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For Crucial California Trip, Bush Calibrates How Best to Handle State's Energy Crisis The New York Times, 05/29/01 In Billing Spat, Enron Project Rejects Payment By Indian State The Wall Street Journal, 05/29/01 El Paso Corp. a villain or scapegoat in Calif. crisis? Houston Chronicle, 05/29/01 Enron India: No Comment On Power Tariff Cut Reports Dow Jones International News, 05/29/01 India's Gokak on Talks With Enron on Dabhol: Comment (Correct) Bloomberg, 05/29/01 Enron Rejects Govt-run Power Buyer's Legal Notice, Paper Says Bloomberg, 05/29/01 Enron Unit's Cline on Discussions With Indian Panel: Comment Bloomberg, 05/29/01 INDIA: UPDATE 2-Enron, India panel make no progress on power row. Reuters English News Service, 05/29/01 SWITZERLAND: Swiss Prime New Energy has bourse debut. Reuters English News Service, 05/29/01 INDIAN GOVT REJECTS PROPOSAL TO BUY POWER FROM DABHOL PROJECT Asia Pulse, 05/29/01 Enron's India Unit Willing To Cut Tariffs By 10% - Report Dow Jones International News, 05/29/01 INDIA'S DABHOL POWER SET TO SLASH TARIFF BY 10%, SAYS IDBI CHIEF Asia Pulse, 05/29/01 ENRON'S DABHOL POWER CO REJECTS STATE BOARD'S LEGAL NOTICE Asia Pulse, 05/29/01 GEB to issue bonds against old debts The Economic Times, 05/29/01 INDIA: Enron's Dabhol to meet key govt panel on Tuesday. Reuters English News Service, 05/28/01 QATAR: Qatar says Dolphin deal not set back by Enron exit. Reuters English News Service, 05/28/01 India: Dabhol project: Politics of power Business Line (The Hindu), 05/28/01 French power plays trample Mediterranean sensitivities South China Morning Post, 05/28/01 Feeling the heat over energy, Bush to visit California Houston Chronicle, 05/28/01 Los Angeles Volts, Quotes and Votes From the Elect Among Us Los Angeles Times, 05/28/01 2003 mayoral race casting a shadow Houston Chronicle, 05/28/01 THE NATION Bush Comes Calling to an Edgy California Politics: President hopes to make amends with Davis, voters. Outcome could color future ties. Los Angeles Times, 05/28/01 Commentary It Takes 2 to Tangle Our Energy Future Los Angeles Times, 05/28/01 National Desk; Section A For Crucial California Trip, Bush Calibrates How Best to Handle State's Energy Crisis By DAVID E. SANGER 05/29/2001 The New York Times Page 12, Column 1 c. 2001 New York Times Company LOS ANGELES, May 28 -- Days after he suffered the biggest political setback of his four-month-old presidency and then won the tax cut that he staked his campaign upon, President Bush traveled tonight to California, carefully calibrating how to deal with the state's energy crisis. After Memorial Day celebrations in Washington and Mesa, Ariz., Mr. Bush began his first visit as president to the most populous state, which he lost by roughly 12 percentage points in November's election. The visit seems likely to showcase the clash between two very different energy strategies and political strategies. Mr. Bush will meet briefly on Tuesday with Gov. Gray Davis, who will insist, as he did again today, that the federal government impose price caps on wholesale electric power. The White House says Mr. Bush will refuse, again. He will argue that such caps would only discourage increased production of electric power. ''We think that's a mistake,'' Vice President Dick Cheney said on Friday, talking about why he rejected those options when he prepared the energy policy the administration made public 10 days ago. But Mr. Bush knows that how he handles the California energy crisis could prove critical to his political fortunes, especially now that his party's loss of control in the Senate seems bound to slow or derail passage of major elements of his energy plan. Moreover, the president can no longer argue that the best cure for high energy prices is a tax cut, because that is now legislative history. As one of his aides said this weekend, after Congress approved the $1.35 trillion tax cut that will be phased in over the next 10 years, ''we will have to turn now to the other arguments.'' Most of those arguments involve urging the rest of the country not to follow California in a partial deregulation of the market, with disastrous results. Repeatedly Mr. Bush has chastised California's politicians, and by implication Mr. Davis himself, for ignoring politically unpalatable choices to avert the state's power-generating crisis. Ten days ago, standing in front of a hydroelectric plant in Pennsylvania, Mr. Bush used the state as Exhibit A for his argument about what happens when population rises, when over-regulation freezes the construction of new power plants and the stringing of new transmission lines, and when politicians fail to plan for the long term. ''The problems in California shows that you cannot conserve your way to energy independence,'' Mr. Bush said then. At the same time, his aides were pointing to polls showing Mr. Davis's approval ratings plunging. They did not mention that Mr. Bush's ratings in the state were hardly any better. A series of recent polls show that roughly two-thirds of Californians believe Mr. Bush should be doing far more to help the state, though it is unclear exactly what kind of help they have in mind. So Mr. Bush's aides have been struggling for days to choreograph the two-day visit here, trying to find ways to differ with Mr. Davis without seeming callous about the problem or in conflict with the state. The betting is that Mr. Bush will focus on long-term solutions, in contrast to Mr. Davis's call for the quicker fix of price caps. The effort started today. Energy Secretary Spencer Abraham issued an order of chiefly symbolic importance, saying his department would move quickly to determine whether investors were interested in financing and co-owning a new transmission line that could bring more power to the state. ''The level of interest will be a factor in the decision to build the line later this year,'' the Energy Department said. It said that it would proceed with studies of how the land could be acquired, by eminent domain if necessary, and that it would speed ahead with environmental reviews. But Mr. Abraham left wide open the question of whether Washington would go ahead with the project even if no private financing was available. ''The Bush administration is taking a leadership role in addressing a long-neglected problem in California's electricity transmission system,'' Mr. Abraham said. ''California's electricity problems developed over a period of years and cannot be solved overnight. However, we can move now on actions that will help avert the same types of problems from recurring year after year.'' The statement was clearly intended as a prelude to the meeting with Mr. Davis, which will be closed to the press. So will a meeting with energy entrepreneurs. (Mr. Bush passed on Mr. Davis's suggestion of a forum with small-business owners and residents who have seen the lights go out.) Few expect Mr. Bush or Mr. Davis to change his mind about energy caps after their meeting. But for Mr. Bush it will not all be tough love. On Tuesday morning Mr. Bush is scheduled to travel to Camp Pendleton to repeat his call for the military and other federal users of power in California to flip off their switches whenever possible. But given his own comments, and Mr. Cheney's, about the limited utility of conservation, that order could strike some Californians as a little hollow. Later he will give a trade speech in Los Angeles, underscoring the message that if California hopes to remain the world's greatest exporter of high technology -- if it were a nation, California would be the world's sixth-largest economy -- it must find new ways to produce and deliver electricity. Already, leading Silicon Valley companies are threatening to build their next-generation chip fabrication plants elsewhere, probably in Texas, which has a surplus of generating capacity, a move that would further undermine Mr. Davis's stewardship. In fact, Mr. Bush's Texas roots will never be far from the political battlefield here. Mr. Davis has accused Texas energy companies of profiteering at California's expense. To press the case, he has hired two political operatives from the Clinton White House, Marc D. Fabiani and Chris Lehane, who are being paid tens of thousands of dollars a month to make the case for price caps. California's attorney general, Bill Lockyer, also a Democrat, suggested to The Wall Street Journal last week that some time in jail would be the best way to deal with one of Mr. Bush's biggest supporters -- Kenneth Lay, who heads the Enron Corporation and has sought to influence the selection of members of the Federal Energy Regulatory Commission. The comments may have been partly facetious, but they were not interpreted that way here. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. International In Billing Spat, Enron Project Rejects Payment By Indian State By Jesse Pesta Staff Reporter of The Wall Street Journal 05/29/2001 The Wall Street Journal A14 (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -- In an unusual twist in their quarrel over unpaid bills, Enron Corp.'s Indian power project, Dabhol Power Corp., has rejected a check valued at $29.1 million from its only customer, the Maharashtra State Electricity Board, to make a legal point. Dabhol also delivered a sharply worded four-page letter to the MSEB, responding to the electricity board's decision last week to rescind its power-purchasing contract based on a claim that Dabhol misrepresented its "ramp-up" speed -- the time the plant takes to go from a cold start to full power. "We deny that DPC have practiced any misrepresentation," Dabhol's letter says. "Furthermore, we do not think that the MSEB entertains any honest belief" in its own allegation, it says. It's the latest in a series of rancorous exchanges as both sides try to gain an edge in a fight over Dabhol's power tariffs. The $3 billion power plant is the largest foreign investment in India, and the dispute is closely watched as an indicator of India's hospitality to investors from abroad. India needs electricity badly, but many of its state electricity boards are cash-strapped due to widespread power theft and lax metering. The Dabhol dispute started about six months ago, when the MSEB defaulted on monthly bills totaling $48 million. Dabhol's critics claim its tariffs are unreasonably high, which Dabhol denies. Among other things, Dabhol says MSEB draws only about 15% of the plant's capacity, down from an average 60% or so before the dispute; the reduced usage boosts the per-unit price because the pricing formula includes some capital costs. In its letter, Dabhol says it rejected the 1.369-billion-rupee check because it came with a note saying it was submitted "under protest," a reference to the MSEB's decision last week to rescind the contract. "The MSEB cannot have it both ways," says the letter, signed by Enron executive K. Wade Cline. Either it's rescinding the contract, or "it is affirming the validity of the [contract]" by making payments. However, MSEB Chairman Vinay Bansal said that after the check was rejected, the MSEB went ahead and direct-deposited a payment to a Dabhol account, unaware of the letter's contents. Mr. Bansal said that he hadn't read the letter yet, so he wouldn't comment on it. He said the MSEB is eager to pay because the April bill was due on Friday. A Dabhol official, while unable to confirm whether payment was received, said it would mark "the first time in history" that the MSEB has paid on time. Mr. Bansal disputed that, saying he believes the two previous bills were also paid on time. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. May 29, 2001 Houston Chronicle El Paso Corp. a villain or scapegoat in Calif. crisis? Californians' ire grows as case resumes By DAVID IVANOVICH Copyright 2001 Houston Chronicle Washington Bureau WASHINGTON -- The lights keep going out in California, and people there want someone to blame. California is pointing the finger at Texas' energy companies. And first up is Houston's El Paso Corp. The California Public Utilities Commission has accused El Paso of using its power in the natural gas market to drive up gas prices in California. That behavior, Californians say, has cost the state's consumers more than $3.7 billion in higher energy bills and exacerbated California's dire power woes. And they want the federal agency that regulates natural gas pipelines to force El Paso to hand over the profits from this deal. At issue is whether El Paso, the nation's largest gas pipeline company, violated federal law by purposely withholding capacity on the biggest gas pipeline serving Southern California during a crucial period when gas demand was on the rise last year. By refusing to make that space available, the state agency alleges, El Paso was exercising its "market power" to artificially hike prices and keep them high. El Paso counters that the run-up in gas prices was caused, not by its actions, but by an unanticipated -- and unprecedented -- surge in demand. And they argue the real problem is pipeline capacity constraints within California, not on the supply of gas moving in pipelines bringing gas to the state. When filed more than a year ago, the state's allegations went all but unnoticed by the public. But with blackouts expected to roll across California repeatedly this summer, the El Paso case has morphed from an esoteric regulatory dispute into the test case for the legal battles spawned by the state's power debacle. As they wait in darkened elevators and struggle to pay soaring utility bills, Californians discern a pattern, argues Bruce Cain, director of the Institute of Governmental Studies at the University of California at Berkeley. "It's the same story with slightly different details," Cain said. "And people in California are getting very, very irritable." Gov. Gray Davis and other Democratic leaders have repeatedly blamed "out-of-state" energy firms for the state's energy woes. And they have excoriated the Federal Energy Commission for failing to take decisive action to give Californians relief. As President Bush visits California today, Democrats are pointing to the El Paso case to show how companies from Texas are ravaging California. Whether El Paso is an appropriate target for their anger remains an open question. El Paso operates a major pipeline system that transports natural gas from producing basins in areas such as West Texas and Oklahoma to Southern California and other parts of the Southwest. For years, the state's two cash-strapped utilities, Pacific Gas & Electric and Southern California Edison, and a local gas distribution company, Southern California Gas, owned the rights to transport gas along the Edison pipeline system. But as California moved to deregulate its electric industry and encourage competition, the California Public Utilities Commission prodded the utilities to give up their capacity on the El Paso line. That made room for other gas marketing firms to move in. Houston-based Dynegy held the rights to the pipeline capacity for a while. Then an Enron affiliate took a brief turn. In February 2000, El Paso's pipeline arm, El Paso Natural Gas Co., opened the bidding again for about 1.2 billion cubic feet of pipeline capacity. That space accounted for about one-third of the capacity of the El Paso line and about one-sixth of the total pipeline capacity running into California. An El Paso affiliate, El Paso Merchant Energy Co., won the rights to that capacity for 15 months with a $38.5 million bid. The California Public Utilities Commission cried foul and asked the Federal Energy Regulatory Commission to force El Paso Merchant to "disgorge" its profits earned under the contract. (El Paso has earned $184 million in pre-tax profits since the contract began, Ralph Eads, president of El Paso Merchant, testified last week.) The case was turned over to Curtis L. Wagner Jr., an administrative law judge at the Federal Energy Regulatory Commission, who acknowledged it would be a bellwether case. This much was clear. Gas prices skyrocketed at the California border last year, rising from an average of $2.84 a thousand cubic feet in March 2000 to as high as $25.08 in December, according to Southern California Edison. That was no small issue for California's troubled power market because nearly one-quarter of electric generators in California are fired by natural gas. In making their case, California officials pointed to the difference between gas prices in the gas fields in the San Juan and Permian producing basins and in California at the other end of the El Paso line. Those price differentials began to widen while Dynegy held the capacity, state officials said, only to expand dramatically after El Paso Merchant took control. El Paso Merchant admits significant portions of its capacity went unused. And the company acknowledges it was not successful at finding other players to take the space, despite the interest of several potential bidders. California officials insist the company only went through the motions of trying to find other shippers to take the pipeline capacity because it wanted to limit supplies. Perhaps the most tantalizing evidence in the case surrounds a Valentine's Day 2000 presentation made by El Paso Merchant officials to El Paso chief executive William Wise. The El Paso Merchant documents are still largely held under wraps by the court, although portions have been revealed and others were obtained by the New York Times. In those documents, El Paso officials acknowledged the deal for the pipeline capacity would give the company "more control" over gas markets, including "the ability to influence the physical market," the Times reported. Lawyers for the plaintiff tried to argue that El Paso officials had crossed over the invisible line that is supposed to separate the operations of the regulated gas pipeline business and the unregulated gas trading arm. Wagner grew irritated with Eads last week when the El Paso Merchant executive appeared to equivocate when asked whether Wise approved Merchant Energy's plans "I feel you're trying to pull something over my eyes, which I don't appreciate," Wagner said, adding: "You have to get my blood pressure up to get the truth out of you." Wagner responded by ordering Wise to fly to Washington for an unscheduled appearance on the witness stand. Wise conceded he had, indeed, approved El Paso Merchant's plan to make a bid for the pipeline capacity, although he said he left it up to El Paso Merchant managers to decide the specifics of that bid. For El Paso's part, Harvard University professor Joseph Kalt argues that the real problem is a lack of capacity on the systems inside the state of California. In other words, even if El Paso had delivered more gas along the pipeline, the intrastate pipeline network would not have had the capacity to take that gas to users there. Eads also argued that if El Paso officials had been trying to push up gas prices, they would not have used a risk management technique known as "hedging." Hedging allows a company to protect itself against a major drop in prices, but it also keeps it from reaping the full benefits of a jump in prices. El Paso Merchant had suffered $691 million in hedging losses through March 31, including $429 million in the first quarter of this year. "If we had thought that we could drive up prices ... we certainly would not have hedged," Eads said. And as for the infamous Valentine's Day, El Paso officials insist the comments were misconstrued, although they still want those documents to be kept secret. Testimony in the case will resume today. Wagner plans to issue his opinion by June 30. Enron India: No Comment On Power Tariff Cut Reports 05/29/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) BOMBAY -(Dow Jones)- Enron Corp.'s (ENE) Indian unit, Dabhol Power Co., Tuesday declined to comment on whether it would cut its power tariffs after a second round of talks with a top panel set up to try and resolve an ongoing power supply dispute. After a 90-minute meeting between officials from the state and central governments, Maharashtra State Electricity Board and Dabhol executives, an Enron spokesperson said he wouldn't comment on newspaper reports Tuesday that Dabhol Power Chief Operating Officer K. Wade Cline had told domestic lenders the company is ready to cut power tariffs by 10%. Power tariffs, deemed "unaffordable" by the state government, are at the core of this simmering dispute. The $3.0-billion Dabhol power plant in western India will generate 2,184 megawatts of power when the second phase is completed later this year. After the meeting, Cline said Dabhol Power "submitted no proposals before the committee." Dabhol Power has consistently maintained it won't renegotiate the power purchase agreement between the company and the MSEB, which sets tariffs for consumers. Industry analysts say Enron may be willing to reduce the power tariffs if it can find other buyers for its electricity. At the moment, the state electricity utility is the only buyer and has defaulted on $48.0 million of power payments. Earlier in the day, an Enron spokesperson also declined to comment on a report New Delhi has turned down a Maharashtra state proposal that seeks the National Thermal Power Corp. or the Power Trading Corp. to buy and distribute Dabhol's power. Indian state officials said another meeting of the panel will be scheduled for later but no date has been fixed yet. Indian financial institutions with more than 50% loan exposure to Dabhol Power will meet Wednesday to devise a strategy prior to their meeting with foreign lenders in early June in a bid to save the power project, senior officials at the Industrial Development Bank of India said Monday. -By Steve Percy, Dow Jones Newswires, 91 22 2884211; steve.percy@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India's Gokak on Talks With Enron on Dabhol: Comment (Correct) 2001-05-29 04:26 (New York) (Corrects typographical error in first paragraph.) Mumbai, May 29 (Bloomberg) -- A.V. Gokak, the Indian government's nominee in discussions with Enron Corp.'s Dabhol Power Co. in a dispute with the western province of Maharashtra, speaks after a meeting between the power utility and the Maharashtra State Electricity Board. This is the first time Gokak has attended a meeting to resolve the stand-off over payments by the board to Dabhol. ``India is very keen for a resolution of this issue. ``We will play an active role,'' in solving the payment dispute, he said. ``We will take into account interests of all sides.'' He declined to comment on newspaper reports that the government has rejected a proposal that Dabhol may be allowed to sell power to other state-run utilities. Enron Rejects Govt-run Power Buyer's Legal Notice, Paper Says 2001-05-28 23:26 (New York) New Delhi, May 29 (Bloomberg) -- Enron Corp.-promoted Dabhol Power Company has rejected the government-run Maharashtra State Electricity Board's legal notice terminating their power purchase agreement, Business Standard reported, citing Managing Director K. Wade Cline's written reply. In the reply, Enron said ``the legal notice is not acceptable to us, as according to the PPA (power purchase agreement), the MSEB does not have the right to rescind the agreement,'' the paper reported. The Maharashtra electricity board Thursday told Dabhol Power it was canceling the contract, six days after the company served the board notice it was set to pull out of the project, India's largest single foreign investment, in six months. Meanwhile, Indian lenders to Dabhol will meet Wednesday to discuss ways to convince overseas counterparts to salvage the $3 billion power project, which is caught up in a payment dispute. Dabhol is owed 3 billion rupees ($63.9 million) for power supplied in December and January. The board has refused to pay the bills saying they're too high. It has imposed a 4 billion rupee penalty on Dabhol for failing to supply power at full capacity on Jan. 28. Enron Unit's Cline on Discussions With Indian Panel: Comment 2001-05-29 03:25 (New York) Mumbai, May 29 (Bloomberg) -- Wade Cline, managing director of Enron Corp.'s Dabhol Power Co., comments on a meeting between Dabhol and a committee that was set up to resolve a stand-off over payments by Maharashtra State Electricity Board. MSEB owes Dabhol 3 billion rupees ($63 million) for power supply in December and January. ``We had a good meeting. We discussed a lot of things. Discussions are ongoing and we'll meet again.'' On Dabhol's plans to cut power tariffs by 10 percent: ``No proposals were submitted before the committee.'' INDIA: UPDATE 2-Enron, India panel make no progress on power row. By Sriram Ramakrishnan 05/29/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, May 29 (Reuters) - Talks between U.S. energy giant Enron Corp's Indian unit and a government panel ended on Tuesday without resolving a contentious dispute over a giant $2.9 billion power project, officials said. But they said the talks will continue. Participants at the meeting, which lasted an hour, discussed the issue of a reduction in tariff rates charged by Enron's unit for the power it sells to Indian state utility the Maharashtra State Electricity Board (MSEB), government and company officials said. Also discussed was the option of a third entity, apart from the sole buyer MSEB, purchasing the power from the second phase of the project. "We had a good meeting. We discussed a lot of issues. But no proposals were submitted," K. Wade Kline, chief operating officer, Enron India Pvt Ltd, told reporters. V.M. Lal, principal secretary to the Maharashtra government, said the discussions will continue with Dabhol Power Company, which is 65 percent owned by Houston-based Enron . "We are negotiating on the various issues that are coming in the way of the project," he told reporters, adding that no date has been fixed for the next meeting. Enron and MSEB have been sparring for over six months on the 2,184 MW project, which was originally slated to sell its entire output to MSEB at a fixed price. The row is seen as a test case of India's ability to attract foreign investment in the power sector, which needs 100,000 MW over the next 10 years to meet growing demand. MSEB began buying the 740 MW of power produced by the the project's first phase in May 1999, but late last year, it started to default on payments saying the tariffs were too high. It also decided against buying the 1,444 MW of power produced by the project's second phase, which is expected to be delayed from its scheduled completion next month. Dabhol issued a notice this month to cancel its power purchase deal over this issue and said the cost of power will drop when the second phase is completed and the plant switches over to a cheaper natural gas fuel. RENEGOTIATE TARIFFS To resolve the dispute, the Maharashtra government formed a panel last month to renegotiate the tariffs, headed by former bureaucrat Madhav Godbole who had earlier chaired a committee which recommended a series of steps to bring down the project tariff. Dabhol had said before Tuesday's meeting, that it does not agree with the committee's recommendations and hence does not believe the new panel would find a solution. The meeting was attended by key executives of Dabhol, the Maharashtra State Electricity Board (MSEB) and representatives of the federal and state governments. Indian lenders to Dabhol will meet in Bombay on Wednesday to try and find a way to protect their interests in the project, a lender said on Monday. The meeting's top priority will be the adoption of a common strategy to convince foreign lenders not to invoke guarantees issued by local financial institutions and banks. The project, which is being built at a total cost of $2.9 billion, is being funded through $2 billion of loans. Of this amount, local lenders have contributed $1.4 billion and foreign lenders have provided the rest. Foreign lenders are protected by guarantees issued by domestic banks and financial institutions. They have called a meeting on June 5 and 6 in Singapore to discuss invoking guarantees on their loans in the project. At stake is not just the investment in the project, but also India's efforts to reform the power sector. Indian lenders would also take a hit on their books if their foreign counterparts insist on payments. (Additional reporting by Maria Abraham) ($1 = 46.98 Indian rupees). Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. SWITZERLAND: Swiss Prime New Energy has bourse debut. 05/29/2001 Reuters English News Service (C) Reuters Limited 2001. ZURICH, May 29 (Reuters) - Shares in Swiss investment company Prime New Energy AG, which invests in sustainable energy technology, start trading on the Swiss SWX stock market on Tuesday, lead manager Credit Suisse Asset Management said. CSAM, part of Credit Suisse Group , said in a statement the company completed a placement of 700,000 bearer shares at 93 Swiss francs on April 12. The listed shares will be included in the investment company segment of the SWX and its index. The company was founded in October 2000 and targets long-term capital growth by investing in the future-oriented domain on the energy sector in North America and Europe. The founding shareholders include the pension funds of the canton of Baselland, Credit Suisse Group, SBB Swiss railways and the Siemens companies in Switzerland. Prime New Energy is headed by Stefan Maechler, managing director of Credit Suisse Asset Management, which is also responsible for managing the portfolio. Prime New Energy (www.prime-new-energy.com) said net asset value per share stood at 105.59 Swiss francs on May 25, having set a year high of 106.66 on May 22. The year low was 81.39 on April 4. Investments include stakes in listed companies Calpine Corp , Mirant , Aixtron , Enron Corp , Ballard Power Systems , Capstone Turbine Corp and Gamesa . The total investment volume was 187 million francs on April 30. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIAN GOVT REJECTS PROPOSAL TO BUY POWER FROM DABHOL PROJECT 05/29/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. NEW DELHI, May 29 Asia Pulse - The Indian federal government has refused a proposal by the Maharashtra state government that it purchase electricity from the Enron-promoted Dabhol Power Company, which is currently embroiled in a legal battle with the state. "How can Central utilities buy power from DPC and sell it elsewhere when it is not possible for the Maharashtra government to buy it," the federal Power Minister, Suresh Prabhu, told PTI in an interview. "A solution has to be found out which will have to be both in the national interest as well as acceptable to the investors... by asking National Thermal Power Corporation to buy power we can't have a solution," he said. Stating that he had made his stand clear to the Maharashtra Chief Minister, Vilasrao Deshmukh, when he came with the proposal to meet him and the Finance Minister, Yashwant Sinha, Prabhu said "what appears a solution can prove to be a precursor to a problem later." In the wake of the ongoing fight between DPC and the Maharashtra State Electricity Board over the payment issue and legalities of power purchase agreement, Deshmukh had asked the federal government to bail out the state by instructing the NTPC and the Power Trading Corporation (PTC) to buy power from the second phase of DPC, to be commissioned later this year. Prabhu said states were the users of the electricity and not the federal government, which was only playing the role of a facilitator by generating and supplying power. (PTI) 29-05 2002 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron's India Unit Willing To Cut Tariffs By 10% - Report 05/29/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- Dabhol Power Co., the Indian unit of Enron Corp. (ENE), has told its domestic lenders that it's willing to cut tariffs by at least 10% in an attempt to resolve a dispute with Indian authorities. "The DPC (Dabhol Power) managing director met me recently. He is agreeable to cutting tariff by 10%. I am sure it can even be reduced further," S.K. Chakrabarti, chairman and managing director of the Industrial Development Bank of India, was quoted by the Business Standard newspaper as saying Tuesday. IDBI has a total loan exposure of 21.58 billion rupees ($1=INR46.9750) to Dabhol Power. The $3 billion Dabhol Power project, India's biggest foreign investment project, is situated in the western Indian state of Maharashtra. The project, which will generate 1,444 megawatts of electricity when the second phase is completed later this year, is at the center of a dispute between the state government and Dabhol Power over what the government claims are "unaffordable" power tariffs. The statement government hasn't been paying its dues to Dabhol Power and the company on May 19 issued a preliminary termination notice to the Maharashtra State Electricity Board, or MSEB. Indian financial institutions with outstanding loans to Dabhol, including IDBI, will meet Wednesday to agree on a common stance prior to their meeting with foreign lenders in early June. The lenders are hoping to save the power project, which is facing severe cash flow difficulties because of nonpayment by the state electricity body. Separately, a negotiating panel that includes officials from the state and central government and MSEB will meet senior executives of Dabhol Power later Tuesday in a bid to resolve their differences. In a separate report Tuesday, the Financial Express newspaper said the Indian government had rejected a proposal by the Maharashtra government that National Thermal Power Corp. or Power Trading Corp. be asked to buy and distribute power from Dabhol Power. The report quoted unnamed government officials as saying that the consequences of commercial decisions taken by the state government or the MSEB won't be passed on to consumers across the country. -By Muneeza Arjuman, Dow Jones Newswires; 91-11-461-9427; muneeza.arjuman@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA'S DABHOL POWER SET TO SLASH TARIFF BY 10%, SAYS IDBI CHIEF 05/29/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. MUMBAI, May 29 Asia Pulse - Enron promoted Dabhol Power Company (DPC) is ready to slash its tariff by 10 per cent after the second phase of the 2,184 mw project is functional in June first week, the leading financial institution Industrial Development Bank of India (IDBI) acting chairman and managing director S K Chakrabarti said here. "DPC has assured its Indian lenders that it was willing to reduce the tariff after firing of the 1,444 MW second phase. The per unit price would also reduce by another 10 per cent when the plant switches to Liquified Natural Gas as fuel", Chakrabarti said. He said there was hope that DPC's tariff would come down at Rs 3.50 per unit after LNG use. Meanwhile, Indian lenders would meet on May 30 to chalk out a strategy for pressurising their foreign counterparts not to escalate the crisis by withdrawing from the USD three billion project. "There is a rift between domestic and foreign lenders, but the forthcoming meeting will formulate our future course of action to convince the latter not to precipitate the crisis any further in the June 4-6 Singapore meet", he said. "IDBI's exposure to DPC project is to the tune of Rs 21.58 billion (US$459 million) including guarantees worth Rs 15.28 billion and rupee loans of Rs 6.30 billion," Chakrabarti said. For the first time, the Indian lenders today disclosed their exact exposure to DPC, which stood at Rs 66 billion. Chakrabarti said adding other domestic lenders were ICICI, State Bank of India and Canara Bank. (PTI) 29-05 1609 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. ENRON'S DABHOL POWER CO REJECTS STATE BOARD'S LEGAL NOTICE 05/29/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. MUMBAI, May 29 Asia Pulse - Enron's Dabhol Power Company (DPC) has rejected the Maharashtra State Electricity Board's (MSEB) legal notice for "rescinding" the PPA, saying "it did not have the right to do so," as the two partners get ready to plead their case before the state Electricity Regulatory Commission (MERC) tomorrow. In a three-page response to the MSEB's May 24 legal notice, Enron India managing director K Wade Cline has said "The legal notice is not acceptable to us, as according to the PPA, MSEB does not have the right to rescind the agreement," the state government sources told PTI here today. In its notice, the MSEB has questioned the legal validity of the entire PPA as per the Indian Contracts' Act (ICA) 1872 and later also went a step further by filing a petition in MERC. "Other than non-acceptance of our legal notice, the DPC has continued its demand for an escrow account, knowing fully well that MSEB has filed a caveat in the Mumbai high court for not activating the sam," sources said. The DPC has also demanded an increase in LC (letter of credit) amount in line with the PPA, as the MSEB was supposed to do 21 days before the firing of its second phase on June six, they said. (PTI) 29-05 1143 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. GEB to issue bonds against old debts Kamlesh Trivedi 05/29/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) WHEN the dispute over past outstanding has turned relations between Enron and Maharashtra state Electricity Board sour, Gujarat state Electricity Board has come out with a trend setting concept to retire past debt of independent power projects. GEB has decided to issue bonds worth Rs 650 crore to two of the three independent power projects in the state, Gujarat Powergen Eenergy Corporation and Gujarat Industries Power Company Limited against their old debts. Bonds will be issued by GEB during the first week of June. GPEC will be issued bonds worth Rs 400 crore, while GIPCO will be issued bonds worth Rs 250 crores to settle the past dues according to sources in the state energy department. GPEC will be issued bonds with option of four, five and six years of maturity period. While GIPCO, which will be issued bonds worth Rs 250 crore, will have maturity period options of six, seven and eight years. With a fluid situation in the market, GEB is still indecisive about the coupon rates to be offered on bonds to IPPs. A similar offer for the third independent power project Essar power, is believed to be in the process. GEB, which has been facing severe financial crunch for the past few years, will now be worried only about current power purchase bills raised by IPPs. Thanks to subsidy payment arrangement in cash on monthly basis facilitated by Gujarat Electricity Regulatory Commission, GEB now has some liquidity to pay current bills of IPPs and so IPPs are worried only about the past dues, said sources. Past accumulated outstanding of the independent power projects was a major headache for GEB. Infact, two of the three IPPs, GPEC and Essar power had brought in pressure on the state government to settle down the past dues. Outstanding had become such a serious issue, that at one point of time, Essar power, in its wisdom, had also considered dragging the state government to the court. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: Enron's Dabhol to meet key govt panel on Tuesday. 05/28/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, May 29 (Reuters) - Officials at U.S. energy giant Enron Corp's Indian unit are scheduled to meet with a state government panel on Tuesday to discuss the fate of a controversial $2.9 billion power project. But analysts said the meeting is unlikely to yield any result as Dabhol Power Company, owned 65 percent by Houston-based Enron , has already announced that it regards the meeting as a courtesy call only. The panel was formed last month by the Maharashtra state government to renegotiate the tariffs charged by the 2,184 MW power project. Maharashtra State Electricity Board (MSEB), which agreed in 1995 to buy the plant's entire output, says the power is too costly and has defaulted on $48 million of power payments. Dabhol issued a notice this month to cancel its power purchase deal. The Maharashtra government has asked the panel to renegotiate the project with Dabhol and bring down the tariff. The panel is headed by Madhav Godbole, a former bureaucrat, who earlier headed a committee which recommended a series of steps to bring down the project tariff. Dabhol has said that it does not agree with the committee's recommendations and hence does not believe the new panel would find a solution. LENDERS MEET Indian lenders to Dabhol will meet in Bombay on Wednesday to try and find a way to protect their interests in the project, a lender said on Monday. The meeting's top priority will be the adoption of a common strategy to convince foreign lenders not to invoke guarantees issued by local financial institutions and banks. The project is being built at a total cost of $2.9 billion, of which $2 billion has been funded through loans. Of this amount, the local lenders have contributed $1.4 billion and foreign lenders have provided the rest. Foreign lenders are protected by guarantees issued by domestic banks and financial institutions. They have called a meeting on June 5 and 6 in Singapore to discuss invoking guarantees on their loans in the project. At stake is not just the investment in the project, but also India's efforts to reform the power sector. Indian lenders would also take a hit on their books if their foreign counterparts insist on payments. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. QATAR: Qatar says Dolphin deal not set back by Enron exit. 05/28/2001 Reuters English News Service (C) Reuters Limited 2001. DOHA, May 28 (Reuters) - Qatari Oil Minister Abdullah bin Hamad al-Attiyah said momentum had not slowed on a $3.5 billion project to route Qatari gas to the United Arab Emirates after Enron Corp bowed out of Dolphin Energy Ltd (DEL). "Actually it is the opposite, for there are seven international firms each larger than Enron that are competing for its stake," Attiyah was quoted by the official Qatari news agency QNA as saying late on Sunday. Enron last week sold its 24.5 percent stake in DEL to the UAE Offsets Group (UOG) for an undisclosed amount, raising the UAE firm's stake to 75.5 percent. DEL has said several companies, including its other partner in the project, France's TotalFinaElf , were interested in acquiring Enron's stake. In March, Qatar and DEL signed a "commmercial term sheet agreement" which outlined the conditions of the upstream agreement for the long-awaited project. The two sides aim to sign a production sharing agreement before the end of the third quarter 2001. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: Dabhol project: Politics of power 05/28/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire IT ALWAYS looked as if the Maharashtra Government had a definite plan while renegotiating with Dabhol Power Company (read Enron). The plan perhaps was to get some cosmetic changes in tariff and give DPC large benefits such as sales tax exemption for naphtha; reduction in interest rates of loans; and third party sales in the hope of getting the Centre to make NTPC and other Central utilities buy the costly power. This would look as if the contract has been renegotiated to ease the burden on Maharashtra when in fact the burden would have been distributed among several States and the Centre. The ultimate beneficiary would be Enron which would continue to keep a contract executed so blatantly against public interest. The real objective of the Maharashtra Government and perhaps the Centre is to give the controversy a decent burial. The party was spoilt by a statement by the Nationalist Congress Party President, Mr Sharad Pawar, criticising the re- negotiating Committee Chairman, Mr Madhav Godbole. The latter resigned, but was convinced to retract it. But it cannot be forgotten that it was Mr Pawar as Chief Minister of Maharashtra, who had bypassed a lot of objections to give the project to Enron. Now it has become convenient for the Maharashtra Government to say that the State is suffering because of the decisions of the BJP-Shiv Sena Government. While the role of the BJP-Shiv Sena Government in reopening and permitting Phase II and integration of the LNG terminal, by which means Enron can recover the capital costs many times over, is utterly deplorable, it can not be lost sight of that it was Mr Pawar's government that brought in Enron. As Mr Praful Patel rightly said in STAR News' Newshour, the project had the blessings also of the then Prime Minister, Mr P. V. Narasimha Rao, and his Finance Minister, Dr Manmohan Singh. All of them, pushing for reforms, wanted a project in double-quick time and they ignored the several layers of approval process. The real story is described in a civil suit filed in 1995 by the then BJP-Shiv Sena Government in the Bombay High Court. It is another matter that this civil suit was mysteriously withdrawn after the Enron head, Ms Rebecca Mark, met the powers that be in Maharashtra, including the Shiv Sena chief. The suit - drafted by such eminent lawyers as, Prashant Bhushan, Nitin Pradhan, C. J. Sawant, the then Advocate General, and F. S. Nariman - tells the interesting story of how the Pawar government went out of its way to favour Enron by giving approvals even after the elections were announced and conducted in the State - a gross violation of the election code. To this day, neither the Congress nor the BJP-Shiv Sena nor the NCP governments has had the courage to speak the truth -perhaps because all of them were beneficiaries. Here are a few passages from the suit to judge the actions of the Pawar government: A After the calling of elections for the Maharashtra State Assembly, after expiry of its full term, the following documents came to be executed namely (i) Amendment to PPA dated 2/2/1995, (ii) Consent Agreement dated 23/24.2.1995, and (iii) Fuel Management Agreement dated 25.2.1995. As mentioned above, all the aforesaid documents were in aid of and supportive of the PPA dated 8.12.1993 (later amended as mentioned above). Elections were called for by a press note dated 8.12.94 and a notification date 10.1.95 and were held from 9-12 February, 1995, but announcement of results was deferred in order to complete election process in other States which were to take place. It was this deferment of results which was taken advantage of and the letters/agreements were executed and/or exchanged during this period. A By reason of Clause 2 of PPA, the status of the PPA was that of an agreement not enforceable by law until all conditions precedents had been fully satisfied and/or bona fide waived as provided in the PPA itself. However, by a letter dated 25.2.1995 these conditions precedents were waived. The so-called waiver was not bona fide but was deceptive and fraudulent. * The unholy haste with which the purported financial closure was sought to be achieved was clearly in order to reap the benefit of the huge sum of $20 million admittedly already spent by the principal shareholder of the First Defendant (Enron) described by them euphemistically as 'educational expenses'; (the testimony of Ms Linda Powers specifically states that: "Moreover, our company spent an enormous amount of its own money approximately $20 million on this education and project development process alone not including any project costs... Why do we, and other developers include such things in our project? To win local support and support of the authorities, and contribute to the general improvement of conditions, and contribute to the general improvement of conditions in the area". In the purported refutation also enclosed in the letter dated 18.8.1995 of the First Defendant, it is stated that $20 million included "engineering, financing, legal, travel and administrative costs actually totalling a sum in excess of $20 million as of 29.3.1995.") * 20.6.1992 - (within five days of arrival in India and within three days of arrival in Bombay) The Enron team arrived in India on June 15 and spent two days visiting various sites in addition to meeting people in Delhi and Bombay. A memorandum of understanding was signed between the Second Defendant (represented by Mr Ajit M. Nimbalkar), then Chairman of the Second Defendant, Ms Rebecca Mark of Enron, and Mr Douglas Mcfadden of General Electric Corporation. The term sheet annexed to the MoU opens with the following: "Electrical Power Purchase Contract" - Contract for 20 years term between Power Venture and MSEB to be structured to achieve an all in price of US$ 0.073/kWh, comprised a fixed monthly capacity payment calculating at the Indian rate of inflation each year and a per-kWh energy payment equal to the per-kWh operating cost (as defined below). (ii) Thus, the purported decision to set up a huge power generation project in the private sector with a foreclosed obligation on a statutory corporation to buy power from the private sector at a predetermined unprecedentedly high rate was taken in a great hurry without there being any public debate on the said issue apart from there being any detailed consideration of the matter. A Before the PPA was executed in December 1993, the following events occurred: (a) The World Bank expressed its opposition to the project and advised that it was not viable, not in the interest of Maharashtra in particular and the country, the public and the consumers, in general. This objection was brushed aside by Enron which said, in a letter, that "the World Bank opinion can be changed", that "we (Enron) will engage a PR firm and hopefully manage the media from here on" (June 1993). A The Central Electricity Authority had drawn attention to several aspects of the MoU including: (i) The all-in price is a departure from the existing norms and parameters notified by the Government under Section 43 A(2) of the Electricity (Supply) Act, 1948. (ii) Denominating the price in US dollars is also a departure from the existing norms. (iii) We take it that the price of 0.073 kWh will be applicable from 1996 when power would be available. * The PPA violates the tariff guidelines in force issued on December 8, 1993. The tariff guidelines permitted only a return of 16 per cent on equity but the PPA allows a return much in excess of 25 per cent. Second, the tariff notification puts a cap on Operation and Maintenance (O&M) charges at 2.5 per cent of the capital cost. In the case of the PPA the O&M changes were over Rs 90 crore annually which is over three per cent of the capital cost. The PPA was not even structured in accordance with the said notification. The tariff notification allows payments only for the actual fuel consumed and not for deemed consumption. In the present case the heat rate guaranteed by the Dabhol Power Company to the MSEB is 7605 BTU per unit while the heat rate guaranteed by GEC to DPC is considerably lower. Under the PPA about 25 per cent of this difference and deemed consumption and actual consumption is allowed to be retained by DPC, contrary to the tariff notification. All these are but a few paragraphs of the 600-page civil suit. Perhaps had the then Maharashtra Government persisted with the arbitration the compensation would have been far less than what could be anticipated now. However, for reasons best known to the BJP-Shiv Sena combine, the suit was withdrawn and its government appointed a review committee which integrated the LNG plant with the power plant and gave the green signal for the second phase. The net result was a higher tariff than what was negotiated by the Pawar Government. The project has come a full circle now. Now the effort is on to distribute the burden across the country. This is evident by the Maharashtra Government turning to the Centre and its representative A. V. Gokak, and stating that the Centre is evaluating various options including of the Power Trading Corporation to buy the power from DPC and distribute it to all the States. But at what price? Not lower than negotiated under the PPA of course with cosmetic concessions by Enron and a lot of sacrifices by the State and the Centre. But is this what we want? - S. Padmanabhan Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. French power plays trample Mediterranean sensitivities 05/28/2001 South China Morning Post 8 © Copyright 2001 South China Morning Post Publishers. All Rights Reserved. An electric storm is raging over the western Mediterranean. French power plays have become a charged issue in Italy and Spain. French state monopoly power company Electricite de France (EdF) caused a furore in Rome last week by grabbing 20.1 per cent of Italian industrial group Montedison. Montedison has majority holdings in energy producers Edison and Sondel. Together, these two modern and thrusting companies, soon to be merged, have 6,000 megawatts of generation capacity - 12 per cent of Italy's active production capacity. Projects coming on stream will take that share to about 22 per cent within three years. Italy's shocked response was to rush through a decree limiting voting rights of foreign companies buying into its generation industry to 2 per cent - unless Italian companies are allowed reciprocal access to the buyer's domestic energy markets. It is a response learned from the Spanish Government, which has suspended the voting rights of the foreign companies that recently acquired its fourth-largest power company, Hidrocantabrico. One of those is Electricidade de Portugal (EdP), 30 per cent owned by the Portuguese Government. The other is Germany's third-largest producer, Energie Baden Wuerttemberg (EnBW), 34.5 per cent owned by the French monopoly EdF. Spain is acting under a new "EdF Law" intended to keep state-owned foreign groups from controlling its utilities. The thinking behind it is similar to Madrid's restrictions on shareholdings by foreign telecommuications companies in which governments still hold a "golden share". The golden-share law, used to scupper a deal between Spanish phone company Telefonica and Holland's KPN, has been challenged by the European Commission. This is not what the European Union's single market is supposed to be about. The idea is to foster free movement of capital and investment between member nations, not to give governments the excuse for nationalistic grandstanding and protectionism. Nor is EdF is the kind of investor the single market was designed to encourage. France is liberalising its electricity market more slowly than many other EU countries, permitting only the minimum outside competition allowed under EU rules. It also bans companies from taking a stake in EdF. In a sense, EdF is doing what state monopolies facing eventual privatisation always do - moving into markets where liberalisation is further advanced and barriers to entry are lower. It has a war chest overflowing from a high domestic-price policy and can snap up newly privatised shares of other former monopolies abroad or buy stakes in struggling newcomers. That is what it has been doing in Italy, where the former state monopoly Enel is being forced to sell off capacity. Much would have gone to Montedison, but it may go elsewhere if EdF is seen to be in control. Eventually, EU pressure to liberalise will mean EdF will have to face serious competition on its domestic market. Some market opening has already been forced on it, despite the best efforts of the French Government. The company says it has already "lost 48 clients, representing roughly 3 per cent of sales, to the benefit of the German companies RWE and E.On, America's Enron, Spain's Endesa, the Franco-Belgian company Electrabel and [upstart French rival] Suez," reports the Paris daily Le Monde . It will also have to put a further 6,000 megawatts, or 6 per cent of production, up for sale later this year as a condition for EU approval of the EnBW purchase. But that is not enough to satisfy its neighbours, who want EdF tamed, at least for as long as it remains under state protection. The EU's commission would dearly like to be able to agree. Commission President Romano Prodi, a former Italian prime minister, uncomfortably admits Brussels needs to study what can be done about companies which can buy but cannot be bought. Commissioner for Energy Loyola de Palacio, who happens to be Spanish, has argued fiercely there is no point in privatising state companies only to have them re-nationalised by someone else's government. Nonetheless, the commission has taken Spain to court over the golden-shares law and is investigating the decision against EnBW and EdP. Mr Prodi has also signalled he will also "look very closely" at the Italian law. Fearing the battle could reverse years of painful effort to liberalise the utilities market, the commission argues it is better to pressure Paris to open the French market than to let Rome and Madrid close theirs. That is correct in principle. Market liberalisation is a fundamental pillar of European integration and national barriers cannot simply be re-erected at the first sign of cross-border investment. In practice, however, the Italian and Spanish reactions may be rather more effective at concentrating French minds than lectures from Brussels. If EdF finds its foreign forays thwarted, it may decide for itself that some domestic liberalisation is necessary. After all, a little competition at home may be a relatively small price to pay for the success of an international expansion programme intended to ensure half the company's sales are generated outside France by 2005. That is double the proportion achieved in 2000. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. A Feeling the heat over energy, Bush to visit California BENNETT ROTH, Houston Chronicle Washington Bureau Staff 05/28/2001 Houston Chronicle 3 STAR 1 (Copyright 2001) WASHINGTON - After keeping his distance from California for months, President Bush finally will travel to the Golden State today to confront an energy crisis that threatens to darken the futures of politicians on both coasts. The trip comes at a time when the White House and California's Democratic Gov. Gray Davis have been engaged in a cross-country war of words, each blaming the other for the state's rolling blackouts and escalating energy prices. Prodded by nervous state Republicans who fear voters are coming to see the White House as indifferent to the crisis, Bush will focus on energy problems during the two-day swing. The trip tentatively includes a tour of Camp Pendleton Marine Corps Base, a speech to the Los Angeles World Affairs Council and a trip to Sequoia National Park. Perhaps most significant, Bush has agreed to meet with Davis - at the governor's request - to discuss their differences over how to resolve the energy crunch. The stakes are high for both. Although Bush and Davis are of different parties, political experts say voters in the nation's most populous state could hold both of them responsible for a summer of inconvenience and high utility bills. "Voters don't look at the energy crisis in an ideological mode," said Allan Hoffenblum, a Los Angeles-based Republican consultant. "It is, `Why can't I turn on my lights?' and, `Why are my electric rates so high?' " A recent poll by the Public Policy Institute of California found that voters statewide gave both Bush and Davis low marks in the way they have dealt with the energy crisis. The survey found 56 percent of Californians disapproved of Bush's handling of the matter. Davis fared even worse, with 62 percent of respondents saying they are unhappy with his performance. For many Republicans, Bush's visit is not a moment too soon. Having lost all but one statewide elected position in their increasingly Democratic state, they have been eager to get a high- profile Republican there to rally the troops. Furthermore, some political observers say Davis' latest strategy - linking Bush to the Texas-based energy companies the governor charges are responsible for high prices - is beginning to resonate with voters. "He is pointing his fingers at (energy-price) gougers in Texas and gougers in Houston," said Sherry Bebitch Jeffe, a senior scholar at the University of Southern California. She was referring to recent attacks by Davis and other Democrats against Houston-based Reliant Energy and Enron Corp., which have supplied energy to California. Until recently, Bush has been reluctant to return to a state where voters rejected him by a 12-percentage-point margin last November. The big loss came despite the fact that Bush campaigned hard there and pumped millions of dollars into a statewide effort. Since assuming office, Bush has traveled to more than half of the states before scheduling a trip to California. And he has waited longer than any president in the last three decades to make his first visit to the Golden State. Bill Clinton, who cruised to two California victories, headed to the West Coast after his first month in office and returned frequently. Critics say Bush has been trying to avoid the energy mess, which is the No. 1 topic from San Diego to San Francisco. Initially, White House advisers dismissed the state's energy crunch as a self-inflicted crisis caused by a flawed deregulation plan. When administration officials suggested that state officials solve their own problems, Democrats responded that the message from Washington was "Bush to California: Drop dead." But more recently, the administration has sought to be more attentive to the energy shortage after California Republicans warned of a possible voter backlash in the 2002 midterm elections. Bush ordered federal facilities, including the sprawling military bases in the state, to reduce energy consumption by 10 percent. And he has directed the federal government to expedite permits for new power plants that the state desperately needs. But the president's long-term energy strategy unveiled this month did not address the state's short-term problems. And the administration has adamantly rejected Davis' pleas to have the federal government cap the price of wholesale electricity in the state. White House officials say price caps distort the market and would not solve the major problem facing California, which they argue is not generating enough electricity to meet demand. Furthermore, they contend, price caps would even harm the state in the long run. Nevertheless, Davis spokesman Steve Maviglio said the governor will use his meeting with Bush to once again request that the president approve a ceiling on electricity costs. "The governor wants to ensure there is some short-term price relief by the administration," said Maviglio. "I think the longer the president stays in California, he will hear at every meeting and at every turn about energy and price gougers. So, hopefully, he will be compelled to do something about it instead of being AWOL about it." White House spokesman Ari Fleischer disputed California Democrats' contention that the president has ignored the crisis. "The president's focus is going to be on solving problems," Fleischer said. "He is not interested in finger-pointing. And that's what the president has done on energy policy in this country, whether people agree or disagree with the specifics of his energy plan." However, even the president's long-term energy strategy, which emphasizes more oil drilling and nuclear power plants, may be in peril now that Democrats have regained control of the Senate following Vermont Sen. James Jeffords' defection last week from the GOP. Democrats already have said they are unlikely to approve some of Bush's more controversial proposals, such as drilling in the environmentally sensitive Arctic National Wildlife Refuge in Alaska. The scuttling of such oil-drilling plans is likely to be well- received in environm
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