RWE Has Held Talks On Possible Purchase Of American Water
The Wall Street Journal, 08/27/01
WORLD NEWS - EUROPE - Europe struggles to pass test of opening up energy sector.
Financial Times, 08/27/01
Free-Market Dangers
The New York Times, 08/27/01
Enron Chairman Denies Call for India Sanctions Energy: Executive had been quoted as suggesting that U.S. could withhold foreign aid if $1-billion dispute over power plant is not resolved.
Los Angeles Times, 08/27/01
Utility commission boosts San Diego rates, recoups state money
Associated Press Newswires, 08/27/01
DENMARK: ANALYSIS-Wind makers give mergers the thumbs down.
Reuters English News Service, 08/27/01
INDIA PRESS: Enron Wants Payment Guarantee For Dabhol 2
Dow Jones Asian Equities Report, 08/27/01
ENRON CHIEF DENIES ASKING US GOVT FOR SANCTIONS AGAINST INDIA
Asia Pulse, 08/27/01

Indian State Blocks AES Plan to Exit From Power Venture
Bloomberg, 08/27/01

Enron's Indian Lenders May Fund Dabhol Expansion (Update1)
Bloomberg, 08/27/01

Positive views on Dabhol problem - Meeting with Tata Power MD
The Hindu, 08/27/01
India: Lay off
Business Line (The Hindu), 08/27/01
Enron A Victim Of Irrational Pessimism
InternetWeek, 08/27/01
"I have not asked anyone in US govt to impose sanctions": Lay
Press Trust of India Limited, 08/26/01
THE NATION SUNDAY REPORT Bush's Energy Plan Bares Industry Clout Cheney-led task force consulted extensively with corporate executives. Its findings boosted their interests. Environmental groups had little voice.
Los Angeles Times, 08/26/01
Enron using pressure tactics?
The Hindu, 08/25/01
Enron revives plans for power plant
The Globe and Mail, 08/25/01

Away from the daily grind / Skilling explains departure / Former Enron CEO wants more time for family, new adventures
Houston Chronicle, 08/25/01




RWE Has Held Talks On Possible Purchase Of American Water

08/27/2001
The Wall Street Journal
A4
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW YORK -- German utility RWE AG has held discussions to buy American Water Works Co., but talks between the two companies broke down abruptly late last week, people familiar with the matter said. 
Negotiations, however, could be revived at any time, these people said. It wasn't clear what prompted the collapse of the talks, but American Water, which has a market capitalization of $3.3 billion, apparently called them off.
An acquisition of American Water Works, the largest publicly traded water utility in the U.S., would be the latest in RWE's expansion in the water business around the world. Last year, it bought Thames Water PLC of Britain and also acquired E'town Corp. of New Jersey. 
The Financial Times reported last night on its Web site that RWE was "considering" a $3.6 billion bid for American Water Works. 
American Water Works, Voorhees, N.J., is an aggressive buyer in its own right. Earlier this month, it announced the purchase of Azurix North America Corp., the North American water-services division of Houston's Enron Corp. for an undisclosed amount. It scrapped a planned acquisition of water utility SJW Corp., San Jose, Calif., earlier this year after repeated regulatory delays. And it is expected to soon complete a nearly two-year-old deal to buy the water and waste-water assets of Citizens Communications Co., Stamford, Conn. 
Spokesmen for American Water Works and RWE couldn't be reached for comment. Mike Brophy, a spokesman for RWE's Thames Water unit, said he couldn't confirm the talks.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

WORLD NEWS - EUROPE - Europe struggles to pass test of opening up energy sector.
By DANIEL DOMBEY.

08/27/2001
Financial Times
(c) 2001 Financial Times Limited . All Rights Reserved

Can you free up an industry by cracking down on one big company? That is the question European regulators are tussling with this summer. 
The company involved is Electricite de France, the state-owned utility that has built up a network of interests abroad while remaining largely protected at home.
The industry is Europe's Euros 400bn ( #250bn) energy sector, which despite the arcane nature of such concepts as gigawatts, cubic metres of gas and interconnectors, has become one of the latest battlegrounds between the state and the free market, national interests and pan-European consolidation. 
Most European Union leaders want energy, one of the few remaining sectors where companies can have legal monopolies, to be fully opened to competition as part of the EU's drive to become the world's most dynamic economy. The European Commission has prepared legislation to liberalise the electricity and gas sectors by 2005. 
Tony Blair, UK prime minister, even gave the impression in a speech in Brazil last month that without such reforms, Britain would be less likely to join the euro. "This is a real test of our collective leadership," he said. 
So far, however, it is a test Europe has flunked. France thinks the energy proposals are too much, too soon and that the EU should could first assess the effect of a previous wave of liberalisation. French officials are only too happy to talk of California's blackouts as an example of liberalisation gone terribly wrong. 
Germany is unhappy with the Commission's insistence that effective liberalisation needs a strong regulator, since it believes that further meddling could disrupt age-old ties between utilities and local government. Together, the two countries blocked the Commission's proposals at a summit in Stockholm in March. 
But the pro-reform leaders did win one concession at Stockholm - an instruction to Brussels to use competition law to free up the sector in lieu of the promised legislation. The presidents and prime ministers told the Commission to ensure that "enterprises which still benefit from a monopoly situation on their national market will not unduly benefit from that situation". 
There was little doubt which company was in their sights. EdF was already embroiled in a controversial takeover of Hidrocantabrico, an energy company in Spain, where politicians raged that they did not privatise utilities to see them snapped up by a foreign state. France stands out in Europe for having opened up only 30 per cent of its electricity market - the minimum required by current EU law. 
EdF came even further into the limelight in the succeeding months, when it first built up a stake in the Italian industrial company Montedison and then became the junior partner in a Fiat-led takeover of the group. 
Brussels' probe of both cases will be a crucial test of whether Mario Monti, the competition commissioner, can provide an acceptable second-best to the much longed for legislation. 
"Being able to use competition policy to help liberalisation along is one of the reasons the Commission has had against having an independent competition body," says Alec Burnside, a partner at the law firm Linklaters & Alliance in Brussels. 
Mr Monti's chief weapon may be the concessions the acquiring companies agree to make in order to see the takeovers through. Such a process is a long drawn out one. Next month, EdF will begin to auction a sizeable chunk of its capacity in France as a "remedy" to its acquisition last year of a stake in the German power company EnBW. Its rivals say that the progress of the auctions will be an important test of the Commission's ability to open the French market to competition. 
Meanwhile, Brussels has to decide by tomorrow whether to unleash a full scale investigation on the Montedison acquisition, which could end in further "remedies". And by October 8, it will decide the fate of the Hidrocantabrico deal - settlement could involve giving EdF's rivals more access to the "interconnectors" that export electricity from France to Spain. 
But the competition directorate, with a staff of only 446, has limited time and resources to spend on freeing up Europe's energy markets. Other merger, cartel and state aid cases also crowd the agenda. 
"Competition remedies are helpful but by their nature these are piecemeal approaches," says Peter Styles, vice-president at Enron, a Houston-based energy-trading company. 
Indeed, no German energy companies have been subjected to the attention lavished on EdF - although the German market is on some measures even less open than the French. 
Certainly, leaders like Mr Blair appear to have concluded that competition policy is no long term substitute for energy reform. Commission officials hope to make real progress on the pending legislation by the end of the year, leaving only the target date for full energy liberalisation to be resolved. But such hopes presuppose that Germany will overcome its doubts about a regulator - and that, after that, France will be willing to agree on some sort of date. Lionel Jospin, French prime minister, has given no indication on that so far. 
The most important deadline is the EU's Barcelona summit in March 2002, which will judge progress on a range of economic fronts. But for now, where energy liberalisation is concerned, Mr Monti is just about the only game in town. 
(c) Copyright Financial Times Ltd. All rights reserved. 
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Editorial Desk; Section A
Letters to the Editor
Free-Market Dangers

08/27/2001
The New York Times
Page 14, Column 6
c. 2001 New York Times Company

To the Editor: 
Re ''Defending Free Markets'' (letter, Aug. 22): 
The chairman of Enron Corporation, in his response to Paul Krugman's Aug. 17 column, misses a vital point.
The success of free markets and a capitalistic economy in a democratic society depends on the support of the people. 
Even Adam Smith realized that a capitalistic free-market economy would run amok if left to its own devices. With all its faults, regulation and oversight by a democratically elected government are a much more sensible way to control and ensure the long-term success of our system. 
The suggestion that we should rely on the self-interest of corporations, whose charters are primarily focused only on making a profit, is a recipe for disaster. The power of the will of the people is no match for the self-interest of corporations unregulated by government. 
LEO MONTAGNA 
Northport, N.Y., Aug. 23, 2001

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	


Business; Financial Desk
Enron Chairman Denies Call for India Sanctions Energy: Executive had been quoted as suggesting that U.S. could withhold foreign aid if $1-billion dispute over power plant is not resolved.
From Associated Press

08/27/2001
Los Angeles Times
Home Edition
C-2
Copyright 2001 / The Times Mirror Company

BOMBAY, India -- The chairman of Houston-based Enron Corp. told India's prime minister that he had not advocated U.S. sanctions against India if the company fails to get the $1 billion it spent to build a controversial power plant here, a company official said Sunday. 
Kenneth Lay had outraged Indian officials with his reported comments in an interview with the Financial Times, slamming the government over the project--India's largest foreign investment.
Lay was quoted as saying by the paper: "If they try to squeeze us down to something less than cost then it basically becomes an expropriation by the Indian government, and that would send an incredibly damaging signal to the international capital markets and investment community as to making any future investments in India." 
He reportedly told the newspaper that there are U.S. laws "that could prevent the U.S. government from providing any aid or assistance or other things to India going forward if, in fact, they expropriate property of U.S. companies." 
Chief minister Vilasrao Deshmukh of Maharashtra state, where the plant is located, criticized what he called "the strong-arm tactics of Enron." 
The plant stopped production in May after its sole customer, the Maharashtra State Electricity Board, canceled a 7-year-old power purchase agreement. Enron says the board had no right to cancel. 
Federal representatives and officials of the Dabhol Power Corp., an Enron subsidiary, are trying to resolve differences that have threatened to shut down the $3-billion project. 
The two-phase project was to be the world's biggest natural gas-fired power plant, able to generate 2,184 megawatts once completed. 
In a letter to Prime Minister Atal Behari Vajpayee, Lay said, "I have not asked anyone in the U.S. government to consider sanctions. I did not say that the Dabhol Power issue had been expropriated." An Enron official in Bombay read excerpts of the letter to Associated Press on condition that he not be identified by name. 
Politicians in Maharashtra state say DPC's electricity is overpriced and demanded the renegotiation of the purchase agreement between the company and the state utility. 
Enron has said it wants to sell its 65% stake in the Dabhol Power Co. project for a minimum of $1 billion. The utility holds a 15% stake, and General Electric Co. and Bechtel Corp. each have a 10% stake.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	


Utility commission boosts San Diego rates, recoups state money
By DON THOMPSON
Associated Press Writer

08/27/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

SACRAMENTO (AP) - California regulators moved Monday to recoup the state's electricity purchases, boosting rates for San Diego customers an average of 12 percent and blocking big businesses from bypassing utilities to buy power. 
The California Public Utilities Commission also delegated much of its future ratemaking authority to the California Department of Water Resources. Critics said that gives Gov. Gray Davis' administration too much freedom to raise rates to buy power on behalf of three struggling utilities.
San Diego Gas & Electric residential customers who use less than 130 percent of a basic amount of electricity would see no increase under rates that could be adopted Sept. 6. The higher rates could kick by Sept. 15. 
SDG&E spokesman Art Larson said 130 percent of baseline equals about 328 kilowatts per month. While about 40 percent of the utility's residential customers fall below that baseline, the typical residential consumer uses about 500 kilowatts a month. 
Residents who use more than 130 percent of that baseline amount would see an average increase of 12.49 percent under a tiered rate structure designed to promote conservation. 
San Diego residents using up to twice the baseline would see a 6.04 percent increase; up to three times the baseline would see would see an average 12 percent increase; and those using more than three times the baseline would see a 22.29 percent rate boost. 
Small commercial customers would pay 18 percent more; industrial users face a 19 percent increase; and agriculture a 14 percent increase. There is no baseline for other than residential customers. 
Larson said the company is reviewing the decision, but SDG&E gets none of the rate increase. It all goes to repay the state for buying electricity for the utility's 1.2 million customers. 
No one outside the SDG&E territory would have their rates increased under Monday's proposals, and rates could drop if natural gas prices keep falling, said commission President Loretta Lynch. 
However, other commission orders affect how much of existing rate increases go to utilities instead of DWR to repay $13 billion worth of state bonds ready for sale. 
The commission's proposal shifts about $500 million a year from Southern California Edison to Pacific Gas and Electric Co. to cover what the commission says are higher costs of providing electricity in Northern California. 
That amount is subject to ongoing lawsuits, although Lynch maintained the division proposed by the commission should cover the reasonable costs of both the utilities and DWR. 
PG&E said the proposed shift "discriminates against PG&E's customers." 
The proposed division would cost PG&E customers 40 percent to 55 percent more to pay back DWR over the next 10 years than it would cost Edison or SDG&E customers, said spokesman Ron Low. He said it was unclear if PG&E rates would have to increase. An Edison spokesman had no immediate comment. 
Lynch said the commission is shortening its usual monthlong comment period to just one week so the state's bond sale can proceed quickly this fall. 
She said the commission had little choice but to delegate much of its future ratemaking authority to the department, under legislation approved earlier this year that enabled the state to buy power on behalf of the three cash-strapped utilities. The state will be repaid by the $13 billion raised by the bond sale, which requires a revenue guarantee before it goes ahead. 
Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights, called the decision a "devastating and costly dereliction of the PUC's duty. 
"They're abdicating their responsibility under the state constitution to monitor and scrutinize the purchases of power," Rosenfield said. 
Lenny Goldberg of The Utility Reform Network agreed but did laud the commission's decision to cut off utility customers' ability to buy electricity outside utilities after July 1 as "absolutely necessary." Legislators earlier ordered an end to what is known as direct access, but left it to the commission to set a termination date. 
Customers who contracted for power with private companies before then will be allowed to complete those contracts, said commissioner Carl Wood. But the retroactive date was included to block other customers from unfairly anticipating the commission's action and signing late contracts to avoid higher rates necessary to repay the state bond, he said. 
That decision primarily affects large industrial users, as well as Houston-based Enron Corp.'s burgeoning retail sales in the state, Wood said. Enron's wholesale sales to utilities would not be affected. An Enron spokesman had no immediate comment. 
The decision to block outside electricity purchases for as many as 15 years, until the bond is repaid, marks another retreat from California's flawed 1996 deregulation law. 
But Lynch argued the $13 billion is already being spent to keep California's lights on. Now that debt must be repaid by those who already used the electricity. 
About 16 percent of California's electricity load had been direct access last year, but that dropped to less than 1 percent once the electricity crisis hit, Lynch said. 
--- 
On the Net: Read the draft decisions on the Web under "special announcements" at www.cpuc.ca.gov

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	


DENMARK: ANALYSIS-Wind makers give mergers the thumbs down.
By Birgitte Dyrekilde

08/27/2001
Reuters English News Service
(C) Reuters Limited 2001.

COPENHAGEN, Aug 27 (Reuters) - U.S. energy group Enron is meeting heavy going in its efforts to sell its wind turbine arm Enron Wind, with top industry players saying the firm is too expensive and there is no need to consolidate. 
"The safe way is to grow organically in an industry expanding as fast as wind power and our strategy is to grow on our own," said Johannes Poulsen, Chief Executive at Danish Vestas Wind Systems , the world's largest supplier of wind turbines with one third of the global market.
"We have not even considered buying Enron Wind." 
Independent wind power consultancy BTM estimates the global windpower market will grow by an annual average rate of 19 percent over the coming 10 years. 
Enron Wind has unofficially been up for sale for several years and an Enron spokesman recently told Reuters he hoped a deal would be completed this year. 
The world's number four wind turbine manufacturer, Danish NEG Nicon , is not considering acquiring the U.S. firm either. 
"At present we have no acquisition plans and that includes Enron Wind. We believe organic growth can bring us a long way from here," NEG Micon Chief Executive Torben Bjerre-Madsen said. 
Also Danish private-owned Bonus sees no need to buy growth. The company's market share, in terms of megawatts (MW) has doubled to 11.5 percent in 2000 from 1998 organically. 
TOO EXPENSIVE 
But German-Danish Nordex , which was listed on the German Neuer Markt in April, is actively seeking potential acquisition candidates and has been talking to Enron Wind but has been scared off by the price. 
"You can buy technology via an acquisition or a market position which it would take you longer to obtain organically," said Carsten Pedersen, member of Nordex AG's management board. 
"We have been in negotiations with Enron Wind, but the company is too highly valued and the price is only getting higher," he said. 
The case for buying Enron Wind is weakened by the company's recent performance. Its market share has halved from 13.5 percent in 1998 to six percent last year, despite the acquisition of German rival Tacke during this period. 
The Financial Times said last week that Enron's wind turbine unit was valued at $725 million. 
NEG Micon, with a market share more than twice as big as Enron Wind's, was worth $860 million based on Monday's share price, while Nordex with a market share of 8.3 percent was worth $280 million. 
Including its 40 percent stake in Spanish Gamesa Eolica , Vestas Wind Systems has a market capitalisation of $3.95 billion. 
Nordex aims to double its market share to above 20 percent over coming years. 
"We are observing all movements in the market and we would reach our goal faster through acquisitions," Nordex's Pedersen said. 
The company has also been in talks with a smaller rival, Spanish Made, with a global market share of around two percent. 
"Made was also too expensive. This industry is euphoric, all companies compare themselves with Vestas," Pedersen said. 
Analysts also cite German Dewind with two percent of the market as an obvious takeover candidate following postponement of its planned IPO last year. 
NO NEED TO CONSOLIDATE 
Analysts and manufacturers say lack of synergies and technical benefits are the main reasons for the low level of consolidation among top players in the industry. 
"Basically there is no need to merge in this sector. The market is growing very fast and companies can improve sales on their own," said head of Bonus Energy, Palle Noerregaard. 
"It is hard to find technological advantages from acquisitions and also synergies are difficult to see," Noerregaard said. 
Analysts and windmill makers still await traditional, cash-rich industrial conglomerates to enter the lucrative market. 
General Electric was seen as the most likely industrial buyer of the U.S. wind power unit followed by engineering groups Swiss-Swedish ABB , Germany's Siemens and French Alstom . 
Another likely outcome is a financial investor buying Enron Wind. European private equity company Doughty Hanson & Co bought wind power blade manufacturer Danish LM Glasfiber in the spring, saying it planned to launch an IPO in five years.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

INDIA PRESS: Enron Wants Payment Guarantee For Dabhol 2

08/27/2001
Dow Jones Asian Equities Report
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- U.S. energy major Enron Corp. (ENE) has said its Indian unit, the Dabhol Power Co., will complete the 1,444-megawatt second phase of its power plant project only if the Indian government is willing to give a payment guarantee, the Business Standard reports. 
The newspaper says a team of Enron senior executives, led by treasurer Ben Gleeson, discussed the issue with the Indian lenders for the project over the weekend. Dabhol Phase 2 is about 95% complete, the report says.
"Enron has made it clear it would consider completion of the project only after it gets a comfort letter from the center (federal government). In effect, the center has to guarantee the payment for the purchase of power for the second phase since the Maharashtra State Electricity Board is in no position to do so," the newspaper quotes one of the lender sources as saying. 
Enron owns a controlling 65% stake in the Dabhol power project located in the western Indian state of Maharashtra. The project's first phase, a 740-megawatt power plant, has been shut since May 29 after its sole buyer, the MSEB, stopped drawing power, saying the "DPC tariffs were exorbitant and unaffordable." 
MSEB also refused to pay several of its electricity bills to Dabhol. 
Conciliatory talks between India's federal government and Dabhol are under way to settle the Dabhol-MSEB payment dispute. 
The Dabhol project has the federal government's counter-guarantee. At $2.9 billion, the Dabhol project is the single largest foreign investment in India to date. 
Newspaper Web site: http://www.business-standard.com 

-By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

ENRON CHIEF DENIES ASKING US GOVT FOR SANCTIONS AGAINST INDIA

08/27/2001
Asia Pulse
(c) Copyright 2001 Asia Pulse PTE Ltd.

NEW DELHI, Aug 27 Asia Pulse - Enron chief Kenneth Lay on Sunday asserted that he had not asked the US government to consider imposing sanctions against India and said their approach was to settle the issue amicably by selling its stake. 
Earlier in an interview to Financial Times, he had been reported as to have threatened India with new US sanctions unless the company and its partners get back the full US$1 billion in costs incurred in building the project in Maharashtra.
"I have not asked anyone in the US government to consider imposing sanctions," he said in a letter to Prime Minister, Atal Bihari Vajpayee. 
"Further, I did not say that the Dabhol Power Plant had been expropriated," he said adding that he had only factually explained the several possible options, including how one might get to expropriation and about the US laws in place to protect its businesses. 
"It is far from suggesting that we have decided to pursue these mechanisms. My discussions apprear to have caused significant unintended concern," he added. 
The preferred approach continued to be resolving the issue amicably by selling the stake to Indian governmental and financial institutions, Lay said. 
He said without agreement on that they had little choice but to follow the termination procedures jointly agreed under the Power Purchase Agreement (PPA). 
Enron spokesperson Mark Palmer had said in Huston that Lay did not make any kind of threat and he was responding to a question about what might motivate the Indian government to help break the deadlock. 
(PTI) 27-08 1746

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Indian State Blocks AES Plan to Exit From Power Venture
2001-08-27 11:30 (New York)

Indian State Blocks AES Plan to Exit From Power Venture

     Mumbai, Aug. 27 (Bloomberg) -- An Indian state government
blocked a plan by AES Corp., a U.S.-based power generator, to give
up its stake in a power distributor. An administrator was
appointed to take charge of the unit.

     AES last week offered to give its 51 percent stake in Central
Electricity Supply Co. to the utility's employees for virtually
nothing to rid itself of the money-losing contract. AES is barred
by contract from selling its share before 2004.

     Cesco, 49 percent owned by the government of the eastern
state of Orissa, will ``take over control and management of the
business but still keep us an investor,'' Venu Nambiar, director
at the AES Transpower unit, told reporters. ``We don't understand
why they are going through this. We offered to sell it back to
them at no cost.''

    At least five foreign-run power companies face payment
problems or have withdrawn investments from India, citing delays,
bureaucracy and the slow pace of reforms. Their exit may hurt
India's economy, which needs $200 billion to double generating
capacity and avoid the power failures that are common in many
Indian cities.

    Cesco is owed $85 million because of power thefts and unpaid
bills. It ceased paying its 8,500 employees this month, leading to
protests from the workers.

    AES hasn't received details of the order passed by the state
government and didn't know who had been appointed as an
administrator, Nambiar said. ``We don't know the extent of the
order yet.''

    Enron Corp., a rival, has been trying for seven months to
resolve a dispute over $64 million in unpaid bills from the
Maharashtra State Electricity Board, its only customer. Enron,
which invested $875 million in a $3 billion power plant, has
offered the government its 65 percent stake in the project at
cost.

     Arlington, Va.-based AES owns stakes in 173 power plants
generating 59,000 megawatts worldwide, including utilities in the
U.S. and Latin America.

     AES shares were little changed at $34.13 in recent trading.


Enron's Indian Lenders May Fund Dabhol Expansion (Update1)
2001-08-27 12:59 (New York)

Enron's Indian Lenders May Fund Dabhol Expansion (Update1)

     (Adds details from CEO's letter in paragraphs eight to 10.)

     Mumbai, Aug. 27 (Bloomberg) -- Indian lenders said they're
willing to make new loans to Dabhol Power Co., Enron Corp.'s local
unit, to complete its power project only if the government
guarantees repayment.

     ``We are looking at many options,'' said A.K. Doda, executive
director at Industrial Development Bank of India, one of the
biggest local lenders to Dabhol. Still, ``we aren't close to
deciding on any one of them.''

     Doda wouldn't say what other plans the banks are considering
to salvage the $3 billion power venture, India's biggest foreign
investment. The 740-megawatt power plant was shut in May after a
dispute over unpaid bills between Dabhol and Maharashtra state,
and work on a second phase to add 1,444 megawatts of capacity
stalled in June after 95 percent of the work was completed.

     Indian banks, which have loaned $1.4 billion to Dabhol, have
the most at stake, without guarantees on their loans. The $600
million lent by ABN Amro, Bank of America Corp. and other overseas
banks is covered by government guarantees. India risks having to
pay fines of as much as 170 billion rupees ($3.61 billion)
resulting from guarantees on power payments and loans.

     Enron owns 65 percent of Dabhol and is owed $64 million by
the Maharashtra State Electricity Board, its sole customer, in
unpaid bills for eight months. The board in May stopped buying
power, saying it's too expensive. Enron wants to exit the project
and said it's ready to sell its stake to the government at cost.
It has invested $875 million in the project.

     Indian banks would have to disburse about $320 million for
completion of the second phase of the project, which includes a
liquefied natural gas import and storage facility. Contractors
stopped working on the expansion in June because they hadn't been
paid since April.

     Life Insurance Corp. and General Insurance Corp., two of the
country's biggest state-run life insurers, may be included in a
plan to buy out Enron's stake in the power project, the Economic
Times said. Dabhol officials are scheduled to have a series of
meetings with local lenders this week, the paper said.

                           Lay's Letter

     Enron Chairman and Chief Executive Ken Lay said in a letter
sent to India's prime minister and finance minister over the
weekend that the company would prefer the Indian government and
Indian lenders buy out the Dabhol project, spokesman John Ambler
said. Failing that, he said the company would have no option but
to terminate the contract. Enron in May filed a preliminary
termination agreement to end the contract in six months.

     In his letter, Lay further distanced himself from a report in
Friday's Financial Times that quoted him saying the Indian
government could be subject to U.S. sanctions unless Enron and its
partners recover $1 billion they invested in the Dabhol project.
Lay told the Indian government leaders that his comments were
mischaracterized and that Enron hasn't asked the U.S. government
to impose sanctions.

     The company said in a statement Friday that Lay was ``merely
referring to U.S. laws that, under extreme circumstances, exist to
protect the interests of U.S. companies doing business in
countries that have economic relationships with the U.S.
government.''

     Enron shares rose 68 cents to $37.03 in early afternoon
trading. They have fallen 55 percent this year.


Positive views on Dabhol problem - Meeting with Tata Power MD
C. R. L. Narasimhan

08/27/2001
The Hindu
Fin. Times Info Ltd-Asia Africa Intel Wire. The Hindu Copyright (C) 2001 Kasturi & Sons Ltd. All Rights Res'd

Is a just denouement of the controversial Dabhol power project possible? At this stage, the outlook is depressing. The Madhav Godbole committee, trying to renegotiate the project, is facing an uphill task, with Enron, the chief promoter, not willing to give substantial concessions. And even announcing its intention to quit. Ultimately, whether the DPC can be revived or not will depend on how effectively the project is restructured. And that in turn will depend on finding a buyer for Enron's sizable stake and in concurrence with the new owner reworking the project to the satisfaction of all the stakeholders. That course looks daunting for now but is the only worthwhile option available. 
The Godbole committee did a commendable job in identifying the faults of the original project. Those had contributed to a thoroughly one sided agreement. However, in its second incarnation of trying to renegotiate the project, the committee has apparently met with little success. Which shows how much more difficult it is to reconstruct a project than condemning it.
The DPC has been pointing out that it has iron-clad contracts in the form a power purchase agreement (PPA). At this stage, what should be of primary concern are: (a) Enron and its co-promoters have created worldclass assets in a critical infrastructure sector, (b) It is imperative to productively use those assets for the benefit of the whole nation, (c) The continuing failure to honour the PPA reflects poorly on India's image. 
The urgency to renegotiate is obvious. There is already a time and cost overrun to the project. In that context the news that one of India's most respectable business houses would be interested in stepping into the shoes of Enron has created plenty of excitement. Recently in Mumbai The Hindu spoke to Mr. Adi J. Engineer, Managing Director of Tata Power. His views are both illuminating and realistic. 
How it all began 
Actually it was in reply to a shareholder at the recent AGM of Tata Power that the issue of (the Tatas) buying up the Enron stake in the Dabhol power project was first raised. Asked as to whether the Tata group was seeing an opportunity in the DPC, Mr. Engineer had merely said that like any company in the power sector "we will evaluate every opportunity but will only seize those opportunities that add value to our services." In Orissa where the privatisation of power distribution was undertaken a few years ago, Tata Power was the best equipped to take over the central zone. But the terms and conditions stipulated by the company were not accepted. The party which eventually took over is now complaining. 
Referring to the DPC, Mr. Engineer - privately - shares the anxiety of those who say from a distance that you should not go anywhere near this particular project. As very experienced operators in the power sector, they will go in only if the terms and conditions are suitably altered. "And the terms and conditions will have to be altered because we already have a mega project on the ground that cannot be wished away, the contract may not be good from the buyer's or the consumer's angle but the plant is good as a physical asset. Can the whole thing be restructured to make it sensible for the country and the new buyers? These are some of the things that will have to be examined in detail and only when we are fully satisfied that it can be restructured will we think of getting in," he said. 
The Godbole committee looking into some of the aspects will look at it from a government point of view. Tata Power has about 85 years of experience. We should be able to judge whether it makes sense... If it does and is acceptable to other parties then we move forward, he said. "The issue is simply this: here is a private power company which is the largest in the country. It is but natural that the external parties who want to solve the problem will first look at a party with a proven record. That is the stage we are in. We are not saying that we are hell bent on taking it over. If we feel it can be turned around we will take a decision at the appropriate stage." 
Mr. Engineer would not like to comment on issues such as restructuring of the tariff as they affect the sensitivities of all the stakeholders of the DPC. But surely they will be addressed. For it is in the government's interest also to arrive at a solution sooner rather than later." We have to put our heads together to find out how this great asset worth thousands of crores is not allowed to rust and instead be put to use. Tatas have the longest exposure to the power sector and they are capable of solving it, but it cannot be done individually: the co-operation of all the agencies will be required. 
The DPC ought to be seen as a problem that requires a national solution. "If in that process it is recognised that we are a company which has always stood by the shareholders and consumers then we will surely have a role." 
The DPC (imbroglio) ought to be seen as a problem that requires a national solution, says the Managing Director of Tata Power. "We have to put our heads together to find out how this great asset worth thousands of crores is not rusted but used productively."

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

India: Lay off

08/27/2001
Business Line (The Hindu)
Fin. Times Info Ltd-Asia Africa Intel Wire. Business Line (The Hindu) Copyright (C) 2001 Kasturi & Sons Ltd. All Rights Res'd

IN HOLDING OUT the threat of US sanctions against India over the Dabhol imbroglio, Mr Kenneth Lay, chairman of Enron, the energy conglomerate that owns DPC, has displayed poor tactical finesse. For neither the substance of the threat (sanctions) nor the circumstances warranting their imposition have little application, at least not at the present juncture. 
Mr Lay has spoken of American laws that could prevent Washington from providing aid or assistance or other things to India if there is expropriation of US property. That may be so. But there has never been at any time a suggestion from New Delhi that it would not honour its contractual obligation in the Dabhol case. Nor does the track record suggest such a possibility. India knows only too well that its long-term commercial and strategic interests lie in staying within the four walls of international law. All that can be said about DPC is that a contractual dispute has gone for arbitration as per the terms of the contract itself (this must be added) and the arbitrator is yet to give his award. It is only when the award is announced and the counter guarantor, the Government of India, refuses to implement the award can there be any question of expropriation. By his needless reference to sanctions (which strike an emotive chord in Indian minds), Mr Lay is only antagonising those sections in India which might otherwise be inclined to view the company's case with sympathy. Worse, the effort could be misinterpreted in the State Department as a crude attempt at arrogating to oneself the conduct of the US foreign policy - something even a chairman's proximity to the US President might not justify.
The timing of Mr Lay's outburst is significant. One, there is a team of facilitators trying to reconcile New Delhi's position and Enron's for a satisfactory solution to the impasse. Then, in parallel, an international arbitration on the contractual dispute between the Maharashtra State Electricity Board and Enron is in progress. Yet Mr Lay has chosen to take the dispute to the media. Perhaps he knows well that neither of these two approaches is going to guarantee Enron a speedy resolution of the dispute. Also, Mr Lay seems a man in a hurry. He has just taken over the day-to-day management of Enron from the predecessor CEO for a second term at the top. This is at a time when the company's market capitalisation has dropped by more than 55 per cent since the beginning of the year. He has to be, therefore, seen as doing something to turn things around. To add to his woes, Enron faces some uncertainty over earnings prospects because of its foray into the broadband communication business. Its corporate image too has taken a beating with allegations of manipulation of energy prices in California. The last part is particularly significant in the context of its dispute with India. For even if it wins the arbitration award in the Dabhol case, it may turn out to be a pyrrhic victory. 
The situation, then, is tailor-made for NGOs in the developed world to run a campaign to the effect that the company has bribed politicians in a Third World country and written for itself a one-sided agreement to the detriment of starving millions. In the aftermath of Seattle, civil society in the West has come into its own. With the California price-gouging controversy far from having died down, a legal victory in Dabhol is not what it is looking for, considering its potential for causing damage to its image in the US, its main market. A settlement with the Government of India that would allow it an honourable exit from a blighted project is the only option that would make sense to it. The resources freed in the process can be applied elsewhere without any fear of a backlash. The Government must, therefore, seize the initiative and work out a settlement that secures the interest of both parties.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

NEWS & ANALYSIS
Editor's Note
Enron A Victim Of Irrational Pessimism
ROBERT PRESTON

08/27/2001
InternetWeek
9
Copyright (c) 2001 CMP Media LLC

Remember the halcyon days of early 2000, when even the whiff of e-commerce potential was enough to keep a company's stock price climbing? 
Charles Schwab, Fedex, General Electric and scores of other established companies capitalized on that euphoria by playing up their formidable trading, logistics, supply chain and other Internet capabilities. On the other end of the spectrum, even dotcoms with flimsy Internet infrastructures and no prospects for profitability were commanding market caps that took many of their "old economy" counterparts decades to assemble.
Today, in contrast, a company that fundamentally transformed itself on the Internet-having whipped its existing businesses into online ones, ridden the Net into many new markets, added $60 billion in revenue last fiscal year and beaten Wall Street earnings forecasts in the first two quarters of this year-has seen its stock price clipped in half over the past six months and its highly respected CEO resign. 
What gives? Has the Internet economy turned completely upside down? 
Yes, it has. That besieged company, energy trader Enron Corp., the cover subject of InternetWeek's Transformation of the Enterprise special issue last October, is perhaps the most glaring example of the Internet backlash. 
Certainly, Enron has other troubles. Its broadband business, for instance, has been a huge disappointment amid the telecom bust, losing $102 million in the second quarter. But Enron's overall financials appear as sound as ever. Its second-quarter net income rose 40 percent from the year-earlier quarter to $404 million, on 196 percent higher revenue of $50 billion. 
Some of that higher volume can be attributed to the energy crunch, as Enron capitalized on (profiteered from?) volatile markets for electricity and natural gas. Nonetheless, the Internet trading marketplace Enron launched in late 1999 is allowing the company to pounce on market conditions with startling efficiency. EnronOnline now does more than $4 billion a day in trades, in everything from coal and steel to storage services and weather derivatives. As then-CEO Jeff Skilling said in an earnings conference call in July, the company is "well positioned for future growth." 
So why, a month later, is Skilling gone? The hard-charging 47-year-old first cited "personal reasons" for resigning but then told The Wall Street Journal that the pressures associated with a sputtering stock price were a big factor. 
The lesson for e-businesses everywhere? Don't try to diversify on the Internet too quickly? Don't raise investor expectations too high? Maybe it's a little of both. 
But it appears Enron and Skilling are victims of something bigger...and at the same time smaller: irrational pessimism about the economy and everything Internet. 
Enron and Skilling didn't overplay their Internet hand. Enron is still a shining model of what a calculated e-business strategy can do for a company's financials. It and hundreds of other companies tying their futures to the Net must stay the course. These leading e-businesses will have their day in the sun-some of them for the second time. 
Robert Preston is editor in chief of InternetWeek. He can be reached at rpreston@cmp.com. 
http://www.internetwk.com/ 
August 27, 2001

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

"I have not asked anyone in US govt to impose sanctions": Lay

08/26/2001
Press Trust of India Limited
(c) 2001 PTI Ltd.

New Delhi, Aug 26 (PTI) Enron chief Kenneth Lay Sunday asserted that he had not asked the US Government to consider imposing sanctions against India and said their approach was to settle the issue amicably by selling its stake. 
Earlier in an interview to Financial Times, he had been reported as to have threatened India with new US sanctions unless the company and its partners get back the full one billion dollars in costs incurred in building the project in the western Indian state of Maharashtra.
"I have not asked anyone in the US government to consider imposing sanctions," he said in a letter to Indian Prime Minister, Atal Bihari Vajpayee. 
"Further, I did not say that the Dabhol Power Plant had been expropriated," he said adding that he had only factually explained the several possible options, including how one might get to expropriation and about the US laws in place to protect its businesses. 
"It is far from suggesting that we have decided to pursue these mechanisms. My discussions apprear to have caused significant unintended concern," he added. 
The preferred approach continued to be resolving the issue amicably by selling the stake to Indian governmental and financial institutions, Lay said. 
He said without agreement on that they had little choice but to follow the termination procedures jointly agreed under the Power Purchase Agreement (PPA). 
Enron spokesperson Mark Palmer had said in Huston that Lay did not make any kind of threat and he was responding to a question about what might motivate the Indian government to help break the deadlock. 
(THROUGH ASIA PULSE) 26-08 2001

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

National Desk
THE NATION SUNDAY REPORT Bush's Energy Plan Bares Industry Clout Cheney-led task force consulted extensively with corporate executives. Its findings boosted their interests. Environmental groups had little voice.
JUDY PASTERNAK
TIMES STAFF WRITER

08/26/2001
Los Angeles Times
Home Edition
A-1
Copyright 2001 / The Times Mirror Company

WASHINGTON -- Throughout February and March, executives representing electricity, coal, natural gas and nuclear interests paraded quietly in small groups to a building in the White House compound, where the new administration's energy policy was being written. 
Some firms sent emissaries more than once. Enron Corp., which trades electricity and natural gas, once got three top officials into a private session with Vice President Dick Cheney, who headed the energy task force. Cheney did "a lot of listening," according to a company spokesman.
Many of the executives at the White House meetings were generous donors to the Republican Party, and some of their key lobbyists were freshly hired from the Bush presidential campaign. They found a receptive task force. Among its ranks were three former energy industry executives and consultants. The task force also included a Bush agency head who was involved in the sensitive discussions while his wife took in thousands of dollars in fees from three electricity producers. 
The final report, issued May 16, boosted the nation's energy industries. It called for additional coal production, and five days later the world's largest coal company, Peabody Energy, issued a public stock offering, raising about $60 million more than expected. While Peabody was preparing to go public, its chief executive and vice president participated in a March 1 meeting with Cheney. 
The report also touted new gas extraction technologies. An early draft noted controversy over a gas recovery technique offered by Halliburton Co., the firm Cheney ran from 1995 to 2000, before becoming vice president. The plan released to the public deleted the negative language. 
Cheney continues to resist demands by Congress to disclose who met with administration officials during the 106 days earlier this year when the energy plan was fashioned. The private nature of the work fostered candid and creative discussions "from new and unused quarters," said Cheney Press Secretary Juleanna Glover Weiss. 
But interviews and a review of task force documents show how the administration relied on familiar faces who stood to benefit from the process. 
Just once, the task force departed from its pledge to keep secret the names of people invited to pitch their opinions face to face. After producers of power from the sun, wind and geothermal heat met with Cheney, officials led the group to the front of the White House and waiting reporters. 
The date was May 15, just one day before the plan was sent to President Bush. 
Others whose views might conflict with industry--the Union of Concerned Scientists, the Sierra Club, even federal agency staff--found themselves shut out or overruled. 
In the sessions they held while they worked on the plan, Cheney and his staff generally heard a message reinforcing their own mind-set: Free markets, fewer pollution rules and expanded development of traditional fuels. 
Using less energy and energy in different forms were notions mentioned but not emphasized. "What do you expect?" asked one energy industry insider whose colleagues met with Cheney. "These people make their living from coal and natural gas and nuclear power. Do you think they're going to push for solar and wind?" 
The influences are evident in the final product. 
The report focuses on easing regulation for oil and gas drilling, coal-fired generators, nuclear power plants and transmission of electricity, while providing energy assistance to poor households. Though the plan also backs alternative fuels and conservation, it gives the most support to increasing the supply of traditional sources of energy. 
One passage adopts word for word a proposal on global warming from the U.S. Energy Assn.'s National Energy Strategy, which is dominated by trade groups. The section suggests encouraging other countries to build factories with clean technologies sold by U.S. companies. 
Even basic assumptions in the report were tailored to industry's measure. 
A briefing paper prepared for a March 19 task force meeting with Bush said that, "on the whole, U.S. energy markets are working well, allocating resources and preventing shortages." But two months later, the final task force report proclaimed that "America faces the most serious energy shortage since the oil embargoes of the 1970s." 
The energy situation hadn't changed. One staffer recalls seeing a memo that discussed "utilizing" California's rolling blackouts and the past summer's high-priced gasoline to press for more drilling for gas and oil. 
The task force began work in late January, nine days after Bush's inauguration. 
By all accounts, the vice president dominated the meetings. Energy Secretary Spencer Abraham; Bush's chief economic advisor, Lawrence B. Lindsey; and Environmental Protection Agency Chief Christie Whitman were the others with the most to say, one administration official said. But everyone jumped in on matters outside his or her own immediate jurisdiction. 
There was no shortage of private energy experience. Besides Cheney's stint as Halliburton's chief executive, Commerce Secretary Don Evans ran an oil company and Lindsey served on an Enron advisory board. 
The committee still gathers on occasion, most recently last month, to monitor progress of its recommendations. The House of Representatives passed an energy measure that reflects the plan. Once the Senate votes next month and the two houses of Congress sit down to negotiate a final bill, "we'll be bringing a lot of pressure to bear," Weiss said. "Our objective is to get that legislation as close to the policy as possible." 
To Howard "Bud" Ris, who heads the Union of Concerned Scientists, the process represents an opportunity lost. He disagrees with the report's conclusions but says he would have felt better if task force members and staff had thoroughly explored all sides. 
"They should have done a really rigorous review. They foreclosed all kinds of options." 
Electricity 
If any group had the White House wired, it was the electricity industry. 
The director of its major lobbying arm, the Edison Electric Institute, roomed at Yale University with George W. Bush. Electricity generators and marketers contributed $19.7 million to Republicans since 1998, roughly double what they gave Democrats, according to the Center for Responsive Politics. And electricity companies negotiated contracts with administration friends, political operatives and, in one case, a family member. 
Take Haley Barbour, former chairman of the Republican National Committee. In the spring of 2000, the Bush campaign recruited him to help with strategy. 
A year later, as a lobbyist for several electricity producers, he pushed Bush and Cheney to renege on a campaign promise to restrict power plant emissions of carbon dioxide. The gas has been linked to global warming. 
On March 1, Barbour sent a sternly worded memo on the subject to Cheney. "A moment of truth is arriving," the note began. Complying with carbon dioxide limits would be so expensive that Bush should reverse his position, Barbour argued. 
"Clinton-Gore policies meant less energy and more expensive energy," he wrote. "Most Americans thought Bush-Cheney would mean more energy, and more affordable energy." 
Within weeks, Cheney's task force had adopted the same reasoning on carbon dioxide. Bush cited the task force position when he announced in March that he had changed his mind. 
The National Electric Reliability Council, an industry trade group, hired former Montana Gov. Marc Racicot as a Washington representative. Racicot was a close Bush advisor during the tumultuous postelection days in Florida. 
Racicot said he met with Cheney and his energy director, Andrew Lundquist, on the subject of the EPA's forcing old plants to update their clean air equipment. 
The task force report suggested that the Justice Department consider dropping lawsuits it has already brought for alleged violations. 
Three electricity companies employ Diane Allbaugh as a lobbyist. She is married to Joe Allbaugh, the only member of Bush's so-called iron triangle of trusted Texas cohorts to serve on the energy task force. During meetings of the panel, Joe Allbaugh always took a chair at one end of the table, with Abraham to his right and Whitman to his left. He serves by virtue of his position as director of the Federal Emergency Management Agency. 
In her most recent disclosure reports in January, Diane Allbaugh said that the three firms--Reliant Energy, Entergy and TXU, paid her $20,000 apiece in the previous three months. She wrote that she did no lobbying on their behalf. The companies say she performed other consulting duties. 
Reliant spokesman Richard Wheatley said the company is "actively supporting" the energy plan, but Diane Allbaugh's "minimal assignments have not involved the task force, specifically to avoid any specter or allegation that there is a conflict of interest." She is a consultant on "Texas-related" issues, he said. 
Spokeswomen for TXU and Entergy said Diane Allbaugh's work for them is likewise restricted to their Texas operations. 
Meanwhile, her husband, Joe Allbaugh, has participated in task force talks with a direct bearing on the energy companies' interests generally, such as environmental rules for power plants and electricity deregulation--a specialty of his wife's. 
At least twice he was privy to updates from economic advisor Lindsey on California's malfunctioning market, where Reliant stands accused by the state of overcharging. The company denies any wrongdoing. 
Joe Allbaugh's spokeswoman, Christi Harlan, said that nothing "about the situation would suggest that the director would need to seek ethics guidance" and added that his wife's lobbying reports "are going to have to speak for themselves." 
Diane Allbaugh declined comment. Visited at the townhouse that the Allbaughs bought in March from the Cheneys, she said: "I appreciate the effort you've gone to, but I don't think we're going to talk." 
In 1996, the Dallas Morning News reported that she represented clients with interests in pending Texas state deregulation of telecommunications and utilities markets, while her husband served as then-Gov. Bush's chief of staff. At the time, Bush said he was troubled "if it creates a public perception that something unfair is taking place." 
At the time, she wrote the governor's counsel that she was withdrawing from her contracts. And Bush instituted a policy that division heads and senior aides could not be married to registered lobbyists, according to Texas newspapers. 
As president, Bush has no special guidelines beyond those of the Office of Government Ethics, said White House spokeswoman Claire Buchan. These regulations appear less stringent, prohibiting participation only if a particular matter applying to a specific company is addressed. 
TXU Chief Executive Erle Nye--a client then and now--said Diane Allbaugh has been a consultant on deregulation issues. She registered as a lobbyist, he said, just in case she happened to talk about a pertinent issue to a politician. "To my knowledge, we would not have let her lobby," he explained, "because she is the wife of Joe." 
Natural Gas 
Natural gas was connected in high places too. 
When the Energy Department drafted a chapter for the report about how to increase domestic energy production, the text mentioned the importance of hydraulic fracturing, a method of accelerating production of natural gas wells. It so happens that Halliburton is a major provider of the service. 
Chemicals and sand are injected under high pressure into gas-bearing geological formations, causing underground cracks. The gas rises into the cracks and moves closer to the well, making recovery easier. 
The process has its foes. Neighbors of natural gas wells in Alabama complained of oily goop and sulfur smells streaming out of faucets just after a company conducted fracturing. An Alabama federal appeals court ordered the state to regulate the process--and EPA to step in if needed. Natural gas drillers, and hydraulic fracturing purveyors, expect similar lawsuits to be filed in the Rocky Mountain states, according to material submitted to the task force by the Domestic Petroleum Council. 
The EPA is studying whether hydraulic fracturing is linked to water well contamination but doesn't expect to finish its preliminary inquiry until at least February. The agency will decide then if further research is warranted, officials said. 
Halliburton complained in federal court, during Cheney's last year at the company, that new federal restrictions on the process would "have a significant adverse effect" on its business. 
The Energy Department chapter mentioned the environmental controversy as well as the potential of hydraulic fracturing. With the Energy Department chapter in hand, a Cheney assistant informed an EPA official in late March that hydraulic fracturing would go on the April 3 agenda for the Cabinet-level gathering. The agency was advised to prepare a recommendation. 
EPA officials balked at suggesting any actions for the task force before the study was completed. The subject disappeared from the agenda by the day of the meeting. 
But it didn't disappear from the final report. The document emphasized the technique's importance as "one of the fastest-growing sources of gas production" and noted that "each year nearly 25,000 oil and gas wells are hydraulically fractured." The information about potential water well contamination, the appeals court decision and the possibility of EPA controls had all been dropped. 
A few paragraphs after the hydraulic fracturing discussion comes the task force recommendation that the nation "promote enhanced oil and gas recovery from existing wells through new technology." 
Halliburton spokeswoman Wendy Hall said company executives did not discuss the energy report with Cheney. "Of course, we talk to him; you don't work with someone for that long and then not talk to him. But not about the plan, and not about hydraulic fracturing." 
Coal 
Perhaps the biggest winner in the task force report was coal. 
Though coal produces more than half of the country's electricity, natural gas dominates the next generation of power plants. The reason: clean air rules. Burning coal produces a significant amount of carbon dioxide, which has been linked to global warming, and other elements tied to acid rain and smog. 
Under President Clinton, " 'coal' was a dirty word," said John Feddock, an industry analyst based in Bluefield, Va. 
Not so under Bush, whose U-turn on carbon dioxide was the coal industry's biggest victory in Washington in years. 
"If rising electricity demand is to be met, then coal must play a significant part," the task force report stated. The plan recommended spending $2 billion in federal money for research into making coal-fired electricity cleaner. And the task force recommended directing federal agencies "to provide greater regulatory certainty relating to coal electricity generation." 
"The president is friendly to energy, and so is the vice president, and thank God," said Fred Palmer, a vice president at Peabody Energy, the world's largest coal producer. "Our society needs energy." 
Peabody, an affiliate called Black Beauty Coal and their employees have directed $900,000 to Republican coffers over the last two years. Peabody Chief Executive Irl F. Engelhardt personally gave $100,000 to Bush's inaugural committee. 
Two Peabody executives and one from Black Beauty were named to Bush's energy advisory team after his election victory. 
Two weeks after the task force was formed, Peabody announced plans to make a public stock offering. Several weeks later, on March 1, Palmer and Engelhardt attended a coal-interests meeting with task force members Abraham and Lindsey and Cheney's energy director. 
On May 21, five days after the task force report touted coal, Peabody's stock went on sale. The company received $420 million, about $60 million more than analysts expected. 
Could Peabody have gone public if Al Gore had beaten George W. Bush? 
"That's an interesting question," Palmer said. "We'd been working on [the stock offering] for a long time. But it picked up steam this year, no question. I am sure it affected the valuation of the stock." 
Conservation 
Environmental leaders say they never got a real chance to influence the report in favor of greater conservation efforts and renewable power. 
Just after the election and again in January, when the task force was announced, several groups requested meetings with Bush, Cheney or both. 
Months passed without a reply. 
Dan Becker, legislative director at the Sierra Club, heard suddenly from an Energy Department staffer in late March: Please give us your thoughts on the plan. We need them within 24 hours. Then, he says, the caller mentioned that Abraham was traveling and wouldn't be reading the response. 
On April 3, the Energy Department submitted a briefing paper on nuclear power to the vice president's office, recommending the U.S. use more of it. Under "pros," the paper noted that this policy would be "a bold step" and added that it would underscore "the responsible approach of the administration towards carbon emissions"--the global warming issue. 
But under "cons," the paper noted: "Environmental groups will sharply criticize any proposed expansion" because of waste disposal issues and the history of accidents at Three Mile Island and Chernobyl. Environmentalists will "use the proposal to fund-raise and organize to defeat the administration's policy, and use the proposal to suggest our national energy policy is out of the mainstream." Nuclear power would go on to win a place in the report as "a major component of our national energy policy." 
By this time, the task force was well aware that environmentalists would be unhappy about many aspects of the report. 
The panel had already abandoned its original plan for a release date of April 6. It was too close to Earth Day, a staffer with knowledge of the discussion said, and it would offer much too tempting a target. 
In this wary atmosphere, Lundquist met April 4 with 15 emissaries from environmental groups. 
The assembled activists barely had time to introduce themselves in the allotted 50 minutes. "To characterize it as meaningful consultation is quite a stretch," said Elizabeth Thompson, who attended for Environmental Defense. 
Ris, from the Concerned Scientists, asked twice to meet directly with Cheney "to no avail," according to a memo written afterward by one of the participants. 
Environmental leaders finally sat down with Cheney on June 5, weeks after the report was released. 
The environmentalists' clear anti-Bush sentiments during the election campaign sealed their fate, said William K. Reilly, who headed the EPA when Bush's father was president. 
"They have roles to play," he said. "But they're not going to be insider roles." 
* 
Times staff writers Robert Patrick, Megan Garvey and Richard Simon contributed to this story. 
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC) 
Input From Energy Industry 
Passage from the Bush administration's national energy policy appears to have come almost verbatim from the U.S. Energy Assn.'s National Energy Strategy, an organization that represents the energy industry.

PHOTO: From left, New York Stock Exchange President William R. Johnston, Peabody Energy Corp. Chairman and CEO Irl F. Engelhardt and firm President Richard M. Whiting (the latter two holding chunks of coal) celebrate the company's Big Board listing in May.; ; PHOTOGRAPHER: Associated Pre; PHOTO: Vice President Dick Cheney continues to resist demands by Congress to disclose who met with administration officials during the 106 days earlier this year when energy plan was devised.; ; PHOTOGRAPHER: Reuters; PHOTO: Lobbyist Diane Allbaugh watches husband Joe sworn in as FEMA head by White House Counsel Alberto R. Gonzales, next to Bush.; ; PHOTOGRAPHER: Associated Press; PHOTO: Vice President Dick Cheney heard a message from energy industry at task force sessions that backed his own thinking.; ; PHOTOGRAPHER: Associated Press; GRAPHIC: Input From Energy Industry; 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	


Enron using pressure tactics?
Hasan Suroor

08/25/2001
The Hindu
Fin. Times Info Ltd-Asia Africa Intel Wire. The Hindu Copyright (C) 2001 Kasturi & Sons Ltd. All Rights Res'd

LONDON, AUG. 24. In what is seen as pressure tactics, the U.S. power company, Enron, has warned that Washington could impose new sanctions against India if it does not pay up the full $1 billion that Enron claims it spent on setting up a power plant in Maharashtra. 
The Enron chairman, Mr. Kenneth Lay, told The Financial Times today that non-payment would amount to "expropriating" a U.S. company which could invite economic sanctions under American laws, besides sending a "damaging" signal to international investors. "There are U.S. laws that could prevent the U.S. Government from providing any aid or assistance or other things to India going forward if, in fact, they expropriate property of U.S. companies", he said.
He pointed out that India had indicated its willingness to solve the dispute amicably and the two sides were working with an international reconciliation team, but he did not rule out an alternative to continuing with arbitration. "We have very, very tight contracts, and we'll enforce those contracts", he said. 
The Financial Times underlined the fact that "Mr. Lay is known to have warm relations with the Bush administration which has its roots in the company's home base of Texas."

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Report on Business
IN BRIEF ENERGY
Enron revives plans for power plant

08/25/2001
The Globe and Mail
Metro
B4
"All material Copyright (c) Bell Globemedia Publishing Inc. and its licensors. All rights reserved."

Enron Canada said it is reviving plans to build a $200-million power plant near Sarnia, Ont., following signs a long-awaited date for market opening has been set for next March 1. The Calgary-based subsidiary of Houston-based Enron Corp. had put the 140-megawatt Moore project on hold after the Ontario market opening date was postponed from last May. Enron will re-evaluate the project over the next month based on technical issues and new market calculations for the spring. The company said it has invested $50-million (U.S.) in land and turbines needed for the plant.


Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

BUSINESS
Away from the daily grind / Skilling explains departure / Former Enron CEO wants more time for family, new adventures
LAURA GOLDBERG
Staff

08/25/2001
Houston Chronicle
3 STAR
1
(Copyright 2001)

RECENTLY departed Enron Corp. CEO Jeff Skilling wants to learn to speak a foreign language fluently, travel in Africa, master dirt- bike riding and, most importantly, spend more time with his family. 
"I'm like a lot of people," said Skilling, who took on his first full-time job at 14 and turns 48 in November. "I've worked too hard for too long. It kind of builds up. You know there's things that you miss. There are things that you would like to do that you have never done."
Skilling caused a stir on Wall Street and in Houston's business community when a week and a half ago he unexpectedly announced he was leaving Enron after just six months as its chief executive. 
He cited personal and family reasons for the departure. Enron Chairman Ken Lay, who has returned to his former chief executive role, said in ironclad statements that Skilling wasn't forced out and that no troubling company disclosures would be following. 
Some observers have a hard time believing Skilling would freely leave the company he worked so hard to transform from a pipeline concern into an energy-trading giant, while others noted that Enron's stock price had fallen from $82 a share at the end of February to under $43 right before Skilling's announcement. 
Skilling became Enron's president and chief operating officer in 1997 and was named chief executive in December effective in February. 
In an interview at his newly built River Oaks home Friday, several hours before leaving to go camping and fishing with one of his three children, Skilling said he's not sure he ever aspired to be chief executive of Enron. 
"I was working to build a company, build an institution," said Skilling, who joined Enron in 1990 after working with the company as a consultant in his job with McKinsey & Co. 
At age 14, Skilling took a job at a television station in Aurora, Ill. (the same Aurora put on the map by Wayne's World). He began painting the walls as the station was being built and ended up as its chief production director. His shift started at 3:15, after school, and he signed off at midnight. 
Throughout his undergraduate and business school years, he also worked. 
Skilling, who is divorced and shares custody of his children, finally reached a point in his career where he felt it was time to do something else. 
"I don't understand why people don't get that," said Skilling, who is engaged to be married. "I've worked for 34 years. I deserve a break. I honestly believe that." 
He said he hasn't spent the time he should have with his parents, brother, sister and children. His job, which was a 24-hour-a-day, seven-day-a-week enterprise, required him to travel 50 to 60 percent of his time. 
Skilling, Houston's fifth-highest compensated executive at a publicly owned company last year based on a survey done for the Chronicle, said he's lucky he can leave. 
"A lot of people work hard all their life, and they really don't have an option," he said. "I have options." 
His recent trip to England, where three employees were killed and another seriously burned in an accident at an Enron power plant, also hit him. 
"It reinforced how transitory life is," he said. "For 34 years, I've always assumed I would have something afterward. All of a sudden you realize there may not be an afterward unless you get going. . . . If something is important to you, you probably ought to go ahead and do it." 
But what of Enron's stock drop, and why didn't he leave before taking over as CEO? 
"It's no fun to watch your stock price go down when you are having record earnings," said Skilling, who still owns about 1 million shares in Enron and has vested options for additional shares. 
While all sorts of factors entered into his decision, including the stock price, he stressed again that his reasons for leaving were "personal and family." 
"If people come back and write the history of Enron Corporation, they'll look at my tenure as CEO. It was not great for the stock price. I wish it wasn't that way. It is what it is. I think what I would ask and I would hope people would look at is what earnings did." 
The price was battered for a number of reasons, including worries about Enron's potential exposure from California's energy crisis, the collapse of its new broadband business and continued problems with a power plant project in India. 
Previously, those issues demanded his attention and now, Skilling said, the California crisis has passed and Enron's broadband costs have been pared. 
Skilling's big near-term hopes for the broadband business were dashed when the telecommunications industry suffered a meltdown. 
"I didn't realize it would get this bad this fast," Skilling said. "Who would have thought? Everybody blew it. I blew it, too." 
All told, Skilling believes Enron is in strong shape for the future. 
Don't expect Skilling to lounge somewhere on a beach. He'll open an office after he returns from camping. 
He wants to do something - what, he's not exactly sure yet - to get the word out that Houston is a good place to incubate innovative and important businesses. 
"There is no place, in my view, that is as good for building as Houston, Texas, is," said Skilling, who may try to leverage his relationships with a number of business schools around the country to achieve his goal. 
He's also interested in continuing and expanding on his charity work. He wants to stay involved in multiple sclerosis fund-raising and would like to do hands-on work such as home-building. 
Don't be surprised if he tries to create a new business at some point. But not at least for a year or two. 
"I think that there will be some new big idea," he said. "I don't know what the big idea will be."

Photo: 1. Former Enron CEO Jeff Skilling at his River Oaks home on Friday: "I'm like a lot of people. I've worked too hard for too long. It kind of builds up. You know there's things that you miss. There are things that you would like to do that you have never done." (color); Mug: 2. A clean-shaven Skilling in August 2000, six months before taking over as CEO. (color) 
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