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Bush Advisers On Energy Report Ties To Industry
The New York Times, 06/03/01 Watt Price Ideology? The New York Times, 06/03/01 The Nation THE ENERGY CRISIS Watchdogs Take a Hit in State's Power Ills Energy: Ex-federal officials say oversight of California's deregulation suffered due to a push for free-market competition. Los Angeles Times, 06/03/01 Saudi Arabia Sets Pacts With 9 Oil Firms Dow Jones Business News, 06/03/01 INDIA: INTERVIEW-India to respect international contracts - Prabhu. Reuters English News Service, 06/03/01 Saudi Arabia signs landmark agreement with major oil companies Associated Press Newswires, 06/03/01 India struggles to keep foreign investors Agence France-Presse, 06/03/01 `Expert knowledge' and Dabhol Business Standard, 06/03/01 California energy czar vows to get L.A.'s excess power Associated Press Newswires, 06/02/01 SAUDI ARABIA: U.S. Marathon to replace Enron in Saudi gas deal. Reuters English News Service, 06/02/01 Enron chief worried power plant may be in jeopardy National Post, 06/02/01 Enron: prime time soap opera Business Standard, 06/02/01 White House staff's investments detailed / Holdings include energy stocks, Enron Houston Chronicle, 06/02/01 Enron backs out of Saudi Arabian natural gas plan Houston Chronicle, 06/02/01 IRRIGATION SYSTEM HAD ELECTRICAL FIRE Portland Oregonian, 06/02/01 THE NATION Bush Staff Well Invested in Energy Politics: Financial records of White House officials show past ties to industry. Several have since divested. Los Angeles Times, 06/02/01 Davis' energy boss took thousands from power titans in run for office The San Francisco Chronicle, 06/02/01 Bush Aides Disclose Finances; Several Tied to Enron; Speaking Fees Boost Matalin Income The Washington Post, 06/02/01 National Desk; Section 1 Bush Advisers On Energy Report Ties To Industry By JOSEPH KAHN 06/03/2001 The New York Times Page 30, Column 4 c. 2001 New York Times Company WASHINGTON, June 2 -- At least three top White House advisers involved in drafting President Bush's energy strategy held stock in the Enron Corporation or earned fees from the large Texas-based energy trading company, which lobbied aggressively to shape the administration's approach to energy issues. Karl Rove, Mr. Bush's chief political strategist; Lawrence B. Lindsey, the top economic coordinator; and I. Lewis Libby, Vice President Dick Cheney's chief of staff, all said in financial disclosure statement released on Friday that they already had or intended to divest themselves of holdings in Enron, the nation's leading trader and marketer of electricity and natural gas, as well as holdings in other energy companies. Mr. Lindsey received $50,000 last year from Enron for consulting. Mr. Rove's statement said he intended to sell stock holdings in Enron valued at $100,000 to $250,000, though the statement does not make clear if he has completed the sale. Mr. Libby sold his stake in the company. The financial disclosures for senior White House aides show that many of Mr. Bush's top advisers are millionaires. Among the wealthiest are Mr. Rove, Mr. Lindsey, Mr. Libby and Andrew H. Card Jr., the chief of staff, who earned $479,138.77 as chief lobbyist for General Motors and reported assets of $810,000 to $2.1 million. Mary Matalin, Mr. Cheney's senior counselor and a former political commentator, reported income of more than $1.5 million last year from speaking fees and television appearances. Her husband, James Carville, a Democratic commentator and political adviser, made $2.1 million last year on the speaking circuit, Ms. Matalin's financial disclosure shows. Enron was one of the largest contributors to Mr. Bush's presidential campaign. Kenneth L. Lay, the chairman, has close ties to Mr. Bush, as he did to Mr. Bush's father, and he has had considerable access to the Bush White House. The administration's energy strategy issued last month recommended opening protected lands to oil and gas drillers, building hundreds of power plants and easing some environmental controls, measures strongly favored by the industry. It suggested that the federal government exercise more power over electricity transmission networks, a longtime Enron goal. Mr. Lay and other Enron officials interviewed several candidates to fill vacancies on the Federal Energy Regulatory Commission, which regulates Enron 's main markets. Mr. Bush selected two people for the panel who were favored by Enron and some other energy companies. White House officials have said that Enron's views were not crucial to their selections. ''The energy task force had a singular goal to present a plan that best addressed America's energy needs,'' a White House spokeswoman said. ''Any decisions made as part of that process were made with that one goal in mind.'' The spokeswoman said the White House counsel's office had worked with all officials to ensure they met the highest ethical standards. Administration links to energy companies are wide ranging. Condoleezza Rice, the national security adviser, had stock holdings of $250,000 to $500,000 in the Chevron Corporation and earned $60,000 as a director of the company in the last year. She resigned her position and sold her shares. Clay Johnson, director of presidential personnel, reported holding a stake in El Paso Energy Partners valued at $100,000 to $250,000. El Paso is a Houston oil and natural gas company. As part of his White House duties, Mr. Johnson has been involved in selecting people to fill vacancies at the energy regulatory commission, which oversees the natural gas market. There was no indication in his disclosure statement that Mr. Johnson intended to sell his stake in El Paso. The stakes in Enron held by Mr. Rove and Mr. Libby were part of diversified stock portfolios. Mr. Rove also reported investments in BP Amoco and Royal Dutch Shell, as well as several leading pharmaceutical, technology and financial companies. Mr. Libby, a lawyer, sold tens of thousands of dollars' worth of energy stocks. They included Texaco, Exxon Mobil and Chesapeake Energy as well as Enron. Mr. Lindsey, the director of the National Economic Council, reported the most ties to major American and international companies. His Washington consulting firm, Economic Strategies Inc., advised 67 leading American, European and Japanese banks and businesses, including American Express and Citibank. Mr. Lindsey was paid an annual salary of $918,785. He also reported $50,000 in consulting fees from Crow Family Holdings, a Dallas real estate concern, and Moore Capital, a leading hedge fund, as well as Enron. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Editorial Desk; Section 4 Reckonings Watt Price Ideology? By PAUL KRUGMAN 06/03/2001 The New York Times Page 17, Column 1 c. 2001 New York Times Company I once had a math teacher who responded to student errors by saying ''Save that answer -- I may ask that question someday.'' I thought of him after George W. Bush's apparently pointless trip to California. During that trip, Gov. Gray Davis asked for a temporary cap on wholesale electricity prices -- a request that gained extra force because it was backed by economists with strong pro-market credentials, including Alfred Kahn, who oversaw the deregulation of airlines, trucking and other industries in the 1970's. Mr. Bush, however, was unmoved. Again and again he declared that a price cap would do nothing either to increase supply or to reduce demand. Save that answer, Mr. Bush. We might ask that question someday. Actually, Mr. Bush's assertion may have been wrong even on its own terms. I'll come back to that in a minute. But the most striking thing about his declaration was that it had nothing to do with the actual problem. For the issue facing California right now is not how to increase supply and reduce demand. It's too late for that; summer is almost upon us, and it is simply a fact of life that there will be power shortages in the months ahead. It is important that the state build power plants as quickly as possible, so that this shortage is only temporary. But not to worry: power plants are being built at a furious rate, in California and in the nation at large. Indeed, last week the credit agency Standard & Poor's expressed concern that electric generating capacity is being added so quickly that the industry will soon face a glut. Meanwhile, however, the temporary lack of capacity has led to incredibly high wholesale electricity prices, which are a huge financial burden on the state, over and above any disruption that may be caused by physical shortages of power. Nobody knows exactly how much California will pay for power this year, but reasonable estimates suggest that it will pay at least $50 billion more than two years ago -- an increase of more than $1,500 for every resident. The great bulk of that represents not an increased cost of production but windfall profits for a handful of generating companies. The main purpose of a temporary price cap would be to reduce -- though by no means eliminate -- this transfer of wealth away from California residents. That is, we're talking about dollars, not megawatts. And Mr. Bush's response is therefore almost surrealistically beside the point. You could argue that any financial benefit from price caps would be more than offset by a worsened physical shortage. But that's a hard case to make. Nobody has proposed capping prices at a level that would prevent power producers from making extraordinarily high profits; why should this reduce the supply of power? It's true that Econ 101 teaches that price controls tend to produce shortages. But this would be a minor effect in this case, since neither production nor consumption would be much affected. And anyway, students who go beyond Econ 101 learn that strictly speaking the standard argument against price controls applies only to a competitive industry. A price ceiling imposed on a monopolist need not cause a shortage, if it is set high enough; indeed, price controls on a monopolist can actually lead to higher output. That's not an argument you want to use too often, but given the extraordinary prices now being charged for electricity, and the considerable evidence that producers are exercising monopoly power, if ever there was a case for a temporary price ceiling, California's electricity market is the place. I am actually somewhat surprised by Mr. Bush's obtuseness on this whole subject. No doubt his determination to answer the wrong question is deliberate: misrepresenting policy issues is, after all, standard operating procedure for this administration. But even on a cynical political calculation, Mr. Bush's remarks seem to be foolish, only reinforcing the sense that he neither understands nor cares about California's problems. Maybe Mr. Bush's advisers are knee-jerk ideologues who believe that the market is always right, even when textbook economics says it is wrong. Or maybe they are so close personally to energy industry executives that they believe that whatever is good for Enron is good for America. Whatever the real story, it's clear that this administration not only has no answers for California, it won't even listen to the question. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. National Desk The Nation THE ENERGY CRISIS Watchdogs Take a Hit in State's Power Ills Energy: Ex-federal officials say oversight of California's deregulation suffered due to a push for free-market competition. JUDY PASTERNAK; ALAN C. MILLER TIMES STAFF WRITERS 06/03/2001 Los Angeles Times Home Edition A-1 Copyright 2001 / The Times Mirror Company WASHINGTON -- California was the first test, and right from the start economists at the Federal Energy Regulatory Commission saw trouble coming. Their bosses were worried too. In hindsight, some admit they could have done better. But five years ago, when California officials were rushing to deregulate electricity, the federal watchdog charged by law with overseeing the process and guarding against runaway prices decided not to bark. In their zeal for free-market competition and their ideological commitment to shifting authority away from Washington to the states, FERC's commissioners brushed aside their qualms and let the process roll forward. "There were a lot of issues that got swept under the rug," said economist Carolyn A. Berry, who headed FERC's analysis of the California plan. "We were trying to point out the ugly warts, but it wasn't our job to set policy." Former FERC Chairman James J. Hoecker, who presided over the approval, said the agency "should have been far less deferential." John Rozsa, a state legislative analyst who played a key role in the deregulation law, laughed when he heard that. "FERC wanted it badly," he said. Today, FERC stands accused of failing to exercise its oversight, enforcement and political muscle just when they were needed most. The agency, critics on the inside and outside agree, helped launch a radical economics experiment without sufficient preparation, adequate staff or a clear sense of how to carry out its mission. With fully half the states considering deregulation, the story of what a previously obscure federal agency did not do has become more than a case study in regulatory shortcomings. It has become a warning shot across the bow of the whole country. FERC has approved deregulation plans in New England, New York and the mid-Atlantic states. At stake is a reliable supply of a commodity that fuels virtually every home and workplace in America. California's example is hardly encouraging: months of blackouts and an electric bill that has rocketed from $7 billion in 1999 to as much as $50 billion this year. Now the commission is caught in what some see as an identity crisis, divided and uncertain as politicians in California and Washington call for mutually contradictory action. "I think the commission needs to decide what it wants to do when it grows up," said Hoecker, who headed the agency during a critical period ending in January. His own leadership, he concedes, was not always all it might have been. Without question, there is ample blame for everyone, not just FERC. Certainly in California, state officials devised a flawed deregulation scheme and then insisted on carrying it out. Some power company executives have extracted windfall profits. Politicians have wilted when things went awry. And, as FERC officials continually point out, its authority is limited to wholesale markets. State officials are responsible for the local utilities and other retailers selling power to consumers. Nonetheless, it is FERC that Congress charged with overseeing electricity markets and assuring "just and reasonable" prices. How did FERC choose the course it took? What factors influenced its decisions? Certainly energy companies, consumer advocates, lawmakers and others lobbied the agency. Yet even FERC critics say such influence was not dominant. FERC is not insulated from lobbying, but David Nemtzow, president of the Alliance to Save Energy, a coalition of business, consumer and environmental leaders, said: "They are less sensitive to those forces than a lot of other players." Rather, this seems to have been a case of government decisions driven by ideology. The commissioners, both Republicans and Democrats, were wedded to the idea that deregulation at the wholesale level would lead to lower retail bills. The market, they believed, would inexorably produce greater competition, greater efficiency and falling prices. To Mark Cooper of the Consumer Federation of America, the primary problem was "their excessive faith in the market." Even after price spikes occurred across the Midwest and in California as early as 1998, FERC officials dismissed suggestions the surges might reflect market instability or manipulation. And as California's situation worsened, FERC's response was shaped by a continuing commitment to market forces with a minimum of government intervention--witness its April order allowing temporary price caps but only in narrowly defined emergencies. In the last few months, under enormous pressure, FERC has ordered a dozen companies to justify high prices or refund $124.5 million to California utilities for January and February. It won an $8-million settlement from Williams Cos. of Tulsa, Okla., which it had accused of shutting power plants last spring to drive up prices. Williams did not admit guilt. Detractors, including California officials, howl that FERC's actions are too little too late. They have called for a range of solutions, from flat-out price caps, as in the old days of full regulation, to much higher rebates from generators caught price-gouging, to retractions of individual firms' permission to charge market-based rates. If the agency chose to wield all of its authority, it also could force witnesses to testify under oath and subpoena tapes of phone calls among power traders, and even force the state to change the way the market operates. Curtis L. Hebert Jr., the free-market champion who succeeded Hoecker as chairman, insisted "FERC is being vigilant in its efforts to ensure just and reasonable rates, while at the same time ensuring" that it fosters new energy supplies. "I would vehemently disagree with anyone who says otherwise," he added, noting he transferred 75 attorneys--half of the agency's litigators--into market oversight. Still, a consensus that it's time for aggressive action seems to be forming among commissioners, including two nominees confirmed by the Senate last month: Patrick H. Wood III and Nora M. Brownell. Wood, a Texas utility regulator nominated by Bush and probably FERC's next chairman, said the agency needs to evolve into a "market cop with a great big old stick," adding: "There is a role that only the federal government can take. . . . The free market ain't a free and full market yet." Already named FERC's special liaison for California, Wood remains dedicated to market principles but vows to take a fresh look. Commissioner Linda Breathitt, a Democrat, also talks of change. And commissioner William L. Massey describes agency officials as naive in their past actions, in contrast to what he calls the "very sophisticated players" on the industry side. If some commissioners are starting to sound more like watchdogs, that's partly because they feel the tug of two conflicting ideas in their mandate to open markets while assuring fair prices. Americans have always loved the way capitalism gives opportunities to the shrewd and energetic. At the same time, the country has repeatedly turned to government regulation when it thought particular industries, such as the railroads, waxed too powerful. How well FERC deals with this intrinsic conflict and meets its challenges may have a sizable effect on the country's energy future. Frightened by events on the West Coast, some states have slowed their progress toward deregulation. Others have decided not to try at all, at least for now. "If the commission wants to have competitive markets," Hoecker said, "it's going to have to pull the bacon out of the fire." Though it traces roots back to the Federal Power Commission and development of hydroelectric power in the 1920s, FERC began its present incarnation in the 1980s, with the Reagan administration's deregulation campaign. FERC undertook to deregulate natural gas, then, spurred by a Democratic Congress and the first President Bush, it moved on to electricity. The problem is that electricity and its markets differ significantly from natural gas. Electric power cannot be stored to meet future shortages, as gas can. Its markets are more volatile. And the effect of shortages or price spikes cascades through the economy much faster. Without anyone quite realizing it, FERC was sailing into uncharted waters. Moreover, as FERC's staff took up the original California deregulation plan, it faced a significant constraint: The commissioners had made a conscious call to let the state have its way most of the time. As state officials saw it, so much power was available for the Western electrical grid that prices would surely come down. FERC economists, on the other hand, saw myriad problems. For example, the state's scheme called for generators to submit blind bids with a separate quote for each hour of the coming day. With any power plant, the unit cost is highest when a generator is started up and declines as it runs. So the price charged for later hours should be lower than for the first--but only if the operator can sell both the beginning and the later hours. Under the California blueprint, though, bidders could not be sure which hours the purchaser might buy. That meant bidders would have to load the higher start-up costs into each hour throughout the cycle to make sure those costs were recovered. By contrast, the mid-Atlantic market requires the power purchaser to add separate payments to cover start-up costs. Other issues were deferred rather than solved before FERC granted approval, including such questions as how to manage congestion on the grid and what the transmission rights should be for municipalities that generated and sold power. State legislative aide Rozsa argues that such matters were not crucial and that the biggest flaw in the plan--the insistence that the system operator not have any generators of its own--was conceived with FERC guidance. Both FERC and the state, he said, had "an exaggerated sense of their knowledge and ability." As the California launch, originally scheduled for January 1998, drew near, FERC's nervousness increased. As late as the Christmas holidays, the state was still tinkering. The agency ordered the state to provide two weeks' written notice before taking the final step, even though FERC had already approved the plan. When California finally "went to market," FERC analysts snickered at the timing: The first electricity auction was held March 31 for power to be delivered the next day--April Fool's Day. As for the commissioners, "We were somewhat naive," Massey said. "The commission believed there was so much inefficiency built into the old-fashioned . . . regime that any new market would be better." With the nation's largest state deregulating, FERC began blessing plans on the East Coast. Hundreds of companies lined up for permission to charge market rates in various open trade zones. FERC, according to its rules, was supposed to reject any firm that held a big enough share in a market--generally defined as about 20%--to influence prices for a sustained period. But doing the necessary market analyses proved impractical. For one thing, the rising workload was overwhelming the staff, which had shrunk by more than 25% from its 1980 high of 1,600 employees. The agency, as critics see it, simply buckled. "Once it got going, it took over," Berry said of the momentum behind deregulation. "FERC was handing out [permission] to anybody who walked in." FERC economist Steven A. Stoft was infuriated. He wanted to start cautiously, opening one small market, testing before expanding nationally. "To put in markets everywhere, to affect a lot of people, to just wait and see how it turns out, that's completely irresponsible," said Stoft, who now lives in California and is writing a book for regulators about how to design markets. At first, the staff Cassandras seemed wrong. Prices generally headed down. But during the summer of 1998, prices spiked twice--once in the Midwest, once in California. In the Midwest, several aging nuclear plants shut down for maintenance just as a heat wave sent air conditioners into overdrive. Wholesale electricity rose past $7,000 per megawatt-hour, 100 times normal. Consumers and politicians screamed. The weather cooled and new supply came in fast. Prices ebbed. To consumer groups and several FERC economists, the sudden increase suggested the worst can happen. Hoecker and FERC member Vicky Bailey drew a different lesson, as did a staff investigation: The market worked to correct an unusual confluence of events that was unlikely to recur. About the same time, a strange thing happened in California's reserve market, where the state's independent system operator pays generators with extra capacity to stand ready to meet unexpected surges in demand. So few companies offered to sign such contracts that the ISO sometimes had little choice but to accept whatever bid came in. It was just a matter of time before someone took advantage. One day in that summer of 1998 someone did: The only offer to provide reserve power was an astronomical $9,999 per megawatt-hour. To some, it was proof that the California market could--and would--be manipulated. "I was horrified," Berry said. FERC quickly granted California's request for permission to cap prices in the reserve. The authority quietly expired in November. There was no outcry about this spike because reserve costs are spread around to the states' utilities, thus diffusing their effect. "Of course, it should have been a warning that the sellers were several steps ahead of us," commissioner Massey says. In a memo last June, Ron Rattey, a senior FERC economist who has been with FERC since 1975, complained that the staff was "impotent in our ability to monitor, foster and ensure competitive electric power markets." He added in an interview: "FERC doesn't want todiscover that the policy changes it's making aren't working." Commissioners at the quasi-judicial agency are forbidden by law from privately discussing pending cases. So companies and Congress must officially content themselves with filing briefs, writing letters and testifying at hearings. No such restraints apply to the issue of who sits on the commission. There, the jockeying for influence can be intense. Commissioners are appointed by the president and confirmed by the Senate to staggered five-year terms, with a limit of three members of a political party on the panel. The president can also designate at any time which commissioner serves as chairman, a position that bestows broad authority over the FERC's agenda and staff. When Bush took office, he picked Hebert, then the lone Republican on the commission, to the chairmanship and named his choices for the two vacancies. It was unclear whether Hebert would keep the chair once Bush's nominees were confirmed. Soon afterward, Hebert talked by telephone with Kenneth L. Lay, who heads Enron Corp., a Houston-based energy marketing giant that recently saw its profits triple in a year. FERC policy decisions could have a huge influence on its future. Enron spokesman Mark Palmer says Lay, whose friendship with Bush is well known, was returning a call from Hebert. Palmer says Hebert wanted Lay's support for remaining chairman. Hebert told a FERC official, who heard the new chairman's end of the conversation, that Lay offered support but only if the chairman changed his views in ways that would aid Enron. The official says he heard Hebert decline and characterizes him as offended. The discussion was first reported in the New York Times. Lay has never been shy about offering advice, nor about courting political access. He golfed with President Clinton, and Palmer wrote a letter to Clinton's personnel chief touting Hoecker for chairman. The Enron executive's ties with Bush bind especially tight; Lay raised and donated hundreds of thousands of dollars to Bush's campaigns and related efforts. Power companies also scouted candidates for the two slots. Enron went so far as to send the White House a list of a dozen people Lay considered qualified (the two new commissioners were on it). In the end, however, the evidence suggests that such lobbying mattered less than the faith in free markets and less federal intervention shared by two presidents and just about every recent FERC member. "FERC is filled with true believers," Rozsa said. The agency's recent California orders underline the point. In December, FERC concluded the market was dysfunctional and ordered a limited version of the price caps that free marketers abhor. Still, prices remained above $300 a megawatt-hour--10 times the pre-crisis average. So in April, FERC concluded it had to take further action. But the new version of price caps, approved 2 to 1, actually narrowed the circumstances under which they could be imposed, though it gave the state more flexibility. Even temporarily, the commission would not abandon its market principles. "I was reluctant to stop in my tracks," said Breathitt, the swing vote. She didn't want "to go back to a form of regulation that this commission and I had departed from five or six years ago." (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) FERC at a Glance 1920: The Federal Power Commission created to oversee development of hydroelectric power. 1977: Power Commission replaced by the Federal Energy Regulatory Commission to oversee interstate transmission of natural gas, oil and electricity and regulate wholesale electric rates. 1992: Congress gives FERC authority on electricity, opens door to full-scale deregulation. 1996: FERC approves California deregulation plan. 1998: Prices spike briefly; FERC puts temporary price caps on California's emergency reserve. 2000: FERC orders staff investigation of market conditions nationwide, declares California market seriously flawed in November; in December, a form of price caps introduced. 2001: Rolling blackouts hit California. FERC orders $124.5 million in refunds from power companies alleged to have overcharged utilities. Agency says California price caps can apply in narrowly defined circumstances * Source: Federal Energy Regulatory Commission; Times reports (BEGIN TEXT OF INFOBOX / INFOGRAPHIC) Federal Energy Regulatory Commission FERC Members Chosen by Bush * Patrick H. Wood III, GOP Nominated by Bush, March 27; confirmed by Senate May 31. Age: 38 Term: Expires June 30, 2005 Career: Chairman of the Public Utility Commission of Texas, 1995-2001. Attorney for the law firm Baker & Botts in Washington, 1989-1991. Legal advisor to FERC member Jerry Langdon, 1991 to 1993. Personal: Native of Port Arthur, Texas. Education: Texas A&M University, B.S., 1985. Harvard Law School, J.D., 1989. * * Nora M. Brownell, GOP Nominated by Bush, March 27; confirmed by Senate May 31. Age: 53 Term: Expires June 30, 2006 Career: Pennsylvania Public Utility Commission, 1997 to 2001. Senior vice president at Meridian Bancorp, 1992-1996. Current president of the National Assn. of Regulatory Utility Commissioners. Personal: Native of Erie, Pa. Education: Attended Syracuse University, 1966-1969. * FERC Members Chosen by Clinton Curtis L. Hebert Jr., GOP Nominated by Clinton, 1997. Named chairman by Bush in January. Age: 38 Term: Expires June 30, 2004 Professional career: Chairman of the Southern District of the Mississippi Public Service Commission, 1994 to 1996. Member of the Mississippi House of Representatives, 1988-1992. Personal: Native of Pascagoula, Miss. Education: University of Southern Mississippi, B.S., 1985; Mississippi College School of Law, J.D., 1990. * Linda Breathitt, Democrat Nominated by Clinton, 1997. Age: 49 Term: Expires June 30, 2002 Professional career: Chairwoman of the Kentucky Public Service Commission, 1995-1997. Past president of the Southeastern Assn. of Regulatory Utility Commissioners. Executive director of Kentucky's Washington office, 1980-1993. Personal: Native of Lexington, Ky. Education: University of Kentucky, B.A., 1975. * William L. Massey, Democrat Nominated by Clinton, 1993, 1998 Age: 52 Term: Expires June 30, 2003 Career: Practiced law in Washington, 1989 to 1993. Served on the presidential transition team for the Department of Energy, December 1992. Served as chief counsel to Sen. Dale Bumpers (D-Ark.), 1981 to 1989. Personal: Native of Little Rock, Ark. Education: University of Arkansas School of Law, JD, 1973; Georgetown University Law Center, master of laws, 1985. *Compiled by SUNNY KAPLAN/Los Angeles Times Q&A Differences in the approaches of the three most senior members of the Federal Energy Regulatory Commission were apparent during recent interviews with The Times. Following are excerpts: * How do you define FERC's role as a regulator of wholesale electricity? HEBERT: "What the commission has attempted to do here since I've been chairman is to provide a balance--making certain that we have just and reasonable rates and, at the same time, making certain that we have given proper opportunity to build out infrastructure and to add much-needed supply so as to correct the flawed market that California has put in place." BREATHITT: "It is being an effective referee. It's being a cop on the beat. It's being a nurturer of competition. It's being an arbiter of disputes. And it's overseeing a level playing field. And, also, its role--more than we've seen in the past--is going to be a place to listen to the energy consumer." * Is FERC effectively monitoring wholesale electric markets and enforcing "just and reasonable" rates? HEBERT: "I think FERC is using any and all tools available to it to adequately monitor the markets, continue to look 24 hours, seven days a week for market manipulation, and ensure just and reasonable rates. I would vehemently disagree with anyone who says otherwise." MASSEY: "We need more people dealing with the monitoring function. The monitoring function requires skills that are precise. I think we need more people involved in hard-nosed investigation work . . . everyone here realizes we still have to do better in that regard." BREATHITT: "This is new to us. We've been monitoring markets in an old way. We have to get better at monitoring markets within the current framework." * Should FERC revise the test it uses to determine whether a power generator has "market power"? HEBERT: "Obviously, if I thought we needed to change it, we would have." MASSEY: "We have this old horse-and-buggy methodology for determining whether generators have market power. Everybody passes, nobody ever fails. If we've learned nothing else, it's that the screen is not sensitive enough to pick up the exercise of market power in California. . . . I don't know how you can say you see no reason for change." * Have wholesale power generators exercised market power to manipulate rates in California? HEBERT: "I know there are several people in the state of California that continually make remarks, some of them that are completely unnecessary [about manipulation of markets]. If they have information and real evidence, this commission wants to know about it . . . But this anecdotal evidence that they bring forward and is not real is not helpful." MASSEY: "In a capacity-short market where they need all the generation, even a small company can exercise market power. I'm not talking about some kind of conspiracy. I'm talking about the kind of conduct you would expect from a tough, hard-nosed, profit-maximizing company that owns generation." * Did FERC's April 26 order imposing price caps in California during emergency hours go far enough? HEBERT: "I embrace the order; I think it will make a real difference. And I wish there was some way to take California through the experience without the price mitigation and show the proof that the price mitigation is going to bear in trying to level out prices while at the same time giving signals to build out infrastructure and needed supply." MASSEY: "I don't think we've moved quickly enough. Generally, our solutions have been too little too late. We've been hoping the market will settle down, and it just hasn't . . . we should have imposed a timeout . . . on that market to cool it off." BREATHITT: "I wanted it to mitigate against high prices. I wanted it to have a market orientation. And I wanted it to be effective in controlling what I thought would be high prices this summer. . . . We did control prices on April 26." * Has FERC resolved the question of "just and reasonable" rates in California? HEBERT: "When it comes to just and reasonable rates, you cannot just pick a price at which no one should pay over, or be allowed to pay over, because you have to give the proper opportunity for infrastructure and supply. . . . We are addressing it and we will fully address all the legal arguments on it in these rehearings pending on recent California orders." BREATHITT: "This order, I think, will produce just and reasonable rates given the shortage of supply in California." MASSEY: "We haven't really defined it. I would define it as cost-of-service regulation or price disciplined by a well-functioning market. We don't have either of those." * MORE INSIDE Jury still out: No smoking gun yet in natural gas rate hearing. A23 PHOTO: Patrick H. Wood III; ; PHOTO: Nora M. Brownell; ; PHOTO: Curtis L. Hebert Jr.; ; PHOTO: Linda Breathitt; ; PHOTO: William L. Massey; Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Saudi Arabia Sets Pacts With 9 Oil Firms 06/03/2001 Dow Jones Business News (Copyright © 2001, Dow Jones & Company, Inc.) Associated Press JEDDAH, Saudi Arabia -- Saudi Arabia signed agreements with nine oil companies Sunday, a move that marks the first major foreign investment in its energy sector since the industry was nationalized in the 1970s. The expected deal, valued at $25 billion at least, involves the development of three natural-gas fields in the kingdom, as well as a number of related power plants, transmission pipelines and water-desalinization projects. Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, is the lead manager on two of the projects, including the $15 billion Ghawar Core Venture 1 project. It also will lead the Red Sea Coast Core Venture 2 project. Royal Dutch/Shell Group (RD, SC) was chosen to lead the Shaybah Core Venture 3 project. The Western companies will help Saudi Arabia convert its utilities from oil burning to natural gas, which would free up more of the kingdom's crude oil for export. The other companies selected were BP PLC (BP), TotalFinaElf SA (TOT), Conoco Inc. (COCA, COCB), Phillips Petroleum Co. (P), Occidental Petroleum Corp. (OXY), Enron Corp. (ENE) and Marathon Oil Canada Inc. (MRO). Saudi Arabia's state-owned energy company, Saudi Aramco, will be an equity owner in the projects. Saudi Arabia nationalized its oil fields in 1975 after tension caused by the Arab oil embargo against the West that began two years earlier, and it closed its energy exploration and production sectors to foreign investment. Although locked out of the production of energy, Exxon Mobil has $5 billion in refining and petrochemical joint ventures in the country, and it said it is also the largest foreign purchaser of crude oil and other hydrocarbons from Saudi Aramco. Copyright © 2001 Dow Jones & Company, Inc. All Rights Reserved. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: INTERVIEW-India to respect international contracts - Prabhu. By Clarence Fernandez 06/03/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, June 4 (Reuters) - India is in favour of ensuring international contracts are respected, Power Minister Suresh Prabhu told Reuters as investors' fears grow over a squabble between U.S. energy giant Enron Corp and a local utility. The row was sparked late last year when the utility in India's western state of Maharashtra defaulted on payments of $48 million to Dabhol Power Company, 65 percent owned by Houston-based Enron. Prabhu said it was obvious investors saw some question marks over Enron's $2.9 billion power plant, which is India's largest private foreign investment. Enron is building the plant but the dispute with the local utility, Maharashtra State Electricity Board, has threatened to derail the 2,184 MW power project. "We have to address those concerns adequately because the government of India is always in favour of making sure that international contracts are respected in the process of assuring all the foreign investors that there is no need for concern," Prabhu said in an interview late on Sunday. Signs emerged last week that investors are souring on India. Global rating agency Fitch last Thursday revised India's sovereign rating outlook to negative from stable, citing concerns over fiscal policy, privatisation and deterioration in the country's foreign investment climate. Competing agency Moody's said on Friday it has seen slippage in the Indian government's reform effort, but declined to say whether a ratings change could be expected, while Standard & Poor's (S&P) said it was worried about the size of the budget deficit. Asked if he felt the Enron row had deterred investors, Prabhu said, "This is one single issue. We must deal with it in the manner in which it is possible in a given situation. "There is a negotiation going on. The central government has a representative on the negotiating committee and I am sure that the only way in which commercial disputes can be settled is through negotiations." Prabhu was referring to a panel formed last month by the Maharashtra state government to renegotiate the tariffs charged by the 2,184-MW Dabhol power project. The 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 in power payments. Dabhol issued a notice last month to cancel its power purchase deal, a move many investors fear could be the first step towards getting out of the project entirely. "The phase in which we are right now ... is the phase in which some independent power producers have already contracted certain obligations which we will definitely like to uphold, which should be honoured," Prabhu added. "Because in India contracts are very important. Sanctity of contracts should be kept." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Saudi Arabia signs landmark agreement with major oil companies By WARD PINCUS Associated Press Writer 06/03/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. JIDDAH, Saudi Arabia (AP) - Saudi Arabia and nine major international oil companies signed a landmark agreement Sunday that marks the first major foreign investment in the Saudi energy sector since the industry was nationalized in the mid 1970s. The deal, worth at least dlrs 25 billion, involves the development of three natural gas fields in the kingdom, and a number of related power plants, transmission pipelines and water desalinization projects. Irving, Texas-based Exxon Mobil, the world's largest publicly traded oil company, will lead management position for two of the projects, including the dlrs 12-16 billion Ghawar Core Venture 1 project. It also will lead the Red Sea Coast Core Venture 2 project. Shell was chosen to lead the Shaybah Core Venture 3 project. The last two projects have a value of dlrs 7-10 billion each, Prince Saud al-Faisal told reporters. The Western companies will help Saudi Arabia convert its utilities from oil-burning to natural gas, which would free up more of the kingdom's crude oil for export. Saudi Oil Minister Ali al-Naimi said the companies are expected to profit on returns from the exploration and development of gas fields with more than 15 percent of the investment cost. The other companies selected were BP, TotalFinaElf SA, Conoco Inc., Phillips Petroleum Co., Occidental Petroleum Corp., Enron Corp. and Marathon. King Fahd, who rarely appears before foreign visitors, attended the signing and shook hands at the conclusion of the deal with the presidents of the companies. Also present was Crown Prince Abdullah, Defense Minister Prince Sultan and Prince al-Faisal, who signed the agreements on behalf of the kingdom. The signing was rich in pomp as members of the royal family sat along the back wall, with Fahd at the center. Oil company executives sat along one side and other Saudi officials, including al-Naimi, sat on the other. The executives took turns signing the memorandum of understandings. At the conclusion of the signing, they took turns shaking Fahd's hand. Each could be heard saying "Thank you very much" to Fahd. Saudi Arabia's state-owned energy company, Saudi Aramco, will be an equity owner in the projects. Saudi Arabia nationalized its oil fields in 1975 after tension caused by the Arab oil embargo against the West that began two years earlier, and closed its energy exploration and production sectors to foreign investment. Al-Faisal said in case the companies discover oil, they will be compensated and the fields will be repossessed by Saudi Arabia. Although locked out of the production of energy, Exxon Mobil has invested dlrs 5 billion in refining and petrochemical joint ventures in the country and said it is also the largest foreign purchaser of crude oil and other hydrocarbons from Saudi Aramco. wp-ti-hhr Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India struggles to keep foreign investors Uttara Choudhury 06/03/2001 Agence France-Presse (Copyright 2001) NEW DELHI, June 3 (AFP) - Foreign investors are beginning to leave India for emerging economies like China, as they run smack into a cobweb of rules, regulations and intervention at the state level. The list of companies leaving India, after moving in en masse during the early 1990s when the government unleashed sweeping free- market reforms, include major European, American and Asian groups. "A slew of foreign firms have packed their bags. It is a wake up call for New Delhi to cut red tape and pursue much more investor- friendly policies," said Gautam Mahajan, president of the Indo- American Chamber of Commerce. Four foreign power companies, including Europe's largest, Electricite de France (EDF), have pulled out of Indian power projects worth three billion dollars, citing long delays and the slow pace of reforms. EDF walked out of a proposed 1,000-megawatt power project in the western Indian state of Maharashtra following years of hurdles and hold-ups. Ramesh Narayan, chief of EDF's subsidiary in India, told AFP that "inordinately long" delays forced it to pull out of the 1.1 billion dollar joint venture, which also includes France's Alstom. "We gave it a long, hard try for seven years... The coal-pricing and risk issues finally made the project unviable. Recent regulatory changes also made the project's tariff unacceptable," said Narayan. While EDF struggled to get off the ground in India it added 34,000 megawatts of power in countries such as Germany and China. The pull out of EDF followed the withdrawal in January last year of US-based Cogentrix Energy Inc., from a 1.3 billion dollar, 1,000- megawatt power project in the southern state of Karnataka. Now another US energy giant, Enron Corp., has moved closer to pulling the plug on its Indian plant. On May 19, Enron subsidiary Dabhol Power Company (DPC) issued a preliminary notice to terminate its contract to sell power to India's Maharashtra state. The move followed months of wrangling between Enron and Maharashtra state over payment defaults by the state utility, Maharashtra State Electricity Borad, and is likely to further tarnish India's business image. "It will have an impact on how people look at India and that is very unfortunate because we do see India as a potentially good market," Peter de Wit, director of Shell International Gas told reporters. "The sort of circumstance they (Enron) are faced with now doesn't give a lot of confidence to people who want to consider long-term contracts in India." Shell plans to spend 19.5 billion rupees (415 million dollars) to build a five million ton-a-year liquefied natural gas (LNG) terminal at Hazira, a port in the western state of Gujarat. The Dabhol project is the single largest US investment in India and was seen as a litmus test of India's commitment to economic reforms and globalisation. Australian telecoms group United Holdings and its Korean supplier Mocomo Inc announced last month the closure of an electronic parts production facility in northern India, sacking at least 200 people, to relocate to China. Foreign firms also said it took them longer to start operations in India. France's leading liquor company Groupe Pernod Ricard took roughly four years to launch its first brand in India. "I started Pernod's operations from scratch in Japan and Korea. I came to India with the clear intention of quickly launching our first brand," said Albert Algressi, former Delhi head of Groupe Pernod Ricard, before leaving India. "But a few weeks became some months then years. Very frustrating," he added. An executive with U.S consultancy firm McKinsey and Company said multinational companies tried to duplicate "tried and tested models in India, but India was a model of its own". "A bureaucrat will say 'very good' and then not clear the project. The local partner says 'no problem' and this could be the beginning of all your problems," said the consultant. India said foreign direct investment (FDI) in 2000 jumped by 15 percent to 193.4 billion rupees (4.2 billion dollars) from the previous year. However, a commerce ministry report stated that in the first decade of its economic liberalisation India only managed to attract FDI worth 23.7 billion dollars, a little more than what China receives in six months. uc/gh/pw Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. `Expert knowledge' and Dabhol A V Rajwade 06/03/2001 Business Standard 10 Copyright © Business Standard It has now been a few weeks since the appointment of a committee under Mr Godbole to renegotiate the tariffs payable to the Dabhol Power Company Ltd by Maharashtra State Electricity Board (MSEB). There has been hardly any tangible progress in the negotiations. Legal notices issued by either side have been flying around but the problem remains intractable. At present neither DPC, nor its parent Enron, has any incentive whatsoever to hold serious negotiations. It is sitting pretty on an agreement that one can be sure has been drafted by some very clever lawyers. And given that all obligations of MSEB are guaranteed by the Government of India, it probably is not too worried about the safety of its money. It also knows that, in the interest of its international reputation, the Indian authorities cannot afford to take a cavalier attitude to the subject. In the circumstances, if progress is to be achieved, some way will have to be found to get Enron worried about the legal enforceability of its agreements. Only if this happens will Enron be persuaded to start a serious renegotiation of the tariffs. In an earlier article in this newspaper (see Business Standard May 22, 2001), I had referred to the now famous Procter & Gamble vs Bankers Trust Company case in the United States. While I have not been able to get hold of the P&G plaint despite an extensive search on the Web, I have managed to get hold of a copy of the judgement in the case. This has limitations because the substance of the dispute was settled out of court. And yet the judgement does make a few useful points. The bulk of the judgement discusses arcane points of law, in particular the applicability of various legislations in the United States to the case. On most of these points the judge has rejected the contentions of Procter & Gamble, and granted summary judgement in favour of Bankers Trust. However, the judge goes on to argue that: "This does not mean, however, that there are no duties and obligations in their swaps transactions. Plaintiff alleges that in the negotiation of the two swaps and in their execution, defendants failed to disclose vital information and made material misrepresentations to it_ "New York case law establishes an implied contractual duty to disclose in business negotiations. Such a duty may arise where 1) a party has superior knowledge of certain information; 2) that information is not readily available to the other party; and 3) the first party knows that the second party is acting on the basis of mistaken knowledge_ "Additional cases which explicate the duty to disclose indicate that a duty may arise when one party to a contract has superior knowledge which is not available to both parties_" "Even though a fiduciary duty may not exist between the parties, this duty to disclose can arise independently because of superior knowledge_" "The duty to deal fairly and in good faith requires affirmative action even though not expressly provided for by the agreement_" "I conclude that defendants had a duty to disclose material information to plaintiff both before the parties entered into the swap transactions and in their performance, and also a duty to deal fairly and in good faith during the performance of the swap transactions_" The judge has cited a number of court cases in support of these points which seem to be based more on case law and common law principles than on any specific legislation. As such, one would imagine that the enunciated principles would have wider application than narrow infringements of specific laws. In the May 22 article, I had referred to the discount factor of 17 per cent per annum which seems to have been used to calculate the present value of the fixed cost payable by MSEB to DPC. The discount rate is an inferred one from the available data; it seems that the actual rate of discount used is not available in any of the documents. This is surprising; one obvious reason could be that, for what are effectively dollar payments, a 17 per cent discount rate is absurd and it was obviously better not to bring it on record. Can its non-disclosure in the negotiation or in the agreement come under the various points made in the P&G vs BTC case? Again, an old Business Week report on the case quotes from the P&G complaint that it "was bound by a pricing model which (Bankers Trust) did not disclose to the very party that it asserted was bound by such model...". An exact parallel to the MSEB/DPC dispute? A couple of other points occur to me. The Godbole Committee Report thanks IDFC for the excellent work done as the Committee's secretariat. Having put in a considerable degree of analytical input, as is evident from the report, perhaps the analysts may like to try out one other exercise. This is the projection of DPC's balance sheet at the end of the power purchase agreement, on the following assumptions: l No dividend payment and current tax rates; l Dollar appreciation against the rupee of 6 per cent per annum, which is the actual rate of the last five years. l Interest on rupee surplus funds at 11 per cent per cent, and domestic inflation, say, 8 per cent per annum The exercise would give a final value of DPC's net worth and readily permit the calculation of the internal rate of return on the capital invested. How does that compare with the returns in dollar terms assured by government policy? If the return turns out to be absurdly high, as it well might, this could be another example of "superior knowledge" available to the investor but not made known to MSEB. This apart, in its own affidavit in one of the court cases, MSEB has argued why the competitive bidding process was not followed: "The competitive bid requires expert knowledge and experience for evaluating the competitive bids, which at present is still not sufficiently up to the mark. For evaluation of such specialised projects, it is also necessary to have knowledge of risk identification and allocation, which is not sufficiently developed." As if this "expert knowledge" is not needed in bilateral negotiations! Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. California energy czar vows to get L.A.'s excess power By DANNY POLLOCK Associated Press Writer 06/02/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. LOS ANGELES (AP) - California's top energy adviser vowed Saturday that the state will get a guarantee from its biggest municipal supplier to provide power through the summer. "We will get (a contract) in the next few days, one way or another" from the Los Angeles Department of Water and Power, S. David Freeman told an energy summit in Studio City. "We want a contract for all its surplus over the summer," he said. Freeman, former head of the DWP, did not provide details. But his remark follows recent warnings by Gov. Gray Davis that he was prepared to use executive authority, if necessary, to obtain power from municipal utilities and other providers at lower rates. The governor has accused city utilities of gouging the state. Freeman said the DWP, the state's largest municipal utility, has made $300 million in profits by selling its excess power to the state's energy grid. During a panel discussion, DWP Assistant General Manager Henry Martinez said the agency is continuing contract negotiations with the state. "We're willing to negotiate ... to make excess power available, but we have to make sure the city is taken care of first," Martinez said. Los Angeles wants to ensure it won't face blackouts or big rate increases if it makes a long-term deal to sell some of its power, he added. Californians are facing rolling blackouts this summer, even though Davis has expedited the building of more than a dozen new power plants. Freeman said new plants would ease the energy crunch, and California should be able to meet its demand by next year. The state could begin producing surplus power within two years, he added. "By 2003, we will have the problem behind us," Freeman said. "We are not fighting the war on drugs. We are breaking the back of the problem one power plant, one efficient refrigerator and one wind plant at a time." There were no power alerts Saturday as electricity reserves stayed above 7 percent due to lower temperatures and more power plants back on line. A nuclear reactor at the San Onofre Nuclear Generating Station that was shut down in the wake of a February fire was restarted on Friday. The reactor was expected to be running at full capacity by Sunday, cranking out enough power for 840,000 homes. Freeman, in his keynote speech to the summit, praised Californians for conserving energy, noting that they used 9 percent less electricity in May than they did during the same month last year. "Our huge weapon is the market power of the people of California cutting back," Freeman said. He also took aim at President Bush's energy plan, which calls for oil drilling in Alaska but offers little in the way of short-term help for California. "We do not need to drill in the Arctic or slash and burn what's left of America the beautiful," Freeman told the 300 people attending the summit, which was sponsored by Los Angeles radio station KFWB-AM. The summit also featured Stephen Frank, chairman and CEO of Southern California Edison, and John Stout, senior vice president of Reliant Energy. Reliant, a Houston-based power generator, outraged state government officials last month when it charged California $1,900 per megawatt hour of electricity. Another generator, Duke Energy Co. of North Carolina, confirmed Friday that it sold electricity in California for as much as $3,880 per megawatt hour. During the panel discussion, Stout blamed high costs on a reduction of as much as 25 percent in hydroelectric power from the Pacific Northwest because of a drought, and a seven-fold rise in the past year for natural gas, which fuels generating plants. Meanwhile, the San Francisco Chronicle reported Saturday that energy-related companies, unions, trade groups and executives gave about $95,000 in contributions to Freeman's unsuccessful primary campaign for a state Assembly seat last year. The contributions included $25,000 from Roger W. Sant, chairman of AES. The governor recently requested federal regulators ban AES from selling wholesale power in California, alleging the company illegally manipulated the market. Freeman also got $9,000 from Texas Energy, $8,000 from Edison International, parent of Southern California Edison, and $7,500 from Kenneth Lay, CEO of Texas-based energy producer Enron. Pacific Gas & Electric Co. contributed $5,500. Freeman could not immediately be reached for comment after leaving the energy summit, but a spokesman for Davis defended the governor's appointee. "That was then, and this is now," Steve Maviglio told the Chronicle. "If you look at David's statements and actions since he's been on board, he's been harshly critical of those who gave him contributions." Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. SAUDI ARABIA: U.S. Marathon to replace Enron in Saudi gas deal. 06/02/2001 Reuters English News Service (C) Reuters Limited 2001. JEDDAH, June 2 (Reuters) - U.S. Marathon is set to replace Enron Corp in a just-formed consortium to develop a $5 billion gas project in Saudi Arabia, industry sources said on Saturday. "This is part of Enron's global restructuring," an industry source told Reuters. Saudi Arabia on May 18 awarded U.S. Enron, Occidental and ExxonMobil with stakes in the Red Sea gas package - one of three projects on offer under the kingdom's $25 billion gas development opening. ExxonMobil will retain the lead role, with 60 percent, while Marathon and Occidental will each hold 20 percent stakes, the industry sources said. Enron Corp last month bowed out of Dolphin Energy Ltd, majority owned by the government of the United Arab Emirates, which is embarking on a $3.5 billion project to route Qatari gas to the UAE. An Enron official has said that the U.S. firm had sold its stake in the project to UAE's Offsets Group (UOG) for an undisclosed sum. The kingdom has awarded eight major oil companies with stakes in three so-called core venture projects - marking a reopening of Saudi Arabia's upstream petroleum industry 25 years after nationalisation. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Financial Post: Canada Enron chief worried power plant may be in jeopardy Scott Anderson Reuters 06/02/2001 National Post National D05 © National Post 2001. All Rights Reserved. TORONTO - A planned $200-million power plant for Southwestern Ontario may be in jeopardy if the provincial government continues to drag its feet on deregulating the province's electricity market, the head of Enron Corp.'s Canadian unit said yesterday. Enron, the Texas-based energy firm, is slated to build the 400-megawatt Moore project near Sarnia, Ont. However, construction of the plant is contingent on the government's date for opening the market to competition and time may be running out, Rob Milnthorp, president of Enron Canada, said from Calgary. "I think we are really looking for a fall date as an optimum time for us to align our interests with Ontario," Mr. Milnthorp said. "If it's put off until spring, I do believe that the project is somewhat in jeopardy and would need to be assessed from an operational standpoint against all other opportunities that Enron has on its plate." Ontario said in April that deregulation would be brought into effect by the late spring of 2002, but was accused of raising market uncertainty by not setting a specific target date. The government may have a better idea of its timetable in September, after a key study by the Independent Electricity Market Operator (IMO) and the Ontario Energy Board (OEB) is finalized. The two have set up a joint task force to prepare for an opening in the wholesale and retail electricity market. Mr. Milnthorp said Enron still holds out hope the province will give a target date soon after the September study is released. Although he said Enron is "still committed to Ontario," he said the company will not invest any further until there is greater certainty. "We're on hold at this point," he said. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. The Weekend Enron: prime time soap opera Tamal Bandyopadhyay & S Ravindran 06/02/2001 Business Standard 1 Copyright © Business Standard It has been an eyeball-to-eyeball confrontation. But are both sides beginning to blink as they stare deep into each others eyes? Until three days ago, it looked pretty certain that the US utility giant Enron would pull out of the $3 billion 2,184 mw Dabhol power project. But suddenly there are a few tell-tale signs that suggest that both sides are looking for a way out of the imbroglio. Enron made the first move. After weeks of insisting that its agreement was sacrosanct, Cline announced that DPC might be willing to cut tariffs and pare their ra
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