Daily Briefing
The Atlanta Constitution, 02/15/2001

State Sees $2.3 Billion Tab for Emergency Buys
San Diego Union-Tribune, 02/15/2001

Deals & Deal Makers: First Boston's `Son of Tyco' Deal Goes Sour --- 
Underwriter Left Holding A Bagful of Unsold Bonds
The Wall Street Journal, 02/15/2001

Envera Becomes Preferred Settlement Network for Enron Global Markets' 
Petrochemical Transactions
PR Newswire, 02/15/2001

LME to Continue with Longer Open-outcry Hours
Reuters, 02/15/2001

Nigeria Races Against Time to End Power Outages
Reuters, 02/15/2001

Team Canada Assists China's Power Monopolists 
Financial Post - Canada, 02/15/2001

US Marathon Oil Mum On Reported Enron India Assets Buy
Dow Jones, 02/15/2001

State Agrees to Widen Scope of Enron Review Committee
The Economic Times, 02/15/2001

Indian Newspaper Highlights 
Asia Pulse, 02/15/2001

India: For a Dabhol Relief Fund?
Business Line (The Hindu), 02/15/2001

Enron Saga: Power of Political Will on Test
The Times of India, 02/15/2001

Making the Power Sector Viable
The Hindu, 02/15/2001

Prabhu Stresses Supply Reforms
Business Standard, 02/15/2001
 
Apps off the Shack
Computers Today, 02/15/2001
 
National Award From The Points of Light Foundation Honors Six Companies 
Dedicated to Community Service
PR Newswire, 02/15/2001

Lawsuits Pending in the Wake of State's Energy Crisis
Associated Press Newswires, 02/14/2001
 
Power Crisis Was Long in the Making: California Deregulation Just Hastened 
Reckoning
Seattle Post-Intelligencer, 02/14/2001
 
Letters Page
Denver Rocky Mountain News, 02/14/2001
 
Catholic Health East signs energy supply contract
Times Union Albany, 02/14/2001
 
Rentable Storage: Efficient But Risky
CMP TechWeb, 02/14/2001

3 Members Keep Off First Enron Panel Meet
The Indian Express, 02/14/2001

Letters to the Editor: A Contradiction?
The Statesman, 02/14/2001

Letters to the Editor: A test of principles and being practical
The Statesman, 02/14/2001

Regulator Authorizes Enron and British Gas to Use Brazil-Bolivia Gas Pipeline 
Gazeta Mercantil, 02/14/2001

Studios Release Movies for Internet
Reuters, 02/14/2001

Video Store No More?
TheStandard.com, 02/14/2001

Stonepath Group to Sell Interest in Intermodal Business To Enron Global 
Markets
PR Newswire, 02/14/2001


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Business
DAILY BRIEFING
STAFF REPORTS AND NEWS SERVICES

02/15/2001
The Atlanta Constitution 
Home
G; 2
(Copyright, The Atlanta Journal and Constitution - 2001) 

UTILITIES/ENERGY: Enron says it can help California power woes 

Enron, the largest energy trader, has turbines that could be used in new 
California power plants if the state gives generators incentives to relieve 
an electricity shortage there, Chairman Kenneth Lay said. California Gov. 
Gray Davis wants to boost the state's generating capacity by 5,000 megawatts, 
enough to light 5 million homes, by July. 
 
--- Staff, Associated Press, Bloomberg News, Dow Jones News Service, Wall 
Street Journal


State sees $2.3 billion tab for emergency buys
San Diego Union-Tribune 
By Ed Mendel 
UNION-TRIBUNE STAFF WRITER 
February 15, 2001 

SACRAMENTO -- The amount the state expects to spend on emergency power has 
soared to $2.3 billion and may continue to grow for weeks or months. 
A request for an additional $500 million last week was quickly followed by a 
request for another $500 million this week, in part because the state has 
begun buying power for San Diego Gas & Electric. 

The emergency purchases began Jan. 17 when Gov. Gray Davis declared an 
emergency because suppliers would no longer sell power to two nearly bankrupt 
utilities, Pacific Gas and Electric and Southern California Edison. 

The state is buying power on the expensive spot market while struggling to 
negotiate a portfolio of long-term contracts that are expected to sharply 
reduce costs. 

Davis said yesterday that more long-term contracts could be announced this 
week. But the state does not want to obtain all of its long-term contracts 
immediately, because prices could go down later. 

Meanwhile, the governor said he hopes that an agreement on a plan to begin 
paying off the $13 billion debt of the utilities, in exchange for their 
transmission systems and other assets, will calm the market. 

The governor intends to reach an agreement with legislative leaders on a 
debt-relief plan that can be presented to the utilities tomorrow, setting the 
stage for several weeks of negotiations. 

"As soon as the utilities indicate their assent to this plan -- or some 
modified version we can assent to -- everything will begin to stabilize and 
calm down," Davis said. 

"There is no question when there is uncertainty it affects prices, and we 
want to create the opposite -- some certainty, predictability -- in what I 
like to call a challenge," Davis told reporters, "and you guys call a 
crisis." 

The governor said that state purchase of the transmission systems will be the 
biggest part of the proposal tomorrow. Other assets that have been mentioned 
are stock options, scenic land around hydroelectric facilities, and payments 
from utility parent firms. 

The state is not revealing the price of its power purchases, arguing that 
would prevent lower-priced bids from suppliers in the future. Davis said he 
hopes to have a secrecy period of less than six months and may announce a 
schedule in two or three weeks. 

"But I definitely do not want to jeopardize the integrity of the secret bid 
prices," he said. "Because if we do that, we are just going to force 
Californians to pay more for power than they would otherwise." 

An official of the state Department of Water Resources, which owns 
hydroelectric facilities and is purchasing power for the state, estimated 
last month that the state was paying $45 million a day for power. 

The governor's emergency order last month authorized the state to dip into 
$440 million in Water Resources funds. The Legislature quickly appropriated 
$400 million for additional power purchases, and included $500 million in the 
bill authorizing long-term contracts. 

But Feb. 5, the state Department of Finance sent the Legislature a 
"deficiency" 
notice saying it intended to begin spending an additional $500 million to buy 
power in 10 days, unless the Legislature objected. 

The department issued another notice this week saying yet another $500 
million will be required because all of the previous funding is expected to 
be exhausted by Feb. 23. 

"This is somewhat sooner than had earlier been anticipated due to colder 
weather and the inclusion of electricity purchases for the San Diego Gas & 
Electric service area," said the notice issued Tuesday. 

The long-term contracting legislation signed early this month by Davis made 
SDG&E eligible for the state purchases. SDG&E is in better financial 
condition than PG&E and Edison, but has a debt of more than $500 million. 

All three utilities are the victims of a failed deregulation plan: The rates 
they can charge customers are capped (in SDG&E's case by legislation after 
bills doubled last summer) while the wholesale cost of power soared, 
producing huge debts. 
The long-term contracting legislation authorizes the state to issue $10 
billion or more in bonds to spread the cost of the power purchases over a 
period of years in an attempt to avoid a rate increase. 

The bonds will be paid off by ratepayers through a monthly charge on their 
bill. Money from the bonds also will be used to repay Water Resources and the 
state general fund for the purchases made on the spot market. 

In comparison, the $2.3 billion that the state expects to spend on power 
purchases so far is equal to the reserve in the $104.7 billion state budget 
proposed for next fiscal year. It is more than the total amount of money 
earmarked for the state's mental health programs. 

State Treasurer Phil Angelides told reporters last week that the $10 billion 
bond issue will not be ready until May. He said if interim financing through 
short-term notes is too expensive, the state has $9 billion in cash reserves. 

Angelides said that the long-term contracts must be obtained before the bonds 
can be issued. He said the average price of the contracts will determine the 
total amount needed for the bond issue, which could exceed $10 billion. 

The governor spoke yesterday while revealing more details of his plan to 
boost power generation in California by 5,000 megawatts to avoid blackouts 
this summer, when air-conditioning drives up the demand for electricity. 

He is proposing legislation that would provide rebates to companies that 
install small business generators of less than 10 kilowatts, a 50 percent tax 
credit for generators between 10 and 200 kilowatts, and $50 million for 
co-generation, wind and solar programs. 

"We are in for a struggle this summer," Davis said. "It will test our 
resolve. But I am convinced if we all do our part, we will get through this 
summer without major disruptions." 

Jeffrey Skilling, chief executive officer of Enron, the nation's largest 
electricity trader, said electricity costs would go down when significant 
progress occurs in planning power plants. 

"Faster siting will cause the forward price of electricity to drop below $50 
a megawatt," Skilling said yesterday at an electric industry conference in 
Houston. In retail terms, that is 5 cents a kilowatt. 

Yesterday was California's 30th straight day in a Stage 3 power alert. Grid 
operators struggled to meet demand by making last-minute power purchases from 
the Northwest. 

"We came close this morning (to blackouts) but it got better by the hour," 
said Patrick Dorinson, spokesman for the state Independent System Operator. 
"It was touch and go." 

ISO managers had worried they might not meet demand because of the forced 
shutdown of power plants capable of producing 10,400 megawatts -- 400 
megawatts more than the day before. Officials said the plants were taken off 
line for repair work. 

Dorinson said he could not predict how long the state would remain on Stage 3 
alert. 

"It is the same situation. I feel like Bill Murray," he said, referring to 
the star of the movie "Groundhog Day," whose character keeps reliving the 
same day. 



Deals & Deal Makers: First Boston's `Son of Tyco' Deal Goes Sour --- 
Underwriter Left Holding A Bagful of Unsold Bonds
By Suzanne McGee
Staff Reporter of The Wall Street Journal

02/15/2001
The Wall Street Journal
C1
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Credit Suisse First Boston is finding there may be too much of a good thing. 

The big New York investment bank apparently scored a coup last week when it 
was chosen as underwriter to sell $2.25 billion of convertible bonds for 
conglomerate Tyco International, a deal that CSFB might have expected to 
produce big fees and give the firm a leg up on the widely watched "league 
tables" that rank Wall Street underwriters.
. . .
"The market has been flooded with these deals, even as the frustration on the 
part of investors has grown," Mr. Cunningham says. "And the new issue market 
has been so, so active that everyone's trying to digest what's out there." 
--- Hitting the Rocks?

Rumors swirl that underwriters of several big convertible issues weren't able 
to sell everything, and still carry some of the
securities on their books.
. . .
Underwriter: Salomon Smith Barney
Company: Enron
Size: $1.25 billion
Date: Feb. 5
Took the still-unusual step of buying some of the issue in the aftermarket as 
"stabilization", sparking rumors it still owned the
issue.

Source: WSJ Research


Envera Becomes Preferred Settlement Network for Enron Global Markets' 
Petrochemical Transactions

02/15/2001
PR Newswire
(Copyright (c) 2001, PR Newswire)

RICHMOND, Va., Feb. 15 /PRNewswire/ -- Envera(TM) announced today that Enron 
Global Markets LLC has become its newest equity participant and trading 
member. Envera is a leading global electronic network for chemical and 
petrochemical industry B2B transactions and services. 

Enron Global Markets will connect its petrochemicals, natural gas liquids and 
plastics systems to the Envera network. Additionally, Envera will become the 
Preferred Settlement Network for members' petrochemical transactions with 
Enron Global Markets. Envera members also will have access to Enron's world- 
class product and service offerings.

"We welcome Enron as a member of Envera," stated Bob Mooney, Envera's CEO. 
"As our newest member, Enron extends Envera's value proposition by opening up 
to Enron's trading verticals, including new industries such as oil and gas, 
petrochemicals and plastics to Envera's trading members. Furthermore, our 
members have enhanced access to Enron's many services, continuing Envera's 
"Business FOR Business" (eB4B)(TM) strengths." 

ABOUT ENVERA 
Envera is a trusted e-business solutions provider that improves members' 
supply-chain communications and fosters business growth in the chemical and 
petroleum industries. Envera's initial equity and trading partners include: 
Albemarle Corporation (NYSE: ALB); Borden Chemical, Inc; Enron Global Markets 
group of Enron (NYSE: ENE) Equistar; Ethyl Corporation (NYSE: EY); Lubrizol 
(NYSE: LZ); Lyondell Chemical Co. (NYSE: LYO); Mays Chemical; Occidental 
Chemical Corporation (NYSE: OXY); Phenolchemie; and Solutia (NYSE: SOI). 
Visit Envera via its Web site at www.envera.com or call 1-888-ENVERA1.

/CONTACT: Richard J. Chvala of Envera, 804-788-5667 or rchvala@envera.com or 
Douglas Friedman of Enron, 713-853-7377 or Douglas.S.Friedman@enron.com/ 
06:01 EST 


LME to continue with longer open-outcry hours
By Martin Hayes 

LONDON, Feb 15 (Reuters) - The London Metal Exchange (LME), the world's 
largest non-ferrous metals market, said on Thursday an experimental extension 
to its open-outcry hours would continue. 

``The board looked at a whole range of issues at its (February) meeting...It 
decided that this aspect should continue, but will be kept under review,'' 
LME Director of Corporate Affairs Jonathan Haslam said. 
In a move that bucked the inexorable trend in European markets away from 
floors and towards electronic trading platforms, the LME last October 
introduced a trial 1330-1510 GMT extension to its open-outcry trading hours. 

Before then, there had been a break at the end of the morning session when 
the floor was closed. Now LME open-outcry trading hours run from 1140 to 1700 
continously. 

LME Select, the exchange's screen trading system which was launched on 
February 9, operates from 0730 to 1930, with the exception of a 45-minute 
closure between 1230 and 1315, when the second official rings take place. 

Traders from the LME's 12 ring-dealing members (RDMs), who are entitled to 
trade during the open-outcry sessions, said more activity has been seen 
during the first part of the extended period. 
``The guys on the floor have got accustomed to it now, and are doing more 
business than they previously would have,'' one floor trader said. 

Others said the bulk of trade was seen after 1330, with business slackening 
after some 45 minutes, only to pick up from 1510 onwards when the customary 
afternoon rings take place. 

``There is a bit of a dead zone between 1415 and 1515...but the longer it 
(the floor) is open, the better it is for the survival of the ring,'' another 
senior trader said. 

EVEN LONGER HOURS UNLIKELY 
Last month traders from the RDMs mooted the idea of even longer trading hours 
-- with some seeking to begin daily floor trading from as early as 0900 GMT, 
ending as now at 1700 GMT. 

``It (the board) looked at this situation in the light of a great deal of 
change that is taking place....We continue to review the whole of the 
operation,'' Haslam said. 

As well as introducing an electronic trading platform to run alongside but 
not replace open-outcry trading and the inter-office telephone market, the 
LME also demutualised late in 2000 and reconstituted its board. 

Traders said another extension was unlikely as there was no unanimity among 
the 12 RDMs. Also, such a move would meet opposition from the LME's 27 
associate broker clearing members (ABCMs). These companies have all the 
rights of LME membership, but cannot trade during the open-outcry sessions. 

Then they largely become customers of the market and trade through the RDMs. 

``The current extension means that they (ABCMs) have lost a lot of their 
pricing power over lunch,'' one said. 

The RDMs are fighting the advance of electronic trading to maintain 
traditional open-outcry trade, which has all but disappeared from European 
markets -- only London's International Petroleum Exchange (IPE) still 
operates a floor. 

As well as LME Select, rival systems managed by Spectron Metals and Enron
Online, part of Enron Corp (NYSE:ENE - news), also operate and capture 
business. 



Nigeria races against time to end power outages
By Mike Oduniyi 

EGBIN, Nigeria, Feb 15 (Reuters) - The rumble of pneumatic drills echoes 
through the jungle surrounding this rustic village on the outskirts of 
Nigeria's biggest city, Lagos. 

Scores of workmen in orange overalls and youths from villages close to 
Nigeria's power complex at Egbin dig frantically in a race against time to 
complete the country's most eagerly awaited electricity project. 

After prolonged squabbling between Lagos State and the federal authorities 
over regulatory issues, the U.S. energy group Enron (NYSE:ENE - news) is 
finally pushing ahead with the first major private initiative to help end 
Nigeria's chronic energy crisis. 

Enron has the task of providing 270 megawatts (MW) of emergency electricity 
to Lagos by the end of February after a botched earlier plan to start 
producing from last December. 

``We are working hard to meet the February deadline,'' said Adeola Taiwo, a 
worker at the site. 
Decades of mismanagement by military rulers have left Nigeria, Africa's top 
crude oil producer, with a long running scarcity of both electricity and 
refined petroleum products that has paralysed everything from private homes 
to industry. 

``The economy is at the mercy of the erratic electricity supply,'' said 
Adekunle Olumide, head of the Lagos Chamber of Commerce and Industry. 

Production costs had soared by 25 percent because companies needed to install 
their own generating plants, he told Reuters. 

El-Tayeb Ibrahim, an official of the Nigerian Manufacturers Association, said 
the energy problem had forced the closure of about 130 companies in northern 
Kano State in the past six months. 

STATE MONOPOLY A FAILURE 
The state power monopoly, the National Electric Power Authority (NEPA) has 
become a by-word for inefficiency in Nigeria where some households can be 
without electricity for months. 

The $800 million Enron project is the initiative of Governor Bola Tinubu, 
whose territory covers the sprawling metropolis of Lagos, with a population 
of more than 10 million inhabitants. 

NEPA now produces just over half the 4,000 MW which it estimates is the 
minimum Nigeria needs. Some 40 percent of that is consumed by Lagos, the 
country's industrial hub in the southwest. 

The most visible part of the work involves laying a 10-km (six-mile) stretch 
of pipeline that will collect natural gas from a station in the Ikorodu 
district of Lagos state to fire Enron's barge-mounted electricity generating 
plants anchored at a small jetty near Egbin. 

Also in full steam are contracts awarded by the federal government to fulfil 
President Olusegun Obasanjo's pledge to end power outages nationwide by 
December this year. 

After two countrywide blackouts early last year, an angry Obasanjo went on 
state television to apologise to the nation. He sacked NEPA's management and 
took direct charge of plans to boost electricity supply. 
Obasanjo, who was elected in May 1999 at the end of 15 years of military 
rule, faces re-election in 2003. Many Nigerians believe his chances depend 
largely on how he delivers on his promise of uninterrupted power supply. 

Close to the Enron site lies Nigeria's biggest power station, the Lagos 
Thermal Power Station at Egbin. NEPA workers have been clearing sites there 
for equipment due to be shipped in by the Japanese engineering firm Marubeni. 

The company won the federal contract to overhaul two Egbin generating units 
of 220 MW capacity each in the thermal plant. 

Similar projects are in progress to refurbish rusty generating plants 
neglected by ruling generals. 

TOUGH TASK 
Obasanjo has set NEPA the tough target of raising electricity output to 4,000 
MW by the end of this year. 
``It is not going to be easy, but we are achieving this target by end of this 
year,'' said NEPA spokesman Mohammed Mousa-Booth. 

Electricity generation reached a new record peak of 2,600 MW in the first 
week of January, he said. The previous highest level of 2,460 MW was last 
attained in 1996. 

Other international companies involved in Nigeria's electricity programme 
include Germany's Siemens , which is constructing a 276 MW thermal power 
plant, and Italy's oil giant Agip which is to build and operate a 450 MW 
gas-fired power plant. 

The government has also given its approval in principle for the U.S. oil 
major ExxonMobil (NYSE:XOM - news) to build and operate a 350 MW thermal 
plant. 

While the ExxonMobil and Agip projects are long-term, NEPA is hoping to 
quickly add 1,226 MW to its present output by September this year. 

The government has backed the power programme with a massive 51 billion naira 
($460 million) allocation in the 2001 budget which helped push up the overall 
capital budget significantly. 

($ equals 110.8 naira) 



Team Canada assists China's power monopolists 
Financial Post - Canada; Feb 15, 2001
BY GRAINNE RYDER

Team Canada's host in China, Premier Zhu Rongji, has performed miracles in 
restructuring much of China's debt-ridden state sector. Burdened with 
hundreds of thousands of decrepit state companies that could neither repay 
their debts nor create new jobs, Mr. Zhu shut down thousands of money-losing 
coal mines, textile factories, and steel works, slashing 12 million jobs in 
the last three years. He gave the military five months to divest its business 
empire of trading companies, luxury hotels, and nightclubs. He granted cities 
greater autonomy to run their own affairs -- a move credited with improving 
the country's investment climate and providing new incentives for 
environmental cleanup. The Far Eastern Economic Review describes his reforms 
as "the largest transfer of industrial property since Mao Zedong nationalized 
industry in the 1950s." 

But Mr. Zhu's plans to bring competition to the last big holdout of the 
monopolists -- China's power industry -- have stalled. China's old guard has 
decided to make its stand for central rule in the power sector and it has 
found an important Western ally: Canada. 

Under Mr. Zhu's plans, the power industry would no longer be run as a 
monopoly. State power companies operating hydro dams and nuclear stations 
would have to compete with private power companies for access to customers. 
Consumers would need to pay for transmission costs as well as generation 
costs, giving local power producers -- who don't need to ship power a great 
distance -- a major cost advantage over distant suppliers. 

If Mr. Zhu and his reformers succeed in implementing this plan, China's 
multi-billion dollar hydro and nuclear empires -- long subsidized by Canadian 
taxpayers -- could face bankruptcy. Even without these reforms being fully 
implemented, the state power industry, a bastion of central planning, knows 
that it cannot find willing customers for power from its hydro dams and 
nuclear plants. 

Chinese officials now openly doubt whether the Three Gorges dam, backed by 
Canada's Export Development Corporation, will be able to sell all its output 
when it starts generating power in 2003. The provinces and cities slated to 
buy its power either already have enough power, or they prefer to have the 
private sector build local power plants to meet future demand. 

Other large government-run hydro projects face the same predicament. The 
US$3.5-billion Ertan dam, built with Canadian grants and World Bank loans, 
has run at an annual loss of US$120-million since it came online in 1998. It, 
too, can't find enough customers. Its largest prospective customer, Chongqing 
municipality, balked at buying its overpriced power. The newly built 
US$4-billion Xiaolangdi dam, again backed by Canada and the World Bank, can't 
find customers either. As the retired deputy general manager of the Three 
Gorges Project Corporation recently explained to China Business Times, 
provincial governments and municipalities favour local power plants over the 
central government's distant hydro dams because local plants produce 
lower-cost power and, when they're privately owned, generate local tax 
revenue. 

Under pressure from residents who are tasting democracy and making 
environmental demands, cities are also switching from coal to cleaner-burning 
gas -- but rarely with the help of Canada. The city of Lanzhou, on the World 
Health Organization's list of the world's 10 worst-polluted cities, is 
working with Siemens of Germany to co-finance and retrofit its existing coal 
plant with gas turbines and to build a new gas-fired plant. Hangzhou city, 
with Japanese financing, is building a 100-megawatt, gas-fired co-generation 
plant that will save 200,000 tons of coal a year and eliminate dozens of the 
city's inefficient industrial boilers. Already, five major Chinese cities 
have built their own natural gas networks to promote private investment in 
gas-fired power plants. 

While Canada partners with China's aging monopolists to push outdated, 
money-losing technologies -- Team Canada is expected to announce another 
Three Gorges Dam contract today -- China's newly privatized power companies 
are mostly turning to U.S. and European energy know-how. 

"Gas is the quickest way to get a turnaround in pollution levels," says Brian 
Anderson, chairman of Shell Companies, Northeast Asia, who saw China's cities 
begin the switch from coal to gas in 1998. With only 2% of China's energy 
needs currently met by gas (coal still provides 70%), there is plenty of room 
for growth. Last year, China's State Council approved construction of a 
US$12-billion, 4,200-kilometre gas pipeline from Xinjiang to Shanghai, 
expected to be built in partnership with Enron and BP Amoco. Royal 
Dutch/Shell Group is investing US$3-billion in gas pipelines and power plants 
to serve Beijing and neighboring cities. 

In the coastal province of Guangdong, where electricity demand has grown 
rapidly over the last decade, Swiss-giant ABB has built several 
combined-cycle plants, running them on alternate fuels (diesel, blast furnace 
gas) until natural gas comes online. An advanced ABB combined-cycle plant 
supplies electricity and steam to China's largest steelmaker, the 
newly-privatized Bao Shan Steel Corporation. Shakou Power Plant Company now 
supplies electricity to Foshan city using a 280-megawatt oil-fired 
combined-cycle plant financed by Hong Kong banks. 

Knowing that large hydro, coal and nuclear cannot compete with this new breed 
of cleaner and lower-cost power producer, the central monopolists are 
fighting back. To prop up the uneconomic nuclear plants that Canada and 
China's domestic nuclear industry are providing, China's State Council not 
only provides a host of subsidies, it wants to force large power consumers to 
buy nuclear power. To prop up the Three Gorges project -- a pariah that no 
western government would touch before Canada endorsed it with subsidies on a 
previous Team Canada mission -- the State Economic and Trade Commission 
announced that provincial and city authorities will have to buy electricity 
from the Three Gorges dam once it starts generating electricity in 2003. At 
the same time, the government is shutting down small power plants, ostensibly 
for environmental reasons, and forbidding electricity distribution 
authorities in areas served by large hydro dams to buy power from private 
suppliers. 

But these successes by the old guard at subverting markets are exceptions. 
Apart from Canada, the power monopolists have few friends. Should the power 
monopolists lose their grip to Mr. Zhu -- as have other monopolists in 
China's economy -- Canada's power industry may find it has few friends in 
China. 


Thursday, February 15 
US Marathon Oil Mum On Reported Enron India Assets Buy
SINGAPORE (Dow Jones)--U.S.-based Marathon Oil & Gas Co. declined to comment 
late Wednesday on Indian press reports saying it has submitted a bid for 
Enron Corp.'s (ENE) upstream Indian oil and gas assets. 

Quoting unnamed industry sources, the Financial Express reported Tuesday that 
Marathon had emerged as one of the strong contenders for picking up Enron's 
30% stake in the Mukta, Panna and Tapti oil and gas fields. 

"Top industry sources disclosed that Marathon has also been shortlisted in 
the first round of bidding along with Reliance (Reliance Petroleum Ltd. 
(R.RPT)) and ONGC (Oil & Natural Gas Co. (P.ONG)) for buying Enron's stake in 
these fields," the Financial Express reported. 

Asked to comment on the report, Roger Holliday, Marathon's director of public 
affairs told Dow Jones Newswires that "it is not company practice to respond 
to speculation in the media." 

Enron said last year it was considering selling its oil and gas assets 
located in the Mukta, Panna and Tapti oil and gas fields. Reliance Petroleum 
and ONGC, Enron's joint ventures partners, have expressed an interest in 
bidding for the stake. 

Enron India operates three offshore oil and gas fields in a joint venture 
with ONGC and Reliance Petroleum. The Tapti, Panna and Mukta fields are 
located off the coast of Gujarat and Maharastra. 

It holds a 30% stake in each field, while ONGC and Reliance hold 40% and 30% 
stakes respectively. 
Analysts said Enron may be seeking to divest its oil and gas assets to focus 
instead on "new economy" sectors such as telecommunications. 


State agrees to widen scope of Enron review committee
Our Bureau

02/15/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

MUMBAI 
IN RESPONSE to persistent demands from the anti-Enron section of the ruling 
alliance, the Maharashtra government on Wednesday agreed to widen the terms 
and references of the high-powered Enron review committee.

The state government has instituted the review committee to look into the 
states energy scenario, with special reference to the US energy giant Enron,s 
Dabhol Power Company. 

The terms and references of the review committee will be extended as 
suggested by the allies of the ruling Democratic Front and whatever documents 
are sought by the committee will be provided to it including the power 
purchase agreement, chief minister Vilasrao Deshmukh said on Wednesday. 
He, however, refused to go into details of the extended scope of the review 
panel saying, all issues raised by the DF constituents will be studied. 

The DF co-ordination committee convenor, N D Patil had earlier disapproved 
the terms and references of the Madhav Godbole-led panel saying, the 
committee should look not only into the PPA but also the Enron project in 
totality. He had written to the chief minister asking him to widen the review 
committees scope. 

The review committee will be submitting its interim report about the PPA 
signed between the Maharashtra State Electricity Board and Enron,s DPC, 
within a month, said the chief minister. 

It could take another month or so to submit its report concerning issues 
raised by the DF splinter groups, Deshmukh said, adding, there are no 
differences in the ruling alliance over the matter. 

When asked about the state governments Rs 74-crore payment to MSEB to clear 
the last installment of DPCs November bill of Rs 148 crore, Deshmukh said, 
The amount was not paid to clear DPCs dues. It is the amount payable to MSEB 
from the budgetary allocation. It is purely at the discretion of the board as 
how to use its funds, he clarified. 

To a query, he said, we have not asked the MSEB to put a stop to DPCs 
payments. 

Deshmukh reiterated that the Centre should take over DPCs project and said, 
the state government was yet to receive any communication in this regard. 

Asked about renegotiations with DPC, Deshmukh said, let the review committee 
submit its report first. 
Meanwhile Kirit Parikh, a prominent member of the review committee, has 
expressed his inability to attend some of the committee meetings. The 
anti-Enron section of the DF allies had expressed displeasure at Parikhs 
inclusion in the committee, citing his pro-Enron stance in the past. 

Parikh is not withdrawing from the committee, said Deshmukh, while confirming 
the development. It might not be possible for a member to attend each and 
every meeting of the committee, he said.



INDIAN NEWSPAPER HIGHLIGHTS - FEB 15, 2001

02/15/2001
Asia Pulse
(c) Copyright 2001 Asia Pulse PTE Ltd.

NEW DELHI, Feb 15 Asia Pulse - Highlights of today's newspapers: 
 
THE FINANCIAL EXPRESS 
- Maharashtra (western India state) government has agreed to widen the terms 
and references of the high-powered committee, instituted to look into the 
state's energy scenario with special reference to US energy major Enron 
promoted Dabhol Power Company. 


India: For a Dabhol relief fund?

02/15/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

IMAGINE this. You are running a company and sign a long-term contract with a 
supplier. You guarantee the supplier you will buy at least 90 per cent of 
everything he produces. In case you fail to buy up to 90 per cent of the 
supplier's plant capacity then you agree to pay a penalty to the supplier. 

The absolute quantum you have to pay is determined, among other factors, by 
the rupee-dollar rate as well as the prices of certain commodities in the 
international market. Under the terms of the contract, you agree to shoulder 
both these risks.

In case you fail to pay your supplier who, incidentally, is supplying only 
about a fifth of your total requirements, the contract mortgages all your 
assets as well the assets of your parent company. The contract also 
guarantees that in case you fail to pay the supplier, your parent company 
will be forced to pay the supplier and then deduct it from the revenues due 
to your company. 

As if all this is not enough, the contract also stipulates that it is not 
governed by Indian laws and that the parent company will continue to pay the 
supplier even if the contract is termed illegal, invalid or unenforceable. 

The supplier starts his operations and given the nature of the contract, the 
product is extremely high-priced and your company is not in a position to 
pay. What would you do? 

"Are you stupid? I would never sign a contract like that." "If my company 
even got a hint that I was contemplating signing a contract like this, I 
would be sacked and legal proceedings initiated against me," were some of the 
reactions I got when I put this proposal to some of my friends from the 
corporate circles. 

Why is it then that the Maharashtra State Electricity Board, the Maharashtra 
Government as well as the Union Government have got into such an agreement 
with the Enron-promoted Dabhol Power Corporation? Were they all really 
concerned about the power situation in Maharashtra or were there other unsaid 
imperatives? 

We will perhaps never get the answers to these questions, but as DPC evoked 
the Central counter-guarantee for its payment, the controversial project has 
once again become the focus of media attention. 
Last week was full of stories and discussions on the controversy from 
day-to-day news reports, to a lengthy feature in the India Business Report. 
But the most interesting one was on India Talks on CNBC and featured Mr Harry 
Dhaul, Director-General of the Independent Power Producers' Association, and 
Mr Abhay Mehta, activist and author of Power Play, an "expose" of the Enron 
project. 

Anchored by Mr Paranjoy Guha Thakurta, the discussion kicked off by talking 
about the options open to the various parties involved. Mr Dhaul, 
understandably considering his constituency, was of the opinion that the 
first thing to do is honour the contract. He believed it was possible for all 
parties concerned to come to some kind of an amicable solution. Mr Guha 
Thakurta interrupted to ask him whether the Maharashtra Government going 
bankrupt by honouring the contract was an amicable solution. Mr Dhaul's 
answer was a classic case of using numbers to confuse the issue. "I do not 
know whether by adding five per cent of the capacity the Maharashtra 
government will go bankrupt," he said. 

Reacting to this, Mr Mehta pointed out that for this additional five per cent 
capacity that Mr Dhaul talked about, the MSEB would be shelling out about 30 
per cent of its revenues and once the second phase of DPC came on stream, the 
MSEB would be paying out close to 70 per cent of its total revenues. "There 
is no set of conceivable economic parameters which can allow payments of this 
magnitude," he said. 

Mr Mehta pointed out that what has never been appreciated is the sheer amount 
of money involved. The total contract with DPC is worth $35 billion, "the 
single-largest commercial contract in the history of this country," as Mr 
Mehta described it and went on to say that if one assumed a 6.5 per cent 
annual depreciation of the rupee against the dollar, as it has happened over 
the last 50 years, it meant a total outlay of - hold your breath - Rs 400,000 
crore. 

When Mr Dhaul started to ask whether it meant that the country was not in a 
position to accept foreign investment of $2- 3 billion, Mr Guha Thakurta, 
again to his credit, interrupted to say the issue was not really the quantum 
of foreign investment as the terms at which it has been contracted. 

Mr Mehta disputed the claim that DPC has invested $3 billion or about Rs 
15,000 crore for a 2,000 MW project. "Are they out of their minds? 

Who has checked these figures," he asked, pointing out that internationally, 
the norm for power projects was Rs 2 crore per MW. "There is no way they have 
invested more than $1.5 billion," he said. Mr Thakurta, with a wicked grin on 
his face, interrupted to ask him whether he was including the $20 million 
that Ms Linda Powers of Enron had said been spent on educating Indian 
authorities. Second, Mr Mehta said that almost 60 per cent of the investments 
has come from India from institutions such as the IDBI, SBI, etc. 

"We have an absurd situation when a country like Mozambique orders equipment 
from the US and the US EXIM bank gives a loan for it without any guarantees. 
But the US EXIM Bank's loans to Enron have been guaranteed by Indian 
institutions," Mr Mehta said. 

Mr Dhaul, while eventually agreeing that power from DPC was more expensive, 
said that the regulator in Maharashtra has made certain observations about 
it. He said he was not worried about the merit or dispatch aspect of the 
issue. Mr Dhaul was, of course, referring to the Maharashtra Electricity 
Regulatory Commission's direction to the MSEB to buy power from the cheapest 
available sources. But the problem is that, irrespective of whether the MSEB 
buys power from Enron or not, the PPA stipulates that it still has to 
continue paying. A point that maybe not Mr Dhaul, but all citizens of 
Maharashtra should be worried about. 

Mr Dhaul went on say that he shared Mr Mehta's concerns about the cost of 
electricity, and felt that some sort of solution could be found. But he left 
the critical issue unsaid. Where is the money? 
How is the Maharashtra Government going to pay the absurd amounts of money 
that it has contracted for? 

May be as a wag suggested, trifle cynically, it is time we set up a Dabhol 
Relief Fund. 
Menka Shivdasani



Enron Saga: Power of political will on test
Rajesh Ramachandran

02/15/2001
The Times of India
Copyright (C) 2001 The Times of India; Source: World Reporter (TM)

NEW DELHI: Is there a way out of the Enron imbroglio? Contrary to what 
`experts' and the government say, there seem several options available to the 
government. But to avail them would require some political will. 

S N Roy, former chairman of the Central Electricity Authority, points out 
that just as Pakistan got a US power company to reduce its tariff by half, 
India too should get the Enron tariff reduced.

When asked whether it is ready to re-negotiate the power purchase agreement 
(PPA) and bring down the tariff, Enron did not respond. Instead, a public 
relations agency replied that ``tariffs are not high''. 

Observers assert that even after ensuring a reasonable profit for Enron, the 
tariffs can be cut. K K Govil, director projects, Power Finance Corporation 
insists, ``The present PPA is heavily in favour of Enron. The PPA should be 
re-negotiated to get capital costs and rate of return calculated in rupees 
and not dollars.'' 

According to Govil, pegging the costs and tariffs to foreign exchange is 
unheard of. ``The capacity related incentive should also go. Ideally, the 
cost of a gas-based plant should be half that of a coal-fired plant. 
But in Enron's case it is not so. This too has to be rectified,'' said Govil. 

The government is tight-lipped, but sources say the government may palm off 
the burden to utlilities like National Thermal Power Corporation, Power 
Trading Corporation or Power Grid Corporation. That will end the public 
scrutiny of the project, contrary to what is happening in Maharashtra now, 
and the account will be shared by central utilities, state electricity boards 
and others. Also making the round is a politically powerful industrial 
house's name, which might broker the deal. 

But will all this help? Roy feels it would be a disaster: ``Impossible. How 
can the government force NTPC or PTC, a commercial enterprise, to buy power 
at Rs 5 a unit and sell it at Rs 2?'' Even at full capacity, Enron's power is 
expected to cost around Rs 5 a unit, much higher than the NTPC's selling rate 
of about Rs 2 per unit. 

Prasant Bhushan, fighting a public interest litigation in the Supreme Court, 
has another set of solutions: Nationalise the project by an Act of 
Parliament, paying Enron a token or fair amount as in the case of bank 
nationalisation. Or, the Maharashtra Electricity Regulatory Commission's 
statutory power should be invoked to override the PPA and regulate the 
tariffs. 

The Supreme Court had earlier limited the petition's scope to accountability 
of the public servants. ``If the SC gives full leave, the project will be 
voided since there was much illegality involved. Most importantly, if a 
criminal investigation into the bribes is initiated, enough evidence could be 
unearthed in three months,'' said Bhushan. 

Will all this deter foreign investment in India? Ashok Rao, convenor of 
national working group for power, feels the bogey of foreign investment 
fleeing is a blackmail tactic. He points out that India is a bigger power 
industry market than most of Europe, West Asia or Latin America. ``There is a 
global recession in power industry. So, most private power companies are just 
a front for power equipment manufacturers who have to sell their equipment in 
India. That is why they insist there should be no competitive bidding for 
equipment.'' Would it hurt much if the government synchronised people's needs 
with investor priorities?


Making the power sector viable
Prem Shankar Jha

02/15/2001
The Hindu
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

The fact that Enron had to invoke the Central government's guarantee before 
the Maharashtra State Electricity Board finally paid its dues till November 
shows that both the MSEB and the Maharashtra government are comprehensively 
bankrupt. The MSEB paid because the Maharashtra government realised that 
pushing the burden onto New Delhi would not get it off the hook. The 
counterguarantee ensured that the Centre would pay Enron and deduct the money 
from Maharashtra's annual plan allocation. So why did Mumbai create the 
confrontation? 

If one were to go by the ranting of Maharashtra politicians , it was to make 
sure that there would be `no more Enrons', that is, no more corrupt deals 
with rapacious foreign investors, bent upon robbing the poor people of India 
by forcing them to pay seven rupees a unit for power. But the true reason is 
that the Maharashtra government was trying to shift the blame for its own 
lack of courage. Like virtually every other State government, Maharashtra 
lacks the courage to stop giving electricity free, or nearly free, to more 
than three quarters of its consumers. This has plunged the MSEB deep into the 
red, because there is an obvious limit to how far the remaining paying 
consumers can subsidise the rest.

The CEO of Enron in India put this in a nutshell a few days ago when he 
pointed out that the MSEB's problems arose from the fact that it was 
subsidising 90 per cent of its consumers and allowing transmission and 
distribution losses - an euphemism for power theft - of fully one third of 
the power it generated. As if this was not bad enough, the Government 
repeatedly declared an amnesty for consumers who had not paid their bills. 
The MSEB has therefore sunk deeper and deeper into the red. To cut its costs 
it has bought as little as possible from Enron, and that has pushed the per 
unit cost of Dabhol power into the stratosphere. Enron's argument is 
unassailable. Every single power utility in the world follows one basic rule 
in power pricing. This is to set a tariff that covers the average cost of 
generation for all the stations that are on line at the time. When a new 
power plant is added, or an old one replaced, the much higher cost of 
generation from the new plant (the marginal cost to the utility) is absorbed 
by raising the average tariff just enough to absorb the increased cost at the 
margin. In the case of Maharashtra, since the Dabhol plant added 6 per cent 
to the State's total generating capacity and amounted to about 8 per cent of 
MSEB's capacity, an 8 per cent increase in average tariff or in the 
realisation of unpaid dues, would have sufficed. But although the MSEB had 
been increasing its average tariffs in earlier years, it did not do so 
between 1997-98 and 1998-99, that is, when Dabhol was commissioned. Add to 
this a rise in T&D losses, and MSEB's average realisation actually fell after 
Dabhol came on line. 

If Maharashtra does not want to buy Dabhol's power, why does it not sell the 
surplus to a neighbouring State or to the National Thermal Power Corporation 
in the public sector? The answer is that none of them has kept its average 
tariff realisation above the average cost of generation. They too will add to 
their losses by buying Dabhol power, and therefore prefer load shedding 
instead. 

The difficulty that Enron is experiencing in recovering its dues has 
delivered the coup de grace not just to foreign, but to all private 
investment in power projects. For if it takes a dentist's tongs to extract 
money secured by a formal central counterguarantee, what will happen to 
projects that do not enjoy that safeguard? Since public investment is capable 
of adding at most 3000 MW of generating capacity a year when the country 
needs three times that capacity, economic growth will soon slow to a snail's 
pace for want of power. 

The Central government knows this. Since 1996 it has been prodding the State 
governments towards breaking up the State electricity boards into separate 
generation, transmission and distribution companies, and then privatising 
them. But so far only one State - Orissa - has gone the whole way. The crisis 
that the country therefore faces is that while at the present pace the 
privatisation of distribution could take as long as ten years, the power 
crisis is already here. What the country needs is a means to make the State 
electricity boards viable today, before they are privatised. So far, apart 
from making the States bind themselves to various financial reforms in the 
memoranda of understanding that they have signed with the Centre as they ask 
for doles to tide them over their financial woes, the Central Government has 
done nothing. 

There is, however, a way to do this almost immediately. This is to end the 
theft of power that is taking place in the country in the name of the farmer. 
In sharp contrast to the privatisation of the SEBs, this can be accomplished 
in at most two years. 

While everyone knows that some of the electricity supposedly consumed by the 
farmer is actually diverted to other uses, most people have assumed that the 
proportion diverted is relatively small. This is because the rise in the 
share of electricity consumed by the rural sector, from 14 per cent in 1978 
to 31 per cent in 1995, seems on the face of it reasonable. 

Not everyone has realised that in absolute terms, farm consumption increased 
by 8.3 times. And this happened when the number of electrified tubewells had 
only doubled from 3.3 million to 6.3 million and the land under irrigation 
had increased by only 48 per cent. In absolute terms therefore electricity 
consumption for agriculture should not have risen by more than three times. 
The balance, amounting to 90 billion units in 1998- 99, was in effect stolen. 
Had the States realised only Rs. 2 per unit for this electricity, it would 
have increased the revenue of the SEBs by Rs. 18,000 crores, and made them 
solvent overnight. State governments have been unwilling to raise tariffs for 
agriculture for fear of hurting the farmers. But the Central Government can 
show them a simple way of continuing to subsidise irrigation, which is 
overwhelmingly the main consumer of electricity on the farm, without 
encouraging wholesale diversion and theft. This is to issue registration 
papers for every electrified pumpset in the country, stating its horsepower 
and the land cultivated by the farmer, raise the rural tariff to a flat Rs. 2 
per unit, or whatever the SEBs deem appropriate, and offer a rebate of Rs. 
1.75 (the going rate of subsidy) on the estimated maximum consumption of 
power per tubewell. Farmers need only bring their bills to a local bank with 
which they have opened an account, show their registration papers, and pay 
the rebated amount. The bill will be paid by the bank (as urban electricity 
and telephone bills are paid today) and the rebate collected by it from the 
government authority concerned. 

This scheme has the added advantage that to avail themselves of the subsidy, 
the farmers will have to install electricity meters. State governments have 
accepted the need to do this in principle but have so far been unable to 
speed up its implementation.


Prabhu stresses supply reforms
Our Economy Bureau NEW DELHI

02/15/2001
Business Standard
2
Copyright (c) Business Standard

Union power minister Suresh Prabhu has called for the need to shift focus 
from power generation to the upgradation of the distribution system, so that 
generation of power becomes a more paying proposition. We have decided to 
constitute a committee to look into the upgradation of the distribution 
mechanism in the country, as the pilferages in the distribution procedures 
and poor collection mechanisms have been found to be the main constraining 
factors in the development of the sector, Prabhu said here today.

Reforms have to be undertaken in the distribution front and the central 
government will finance states which are willing to undertake reforms, he 
said at the summit, `India Can Make It', organised by Assocham. "An MoU has 
already been signed between the Centre and the Haryana government yesterday 
for cooperation in the field of power reforms, while more agreements will be 
signed with other states in the near future," he said. The Union Cabinet had 
held a special meeting on the power situation in the country yesterday, with 
the minister giving a detailed presentation on the prospects for reform in 
the sector. 

The country has already faced a major power breakdown on January 1, while the 
invoking of the counter-guarantee by Enron has put both the Centre and the 
Maharashtra government in a piquant situation. The MoUs specify clear 
milestones which state governments have to achieve, following which central 
assistance will be provided, he said. On the transmission front, the 
government has decided to create a national grid for effective management of 
power.


MASTER FILE
APPS OFF THE SHACK
K. JAYADEV WITH INDRAJIT BASU AND SRINIVAS R.

02/15/2001
Computers Today
32
Copyright 2001 Living Media India Ltd

Much saged, are you finally planning to start a dotcom venture? Planning to 
use the Internet as a new tool of doing business? Or want to have a virtual 
private network to get not only your various business processes 
interconnected, but also net in the suppliers and partners? Sign up with an 
Internet data centre (IDC), and your requirements will be taken care of. 

Earlier described mostly as Web hosting companies, IDCs offer a host of 
facilities for organisations to face the Internet economy. It is a facility 
designed specifically to provide organisations with specialised 
infrastructure and support required to optimise the security and availability 
of the firms' Internet-related activities and initiatives. And as E-business 
demands continue to surge and grow in complexity, companies are looking at 
fully managed application hosting. Even companies which till now could not 
afford applications like enterprise resource planning (ERP) and customer 
relationship management (CRM) are on the look out for accessing these key 
applications remotely without having to invest in the infrastructure build-up.

What do IDCs Offer? 
Data centres are considered to be a critical component of Internet 
infrastructure as they contain the servers on which reside the Web sites of 
various companies and businesses. They ensure that the data is available and 
the integrity is maintained without the customer having to employ and train 
someone in-house. It also frees the client of obtaining, maintaining and 
upgrading the required hardware/software. 

Says Jasjit Sawhney, CEO of Net4India, "Data centres can manage bandwidth in 
a very efficient manner which cannot be achieved using leased lines. For 
instance, a small company may not require a full-fledged leased line or it 
might not want to tie itself down to one office/location. Hence, the company 
can place its server at a data centre. Also bandwidth can be increased as and 
when the company desires." 

Explaining the functions of IDCs, Amar Babu, national channel sales manager 
of Intel India, adds, "Data centres provide plain hosting services wherein 
space, security and infrastructure is offered to clients. As they progress on 
the value chain, they will provide value-added services depending on the need 
of their clients, which could range from bandwidth management to various 
applications. This would enable them, and in turn their clients, to define 
QOS (quality of service) and SLAs (service level agreements) across the 
clients' E-business requirements." 

Major Players 
Industry analysts in India expect investments to the tune of Rs 500 crore 
being made in the next 18 months into the data centre business. Starting from 
Sify, major players in India include Enron, Reliance, Asianfrontiers, 
Net4India and Mantra Online. International giants like Cisco, Microsoft, 
Intel, IBM, Sun Microsystems and Compaq are helping organisations build the 
data centres. 

The investment depends on the number of servers and the space they occupy and 
generally range between Rs 3 crore for a small centre and Rs 50 crore for a 
big IDC. Standard benchmark developed by international players hovers around 
$450 per square feet for a world-class organisation, which is called a level 
4 data centre. 

IDCs, like other segment of the IT industry, are now looking at how to 
differentiate themselves. In addition to focusing on delivering services, 
they are also trying to provide carrier neutral facilities and 
platform/network independent solutions to customers. This approach offers 
customers the maximum flexibility in that they can engineer the solution that 
best fits their needs without constriction. It also provides redundancy and 
reliability. "IDCs make data a reliable management tool to run a firm with. 
You have the holy trinity of data-manageability, reliability and security. 
This is ultimately what defines a data centre," observes Parind Parekh of 
Exatt Communications. 

With Indrajit Basu in Kolkata and Srinivas R. in Bangalore 




National Award From The Points of Light Foundation Honors Six Companies 
Dedicated to Community Service

02/15/2001
PR Newswire
(Copyright (c) 2001, PR Newswire)

Ongoing employee volunteer programs benefit companies and their communities 

WASHINGTON, Feb. 15 /PRNewswire/ -- The Points of Light Foundation is 
presenting an national community service award to six companies for their 
contributions and commitment to developing and managing effective employee 
volunteering programs.

The award is part of an ongoing effort by the Foundation to encourage every 
company to get involved in volunteering and make a difference. 

"In industries as diverse as aerospace and e-commerce to the legal profession 
and electric utilities, companies are discovering how ongoing community 
service programs can deliver real-world results," says Robert K. Goodwin, 
president and CEO of the Foundation. "We are excited to have this chance to 
honor their accomplishments as former President George Bush presents them 
with the 2000 Award for Excellence in Corporate Community Service." 

This year's winners include Alibris, an e-commerce company that specializes 
in hard-to-find books; the Boeing Co., the largest aerospace company in the 
world; Capital One, a financial service provider; Holland & Knight, a law 
firm with offices in 21 cities across the United States, as well as several 
international locations; Petroleos de Venezuela, an energy company with 
40,000 employees based in Caracas, Venezuela; and Salt River Project, an 
electric and water utility in Phoenix. 
The awards will be presented Feb. 23 at the George Bush Presidential Library 
and Museum in College Station, Texas. 

The Points of Light Foundation, the nation's leading volunteer resource, 
provides a full range of services to help businesses develop and manage 
workplace volunteer programs. For more information, visit 
www.pointsoflight.org . 

Sponsors of the 2000 Awards for Excellence in Corporate Community Service 
include Bank of America, BP, Compaq Computer Corp., CVS, Enron Corp., 
Prudential, Roy Ryu, and the Washington Times Foundation & Atlantic Video. 

CONTACT: Kimberli Meadows of The Points of Light Foundation, 301-318-9277, 
e-mail, kmeadows@pointsoflight.org 



Lawsuits pending in the wake of state's energy crisis
By The Associated Press

02/14/2001
Associated Press Newswires 
Copyright 2001. The Associated Press. All Rights Reserved. 

Here are some of the lawsuits stemming from California's power crisis and 
hearing dates, if known: 

-Duke Energy vs. California Independent System Operator. Duke is seeking to 
force the state to back purchases of expensive emergency power bought by the 
ISO. The California Department of Water Resources has said it will only pay 
for less expensive energy bought on the day-ahead market. No court date set.

-Duke Energy vs. Gray Davis. Duke claims that Davis' decision to commandeer 
long-term power contracts owned by Edison and PG&E violated the supremacy 
clause of the U.S. Constitution. The lawsuit claims the emergency power 
granted to Davis under state law does not extend to the power contracts, 
which are under "exclusive federal jurisdiction." Hearing Feb. 15. 

-Enron and Avista vs. California Power Exchange. Three power wholesalers want 
to prevent the power exchange from forcing them to pay for nearly $1 billion 
owed by Southern California Edison and Pacific Gas and Electric. Under a 
federal tariff that governs the exchange, if a buyer of power defaults on 
payments, every member of the exchange - including power sellers - must pay a 
portion of the debt. hearing Feb. 15. 

-Southern California Edison vs. Loretta M. Lynch, et al. Edison wants a 
federal court to allow it to pass on the wholesale cost of power to 
ratepayers. A judge rejected an attempt earlier this week to force the Public 
Utilities Commission to raise rates immediately. Lynch is president of the 
PUC. Next hearing is March 5. 

-Pacific Gas and Electric vs. Loretta M. Lynch et al. Similar to the suit 
filed by Edison. It has been transferred to federal court in Los Angeles and 
may be consolidated with the Edison claim. No court date has been set.



News
POWER CRISIS WAS LONG IN THE MAKINGCALIFORNIA DEREGULATION JUST HASTENED 
RECKONING
MIKE LEWIS P-I reporter

02/14/2001
Seattle Post-Intelligencer 
FINAL
A1
(Copyright 2001) 

A decade ago, it seemed like a great idea: Lift regulations on electrical 
utilities so that competition could drive down prices. 

Deregulating the generation and distribution of power, the theory went, would 
create competition among a new breed of power companies that would lower 
costs to consumers and unleash creativity, just as deregulation of the 
telephone utilities did a decade before.

California and more than dozen other states jumped in; Oregon made a small 
step in that direction. Washington took a pass. But now, all three states 
share the burden of out-of-control energy costs and the specter of blackouts. 

Legislators from Sacramento to Olympia are scrambling to rein in a full-blown 
power crisis even as consumers scramble to pay ballooning power bills. 
There's little argument that existing deregulation has not only failed, but 
has failed so profoundly that politicians and regulators are not talking as 
much about fixing it as scuttling it whole. 

"Deregulation has gotten to be such a bad word," said state Sen. Bill 
Finkbeiner a Kirkland Republican who in 1996 chaired the Legislature's Energy 
Committee, which rejected deregulation. "It's never going to happen now, at 
least not in the Western U.S." 

How bad has the situation become? Over two weeks in late November and early 
December, the market price for a megawatt of power jumped five-fold, forcing 
King County to briefly shut down one of its two sewage treatment plants. 

Some cities are turning off streetlights, and the state's multibillion-dollar 
aluminum industry has idled some plants - sometimes to sell power - leaving 
hundreds of workers idle. In Seattle, the average monthly City Light bill has 
jumped 20 percent, to $45. 

For all of us, the power crisis has become a lesson in how policies of 
individual states can be rendered meaningless when it comes to interstate and 
international commerce. Washington didn't deregulate. California did. Both 
states pay the price. As one Northwest corporate lobbyist put it dryly, the 
next time his company needs economic protection in Olympia, he'll contact 
Sacramento. 

"Here's how it is," said Ed Mosey, a Bonneville Power Administration 
spokesman. "Everyone else is the tail; California is the dog." 

Gov. Gary Locke, who is often reluctant to publicly criticize allies such as 
California Gov. Gray Davis, acknowledged in a recent interview that he finds 
it frustrating that his state decided against deregulation but still finds 
itself in a mess. 

"We didn't make the same decision they did," Locke said. "But California's 
effect is impossible to avoid." 
But blaming California isn't just simplistic, it also isn't entirely 
accurate. Those who buy, sell and move electricity and natural gas and the 
politicians who attempt to control the markets agree that Washington's rising 
power costs are a culmination of events that began to unfold a lifetime ago, 
in the depths of the 

Great Depression. 
President Franklin D. Roosevelt's New Deal gave the Northwest the bargain of 
a lifetime. Hoping to lift the nation out of the Depression, the Roosevelt 
administration arranged an unprecedented series of public works projects, 
providing jobs building roads, bridges and dams, among other things, across 
the nation. 

The Works Progress Administration built the Bonneville and Grand Coulee dams 
on the Columbia River, the vanguard of the 29 federal hydroelectric dams that 
now feed power to the Bonneville Power Administration, a self-supporting 
federal authority with headquarters near Portland. 

The BPA is the powerhouse of a region the size of Texas, providing half of 
all electricity used in the Northwest. The remainder comes from a network of 
public and private utilities, including giants like Seattle City Light that 
pre-date Bonneville by decades. 

All told, there are about 250 big and small hydroelectric dams in the 
Northwest, and a far smaller number of coal and gas-fired plants. 

In the early days, the BPA dams generated so much more power than the 
Northwest could use that congressmen joked that even the jackrabbits could be 
wired up. During World War II, the government took advantage of the plentiful 
power by building aluminum production plants in Tacoma, Spokane and Vancouver 
to supply the needs of aircraft makers and shipbuilders such as The Boeing 
Co. in Seattle and Henry Kaiser's shipyard in Portland. 

After the war, BPA officials and local politicians persuaded the aluminum 
producers to stay put, promising continued low-cost, subsidized power - 
contracts recently renewed to run through 2006. 

For local industry, cheap power has always been a selling point. No raw 
materials used in making aluminum are found in the Northwest, but shipping 
them here is cost-effective because smelting the ore takes a lot of juice. 
One aluminum plant consumes as much electricity as a small city. 

In the 1960s, this newly powerful local industry secured its first major 
coup: a federal mandate that public utilities in the region, such as Seattle 
City Light, could buy power at the subsidized cost of production. Sixty 
percent of that "preference power" stays in Washington state. Oregon 
generally takes 25 percent. The balance goes to Idaho and Montana, and any 
surplus can be sold at market rate. 

This combination of natural resources, federal investment and populist 
politics has allowed the Northwest to enjoy some of the cheapest electricity 
in the nation. A 1998 BPA survey showed that the average residential cost for 
power in the region was 5.4 cents per kilowatt hour, compared with a 
nationwide average of 8.3 cents, a rate that - at least until now - has 
continued to attract industry to the region. In 1999, when Seattle residents 
were paying $10 monthly electricity bills, the same amount of power on the 
East Coast sometimes cost as much as $40. 

"Much of the high-tech relocation up here directly was linked to cheap 
power," said Intel's director of governmental relations, Richard Hall. Intel 
employs 2,000 people at its plant in DuPont. 

While rates have gone up recently, power in the Northwest remains a good 
deal. City Light residential customers, for example, pay 3.23 cents per 
kilowatt hour for the first 16 kilowatt hours they use in a day, and 7.56 
cents for each kilowatt hour afterward. 

In 1968 and 1969, the BPA completed an 846-mile line called an intertie 
between The Dalles, Ore., and Los Angeles, allowing it to market what seemed 
like a never-ending surplus of power to utilities in fast-growing California. 

In 1996, BPA sold about 127,000 megawatt-hours for use in California, or 
about 12 percent of all BPA power sales that year - the most recent year 
Bonneville reported those numbers. It takes about 1,000 megawatts of 
generating capacity to serve 1 million homes. 

Public utilities in California are small, but two giant private, 
investor-owned companies rival Bonneville in size. Monopolies regulated by 
the state, California giants Pacific Gas & Electric (PG&E) and Southern 
California Edison (CalEd) eventually grew to serve a combined 20 million 
customers, making them the nation's two largest private utilities. 

During the summer, when air conditioners cause California power use to peak, 
utilities there supplement their needs by turning to the Northwest, which 
usually has electricity to spare. In winter, when furnaces cause demand to 
peak in the Northwest, California plants ship surplus power north. The 
relationship worked flawlessly for decades. In fact, it worked too well. 

With the West Coast tied into one grid, the easy flow of power between 
regions allowed the states to avoid the politically difficult chore of siting 
and building new power plants that would allow each to become 
self-sufficient, even as the total population in the three states blossomed 
from 25.5 million in 1970 to 43.2 million today. 

In the mid-1990s, California began climbing out of a recession brought on by 
deep defense cuts, high unemployment and energy prices that were among the 
highest in the nation, inadvertently driven up by state and federal 
regulators who feared that oil and natural gas prices would soar. These 
officials had pushed the utilities to diversify their generation methods. The 
Federal Energy Regulatory Commission required that they buy a portion of 
their power from what were then expensive alternative sources, such as wind 
and geothermal plants. CalEd estimates that the order has cost its customers 
$25 billion over two decades. 

California business interests began to pressure their lawmakers to deregulate 
the power industry, allowing them to buy electricity on the open market and 
to force PG&E and CalEd to cut rates. Congress wrote the law in 1992, and the 
energy commission pressured the utilities to get moving in 1994. 
In December 1995, the California Public Utilities Commission voted to open 
the state's electricity industry to competition. The Legislature followed 
with a law based on an agreement brokered with CalEd, its biggest industrial 
customers and an association of independent power producers. 

But the deal was based on four colossal miscalculations. And those led to the 
current crisis: 
No one foresaw that California's economy would come roaring back from 
recession so strongly or so quickly, or that so much of the new economy would 
depend on energy-hungry computers and the plants that produce them. Both 
factors over-taxed a system that hadn't seen a new power plant come online 
for nearly a decade. 

California generates about 75 percent of the electricity it uses, relying on 
imports from the Southwest and the Northwest for the rest. Officials 
acknowledge that California has not added enough power plants to accommodate 
the roughly 2 percent annual growth in its demand for electricity. To meet 
that each year, the state has to add either 1,000 megawatts of generating 
capacity or conserve an equal amount. 

Regulators forced California utilities to sell their generation divisions 
without also requiring them to sign long-term power contracts at fixed - and 
presumably lower - rates. This put the utilities at a disadvantage, because 
they had to buy power on the open or "spot" market from operators such as 
Houston-based as Enron and Dynegy, which have reportedly seen revenues climb 
by 400 percent in the past two years while the utilities spiraled into debt. 

A combination of factors cut into the amount of power available on the spot 
market. Less power has been flowing into the grid because several major 
California power plants have been off-line for needed repairs; Northwest 
hydroelectric dams have been operating at lower capacity as they try to avoid 
draining reservoirs during the drought; and a failure to upgrade California's 
distribution system makes it hard to move surplus power to where it is 
needed. 

In fact that failure to upgrade the transmission system has proven to be a 
problem of the same scale as the lack of new power plants. California's first 
rolling blackout was caused not by a lack of power but by a lack of free 
lines to move it. Washington has missed blackouts because it has enough 
capacity to move power when needed. 

While attorneys general in all three states are investigating accusations 
that some power sellers have been withholding electricity to drive up prices, 
it's unclear whether they did, or whether any laws were broken. 

With deregulation, the spot market has taken on the trappings of a desperate 
auction. Every morning, the power marketers pay what they must for whatever 
surplus power they can find. Wholesale prices can swing wildly, climbing and 
falling hundreds of dollars per megawatt- hour over a day of trading. 

When California's demand began to outstrip its supply last summer, San Diego 
was hit first. The Northwest barely noticed. But as the problem spread, the 
power that Bonneville and Puget Sound Energy once bought for winter coverage 
wasn't there. Local prices began inching up. 

Finally, and some would say most important, California's deregulation scheme 
included a cap on rates for consumers. In fact, the Legislature there forced 
a 10 percent retail rate cut as part of the deal to win passage of 
deregulation. These errors and circumstances, combined with some corporate 
restructuring that shifted resources away from traditional lines of business, 
forced California's big utilities to amass a combined debt of $12.7 billion, 
severely limiting their ability to buy power and prompting the recent round 
of blackouts in Northern California. 

"Do you see the problem there?" asked Mosey, the BPA spokesman. "It didn't 
allow the market to function. It gave consumers zero incentive to conserve. 
If you had to devise a method whereby you shot yourself in both feet, you 
couldn't do a better job." 

California lawmakers are trying to undo the damage. They have appropriated 
billions of dollars in emergency funding to keep the utilities afloat while 
they consider a more expensive bailout and re- regulation scheme that might 
involve turning PG&E and CalEd into public utilities - exactly the opposite 
of the intent of deregulation. 

Deregulation was initially popular in Washington state, but it never had the 
same attraction in a region where most voters enjoyed cheap power, thanks to 
Bonneville and public utilities. 

"At the time, most people wanted it," Finkbeiner recalled. "And I'd like to 
say we had the great foresight to pass on it, but that isn't true. We just 
couldn't agree on what to do, and it didn't go anywhere." 

After two years of debate, Washington lawmakers saw there was no groundswell 
of support for deregulation, and they did what politicians do in such cases: 
They dropped it in 1997, moving on to the next big issue. 

"Now, obviously I'm glad," Finkbeiner said. 

But Finkbeiner is once again dealing with deregulation, this time as sponsor 
of pending legislation that asks California to drop its power rate cap - a 
source of irritation for Northwesterners who have seen their bills zoom up 
while Californians' have not. 

"I don't know how (Governor Davis) will react, but it is something they have 
to do," Finkbeiner said of his bill, which is an entirely symbolic act - 
Washington cannot force California to do anything, even though it shares 
California's pain.

Color Photo, Photos, Map, Chart; Caption: (1) THE ASSOCIATED PRESS: Jamie 
Lubbar, a grid resource coordinator for the California Independent System 
Operator, looks at a computer screen while lining up electricity for the 
state. (2) THE ASSOCIATED PRESS: Arthur Osha replaces burned-out light bulbs 
with energy-efficient models in the business district in Solvang, Calif. 
Aside from its Danish influences, Solvang's trademark is the decorative 
lighting on the city's businesses. (3) AP/1939: The Grand Coulee Dam on the 
Columbia River in Washington is a legacy of the Works Progress 
Administration. (4) SEATTLE POST-INTELLIGENCER: DEREGULATING ELECTRIC POWER 
(5) KELLI R. PARKER AND JIM WOOLACE/SEATTLE POST-INTELLIGENCER: POWERING THE 
WEST COAST (Available only on microfilm)


Editorial
LETTERS PAGE

02/14/2001
Denver Rocky Mountain News 
FINAL
43A
(Copyright 2001) 

 
Mike Rosen's `lesson' leaves great deal unsaid 

Mike Rosen's latest effort at providing an economics lesson to the great 
unwashed masses is typical of his previous efforts - it is rife with errors. 

Rosen states that there is no conspiracy of oil and gas companies at work. 
Rosen must have forgotten about OPEC, a conspiracy to maximize profits for 
oil producers. Rosen must also have forgotten that last year Vice President 
Cheney, who at the time was head of Haliburton Oil, praised OPEC for reducing 
production. 

Rosen must not be aware that California has sued energy companies, including 
Enron and Duke Energy, both of which are large contributors to President Bush 
and other conservatives, for unfair business practices. 

Rosen also blames the California electrical shortage on legislators who fixed 
the price of retail electricity and limited the abilities of companies to 
build new power plants. What he fails to state is that retail electricity 
prices were fixed at the request of power companies at 150 percent of the 
national retail electricity price so that power companies could gouge 
consumers and receive a $28 billion bailout for their "stranded costs" - 
losses that power companies had suffered due to bad investments in nuclear 
power plants. 

Since 1996, California private power companies had made $20 billion from 
those excess prices that were charged to consumers and had used that money to 
provide dividends to their shareholders and purchase other power companies. 
Further, Southern California Edison (SCE), one of the largest private power 
companies in California, lobbied to stop a large energy project because the 
project would have reduced SCE's profits. 

Rosen infers that there is an electricity shortage in California because it 
does not have adequate electrical capacity for its users. What Rosen fails to 
mention is that peak usage of electricity in California was higher in both 
1998 and 1999 than it was in 2000 and that 25 percent more electricity is 
used during the summer when air conditioners are running than during the 
winter. Because of those facts, the only reasonable explanation for the 
current shortage of electricity is the unrestricted greed of power suppliers 
who find it more important to maximize the returns to their shareholders by 
restricting supplies and raising profits than to supply necessary power to 
the citizens who need it. 

Steve Waldmann 
Colorado Springs



BUSINESS;
Catholic Health East signs energy supply contract
-- Staff report

02/14/2001
Times Union Albany, NY
THREE STAR
E4
(Copyright 2001)

Enron Energy Services of Houston has signed a 5-year contract to sell 
electricity to Catholic Health East, a health care system that includes St. 
Peter's Health Care Services in Albany. 
The deal covers 20 Catholic Health institutions in New York, New Jersey, 
Massachusetts, Maine, Florida and Pennsylvania.

"Our agreement with Enron enables Catholic Health East to manage volatile 
energy costs associated with deregulating markets and ultimately avoid 
fluctuating market prices," said Tom Gruber, Catholic Health East's vice 
president of materials management. 

The energy provider does not generate electricity itself, but buys it from a 
supplier and re-sells it to customers. Another company -- in this area, 
Niagara Mohawk Power Corp. -- actually delivers the electricity to customers. 

St. Peter's Health Care includes St. Peter's Hospital, St. Peter's Addiction 
Recovery Center and Villa Mary Immaculate nursing home in Albany; The 
Community Hospice in Rensselaer; and Our Lady of Mercy Life Center in 
Guilderland. 

Enron Energy Services is a subsidiary of Enron Corp., which posted revenue of 
$101 billion in 2000.



Rentable Storage: Efficient But Risky
Michael Alexander

02/14/2001
CMP TechWeb
Copyright 2001 CMP Media Inc.

EMC, Enron, Exodus, Sun, and other big companies are throwing their weight 
behind storage services, promising to help deliver storage capacity much like 
utilities furnish electricity. 

But a looming market shakeout makes it more vital than ever for companies to 
scrutinize providers before committing to a contract.

Some customers already are seeking to protect their data with service-level 
agreements (SLAs) that compensate them when their storage service provider 
fails to deliver as promised. Experts also recommend examining a provider's 
market capitalization, expertise, reference accounts, and all the other 
attributes a company would typically consider when choosing a strategic IT 
partner. 

Storage service providers, or SSPs, claim to remove many headaches of 
managing storage. Customers don't have to invest in their own storage 
infrastructure and personnel, so SSPs can be a cheaper and faster way to get 
started. Customers buy only as much capacity as they need. 

The cost of buying and managing a storage system was so prohibitive that 
Verilytics Inc. signed on with StorageNetworks, which charges the Web portal 
builder about $12,500 per month for 200 Gbytes of storage. 

"Because they have a pay-as-you-go model, it allowed us to get in at a fairly 
low entry point," said Mike Harvey, head of operations at Verilytics. "As our 
needs require, we can add additional capacity." 

Verilytics signed an SLA with StorageNetworks that specifies financial 
penalties for unplanned downtime based on the length of an outage. In fact, 
nearly half of 297 companies surveyed by Dataquest say they're willing to pay 
SSPs extra for agreements that compensate them for lost revenue due to 
downtime or service problems. 

Increasing numbers of customers are even demanding SLAs per application type. 

"Unless these storage companies are making appropriate investments so they 
can guarantee per-application SLAs, they're going to meet some resistance 
from potential customers," said Sage Research president Kathryn Korostoff. 

The range of SSP options varies widely. For example, to keep data in-house 
because of security or privacy concerns, a company may elect to have the 
vendor provide remote storage management. 

Companies pay about $20,000 per month per terabyte for basic 
storage-on-demand. Additional features*such as scheduled backup and restore, 
real-time data replication and SLAs guaranteeing 99.99 percent uptime*can 
push costs to more than $80,000 per month per terabyte. That figure includes 
equipment, maintenance, floor space and personnel costs. StorageNetworks 
quotes fees of $25,000 to $125,000 per month per terabyte, said John Clavin, 
executive vice president of marketing. 

A downside to outsourcing storage is that an organization is putting valuable 
digital assets into someone else's hands. The data may not be adequately 
protected from snoops or secured against loss. And what happens to the data 
if the SSP should suddenly go out of business? No one really knows. 

"We tell our end-user clients to be very selective who they choose, and we 
tell them to make sure they have very concrete, very well defined escape 
clauses," said Arun Taneja, an analyst at the Enterprise Storage Group. 

Brokerage firm Charles Schwab & Co. prefers to maintain control of its huge 
repository of customer data, said David Sherr, vice president of architecture 
and planning. Sherr questions the wisdom of trusting customer data to a third 
party. "It would be problematic," he said. "You need to protect the privacy 
of your customers' data." 

The initial SSP customers were mostly dot-coms, but in recent months more 
Global 2000 enterprises have signed up, according to a recent survey by Sage 
Research. The survey found that 3 percent of businesses with fewer than 500 
employees and 6 percent of larger enterprises outsource storage. "While those 
numbers are small, they are significant because the category is still so 
new," Korostoff said. 

More than half of the 175 companies with which StorageNetworks has contracts 
are large enterprises, Clavin said. 

Several companies have jumped into storage services in recent months. Exodus 
Communications (stock: EXDS), Sun Microsystems (stock: SUNW), and 
StorageNetworks (stock: STOR) said they plan to co-market managed storage 
services delivered and hosted by Exodus. Pure SSPs include ManagedStorage, 
Storability, and StorageWay. 

Among application service providers that also host data are Conxion, Digex, 
PSINet (stock: PSIX), and USInternetworking (stock: USIX). Storage vendors 
such as Compaq (stock: CPQ), EMC (stock: EMC), IBM (stock: IBM), and Sun have 
storage services alliances with ASPs and other providers. 

Even energy company Enron is getting into the business. Its Broadband 
Services unit launched a B-to-B exchange on Jan. 31 that matches excess 
capacity owned by SSPs with corporate storage buyers. 

Enron has signed a deal with StorageNetworks and is negotiating similar 
agreements with at least six other providers, said Ravi Thuraisingham, Enron
's lead storage trader. 

Many analysts see a massive consolidation on the horizon. "A lot of companies 
have gone into this business thinking that it's an easy business," Taneja 
said. The economics of running an SSP profitably aren't well defined, Taneja 
said, and the long-term cost of building and regularly upgrading a 
best-of-class storage infrastructure may be too onerous for many. 

Meanwhile, the amount of data that companies amass is increasing 
exponentially. Forrester Research predicts that companies will increase their 
average online storage capacities by a factor of 10 over the next five years. 
That means storage and associated administration will grow from 5 percent of 
current information systems budgets to 17 percent in 2003, the firm 
estimates. 

And the business outlook for SSPs is rosy. North American businesses will 
spend $6 billion on storage utilities by 2003, according to Dataquest. 
Enterprise Storage forecasts a $11.2 billion market in 2004.



3 Members Keep Off First Enron Panel Meet
The Indian Express

MUMBAI, FEB 14: The much-awaited first meeting of the Madhav Godbole review 
comittee on Enron held today against the backdrop of protests over its 
composition, was attended by only two members of the committee, member 
secretary V M Lal and Godbole himself. 

Three other members of the six-member committee, Kirit Parikh, Deepak Parikh, 
R K Pachauri and E A S Sarma did not attend the meeting. 

Anti-Enron activists have strongly opposed the induction of Kirit Parikh and 
R.K. Pachauri on the committee. But Chief Minister Vilasrao Deshmukh today 
firmly indicated that there would be no change in the choice of members 
appointed on the panel. Kirit Parikh and Pachauri would stay on the 
committee, he said. 

``We have appointed the committee. Let it take the decision now,''he said. On 
the absence of members, Deshmukh said Parikh had told him that he would be 
unable to attend all meetings of the committee. 

He also said that the letter handed over to him by PWP leader N.D. Patil on 
amending the terms of reference of the committee had been passed on to the 
review committee. 

Sources said Godbole and VM Lal were briefed by MSEB chairman Vinay Bansal, 
secretary N Sainath and other officials today at the review meeting on the 
electricity board's stand on the controversy. Godbole refused to speak to 
reporters waiting for him outside the hall after the meeting. 

A senior MSEB official said the absent members will attend the meeting of the 
committee on Thursday. 


Letters to the Editor: A Contradiction?

02/14/2001
The Statesman
Copyright (C) 2001 The Statesman Ltd.; Source: World Reporter (TM) - Asia 
Intelligence Wire

Sir, - Enron's Dabhol Power Company has invoked the counter-guarantee clause 
and sent a bill for Rs 79 crores to the Government of India. Enron got 
guarantees from the Maharashtra State Electricity Board and the Maharashtra 
Government. But it is on record that it got counter-guarantees from the 
Government of India and the Reserve Bank of India even though it had not 
asked for them. 

Two questions arise: who in the then Government of India gave them the 
counter-guarantee - and why? Secondly, MNCs claim to believe in free 
enterprise. That being so, they should face the market: why should they ask 
for any guarantee - with regard to purchase of power, or its price?

Yours, etc., 
KR MALKANI. New Delhi, 7 February.


Letters to the Editor: A test of principles and being practical

02/14/2001
The Statesman
Copyright (C) 2001 The Statesman Ltd.; Source: World Reporter (TM) - Asia 
Intelligence Wire

SIR, - Two issues, namely the Dabhol power project agreement with the 
Maharashtra State Electricity Board and the World Bank's annoyance with 
Gridco, are matters of serious concern in view of their likely impact on the 
momentum of reform in the power sector initiated after nearly a decade of 
planning, privatization and unbundling of SEBs and distribution systems. 

The attitude of the Maharashtra Government towards an agreement on Dabhol 
does not inspire confidence in our honesty of purpose. Failure to obey the 
contract displays frustration, lack of integrity and the untrustworthiness of 
the Government. The Government of Maharashtra knew their contractual 
obligations beforehand and should have started negotiations with Enron in 
order to find a solution. The fact that it. has taken two months to appoint a 
committee only indicates the lack of seriousness on its part. Again the 
formation of a committee may be rightly or wrongly construed as an attempt to 
delay the matter. On the other hand, Enron also should not ignore the power 
tariff structure in this country and the rate at which other public 
undertakings are selling power from similar naphtha-based power plants, the 
capital cost and plant load factor based on demand, etc.

Mr. Sharad Pawar, the architect of the project (and whose party is part of 
the present Government), should have been more proactive in resolving the 
present issue so that the situation does not deteriorate any further. 

There are suggestions for Enron to go in for direct selling, bring in the 
Power Trading Corporation (PTC) to deal with the Dabhol power company as an 
intermediary and for the NTPC to dilute the price for a large number of 
consumers, including those outside Maharastra. None of these are indicative 
of any effort to find a compromise between Enron and the Government of 
Maharashtra over the present problem or those likely to surface in future. 

If the power from Dabhol phase II is not going to be absorbed by Maharashtra, 
the PTC, in view of the overall power shortage in the country, should, in 
keeping with its mandate, appear on the scene to trade in deficit areas. The 
fact remains that deficit is in peak time power supply. Selling power in 
off-peak time will not be an easy task for them. 

Yours etc., 
CR BHATTACHARJEE. Kolkata, 11 February.


Regulator authorizes Enron and British Gas to use Brazil-Bolivia gas pipeline 
Gazeta Mercantil (Brazil)

Rio de Janeiro, 02/14/01 - Energy and gas companies Enron and British Gas are 
now finally able to import Bolivian gas into Brazil through the 
Brazil-Bolivia gas pipeline. The petroleum sector regulator ANP rejected an 
appeal by the pipeline's operator Transportadora Brasileira do Gasoduto 
Brasil-Bol?via (TBG) against the authorization for the two companies to use 
the pipeline.

Enron and British Gas are expected to sign contracts to use the pipeline 
before the end of this week and the first cubic meter of gas to be imported 
into Brazil by a private company is expected to arrive in April.The gas will 
be imported by British Gas, which will bring in 1 million cubic meters per 
day to eight distribution points in S?o Paulo state. 

The gas will be sold to one of the three S?o Paulo gas distributors Comg?s 
(which distributes gas in metropolitan S?o Paulo). Enron has yet to seal 
contracts to sell the gas it plans to import. It is currently negotiating 
with another of S?o Paulo's distributors Gas Brasiliano (which distributes in 
northern S?o Paulo state).

(Nicola Pamplona, Gazeta Mercantil - Translated by Barney Whiteoak) 



Studios release movies for Internet
By Sue Zeidler

02/14/2001
Reuters English News Service 
(C) Reuters Limited 2001. 

LOS ANGELES, Feb 14 (Reuters) - The Internet is putting a whole new twist on 
box office receipts as Hollywood gears up to beam movies directly to "boxes" 
in people's homes. 

Movie fans too lazy to run to the nearest video store or the theater, will be 
able to watch films when they want rather than on cable channels' schedules, 
provided they get a high-speed Internet connection.

Fearing a Napster-like service for swapping movies on the Web may emerge, 
studios like Sony Corp.'s Sony Pictures Entertainment and Walt Disney Co. and 
other big moviemakers are ramping up plans to distribute movies online. 

Napster, developed by a 19-year-old college dropout, shook the world's music 
industry with its wildly popular service that lets fans swap songs for free 
by trading MP3 files. 

"The movie studios want to make their films available on the Web, but they 
don't want to give them away," said Chuck Sims, a lawyer at Proskauer & Rose, 
who is defending the movie industry in a high-profile DVD hacking case. 

On Wednesday, Vivendi Universal's Universal Studios said it signed a 
multiyear deal with broadband network Intertainer, to deliver such as the 
Robert DeNiro's hit "Meet the Parents" over Intertainer's digital cable 
platform, starting this month. 

Universal joins Miramax Films, which announced a deal with SightSound 
Technologies to release 12 films for download over the Internet. 

"We're in the very early stages of video on demand. All the players are 
evaluating where they fit into this landscape," said Mark Sonnenberg, 
executive vice president of marketing for Intertainer. 

Web security experts estimate that about 400,000 bootlegged films a day are 
swapped on the Net on services such as Freenet, Filetopia and the Internet 
Relay Chat. 

HOLLYWOOD MOVING QUICKLY, BUT CAREFULLY 
While Hollywood moves quickly to embrace the Internet, they have to be 
careful not to endanger important relationships with cable companies, 
pay-per-view channels or video chains, which are big revenue streams. 

Studios will also need higher penetration of broadband, or high speed 
Internet connections like cable modem or DSL phone lines to make downloading 
films bearable, experts said. 

Sony Pictures is planning to launch in the spring its own online movie 
service, MovieFly, which will rent hundreds of films from Sony, Universal 
Studios - and possibly News Corp.'s Twentieth Century Fox, sources said. 

Sony's video on demand model allows users to download movies from its Web 
site to their personal computers where they can be viewed for a fee. 

Users may then burn the film to a CD and give it to a friend, who can also 
watch it for a fee. People can also watch these films on television if they 
plug their TV into their computers with a special cable, sources said. 

"We believe there is an online market for entertainment, which will prove to 
be an important channel for consumers to access entertainment media," a Sony 
spokesman said, but declined to comment on specifics about MovieFly. 

Alternatively, Walt Disney is said to be studying delivering films via the 
Internet on a wireless set-top box. 
At a recent meeting with analysts and reporters, Peter Murphy, chief 
strategic officer for Disney, said the company was exploring ways to 
broadcast video services to a "box" in the home. 

Murphy said that while Disney had not yet decided to move forward with this 
product, it was an excellent example of the new business models enabled by 
digital technologies. 

Meanwhile, Blockbuster Inc., the nation's largest video rental chain has also 
launched a service in a partnership with Houston energy giant Enron to 
deliver on-demand movies over high-speed telephone lines. 

The Blockbuster service charges $4.99 for pay-per-view movies selected from 
almost 200 titles listed electronically. 

Blockbuster is currently carrying content from MGM, Artistan and Lion's Gate 
and other independent studios. 

And on Tuesday it said it reached a verbal understanding with Universal 
Studios to carry its films. 
"In my opinion, Enron and Disney are going in the right direction, 
television. Sony has done it quicker and more efficiently in terms of 
selection, but it will have to migrate the model to television eventually," 
said one source familiar with the different projects. 

Reuters/Variety.



Video Store No More?
Wednesday February 14, 
TheStandard.com
By Laura Rich 

We're inching closer to the day when we won't have to go to the video-rental 
store again.

Universal Studios announced on Wednesday that it will distribute new releases 
and extensive film archives through video-on-demand service Intertainer. 
Subscribers to the digital cable channel will be able to choose among 300 
movies from eight major movie studios at any time. The addition of Universal 
gives Intertainer the broadest selection of major motion pictures among 
video-on-demand, or VOD, players, which include Blockbuster, CinemaNow and 
SightSound, and which is rolling out a service in partnership with Enron 
Broadband.

"Intertainer is a terrific partner for our ongoing VOD efforts because of its 
experience in the category," Holly Leff-Pressman, senior VP at Universal 
Television & Networks Group, said in a statement.

Intertainer's deal with Universal comes as Hollywood mulls the digital future 
for film. Most studios are digitizing their films and drawing up plans to 
deliver their libraries over the Internet to consumers and movie theaters. 
Sony's Web-based MovieFly system is gearing up for a spring launch, and 
Disney also is said to have a VOD system in the works. The rest of the 
studios are said to be in varying stages of talks with Sony or Disney.

Intertainer continues to make strides even though studios have a history of 
despising the middleman. Blockbuster has long locked horns with the studios, 
which have complained that the chain was reaping ancillary film revenues they 
should have controlled.

By aligning with Intertainer, the studios are supporting a new middleman by 
bolstering it with a larger selection of movies than their own services 
likely will have. Antitrust concerns prevent the studios from grouping all 
their content in a single jointly owned channel. But they also are better off 
distributing their films to as many outlets as possible. "It's never been the 
studios' way to just sell movies to their own channels," said Jonathan 
Taplin, president and CEO of Intertainer.

Intertainer is a relatively small competitor from an audience standpoint. The 
company was formed in 1997 and just launched its VOD service last spring. The 
service is currently available in Cincinnati and Willow Grove, Pa., and will 
be rolled out in seven more cities by the end of summer.

Intertainer is offered as a service to digital cable subscribers in those 
markets. Currently, there are fewer than 10,000 subscribers to Intertainer.

The deal was Universal's second VOD pact in as many days. On Tuesday, 
Universal agreed to add its movies to Blockbuster's VOD service.



Stonepath Group to Sell Interest in Intermodal Business To Enron Global 
Markets

02/14/2001
PR Newswire 
(Copyright (c) 2001, PR Newswire)

PHILADELPHIA, Feb. 14 /PRNewswire/ -- Stonepath Group (Amex: STG) today
announced the signing of a definitive merger agreement between Webmodal, a
Stonepath partner company, and Enron Global Markets, LLC, a subsidiary of
Enron Corporation (NYSE: ENE), one of the world's leading energy companies.
Webmodal, an Illinois-based technology and logistics services business, has
been a Stonepath company since October 1999.  The closing is anticipated to
occur on March 2, 2001.

Upon closing, Stonepath is to receive approximately $6 million in cash
from Enron Global Markets for its stake in Webmodal plus a $1 million loan
repayment.  Closing remains subject to Webmodal shareholder approval, as well
as to the satisfaction of customary and standard closing conditions.

"We're extremely pleased that Enron recognizes Webmodal's value and
potential," said Andrew Panzo, Chairman and CEO of Stonepath Group."

About Stonepath Group
Founded in 1998, Stonepath Group (Amex: STG) currently holds interests in
nine technology companies in various stages of development.  Stonepath Group
(http://www.stonepath.com) is headquartered in Philadelphia, PA.

/CONTACT: John Brine of Stonepath Group, Inc., 646-486-6000/ 17:28 EST