- solar, hydro, biomass (burning natural waste such as wood chips) and geothermal -- wind is seen by both the industry and environmentalists as the cheapest and greenest alternative. Both solar and biomass plants are costly, they say, while hydroelectrical dams are expensive and harmful to rivers. Geothermal plants, which pump hot water out of the ground, have drawn criticism in parts of the West for draining thermal springs -- some revered by native tribes. Windmills, by contrast, are praised by most environmentalists as virtually pristine energy sources with little impact on anything other than birds flying into the blades. The newer turbines' bigger blades turn more slowly, giving birds a better chance, industry officials say. With such advantages, 93% of a $40 million fund allocated to alternative energy that California officials auctioned to power companies this month went to wind-generation projects. Until recent years, wind was a relatively dirty word in Western power circles. After a building boom in the 1980s, fueled by tax credits to make the machines, thousands of the metallic-bladed windmills popped up, offering utilities an alternative that was then only slightly more expensive than fossil fuels. But at the same time that the credits expired in the late 1980s, prices of electricity generated by natural gas plunged to about three cents a kilowatt-hour from as high as 10 cents; the wind farms with their five-cents-a-kilowatt power became noncompetitive. The industry started crawling back in the early 1990s, after Congress reinstated tax incentives, this time tied to wind-energy production, not just to making the turbines. With other local incentives, such as long-term price guarantees in California, FPL, Enron and other energy producers increased their investment in the technology. PacifiCorp, for instance, bought a smaller 40-megawatt wind farm in Wyoming about five years ago as a training ground for expanded wind efforts. It learned a lesson: Don't select a site near already-jammed transmission lines -- as turned out to be the case in Wyoming because of the state's numerous coal and gas plants -- because it rules out growth. In seeking a home for its Stateline wind farm, PacifiCorp settled on the Columbia River area near Walla Walla, Wash., both because of abundant wind and the area's proximity to a less-congested part of the West's transmission grid. Its partner, FPL, had built a smaller, 25-megawatt wind farm there four years ago. Unlike in places like the Altamont Pass, where thousands of windmills created an eyesore in the opinion of many, residents of the Walla Walla area were mostly supportive of having fewer turbines, spaced comfortably apart. There is enough room for landowners to continue operating their wheat farms around the machines. "Plus this supports our values of doing sustainable, `green' building wherever we can," says Peter Harvey, chief financial officer of Whitman College in Walla Walla, which is leasing out some of its wheat land for the windmills. The cost of wind energy from Stateline is between three cents and five cents a kilowatt-hour -- compared with as much as 20 cents from natural gas. The project's timing is pefect. Terry Hudgens, PacifiCorp's senior vice president of power supply, says the company's customers are pleading for power. "They just want the energy," he says. International World Watch Compiled by David I. Oyama 01/26/2001 The Wall Street Journal A10 (Copyright © 2001, Dow Jones & Company, Inc.) ASIA/PACIFIC Indian Utility May Miss Enron Payment India's cash-strapped Maharashtra State Electricity Board was expected to miss a deadline last night for paying 1.59 billion rupees ($34.3 million) to Dabhol Power, a unit of Enron of the U.S., for electricity purchased in December. It again raised the possibility of Enron invoking letters of credit or guarantees provided by the state and federal governments to force payment. The Maharashtra state government said it hadn't yet considered a request by the electricity board for funds to pay the bill, and didn't expect to do so until next week. Dabhol Power sells its entire output to the electricity board. Houston Chronicle Working Column L.M. Sixel 01/26/2001 KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM) ENRON RATING SETUP IRKS MANY WORKERS: Tongues are wagging at Enron Corp., and it's not because of the bonuses they're expecting next month. Employees are irate about a new performance-review ranking system that pits them against each other. Under the system, nicknamed "rank and yank," employees will be put in one of five categories: 5 percent will be identified as "superior," 30 percent will be labeled "excellent," 30 percent will be called "strong," 20 percent will be labeled "satisfactory" and 15 percent will be called "needs improvement" or "issues." An insider said "needs improvement" means "you have one leg hanging out the window." And "issues" is Enron lingo for "you're gone." The rankings, whose names reportedly took Enron officials hours to come up with, are not based just on performance. Instead, they compare employee against employee. "It is possible, therefore, for someone to perform at the same or higher level compared to prior periods, yet receive a lower rating for the current period if other employees' performance raised the bar," according to a memo from Chief of Staff Steven Kean and Executive Vice President Cindy Olson that was distributed this month. While employees are competing against each other for ratings, they're also expected to be team players, according to the memo. The problem, according to someone familiar with the new system, is the horse-trading that goes on when the rankings are divided up. Managers trade rankings like baseball cards, explained the insider, offering to downgrade one employee if they can get a better rating for another employee. An employee's ranking is more a function of the negotiating skills of the manager he is working for, the insider said. Olson, who's over human resources and community relations, said no horsetrading is going on. The rankings, due out this week, aren't set in stone, she said. Only 9 percent of employees were rated in the bottom category while 6 to 7 percent were labeled superior, she said. But Olson said she can see how employees might be worried about the prospect of bargaining. She speculated that one reason employees might worry is because it's a new system for about 60 percent of Enron's employees. In years past, only the wholesale energy services group was ranked this way. Some human resource managers expressed surprise that Enron, which is known for hiring superstars, apparently feels that it must get rid of so many employees -- or at least put them on notice that they're not doing well. It doesn't say much about the confidence of your recruiting system if you're getting rid of 10 to 15 percent of your work force each year, said a human resource manager in Houston who asked to remain anonymous. Some people, as smart and talented as they are, just don't fit into Enron's culture, Olson said. It's a company that doesn't tell people what to do; you have to know what adds value, she said. Some folks just have a hard time in that environment. After thinking about it for a moment, Olson added that maybe Enron's recruiters aren't doing a good enough job weeding out the people who wouldn't do well in an entrepreneurial environment. Forced ranking systems were popular several years ago. But they fell out of favor, in part because they were seen as damaging employee motivation. Several years ago, Houston Lighting & Power put in a forced ranking system, dividing all employees into four groups, with "1" the top group and "4" the lowest. Employees were so angry with the system that some work crews had T-shirts printed: "Don't ask me -- I'm a 3." Olson said she doesn't see a problem with motivation. People like to know how they stand and will work hard to reach the top category, she said. But many of the employees -- at least the ones who rate above satisfactory -- won't know how they're rated. Managers don't have to reveal the ratings. And as for figuring out what it takes to be superior? You've got to reinvent your job, add new business lines or create something totally new. "Employees understand that when it's explained to them," Olson said. To voice comments, telephone 713-220-2000 and dial in code 1002. Send e-mail to lm.sixelchron.com.
|