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Enron Mail |
Stand up, Texas, against California's bullying
Houston Chronicle, 05/24/01 Markets / Your Money Senate Shift to Ripple Across Industries Politics: Jeffords' decision could broadly affect range of sectors, from drugs and HMOs to tobacco and energy. Los Angeles Times, 05/24/01 Brazil asking power users to cut back Houston Chronicle, 05/24/01 California Official Cites Evidence of Electricity Price Manipulation KRTBN Knight-Ridder Tribune Business News: Contra Costa Times - Walnut Creek, California, 05/24/01 Shrugging off energy ties / GOP gubernatorial hopeful downplays his Texas investments The San Francisco Chronicle, 05/24/01 India Appoints Nominee To Dabhol Power Dispute Panel Dow Jones Asian Equities Report, 05/24/01 INDIA: New Delhi aims to help Enron patch up with utility. Reuters English News Service, 05/24/01 POLAND: ANALYSIS-Central European gas markets head for shake-up. Reuters English News Service, 05/24/01 India: A 'hurt' Godbole quits, persuaded to stay on Business Line (The Hindu), 05/24/01 INDIAN GOVT TO ACCEPT PROPOSALS TO SETTLE POWER DISPUTE Asia Pulse, 05/24/01 Endesa to sell coal-powered plants operated by Electra de Viesgo (Endesa incluye una mayoria de centrales de carbon en Viesgo antes de venderla) Expansion, 05/24/01 Is Pawar playing power politics with Enron? The Economic Times, 05/24/01 Godbole does a Mamata; quits, then back The Economic Times, 05/24/01 COMPANIES & FINANCE THE AMERICAS: Dynegy on the lookout for deals Financial Times; May 24, 2001 May 24, 2001 Houston Chronicle Stand up, Texas, against California's bullying By JONATHAN WILCOX LADIES and gentlemen: May I present to you the Hon. Bill Lockyer, attorney general of the state of California, from the May 22 Wall Street Journal: "I would love to personally escort (Enron Corp. Chairman Kenneth) Lay to an 8 x 10 cell that he could share with a tattooed dude who says, `Hi, my name is Spike, honey.' " When you stop gagging, join me in celebrating Lockyer's crude, lewd and unsubdued behavior. It has stripped away whatever veneer of respectability California officials had by virtue of the offices they hold and exposed them as braggarts and bullies of the first order. But they also wield enormous and destructive power -- and they intend to use it. The sooner Texans realize this the better. As citizens of the state that is home to much of the nation's energy production, the people of Texas are intimately familiar with the booms and busts of the oil and natural gas industries. Sometimes, prices are high, new supply is nigh and willing buyers can only sigh. Other times, gluts occur, demand fluctuates, competition grows ruthless and revenues seep out like the last remnants of black crude from a stripper well. These are the principles of American capitalism, free market forces and the give-and-take and push-pull that separate this nation's economic capacity from all others. It is a fundamentally fair system, it has served us remarkably well and every time we have tampered with it, it has been to our ultimate detriment. Witness California's partial "deregulation" of its electricity market. The Golden State, for all its vanity, pride and preening machismo, actually knows very little of tough times. Sure, we can handle the occasional spectacular episode, like an earthquake or wildfire. That's part of the thrill of living in California. But when it comes to our economic expectations and their interrelationship with our desired lifestyle, we only know the California way: more, more often and with no end in sight. And if we don't get what we want, when we want it, it's someone else's fault. In that light, it is no surprise that we are saddled with our current governor, Gray Davis, and our current law enforcement chief, the aforementioned Lockyer. Despite his frequent jittery appearances on national television, Davis is a politically shrewd man. He may not know which public policy choices are best for the state's future, but that's not his highest priority. Item No. 1 on Davis' "To Do" list is to get re-elected next year. But this has been complicated by the state's year of energy woes, Davis' ineffectual response and the fact that California is a largely one-party state. Of California's eight statewide elected offices, seven are held by Democrats, including Davis and Lockyer. You don't have to be a Delphic oracle to discern that if Davis gets tossed out, he will take more than a few of his political brethren with him. So, as California tiptoes toward its long, hot summer of rolling blackouts and unprecedented electricity shortages, Davis is busy digging his personal bomb shelter. He's preparing for the big one, calculating that while the damage will be great, and the fallout potentially lethal, he and the other cockroaches, like Lockyer, will survive. How will they do this? By finding some fall guys to take the rap. Call it the Texas two-step: First, Davis declares "war" on Texas energy producers. Next, Lockyer says he expects to file civil charges against suppliers, with, he hopes, criminal counts to follow. For a demonstration of how not to deal with Lockyer and other California aggressors, examine the rejoinder of Mark Palmer, Enron's vice president for corporate communications. Lockyer's comment about Lay, he said, "is so counterproductive that it doesn't merit a response." Wrong. Weak. Ineffective. Decency in the face of demagoguery may be dignified, but it's little more than an invitation to further abuse and, for Enron, public villainy. Enron had a chance to do something corporations under hostile government fire only dream about: Embarrass, disarm and neutralize a corrupt public official out to smear their good name. By challenging Lockyer to either reassess or renounce his remarks, Enron could have injected common sense and rare truth into a debate that has become twisted and warped by the tirades of California officials. Best of all, Enron could have extracted the kind of retraction that would have adorned Lockyer with the scarlet "A" of contrite politicians: apology. Lockyer and other state officials may not yet know the ceiling of scorn Enron will tolerate from them. But they surely know the floor: Joking with journalists of the pleasure they would take from the arranged assault of Kennth Lay in a California prison. Business; Financial Desk Markets / Your Money Senate Shift to Ripple Across Industries Politics: Jeffords' decision could broadly affect range of sectors, from drugs and HMOs to tobacco and energy. JOSH FRIEDMAN TIMES STAFF WRITER 05/24/2001 Los Angeles Times Home Edition C-1 Copyright 2001 / The Times Mirror Company The expected defection of Sen. James M. Jeffords of Vermont from the Republican Party could markedly affect the drug, HMO, defense, credit card and tobacco industries, money managers and investment analysts said Wednesday. "I don't see any upside for the [stock] market. This looks like gridlock of the worst possible kind," John Carey, manager of the Pioneer Fund, said of the switch, which would give the Democrats control of the Senate for the first time since 1995 and increase their ability to slow President Bush's legislative agenda. "The market was beginning to feel confident that the regulatory burden on business would ease," he added, "and there was even hope for business-friendly legislation. But no longer." Analysts said the clearest winners in a switch to a Democratic Senate could be lenders Fannie Mae and Freddie Mac, whose status as government-sponsored enterprises is expected to remain intact. Both stocks were up strongly Wednesday despite a weak market. Still, most analysts said it's unlikely that a change in the balance of congressional power would lead to what Carey termed "radical anti-business legislation." And President Bush's income tax cut, passed by both houses and headed for a conference committee, also is expected to remain intact. "But I wouldn't expect another tax cut next year, not anymore," said Greg Valliere, chief political analyst in Charles Schwab's Washington Research Group. "The Jeffords defection, if it happens, doesn't mean the Bush agenda is in tatters. It does mean gridlock for a lot of businesses." Here's how some major industries could be affected: * Drug makers A Democratic Senate could produce a public relations nightmare for the pharmaceutical industry, already under scrutiny over the pricing of some medications. "They can apply more heat to the pharmaceutical industry and inflame issues, such as [supposedly] charging too much for drugs," said Tom Miller, a policy analyst with Cato Institute, a conservative think tank. "There's a headline risk. You know, 'Ted Kennedy Holding Hearings on Drug Companies,' " added Valliere. Kennedy (D-Mass.) is in line to be chairman of the Senate Health Committee. Analysts said such tactics aren't likely to result in legislation, given Republican control of the House. Still, Andy Laperriere, a political economist at International Strategy & Investment Group in Washington, said Democratic Senate control at least would revive the "potential threat of price controls in some form." * HMOs Those stocks were hard hit Wednesday, perhaps as investors envisioned industry critic Kennedy shaping a so-called patient's bill of rights or Medicare reform. Still, a power shift could work in Bush's favor if Kennedy and fellow Democrats were to block administration health-care proposals at every turn, said Alan Skrainka, chief market strategist at brokerage Edward Jones. The GOP could end up gaining seats in the midterm election next year, he said, by campaigning against stonewallers. * Defense and aerospace Most analysts said the expected shift would probably have little impact on the defense industry, even if the leadership changes in the key committees such as Armed Services and Appropriations, since both sides of the aisle agree on the need for more defense spending. But debate over already contentious issues such as missile defense and whether to restart production on the B-2 Stealth bomber could intensify. "These would be bones of contention anyway but maybe more so with the Democrats' added power in the Senate," said Paul H. Nisbet, analyst with JSA Partners. Some analysts said defense stocks have run up since last summer on hopes of increased spending, perhaps leaving them vulnerable. * Credit card issuers The bankruptcy reform bill approved by both houses, considered a boon for major credit card issuers like MBNA and Bank One, could be watered down or even killed, Laperriere said. * Energy Some money managers suggested environmental restrictions pushed by emboldened Democrats could hinder a variety of energy companies. "This news is good for the caribou, that's about it," said Pioneer's Carey, referring to the chances that a Democratic Senate could block efforts to drill for oil in sensitive arctic areas. "They can breathe easier." But a Senate shift might not hurt energy companies as much as some expect, analysts said. If the Democrats use their Senate control to block elements of the president's new energy plan, it could be a plus for wholesale power merchants and traders such as Enron, Reliant Energy and Duke Energy, said Merrill Lynch analyst Donato J. Eassey. "With gridlock you're going to have uncertainty, and uncertainty causes volatility, which is good for [traders]," Eassey said. Bush's plan to open the Arctic National Wildlife Refuge to limited oil and gas exploration was politically dicey even before the possible Senate change, several analysts said. The majority of oil field services firms might actually do better if the Alaskan proposal failed, according to analyst Poe Fratt of A.G. Edwards. Only a handful of such companies stand to benefit from development of the wildlife refuge tract, he said. If exploration is blocked there, "more companies will benefit from drilling elsewhere," he said. * Tobacco Huge jury verdicts against cigarette makers in recent years "really started when industry executives got dragged before the Senate," Laperriere said, so tobacco companies wouldn't look forward to another round of hearings. He called new hearings "a real possibility" if the Democrats are running the Senate. * Fannie and Freddie Laperriere said the threat of policy changes that would affect regulation of Fannie Mae and Freddie Mac would be diminished under a Democratic Senate. He noted that instead of Phil Gramm (R-Texas) leading the Senate Banking Committee, it would be led by Paul S. Sarbanes (D-Md.), a major supporter of the popular lending agencies. * Telecommunications Some analysts said chances for deregulation--for example, allowing the Baby Bells fully into the long-distance market--won't survive a power shift in the Senate. "There was hope that the Telecommunications Act, which has actually impeded competition, might be revisited," Carey said. "If this [Jeffords situation] is bad news for any industry, it's telecom." But several analysts and investors said the market impact of the Jeffords defection already has been overblown. "The biggest thing we needed from this administration was the tax cut, and it looks like we're getting it," said Robert Nichols, chairman of Windward Capital Management in Los Angeles. * Times staff writers Denise Gellene, Thomas Mulligan and Peter Pae contributed to this report. RELATED STORIES Switch: Jeffords has told aides he will quit the GOP today. A1 Markets: Stocks fall as investors mix caution with confidence. C4 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. May 24, 2001 Houston Chronicle Brazil asking power users to cut back Officials want to pare consumption by a fifth Copyright 2001 Houston Chronicle News Services SAO PAULO, Brazil -- The towering offices of Banco Itau and Microsoft Corp. in Brazil's financial heartland greeted nightfall with their trademark lights turned off. Store owners celebrated astronomic weekend sales of energy-saving lamps. That's good news as the government asks the nation to chop 20 percent off energy consumption to avoid widespread blackouts and to haul South America's biggest country and economy out of a chronic power shortage sparked by drought. "We are in the hands of the public. If people manage to economize 20 percent, the likelihood of blackouts will be very small," said Mauro Arce, Sao Paulo State energy secretary and member of an anti-crisis task force. The plan to stave off California-style electricity cuts has borne encouraging results so far. The program asks consumers, companies and industry to cut electricity use by 15 percent to 25 percent, with the threat of price surcharges of 50 percent to 200 percent. But it will come at a cost. Economists fear rationing and its consequences could knock Brazil's economic growth to less than 3 percent from expectations of 4 to 4.5 percent. Government officials only say it will slow the economy but will not predict how much. And it may trigger moves by the government to encourage the aggressive power plant program that has long been needed. Power plant builders, including companies with big presences in Houston, have delayed plans to build plants because they fear losses from the risk from local currency devaluations. Rationing officially begins June 1 across most of Brazil, although its biggest cities have already dimmed street lighting, and consumers have turned to candles. The government estimates it needs to expand the country's generation capacity by 50 percent, or 31,000 megawatts, by 2008 at a cost of about 33 billion reais, or $14 billion. Brazil's power shortage has been hidden over the years by overuse of reservoirs. The government increased generation in years with good rain by failing to let the reservoirs fill to capacity. Hydroelectric power is responsible for about 85 percent of Brazil's generation capacity. "In the last 40 years there have been plenty of droughts, but we've never been forced to ration energy," said Lido Luis Sauer, an energy-studies professor at the University of Sao Paulo. Reservoirs, the professors said, were often allowed to fill only to 70 percent of capacity. Reduced rainfall has cut the reservoir levels to as low as 30 percent. "We're on the verge of trying to generate power with mud," Sauer said. "We've been warning them for years that this risk exists, but they told us `don't panic.' " For now, the power grid here depends on the weather and the cooperation of the public. If water levels fall farther, the country may need to cut up to 40 percent of consumption, Arce said. Rationing is set to last through November, when the rainy season resumes. With cooperation and the weather on its side, the energy task force will just need some understanding from the public. In an early sign of irritation, Sao Paulo Internet company ATN Internet filed a lawsuit seeking a judicial ban on power cuts. And Supreme Court President Marco Aurelio Mello said some of the government's measures violated the constitution. "Unfortunately, the filing of injunctions and lawsuits has become a national sport," said Pedro Parente, head of the task force. "The situation today is serious. We need this to be understood by the judiciary." If the public cooperates, Parente said the government could relax some of its rationing measures. The task force had banned energy contracts for new commercial or industrial projects. Brazil's government realizes it has to end the drought in power plant construction and is considering a program to protect some electricity utilities from currency risk to attract the $14 billion it needs for new power plants. Companies such as AES Corp., Duke Energy Corp. and El Paso Energy Corp. have delayed or limited expected investment in natural gas-fired generation plants on concern that government rules limit their ability to pass along increases in dollar-denominated fuel costs to electricity consumers who are billed in reais, the local currency. Devaluations cut the revenues of the power plant builders, but not their expenses. "The government hasn't had a policy to attract investment to generation," said Frank McGann, an oil analyst with Merrill Lynch & Co. in New York. "An adjustment in gas prices is a major step forward, which should have been taken two years ago." The failure to build plants has come despite natural gas supplies piped in from Bolivia, Argentina and fields of Brazil's Atlantic coast and a national "emergency plan" to encourage the building of dozens of new plants to make up the shortfall. A new natural gas supply contract with power producers may spur some much-needed construction. Under the currency guarantee proposal, which could be adopted as government policy as early as this week, Petroleo Brasileiro SA, the state-controlled oil company, which is the lead investor in the country's major pipelines, would sell gas to generators under a one-year contract with a fixed price in reais, said Energy Minister Jose Jorge de Vasconcelos Lima. If the dollar price of gas rose during the contract, Petrobras would charge the difference to a special account. The generator would pay off that account, plus interest and Brazilian inflation, by including them as part of the next one-year, fixed price contract at the same time that the government raises consumer power rates, a spokeswoman for the Energy Ministry said. A utility now has to pay Petrobras and other distributors the market rate, but is limited in the amount of the increase it can pass on to consumers. With rationing likely to raise distributors' costs -- slashing profits more -- these companies are reluctant to invest in any new venture, including generation. "It has never been decided who will pay for foreign exchange losses in the gas contracts," said Luiz Maurer, vice president for the Brazilian association of energy trading companies, as well as head of regulatory matters for Enron in Latin America. Enron, for its part, is moving ahead with plans to build about 800 megawatts of new generation capacity. The move, as well as plans by Petrobras to become a minority investor in a series of gas-fired plants, is a direct result of the same problem. With other companies holding back on generation projects, Enron and other gas distributors need a market for their natural gas. AES said recently it may cancel $240 million in investments in three plants. "If we don't build plants or help others build them, we will be in an even worse situation," said Ron Vaz Moreira, chief financial officer of Petrobras. "We won't have any market for our gas." California Official Cites Evidence of Electricity Price Manipulation Mike Taugher 05/24/2001 KRTBN Knight-Ridder Tribune Business News: Contra Costa Times - Walnut Creek, California Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM) An investigation into electricity prices has turned up evidence that generators are throttling their power plants up and down to drive up prices, according to California's top utility regulator. Loretta Lynch, president of the state Public Utilities Commission, said Wednesday that an investigation started last year to examine electricity prices, and which later turned to examine unprecedented numbers of power plant outages, has found instances where generating units were backed down until electricity emergencies were declared and then brought back up in such a way as to maximize profits. "What we saw was a pattern of individual behavior," Lynch said. Generators acknowledge that they vary the output from their power plants, but say they do so for legitimate business reasons. Included among those reasons is a little-known tactic to insure themselves against breakdowns that would be limited under a federal order that is to take effect next week. Although Lynch would not reveal more specifics, her comments, which echoed revelations she made before a state Senate committee last week in Southern California, come as accusations, legal threats and rhetoric are all swirling to a boil. Earlier this week, Attorney General Bill Lockyer, whose office is working with the PUC in one of several ongoing electricity market investigations, reportedly said that he wanted to escort Enron Corp. Chairman Kenneth Lay to a prison cell "that he could share with a tattooed dude who says, `Hi, my name is Spike, honey."' The heated rhetoric and continuing legal threats have infuriated generators, who continue to trot out figures showing that they are running power plants harder than ever. "There's nothing that gets under our skins more than somebody --some government official -- who is ill-informed making those judgments," said Tom Williams, a spokesman for Duke Energy, a North Carolina-based company that owns three major power plants in California and is building a fourth. Duke generated 50 percent more electricity from those plants last year than it did the previous year, Williams said. And the company is on track to generate even more this year, he added. But Lynch and other state leaders are becoming increasingly hostile in their remarks about the half- dozen out-of-state power companies that bought utility-owned power plants in 1998 and 1999 as the state moved to restructure the electricity industry. Lynch said state regulators are at least a month away from taking legal action, but she also said that in addition to looking at power plant outages, the investigation was looking at patterns in the way power plants are run, allegedly to influence prices and then capitalize on them. "There are several ways the generators game the system," she said. The companies acknowledge they might limit output because of environmental restrictions and in situations where the cost of running a plant is higher than the price they could get for electricity at a given point in time. But there is another reason, too. It is a practice that has troubling implications because it sets up a situation where the higher prices go, the more incentive companies have to hold back power. Documents filed with the Federal Energy Regulatory Commission show that some companies ease off their units' throttles in order to insure themselves against the possibility of a breakdown at another unit. Their logic is this: Energy companies typically sell electricity in advance, so they have an obligation to provide that electricity to their buyers. If they are running at 100 percent capacity and a unit breaks down, the company has to scramble to buy electricity at high, last-minute prices in order to meet its contractual obligations. Last summer, for example, a large, 750-megawatt unit at Duke's Moss Landing power plant broke down, and Duke found itself spending $1.2 million an hour to meet its contracts. By holding some of their power-generating capacity in reserve, the companies can insure themselves against a breakdown somewhere else. And the higher prices go, the more insurance they might want to keep. "That is a rationale they are using," said PUC energy division director Paul Clanon. Duke, Mirant Corp. and Pacific Gas & Electric were among the companies who objected to a draft order from federal regulators that would put an end to the practice of withholding power from the spot-market to cover the possibility of a breakdown. In papers that Mirant filed with FERC, the Atlanta-based generator said that if its ability to withhold power in that way was restricted, then regulators should allow the company to charge even more for its electricity. But FERC shot that argument down, saying that although it is reasonable for a company to not sell all of its electricity ahead of time, there is no reason to hold back power from the hour-to-hour spot market, as Mirant wanted to do. The federal commission said that, contrary to Mirant's claims, "the generator faces no financial risk" if it is forced to sell all its available power on the spot market. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. NEWS Shrugging off energy ties / GOP gubernatorial hopeful downplays his Texas investments Carla Marinucci Chronicle Political Writer 05/24/2001 The San Francisco Chronicle FINAL A.3 (Copyright 2001) Wealthy GOP gubernatorial hopeful Bill Simon Jr., on a campaign stop addressing California's power crunch yesterday, kicked off his own personal energy crisis when he confided to an energy executive, "I'm an oil and gas man from way back." Simon, son of the late Nixon Treasury Secretary William E. Simon, later insisted that he misspoke. But in his first open campaigning in Northern California, the Los Angeles businessman and philanthropist acknowledged both energy investments and his role as a former board member of Houston's Hanover Compressor Co. The publicly traded energy-related firm is a market leader in natural gas compression and counts among its partners the Texas energy giant Enron. Simon, who has also invested in educational technologies, Internet firms and, most recently, South of Market real estate in San Francisco, stressed yesterday that stocks in energy-related firms are only a small part of his portfolio. But ties to a Texas energy firm could negatively affect his first run for public office in California. A Field Poll released this week showed an increasing number of Californians holding energy firms responsible for power shortages. And, as President Bush prepares to visit the state next week, Texas oil and gas firms have specifically been the target of Gov. Gray Davis, who asserts that their hunger for profits accounts for the crisis. Hanover Compressor, traded on the New York Stock Exchange under the symbol HC, has 2,700 employees and had an estimated worth of $2.6 billion on April 30, according to a recent financial report. A 1996 report in Oil and Gas Investor magazine described Hanover as a fast-growing, profitable innovator in technologies to compress and transport natural gas. The firm signed a $130 million deal with Enron Capital and Trade Corporation in 1995, according to the magazine. Yesterday, Simon insisted that he is not strongly tied to the firm, and said that if he runs, he will release financial statements showing his holdings. "I'm not an oil and gas man," Simon told The Chronicle. "Speaking loosely, I said I have experience in looking at oil and gas investment opportunities. "I was one of a group. I was on the board for a little bit," he said of his relation to Hanover. "I still have a small piece. . . . We still have some ownership of it . . . (but) I'm not active, never really was." The focus on Simon's energy holdings came as the prospective candidate toured Lawrence Livermore National Laboratory. Simon also heard presentations -- and pitches for venture capital - - from two energy executives: Rick Jeter, who heads X.L. Operating, a Fort Worth, Texas, oil and gas producer; and Steve Doyle, chief executive of Clean Energy Systems. As Simon met with them after their presentations, his greeting to Doyle, overheard by reporters, was, "I'm an oil and gas man from way back." "Hanover Compression was one company that we started 10 years ago now," he explained to reporters. "It promotes the efficient use of gas. It helps it come out of the ground. It helps it be transported. It's good technology. "We have to continue to focus on these kinds of energy efficiencies," he said. "This is our way out, ultimately, of the energy crisis." Asked the extent of his financial interest in that and other energy-related firms, Simon could not provide specifics. "I'd have to get you those numbers," he said. But he said, "We've looked at a broad variety of opportunities in virtually every industry in the country. Oil and gas is one. . . . I'm not specific to this industry. I'm an eclectic investor." On energy issues, Simon said he would be "willing to look at" expanding oil drilling in California, though he said he was opposed to offshore drilling. He said he could support "temporary" price caps on the wholesale costs of energy, but insisted any details would require more study. "You have to know how urgent the problem is with respect to the supply and balance," he said. Asked if Davis has been fair in criticizing Texas firms, Simon said, "I think he ought to quit pointing fingers and start focusing on solutions." But he said he did not yet have a detailed energy plan, adding, "We're putting it together right now." Simon, 50, said he expects to make his announcement about a gubernatorial run the first week in June. He told potential volunteers yesterday he would be a "major investor" in his campaign, but would also raise funds for the estimated $40 million to $60 million needed in a gubernatorial race. Simon said he is exploring his first political run because "I'm always interested in being of service. I think here's a place I could be of some help." But "the reason I'd like to seek the office of governor, as opposed to controller or even run for the Assembly, is that's where we have to focus our attention," he said. "If you have a weak top of the ticket, you have less of a chance at being elected further down on the ticket. Normally, I'm just working my way up, paying my dues, but in this situation, I don't know we have that option." PHOTO (2); Caption: (1) Bill Simon Jr. listened to a presentation at Lawrence Livermore National Laboratory while former U.S. Energy Secretary John Herrington sat behind him., (2) On a campaign swing through Northern California, Bill Simon Jr. got a lesson in forensic science at Lawrence Livermore National Laboratory. / Photos by Michael Macor/ The Chronicle Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India Appoints Nominee To Dabhol Power Dispute Panel 05/24/2001 Dow Jones Asian Equities Report (Copyright © 2001, Dow Jones & Company, Inc.) BOMBAY -(Dow Jones)- The Indian government Thursday announced measures, including the appointment of a retired senior official as its nominee on the negotiating panel that is sitting with Enron India Pvt. Ltd., to resolve the Dabhol power supply dispute. Retired Telecom Secretary A.V. Gokak has been appointed as the government's nominee on the negotiating panel - set up by the state government of Maharashtra - that's made up of state and federal government officials and officers of Maharashtra State Electricity Board, or MSEB. The long-standing dispute is over power tariffs on electricity generated from a plant of the Dabhol Power Co., the Indian unit of U.S.-based Enron Corp. (ENE). The plant that will generate 1,444 megawatts of power when the second phase is completed later this year is India's biggest foreign investment to date at $3 billion. In a further move Thursday, New Delhi has set up a committee of senior officers from various ministries to examine any proposals that might emerge from the negotiating panel. The panel was set up after last month's delivery to Maharashtra government of the Godbole Report, a 198-page document prepared by a five-member team headed by former federal home secretary, Madhav Godbole. A key recommendation of the report included the renegotiation of a power purchase agreement between the Dabhol Power Co. and the MSEB. The negotiating panel was due to meet Wednesday for a second round of talks with senior executives of the DPC but was cancelled after Godbole resigned over criticism levelled by leader of the National Congress Party Sharad Pawar that implied the panel had negative attitudes. Godbole subsequently withdrew his resignation. A further meeting has been scheduled Tuesday. Meanwhile, federal Minister of Power Suresh Prabhu confirmed Thursday that the Indian government is ready to consider any worthwhile idea emerging from the negotiating panel. - By Steve Percy, Dow Jones Newswires, 91 22 2884211; steve.percy@dowjones.com Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIA: New Delhi aims to help Enron patch up with utility. 05/24/2001 Reuters English News Service (C) Reuters Limited 2001. NEW DELHI, May 24 (Reuters) - India's federal government will help Enron Corp and Maharashtra state resolve their wrangle over the U.S. energy giant's troubled $2.9-billion power project, an official statement said on Thursday. Dabhol Power Co, 65 percent owned by Enron, and the Maharashtra State Electricity Board (MSEB) have been embroiled in a dispute over payments for six months. The dispute provoked the Houston-based Enron Corp to issue a preliminary notice last week to terminate its contract to sell power to the utility. "The government of India will assist in the implementation of any agreed proposals, which have the support of the concerned parties," the statement said. The federal government has nominated a representative in the state's panel negotiating with Enron. Another committee of senior officials has been set up in New Delhi to assess the outcome of the negotiations, the statement said. "The (junior) power minister, Suresh Prabhu, has confirmed that the government of India is ready to consider any worthwhile idea emerging out of the negotiating committee for the settlement of the dispute." The statement said the federal government wanted the state to resolve the dispute. "The government of India is of the view that a quick settlement of the dispute is essential for the power sector of Maharashtra." The 2,184-MW power project was regarded as a test case of India's plans to encourage private investment in the power sector. The first phase of 740 MW of the project is up and running, while the second phase of 1,444 MW is slated to be completed next month. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. POLAND: ANALYSIS-Central European gas markets head for shake-up. By Marta Karpinska 05/24/2001 Reuters English News Service (C) Reuters Limited 2001. WARSAW, May 24 (Reuters) - Central Europe's gas market is heading for a shake-up as Poland nears the go-ahead for a disputed transit pipeline and the neighbouring Slovak and Czech republics launch key sector sell-offs, analysts say. The Polish government plans to examine an industry-backed proposal for a gas link connecting Belarus and Slovakia-based transit systems which would carry fresh Russian supplies to western Europe. "The recommended route is not the worst possible, and I do not rule out that the cabinet will approve it, although we may need some small adjustments," Economy Minister Janusz Steinhoff told reporters on Wednesday. Russian Prime Minister Mikhail Kasyanov, who arrives later on Thursday in Warsaw for a three-day visit, is due to meet Economy Ministry officials and is expected to try to talk up the Russia-favoured pipeline project. The decision - which could terminate an alternative plan by Russia's giant Gazprom to lay a more pricey pipeline along the bed of the Baltic Sea - may affect a key gas sell-off pending in neighbouring Slovakia, analysts said. "Gazprom is very interested in the region, particularly in the Slovak transit system, but its decision will partly depend on whether the new transit will run across Poland," said Evgeny Solovyov, sector analyst at SG Securities in London. SLOVAK TRUMP CARD Analysts say the sale of the Slovak SPP gas group, including a powerful and highly lucrative gas transit system, is sure to attract heavy investor interest and become the largest ever sale in the country. "The national businesses in central Europe are all like individual pieces of one puzzle, and Slovakia's SPP is the most important piece of that picture," said Bidzina Bejuashvili, oil and gas analyst at Raiffeisen Zentralbank in London. Last year SPP shipped almost 90 billion cubic metres (bcm) of Russian natural gas to western Europe, making Slovakia the top cross-region gas transit route. The state wants to sell 49 percent of SPP - also a gas distribution and transportation monopoly - all of which will likely go to a strategic investor. A rough price tag put by analysts on the entire SPP varies from $2 billion to $8 billion. So far, Gazprom and a consortium of Ruhrgas, Gaz de France PR and Italy's Snam - a gas distribution arm of Eni - have expressed interest in acquiring the stake. Germany's RWE Gas and Wintershall have also said recently they would jointly bid for the gas group. The German consortium said it would bid too for SPP's neighbour, Czech gas import monopoly Transgas, which the government wants to sell with eight gas distributors, in a sale which attracted 14 preliminary bids earlier this week. "Czech and Slovak national markets are simply too small, and whoever pursues the respective gas assets is likely to be looking for their transit pipelines connecting Russian supplies and western consumers," said Bejuashvili. POLISH LINK Analysts say that Gazprom, Snam, Gaz de France, as well as Ruhrgas and Wintershall - all involved in a consortium to build the Polish transit link - will likely be the frontrunners in the regional gas asset acquisitions. The consortium is now carrying out a feasibility study on a powerful transit pipeline route running mostly along Poland's eastern border, but avoiding most of its eastern national parks, due to link Belarussian and Slovak pipelines. Poland had initially opposed the transit project fearing the new volumes would be complemented with Russian gas from the pipelines of its strategic ally, Ukraine. But it has surrendered to pressure from both its commercial partners and the European Union - which it is negotiating to join. The government had hoped the new pipeline, likely to replace a previously planned second stretch of the existing east-west Yamal pipeline running across Poland, would be used to supply some Russian gas imports to its industrial southwest. The Yamal pipeline, which now has a capacity of 18 billion cubic metres (bcm) per year, needs $350 million for three compressor stations to boost its capacity to a planned 32 bcm. POLISH POTENTIAL Analysts said that Poland's 39-million-consumer market and relatively low gas usage - only 8.5 percent of total primary fuel consumption - make the domestic gas market growth potential much higher than that of its neighbours. "It is quite reasonable to assume that Polish gas consumption will grow at a faster pace than its economic growth in coming years," said Solovyov. Poland's gas monopoly PGNiG expects last year's consumption of 10.9 bcm to grow by five percent per year over the next three years to reach almost 13 bcm by 2003. The government's long-range forecast - which a lot of analysts say is too high - sees annual gas consumption up to 18.4 billion cubic metres by 2010. In a highly disputed plan the Polish government wants to sign a long-term agreement with Norway later this year which would enable it to diversify from its currently mainly Russian gas supplies, and boost import volumes by 5 bcm as of 2007. "There is absolutely no guarantee the consumption will grow as expected, and signing a new long-term contract may result in PGNiG being highly overcontracted," the head of Enron Polska, Jaroslaw Astramowicz, told a recent industry seminar in Warsaw. Poland already has a 25-year deal with Russia under which it must buy up to 14 bcm annually, and analysts warn that a new long-term deal may seriously dent the financial standing of Polish gas distribution firms ahead of their planned sell-off. Poland does not plan to start selling its four gas distributors until next year, but analysts say that September general elections, strongly tipped to be won by the opposition social democrats, may delay those plans further. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. India: A 'hurt' Godbole quits, persuaded to stay on 05/24/2001 Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - Asia Intelligence Wire MUMBAI, May 23. DR MADHAV Godbole, Chairman of the Enron renegotiation panel, resigned this morning but the Maharashtra Government persuaded him to stay back and continue the renegotiation process with Enron. Dr Godbole withdrew his resignation in the evening. The second meeting of the panel which was scheduled for today with Enron representatives did not take place because of the Chairman's resignation. When contacted, Dr Godbole said: "I am withdrawing my resignation in the light of the Chief Minister's letter to me in which the Cabinet has unanimously asked me to take back my resignation. They have placed complete faith in me and the committee. The Cabinet has asked me to carry on with the complex and onerous task of negotiating with Dabhol Power Company." Dr Godbole also said he had received calls from different political parties and various other organisations asking him to reconsider the decision to quit. He considered it a vote of their confidence in the committee and its working. Dr Godbole had quit in reaction to "derogatory remarks" made by the Nationalist Congress Party (NCP) leader, Mr Sharad Pawar. Last night, Mr Pawar had reportedly made a statement saying he was "apprehensive of the outcome of discussions with Enron as those leading the talks from the Government's side are working with a negative approach". Dr Godbole submitted his resignation to the Chief Minister saying he was "hurt" by Mr Pawar's statement. The NCP is one of the leading partners in Maharashtra's Government. "We will try and clear this misunderstanding. He (Godbole) has been appointed by the State Government. And the Government has no doubt about the committee's working. We want him to continue on the panel," Mr Chhagan Bhujbal, Deputy Chief Minister and NCP leader, said. - Our Bureau Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. INDIAN GOVT TO ACCEPT PROPOSALS TO SETTLE POWER DISPUTE 05/24/2001 Asia Pulse © Copyright 2001 Asia Pulse PTE Ltd. NEW DELHI, May 24 Asia Pulse - The federal government will accept recommendations of the renegotiating committee headed by the Madhav Godbole for the settlement of the dispute between Dabhol Power Company (DPC) and the Maharashtra State Electricity Board (MSEB). A government statement quoted Power Minister Suresh Prabhu as saying, "The Government of India is ready to consider any worthwile idea emerging out of the renegotiating committee for the settlement of the dispute." The proposal, Prabhu said, has to be acceptable to the parties to the dispute - MSEB and Enron-promoted DPC - adding that a quick settlement of the differences was essential for the power sector of Maharashtra. DPC had last week slapped a preliminary termination notice (PTN) on MSEB following the dispute over payment of power bills. While former telecom secretary, A V Gokak, has been appointed as the federal government's nominee on the Godbole Committee constituted by the Maharashtra Government, a committee of senior officers of the concerned ministries has been set up to quickly examine the proposals emerging out of the negotiating committee, the statement said. The committee officers comprise officials of Ministries of Finance, Power and Petroleum. (PTI) 24-05 2000 Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Endesa to sell coal-powered plants operated by Electra de Viesgo (Endesa incluye una mayoria de centrales de carbon en Viesgo antes de venderla) 05/24/2001 Expansion Copyright(C) 2001 Abstracted from Expansion in Spanish, Source: World Reporter (TM) Endesa, the Spanish electricity company, has decided which assets to sell and it will auction its Electra de Viesgo subsidiary, which has 560,000 clients in the Cantabria region. This company has 2,610MW of generation assets and 36 per cent of its plants are coal powered. Electra de Viesgo is estimated to be worth over 2bn euros (Pta332bn). Endesa is carrying out the sale in order to raise funds which will finance operations in other European countries and it has invited European and US energy companies to the auction. These include Hidrocantabrico, of Spain; Eon and RWE, of Germany, and Enron and AES, of the US. The winner will gain 3 per cent of the Spanish electricity distribution market and 5 per cent of the generation market. Hidrocantabrico is regarded as the favourite to acquire Electra de Viesgo. Its market, Cantabria, borders Asturias and the cost of integrating the two companies will enable it to make a higher offer than its rivals. However, Hidrocantabrico's complicated shareholder situation (EDP, EnBW, CajAstur and Ferroatlantica have to agree on the company's management), may be a hindrance. In order to carry out the sale, Endesa will transfer a series of power plants located throughout Spain to its subsidiary. These plants will represent a quarter of the generation assets to be sold by Endesa. The decision to sell follows Endesa's failed merger attempt with Iberdrola and will enable the company to invest without increasing its debts. According to market sources, Endesa may resume plans to merge with Iberdrola following the sale. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Is Pawar playing power politics with Enron? Girish Kuber 05/24/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) MAHARASHTRA'S former chief minister Sharad Pawar's statement criticising Madhav Godbole, the head of the renegotiation team, and the timing chosen by him to air his views, has focused attention on his role in the Enron controversy. Pawar, who had first inked the Enron deal as the chief minister of Maharashtra in 1992, was at the center of controversy when the Opposition accused him of "favouring" the US energy giant. The issue of Rs 64 crore being spent by Enron on "educating" Indians had become a political issue in the 1995 state Assembly elections which Pawar lost. In more recent times, Pawar has repeatedly intervened at crucial junctures. On the eve of Wednesday's session of the Godbole panel, Pawar criticised Godbole of having " a negative attitude" about Enron. Though Pawar did not name Godbole, the message was loud and clear. His statement comes at a time when the Maharashtra State Electricity is planning to issue a pre termination notice to Enron after the Godbole panel's scheduled meet on Wednesday. The board officials had discussed the issue with the state's advocate-general and were believed to have received a go-ahead from chief minister Vilasrao Deshmukh. Last October, when the state government had decided not to pay Enron's bills, Pawar convinced the state government to release Enron payments. It was after his intervention that the state government decided to appoint a committee to review the project. Surprisingly, last month, when Deshmukh had a meeting with Yashwant Sinha and Suresh Prabhu at Delhi, Pawar was seen accompanying the chief minister though his name did not figure on the official list of invitees. However, subsequently, the committee could not be formed since the faction loyal to Pawar in the state government was clearly against Godbole's appointment. State energy minister and Pawar's trusted aide, Padmasinh Patil, had publicly expressed his ire against Godbole. It was only after the Janata Dal, Peasents and Workers Party, CPI (M) and other anti-Enron groups threatened to withdraw support of the government, the Godbole Committee came into being. But not bofore a month was lost in a wrangling. Even after the committee's formation, Patil continued his tirade against Godbole. It was only chief minister Deshmukh's support that the Godbole Committee could survive the opposition from within. Political observers believe that it was the Congress' strategy to support the Godbole Committee that at the end could expose the wrongdoings of the earlier governments. As expected, the Godbole Committee, in its first report, exposed what it called the "lack of governance at every stage" in finalising the Enron deal. Godbole even suggested a judicial probe to pin those guilty for this "faulty deal". It was against this backdrop that Pawar's views on Godbole created a flutter on Wednesday. Although Godbole withdrew his resignation, it has certainly widened the rift between the NCP and Congress. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. Godbole does a Mamata; quits, then back Our Bureau 05/24/2001 The Economic Times Copyright (C) 2001 The Economic Times; Source: World Reporter (TM) IT'S not a comparison that springs naturally to mind. But Madhav Godbole, the former home secretary in charge of renegotiations with Enron, on Wednesday managed a passable imitation of Mamata Banerjee by resigning in the morning and withdrawing his resignation later in the day. In a day marked by considerable drama that briefly threatened the renegotiation process with Enron, Godbole decided not to press for his resignation after chief minister Vilasrao Deshmukh personally expressed "full faith and confidence" in his ability to "handle the complex and onerous task of renegotiation". Earlier in the day, Godbole, who took offence to former chief minister Sharad Pawar's "derogatory" remarks, decided to walk out of the panel. Pawar had last on Tuesday night said he was doubtful about the outcome of the ongoing renegotiations between the state and DPC as those heading the state government's panel did have a positive approach to resolve the issue. Godbole's swift decision to quit the panel sent shock waves at the Mantralaya -- headquarters of the state government -- as it seemed to threaten the existence of the government. The Janata Dal, Peasants and Workers Party and other splinter groups went to the extent of saying they would pull out of the nine-party coalition if Godbole's resignation was accepted. Following these development, the state government had to cancel the crucial second round of renegotiations with DPC slated for Wednesday. Enron and the Centre's representative were to attend the meet. "I have resigned due to the derogatory remarks made against me by Sharad Pawar last night," Godbole said on Wednesday morning. Godbole said instead of strengthening the negotiator's hands, such statements "loosen the concerned authority's grip over the fragile situation". However, chief minister Vilasrao Deshumukh appealed to him to reconsider his decision. "Godbole's in-depth knowledge and experience makes him indispensable for handling vexed issues such as renegotiation with the US energy giant," Deshmukh said. Deshmukh, after the Cabinet meet, sent a letter to Godbole expressing full confidence in him. "Godbole should not respond to statements from those outside the government," said Deshmukh. Meanwhile, Pawar, too, tried to control the damage. "It was my personal opinion that was not aimed at any particular person. Godbole should not have resigned. He should complete his task." Interestingly, Chagan Bhujbal, the state's deputy chief minister, was put on a re-fighting mission and asked to express faith in Godbole on behalf of the NCP, led by Pawar. Later in the evening Godbole decided not to press for the resignation. "I have received a letter from the chief minister expressing full confidence in my abilities. It also states the views expressed by Sharad Pawar were his personal views. He has said the state government had appointed me and they had no complaints against me. I, therefore, see no reason to press for my resignation," Godbole said. Meanwhile, the next meeting of the renegotiating panel has been convened on May 29. Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. COMPANIES & FINANCE THE AMERICAS: Dynegy on the lookout for deals Financial Times; May 24, 2001 By JULIE EARLE Dynegy, the US gas and electricity supplier, has told analysts it will make large imminent acquisitions or mergers in the US and overseas. The company told analysts at a conference in Texas on Tuesday that it was keen to make mergers and acquisitions in the near future. The deals could include generation assets, gas pipeline and storage infrastructure, entire utilities and communication assets. Dynegy's customers are in North America, the UK and elsewhere in Europe. Dynegy, which is Houston-based, was tight-lipped yesterday about any possible deals, saying only that it was "always looking for opportunities to enhance shareholder value". The company told analysts it had an active oil, liquids, gas and power group fully integrated with its US operations, and was "poised to exploit opportunities". It said it would like to own more European assets, but added that prices remained high, despite an oversupplied market. Jay Yannello, an analyst for UBS Warburg in New York, said Dynegy could leverage aggressively any assets within its network infrastructure. "We would not rule out substantial transactions," he said. Dynegy told analysts it was looking for 10 per cent of the US power market and an ongoing 15 per cent share of the US gas market. Dynegy and its competitors, including Enron and El Paso, have been recording big profits in the past two quarters, and and have come under fire from regulators over the California power crisis. Copyright: The Financial Times Limited
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