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JAPAN: UPDATE 1-Enron says priority in Japan is electricity market.
Reuters English News Service, 10/31/00 Enron's Japan Unit To Offer "Elec Discount Pdt" Nov Dow Jones Energy Service, 10/31/00 COMMODITIES & AGRICULTURE: US makes zinc stockpile awards NEWS DIGEST Financial Times, Oct 31, 2000 Arena flier rouses ire of backers Letter attacks plan, mayor and Democrats Houston Chronicle, 10/31/00 AEP to Divide Its Assets Between Two New Companies (Update1) Bloomberg, 10/31/00 JAPAN: UPDATE 1-Enron says priority in Japan is electricity market. 10/31/2000 Reuters English News Service (C) Reuters Limited 2000. TOKYO, Oct 31 (Reuters) - Enron Corp Chairman and Chief Executive Kenneth Lay said on Tuesday the Houston-based company's near-term priority in Japan was the electricity supply market, which is undergoing deregulation. "One of our highest priorities...in the next two or three years is electricity," Lay told a news conference. Last year, Enron established its first Japanese venture, E Power, to try to break into Japan's electricity market that since March has allowed non-utility firms to supply power to large-lot industrial and commercial users. Japanese media have reported that Enron, North America's leading buyer and seller of electricity and natural gas, plans to build a coal-fired power plant in Fukuoka prefecture on the southern main island of Kyushu. Asked whether Enron planned to buy or build a power plant in Japan, Lay said the company believed there was surplus capacity in Japan on which it hoped to draw. "Our belief is, if anything, today there probably is surplus capacity both of generation and transmission capacity," Lay said. "It's not a matter that we are reluctant to buy or build assets," he said. "If the market has surplus capacity, there's not much reason to do that, at least initially." Enron also unveiled on Tuesday a package offering eligible electricity users three-to five-year electricity contracts that it says will reduce their electricity bills by up to 10 percent for the first year, with the possibility of further reductions for the remaining years of the contract. Several other foreign energy firms have also shown an interest in entering the Japanese market. These include U.S. oil major Texaco Inc , Vivendi SA and the Royal Dutch/Shell Group . None has started actually supplying electricity to large-lot consumers in Japan, however. Enron set up a second subsidiary in May, Enron Japan Corp, with the aim of seeking business opportunities other than electricity supply in Japan, mainly through EnronOnline. The Web-based EnronOnline trading system had, as of October 11, executed more than 350,000 transactions with a gross value of $183 billion on the system since it was launched in late 1999. Enron uses the online system to make markets in commodities such as pulp and paper, petrochemicals, metals and broadband capacity, in addition to gas and power. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Enron's Japan Unit To Offer "Elec Discount Pdt" Nov 10/31/2000 Dow Jones Energy Service (Copyright © 2000, Dow Jones & Company, Inc.) TOKYO -(Dow Jones)- Enron Corp. (ENE), the Houston-based energy and communications giant, said Tuesday its wholly-owned subsidiary Enron Japan Corp. will offer effective Nov. 1 an "electricity discount product" targeting Japan's high-volume large-lot power users, numbering 8,000. Joseph Hirl, Enron Japan's president and chief executive officer, told reporters that his company is "already working with a number of entities" to discuss power supply contracts. Enron's package, which will typically run three to five years, will allow customers to "immediately" cut up to 10% in their current electricity costs for the first year of the contracts, with the possibility of further reduction for the following years. In the first full year of the contract, Enron will pay a financial rebate of up to 10% to a customer on a kilowatt-hour basis, under the customers' existing power supply contracts with other power suppliers. Enron will pay a rebate in the first year but will not actually supply electricity. From the second year onward, Enron will supply actual electricity to the customer at agreed fixed prices. Under the government's partial deregulation implemented March 21, high-volume large-lot retail electricity consumers - which represent roughly 27% of Japan's total power demand - can now freely choose their power suppliers. Enron declined to elaborate on how it plans to secure electricity necessary for fulfilling the proposed contracts. Enron Corp.'s chairman and CEO Kenneth Lay, who was speaking at the same press conference, said the company's highest priority in the Japanese market for the next two to three years will be electricity trading and marketing. Next comes trading in metals, weather derivatives and pulp and paper, Lay said. In addition to those main focus areas, Enron Japan's Hirl said there is "tremendous potential" in areas such as liquefied natural gas, coal and foreign exchange trading. "We're looking to provide much services we can at the best price, and in many cases at lower prices, in most of the services we provide," Hirl said. Enron also plans to introduce broadband services in Japan. "For the next two to three years, establishing and extending our broadband network in Japan is a key part of our growth," said Kenneth Rice, chairman and CEO of Enron Broadband Services. Japan is a huge Internet market and it's also a logical foothold for Enron to extend its network into the rest of Asia, he said. By offering "EnronOnline" - the world's largest business-to-business electronic commerce platform, "Enron can help the Japanese economy become more efficient by significantly reducing the costs of many products and services," Lay said. -By Maki Aoto, Dow Jones Newswires; 813-5255-2929; maki.aoto@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. COMMODITIES & AGRICULTURE: US makes zinc stockpile awards NEWS DIGEST Financial Times, Oct 31, 2000, 45 words US makes zinc stockpile awards The US Defence National Stockpile Centre awarded about 26.6m lbs of zinc to three groups in its latest solicitation of offers. Awards were made to Sogem USA, Enron Metals & Commodity Group and US Zinc for an approximate value of Dollars 15m. Reuters, New York Copyright , The Financial Times Limited Oct. 30, 2000, 9:50PM HOUSTON CHRONICLE Arena flier rouses ire of backers Letter attacks plan, mayor and Democrats By ERIC BERGER Copyright 2000 Houston Chronicle Arena proponents are decrying a letter circulating among area Republicans that ties the proposal to Houston Mayor Lee Brown and contains at least six factual errors. Brown, a central figure in the 1999 arena proposition that voters rejected, has had a considerably less visible role in this year's effort. Many Republicans viewed a vote against the arena last year as a vote against Brown, a Democrat, and an opportunity to embarrass him. "There are three areas where we believe Mayor Lee Brown's multimillion-dollar corporate welfare campaign must be addressed," states the letter, which was mailed to more than 500 Republicans and was sponsored by Republican precinct chairwoman Mary Jane Smith. What it fails to mention is that conservative U.S. Rep. Bill Archer, R-Houston, has endorsed the plan and that the pro-arena campaign chairmen are notable Republican fund-raisers Ken Lay and Don Jordan. "I suppose she believes that we've programmed Lay and Jordan to vote Democrat," said pro-arena campaign manager Dave Walden. "And that I spent a day hypnotizing Bill Archer." Beyond Brown, the letter also seeks to tie the pro-arena campaign to Vice President Al Gore, the Democratic presidential candidate. "They have teamed up with Democrat activists and Mayor Lee P. Brown to connect arena and Gore voters," according to the letter. "Turn out a pro-arena vote and you turn out a Gore vote." Such questionable associations -- Lay, for example, is one of Republican presidential candidate Gov. George W. Bush's closest business advisers -- offer a vivid look at how desperate arena opponents are, Walden contends. This criticism failed to stymie Smith, who plans to send out another printing of the letter this week. "All of my Republican buddies are opposed to this," she said. "I think it's kind of funny the arena people are taking the attitude of `How dare anyone question us?' " The letter, which clearly targets Brown, further suggests that "what Houston lacks is world-class leaders" who would have negotiated a tougher deal with Houston Rockets owner Leslie Alexander. "Mayor Lee Brown won't fund the immunization of Houston's poor Hispanic children, but he is able to build a parking garage benefiting a handful of multimillionaires," the letter says. Walden called that statement racist. It is also inaccurate, as the city is not building the parking garage. A group of private business leaders, headed by Lay, will lend the Harris County-Houston Sports Authority $30 million for the garage. The sports authority, and its hotel and car rental tax revenues, are not affiliated with the city. Among other errors in the letter: ? "The ballot language does NOT rule out ... the usual cost overruns." This is irrelevant because the Houston Rockets pay construction cost overruns. ? "Taxpayers fund and build the arena garage with Les Alexander reaping ALL of the parking fees." The private, interest-free loan will help the sports authority finance the garage. To help repay the loan, the sports authority will collect parking fees during the daytime and at concerts and other events that don't involve Alexander's Rockets, Comets and ThunderBears. ? Although the city gets use of the arena for 20 dates a year, the letter says that only five days may be leased for revenue. In fact, all 20 dates may be used for fund-raisers. This was clarified in changes to the letter of agreement between the Rockets and the sports authority. ? "This year's ballot language gives an incredible $200 million to the Rockets for naming rights, while the city receives less than 10 percent." Under terms of the agreement, the Rockets may sell the naming rights to the arena, but it is unlikely the team would receive $200 million. Such a payment is not guaranteed by the ballot language. The city receives 5 percent of the revenue from the sale of the naming rights. ? "Today, Houston is building the Hobby Arts Center, again, with no public funding. If we can use private funding for the arts, why can't our sports owners fund their own projects?" Actually, the city donated land appraised at $35 million for the Hobby Center for the Performing Arts, and gave another $30 million in hotel taxes toward its construction. The city also gives $8 million annually to the Cultural Arts Council of Houston, a $3.5 million subsidy to the Wortham Center and a $1.5 million subsidy to Jones Hall. AEP to Divide Its Assets Between Two New Companies (Update1) 10/30/0 18:40 (New York) AEP to Divide Its Assets Between Two New Companies (Update1) (Adds company, analyst comments starting in fourth paragraph.) San Francisco, Oct. 30 (Bloomberg) -- American Electric Power Co., a Columbus, Ohio-based owner of utilities in 11 U.S. states and Europe, said it will split its regulated utilities from its less-regulated businesses, creating two wholly owned companies. The company also said it has ruled out merging Seeboard Plc, a natural gas and power distributor it owns in England, with Yorkshire Electricity Plc, a U.K. utility partly owned by AEP. The separation of its businesses is patterned on plans it has already filed in Ohio and Texas, AEP said. Earlier this year, the company was required to separate all or most of its power plants and assets from its transmission lines and related assets in those states as part of efforts to open the Ohio and Texas markets to competition. The separation will take about a year to complete, said E. Linn Draper Jr., AEP's chairman, president and chief executive officer. Once it is completed, AEP will have the option of spinning off one of the two companies. ``We will have options of IPO, spin-off, divestiture,'' Draper told analysts at the Edison Electric Institute conference in San Francisco. As deregulation is approved in other states, AEP said, it plans to move all of its transmission system into the company that runs its regulated utilities, which will continue to have fixed rates of return set by regulators, and move its power plants into the company that runs less-regulated businesses with more opportunities for growth. ``I think it's the best way for them to organize such a big company,'' said PaineWebber Inc. analyst Barry Abramson, who has a ``neutral'' rating on AEP. ``It'll focus better attention on the growth business, not the slower-growing distribution business.'' `Undervalued' Shares Draper told analysts that part of the reason for the restructuring is to raise the value of the company's shares by more clearly showing the performance of its better-performing generation, wholesale marketing and trading businesses. ``We are very unhappy about the stock price,'' Draper said. ``We think it is significantly undervalued.'' The wholesale power business -- the buying and selling of power between utilities and other large consumers and generators - - is already deregulated. ``We have no plans to expand our distribution business either in the United States or internationally,'' Draper said. AEP said it will file its restructuring plan with the U.S. Securities and Exchange Commission sometime this week and complete the separation by the end of 2001, in line with the deregulation timetable in Texas and other states it serves. AEP completed the $10 billion acquisition of Central & South West Corp. in June, creating a utility with 5 million customers. Seeboard and the stake in Yorkshire came with the purchase. In February, then-Central & Southwest President Tom Shockley, now AEP vice chairman, discussed the possibility of merging Seeboard and Yorkshire. U.K. utilities have been squeezed recently by taxes and regulated price cuts. Combining those businesses provided no major cost savings, Draper said today. ``We think that keeping them separate gives us options,'' he said. ``It simply made better sense to keep our options open.'' AEP owns more than 38,000 megawatts of generation. About 25,000 megawatts of the company's generation will be deregulated by the end of 2001. AEP also is the No. 2 power trader and marketer after Enron Corp. Shares of Columbus, Ohio-based AEP rose $1.88 to $41.81. --Margot Habiby mhabiby@bloomberg.net, and Daniel Taub dtaub@bloomberg.net in San Francisco/alp/pkc Story illustration: To compare AEP's earnings and shares performance with other utilities, see {AEP US <Equity< RV <Go<}.
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