Smart Globalization Being first and biggest in an emerging market isn't always the best way to conquer it. A better tactic: Learn local cultures--and build a presence carefully
BusinessWeek, 08/27/01
Group of Utilities In West Says Rates Now Are Too Low
The Wall Street Journal, 08/24/01

AFRICA & THE AMERICAS: Enron issues veiled sanction threat to India 
Financial Times; Aug 24, 2001

NATIONAL NEWS: US power trader may buy Hatfield mine 
Financial Times; Aug 24, 2001

COMPANIES & FINANCE THE AMERICAS: Returning hero fights to stop free-fall INTERVIEW KENNETH LAY, ENRON CHAIRMAN AND CHIEF EXECUTIVE: 
Financial Times; Aug 24, 2001

NATIONAL NEWS: HSE statement on fatal blast NEWS DIGEST 
Financial Times; Aug 24, 2001

Enron's Lay Raises Possibility of Sanctions on India (Update1)
Bloomberg, 08/24/01

Enron Plans To Buy UK Hatfield Colliery - FT
Dow Jones Energy Service, 08/24/01

Orange County, Calif., Real Estate Trust Is in Front of Energy Conservation
KRTBN Knight-Ridder Tribune Business News: The Orange County Register - California, 08/24/01

Energy Company Begins Construction of Power Plant in Bakersfield, Calif., Area
KRTBN Knight-Ridder Tribune Business News: The Bakersfield Californian, 08/24/01
City Light & Power Executives Say Company May Bid For Edison International
Dow Jones Business News, 08/24/01
Finding out cause of blast
The Northern Echo, 08/24/01
India Govt Gives Lenders 2 Wks To Resolve Enron Dispute
Dow Jones Energy Service, 08/24/01
Indian government gives lenders two weeks to resolve Enron power company dispute, to avoid arbitration
Associated Press Newswires, 08/24/01
RWE interested in Enron's Azurix or E.ON's Gelsenwasser - report
AFX News, 08/24/01
India ONGC Confirms Bid For Enron Oil Field Stake
Dow Jones Energy Service, 08/24/01
INDIAN LENDERS TO COME UP WITH PACKAGE FOR DABHOL POWER
Asia Pulse, 08/24/01

RWE May Make Bid for Azurix, Gelsenwasser, Paper Says (Correct)
Bloomberg, 08/24/01

Enron May Buy U.K. Coal Mine From Liquidator, FT Reports
Bloomberg, 08/24/01

Enron's Portland General Seeks Power Rate Increase, WSJ Says
Bloomberg, 08/24/01

USA: Enron says not seeking U.S. sanctions against India.
Reuters English News Service, 08/23/01

Energy Glut Fears Put Power Firms' Finances In Focus
Dow Jones News Service, 08/23/01





Special Report: America's Future: Smart Globalization
Smart Globalization Being first and biggest in an emerging market isn't always the best way to conquer it. A better tactic: Learn local cultures--and build a presence carefully
By Pete Engardio 
With Manjeet Kripalani in Bombay and Alysha Webb in Shanghai

08/27/2001
BusinessWeek
132
(Copyright 2001 McGraw-Hill, Inc.)

A television ad running these days in India shows a mother lapsing into a daydream: Her young daughter is in a beauty contest dressed as Snow White, dancing on a stage. Her flowing gown is an immaculate white. The garments of other contestants, who dance in the background, are a tad gray. Snow White, no surprise, wins the blue ribbon. The mother awakes to the laughter of her adoring family--and glances proudly at her Whirlpool White Magic washing machine. 
The TV spot is the product of 14 months of research by Whirlpool Corp. into the psyche of the Indian consumer. Among other things, the Benton Harbor (Mich.) company learned Indian homemakers prize hygiene and purity, which they associate with white. The trouble is, white garments often get discolored after frequent machine washing in local water. Besides appealing to this love of purity in its ads, Whirlpool custom-designed machines that are especially good with white fabrics.
Whirlpool hasn't stopped there. It uses generous incentives to get thousands of Indian retailers to stock its goods. To reach every cranny of the vast nation, it uses local contractors conversant in India's 18 languages to collect payments in cash and deliver appliances by truck, bicycles, even oxcart. Since 1996, Whirlpool's sales in India have leapt 80%--and should hit $200 million this year. Whirlpool now is the leading brand in India's fast-growing market for fully automatic washing machines. 
Whirlpool's success story stands out in a time when Corporate America doesn't talk much about emerging markets. Things were different a decade ago. That's when Western economies had stalled, so expanding operations into the fast-growing, heavily populated lands of Asia, Latin America, and the old Soviet bloc was a top priority. The approach to globalization then was brutally simple: get in fast, strike megadeals with top officials, and watch the profits roll in. Multinationals figured local consumers would snap up their products at a premium. Thus AT&T promised some 20 ventures in China, from state-of-the-art telecom factories to research labs. Enron Corp. negotiated giant power plants and pipeline projects in India, Indonesia, and Bolivia. General Motors Corp. envisioned an Asiawide network of car plants, led by its $1.2 billion facility in Shanghai. SENSE AND SENSIBILITY. Many of these bets fizzled or disappointed. Enron's $4 billion Indian power plant is a debacle. Other multinationals saw that local competitors can catch up fast--and beat them in price and marketing. Tumbling trade barriers are making local production less essential. Meanwhile, a globalization backlash has forced companies to view their activities in poor nations in a different light. Exxon Mobil, Cargill, Freeport-McMoRan, and Royal Dutch/Shell became targets of local uprisings over oil, mining, and other projects in Indonesia, India, and Nigeria. McDonald's, KFC, and Philip Morris have endured withering criticism at home and abroad for aggressively pushing inappropriate products and ignoring local sensibilities. 
The financial crises that ravaged nations like Mexico, Thailand, Russia, Brazil, and Turkey didn't help. Suddenly, ``emerging markets'' connoted excessive risk. Indeed, compared to the booming U.S. of the late '90s and a unifying Western Europe, emerging markets looked irrelevant to many execs. After explosive growth in the early 1990s, foreign direct investment by U.S. companies in East Asia, excluding Japan, plunged by 74% to $1.33 billion from 1997 to 2000, estimates the U.S. Commerce Dept. The drops have been nearly as dramatic in Latin America and Eastern Europe. 
But as Whirlpool and other savvy U.S. companies such as Kodak, Citigroup, and Hewlett-Packard are proving, investing time and energy to understand societies in developing nations can pay rich returns. Rather than swinging for the fences with megaprojects or costly takeovers, the smarter approach is to methodically build a presence from the ground up. Some of the best investments are the most economical--small corner kiosks instead of full-blown stores or bank branches, say, or a tie-up with a savvy local player who owns a factory. Says Bain & Co. global strategist Chris Zook: ``Companies are trying to figure out how to build on their strengths, as opposed to throwing a bunch of Hail Mary passes in the hope they connect.'' 
Above all, smart globalization requires extensive homework. Companies are starting to work closely with bureaucrats, entrepreneurs, and social groups at the grass roots. Not only is it easier to head off a local political backlash by cooperating with local players early; multinationals are also finding they can save enormous resources--and develop products local consumers really need. 
Whirlpool has learned many of these lessons. Eight years after launching its global blitz in 1989, it took a $294 million writedown to shed two of the four appliance plants it built in China. ``What we absolutely missed was how fast these markets would become saturated,'' concedes CEO David R. Whitwam. ``We could build plants around the world, but where you fail is in the marketplace.'' 
Now, Whitwam believes Whirlpool is on track. Besides its sophisticated marketing and inroads with local distributors, the company reorganized its global factory network. For all appliances, it devises basic models that use about 70% of the same parts. Then it modifies its machines for local tastes. Whirlpool has an incentive to get it right: Through 2009, it expects demand for big appliances in the U.S. to remain flat, while it projects demand overseas will grow 17%, to 293 million units. 
Similar dynamics are pushing other companies to renew their global focus. Developing nations are still likely to grow much faster than the industrial West for at least a decade (chart, page 136). What's more, most multinationals today target mainly the richest 10% of the global population. They've yet to reach the 4 billion who earn the equivalent of $1,500 or less annually. Few can afford a PC, car, or mortgage now. But many experts argue they will be the greatest source of future global growth. That's why Hewlett-Packard Co. has launched a drive to help stimulate computer use in villages from Central America to Africa (page 137). The HP program also is politically shrewd: It promotes the beneficial aspect of globalization to the neediest. 
Citibank's new campaign to broaden its traditional base of rich clients exemplifies the new approach to emerging markets. In Bangalore, India, it launched a program called Suvidha--Hindi for ``ease.'' It persuaded midsized companies to set up retail bank accounts for their entire staffs, from janitors to top managers. To open accounts, customers need just $22. They get a card they can use to get cash, take out loans, pay bills at local ATMs, and buy groceries. In three years, Citi has gained 200,000 retail clients, doubling its base in India, for about $10 million. 
In corporate banking, Citi is targeting companies with revenues of $50 million or less. India's trucking business has been one priority. By opening offices in 23 cities offering credit, savings, and checking accounts, Citi now finances 10,000 truckers--most with fewer than 30 vehicles. It also is gearing up in Poland, Brazil, and the Philippines. Since 1997, small-business clients in emerging markets have risen sixfold, to 8.7 million. ``The lower segments of these markets is where the growth is,'' says Citibank CEO Victor J. Menezes. Such markets earned Citigroup $2.7 billion in net profits last year. 
Other U.S. companies are finding they can get ahead working with small entrepreneurs eager for new ways to make money. That's one reason emerging markets are a bright spot for Eastman Kodak Co. While Kodak has struggled in the U.S., in Asia, sales were up 9% last year. Much of this is because of Kodak Express photo supply and development shops, often owned by entrepreneurs such as Qiu Xing, 28. The Shanghai native, who says he had ``always been a photography buff,'' invested $48,000 to open his shop in January. In a deal with a Chinese bank, Kodak lets Qiu use his developing equipment as loan collateral even though he hasn't fully paid for it. Kodak also supplies monthly staff training. Qiu takes in $5,000 a month and makes a 25% profit. 
Kodak has 6,000 Expresses across China and expects 10,000 by yearend. Its market share in China has doubled since 1995, to 60%. ``We moved so fast, our competitors didn't have time to act,'' boasts John Tseng, a Kodak general manager for Asia. 
In these turbulent times, when political and currency crises rock governments from Jakarta to Buenos Aires, it's hard to tell when emerging markets will be the predictable lands of opportunity CEOs once foresaw. But that was always an illusion--and it's time Corporate America figures out what really works. ``The next round of global expansion is as much about imagination as about resources,'' says University of Michigan management guru C.K. Prahalad: ``Putting a billion dollars down does not involve imagination.'' With the mistakes of the '90s behind them, the winners will approach the world in a smarter way.

Succeeding Overseas
How companies are boosting foreign sales--and cutting risk
PRUDENT INVESTMENTS
Rein in capital spending on new factories and acquisitions. Look for smaller,
more focused projects.
BROADENING THE MARKET
Look beyond upscale consumers to the 4 billion people earning the equivalent
of $1,500 or less a year.
LOCAL LEVERAGE
Where possible, use existing distribution networks and underutilized
factories, rather than build from scratch.
CO-OPT THE LOCALS
Don't wait for a backlash. Involve local nonprofits, entrepreneurs, and
officials in your project.
DON'T RUSH IN
Most emerging markets are liberalizing investment rules: So wait until the
terms are right.
Photograph: INDIAN TRUCKERS: Citi customers PHOTOGRAPH BY PABLO BARTHOLOMEW/LIAISON AGENCY Illustration: Chart: Corporate America Is Investing Less in Emerging Markets... 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	


Economy
Group of Utilities In West Says Rates Now Are Too Low
By Robert Gavin and Rebecca Smith
Staff Reporters of The Wall Street Journal

08/24/2001
The Wall Street Journal
A2
(Copyright (c) 2001, Dow Jones & Company, Inc.)

A coalition of Western utilities -- including some that pushed successfully for price caps on wholesale electricity earlier this year -- now is complaining that prices have fallen too low. 
At least three utilities are requesting retail rate increases to cover power costs from earlier in the year, in part, because low wholesale prices mean they are no longer able to completely offset those costs with power-sale revenue. Prices have been falling for months, and dropped even further after June 19 when the Federal Energy Regulatory Commission imposed regionwide wholesale price limits.
Early this week, 14 Western utilities asked FERC to reconsider its order, complaining now that a "one-size-fits-all" approach may help California, but hurt utilities in neighboring states. 
Under the FERC order, Western power generators may charge no more than $92 per megawatt hour, currently, for power sold into the California market and slightly less outside the Golden State, unless they can prove their generating costs are higher. Traders, including utilities that bought too much power, are held to the capped level no matter what their costs. But the caps are somewhat moot since energy currently is trading at far less on the open market. 
Power prices in February, according to Platt's Energy Trader, a daily publication of McGraw-Hill Cos., for two important Northwest pricing points ranged between $220 and $400 per megawatt hour. By yesterday, midday electricity for delivery at the same points was selling for $33 per megawatt hour. 
Portland General Electric bought power last winter for late-summer deliveries at $200 to $250 per megawatt hour, says Robin Tompkins, assistant general counsel. "Now we're having a hard time unwinding those positions." 
Portland General, a unit of Enron Corp. of Houston, is asking for a record 30% increase in residential rates, which would take the price to roughly eight cents per kilowatt hour from about six cents, and a 45% to 60% increase in commercial rates. That is because the Portland, Ore., utility only is able to supply half the power its customers need from its own power plants. For the rest, it must go to the open market and make purchases. 
When it resells power it doesn't need, it now is forced to do so at a loss, says Ms. Tompkins. That isn't at all what it expected during the time of year when prices typically reach their zenith. It puts further pressure on rates, she adds. 
The drop in prices back to the 1999 level is prompting rate increase requests from other utilities. In May, for example, Avista Corp., Spokane, Wash., agreed to defer rate increases needed to recover more than $100 million in unanticipated power-purchase costs. The idea was the utility, with 313,000 customers in Idaho and Washington, would recover those costs over the next two years by selling excess power once drought-stricken hydroelectric generating conditions improved and its new 270-megawatt natural-gas-fired plant came on line next year. 
But Avista now is seeking a 36.9% rate increase in Washington and 15% increase in Idaho because the utility no longer believes wholesale prices will be high enough to pay off earlier power-purchase costs. This week, Puget Sound Energy, a unit of Puget Energy Inc., Bellevue, Wash., asked Washington regulators to grant an 18% residential rate increase to recover some $84 million in power costs, saying falling power-sale revenues mean ratepayers have to pick up a bigger share of costs. 
Washington Public Counsel Simon Ffitch, who represents ratepayers in utility cases, says the rate increases "appear to be an effort to shift the risks of power-cost fluctuations to ratepayers from stockholders."

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


AFRICA & THE AMERICAS: Enron issues veiled sanction threat to India 
Financial Times; Aug 24, 2001
By SHEILA MCNULTY and KHOZEM MERCHANT

Energy giant Enron has issued a veiled threat to India that it could face new US sanctions unless the company and its partners get back the full Dollars 1bn (Pounds 600m) in costs incurred building a power plant there. 
In an interview with the Financial Times, Mr Kenneth Lay, Enron chairman, said: "There are US laws that could prevent the US government from providing any aid or assistance to India going forward if, in fact, they expropriate property of US companies." 
The warning comes at a sensitive time as the Bush administration is trying to improve its long-strained relations with India. Two weeks ago Richard Armitage, US deputy secretary of state, predicted an early lifting of the sanctions imposed in the aftermath of India's nuclear tests in May 1988. 
Enron launched arbitration proceedings earlier this year after its Dollars 2.9bn Dabhol power plant in India was closed. The plant's sole client, the Maharashtra State Electricity Board (MSEB), failed - and later refused - to pay bills that now total about Dollars 45m. It said Enron's tariffs - four times greater than those levied by domestic power producers - were too expensive. But Enron says the basis for calculating the tariffs was in the contract and asked the Indian government to buy its stake earlier this month. 
Mr Lay's demand for full-cost compensation is regarded as optimistic by some bankers in Bombay. One executive at a foreign bank said a more attainable solution would be one "that allows Enron to get out at 70 cents to the dollar", suggesting a significant writedown by Enron. 
Mr Lay said in the interview: "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." 
His threat is likely to irritate the Indian government, which is eager to reach a face-saving compromise amid a strong domestic anti-Enron lobby, without disturbing warming bilateral ties with Washington. 
Mr Lay is known to have warm relations with the Bush administration, which has its roots in the company's home base of Texas. 
Mr Lay said the Indian government had indicated it wanted to solve this problem quickly and amicably. Both sides are working with an international reconciliation team. But Mr Lay said the alternative of continuing with arbitration remained. "We have very, very tight contracts, and we'll enforce those contracts," he said. Interview, Page 22 
Copyright: The Financial Times Limited

NATIONAL NEWS: US power trader may buy Hatfield mine 
Financial Times; Aug 24, 2001
By MATTHEW JONES

Enron, the US power trader, has emerged as the leading contender to buy Hatfield colliery near Doncaster, which went into liquidation earlier this month with the loss of 220 jobs. 
The news follows the government's decision late on Wednesday to grant a four-week stay of execution to the mine by pledging Pounds 200,000 to keep it open on a care and maintenance basis. 
The 80-year-old pit, which appeared in scenes from the film Brassed Off, was the last producing mine in north Doncaster, once the hub of the English coal industry. 
It had been negotiating a contract to supply coal to Drax power station, owned by AES of the US, but went into liquidation on August 13 after failing to secure loans needed to expand production. Enron has been talking to Hatfield Coal Company, the mine's private operator, since before it collapsed. An observer close to the negotiations said Enron was continuing to show interest and had resumed coal supply talks with AES. 
UK Coal, Britain's largest deep mine operator, is paying Pounds 1m a year to keep the adjacent Thorne colliery mothballed. The group has said it may develop the site as a replacement for Selby colliery, which is due to close by the end of the decade, but it is under pressure to cut costs and has ruled out a purchase of Hatfield. 
The mine had been due to be capped and abandoned on Tuesday. But Brian Wilson, energy minister, agreed on Wednesday to provide Pounds 50,000 a week for the next four weeks to keep the mine shafts ventilated and drained. The decision is thought to be the first time public money has been used to delay the closure of a privately owned mine since state coal assets were sold off in 1994. 
Industry experts believe Hatfield has reserves of 15m-23m tonnes of coal but would need investment of about Pounds 45m to access them. Ian Roxburgh, chief executive of the Coal Authority, which has assumed ownership of the underground workings, said: "Once maintenance of mine shafts ceases they would quickly fill up with water and gas, making the costs of re-starting production prohibitive." 
The official receiver disclaimed its lease for the mine on Wednesday but retained ownership of the surface site and responsibility for disposal of the company's assets. Sanctions threat, Page 6 
Copyright: The Financial Times Limited

COMPANIES & FINANCE THE AMERICAS: Returning hero fights to stop free-fall INTERVIEW KENNETH LAY, ENRON CHAIRMAN AND CHIEF EXECUTIVE: 
Financial Times; Aug 24, 2001
By SHEILA MCNULTY

When Kenneth Lay, chair-man and chief executive of Enron, returned to the top job at the US energy group, he was touched to receive a standing ovation from the 1,400 staff at his first meeting with employees. 
The level of support for Mr Lay's second stint in the top job has encouraged him, and he vows to leave the company "substantially bigger and more profitable" when he resigns as CEO in 2005. 
During his first 15-year stint at the top, Mr Lay transformed Enron from a regional natural gas pipeline company into a leading electricity, natural gas and communications company. 
Market capitalisation rose during his tenure from Dollars 2bn to Dollars 70bn. The company reported revenue of Dollars 101bn in 2000. 
Mr Lay's replacement, Jeffrey Skilling, lasted just six months in the job until he resigned last week for "personal reasons". 
Mr Lay said in an interview with the Financial Times that he believed Enron stood a good chance of continuing to grow 20 per cent a year, enabling it to double its net income about every three and a half years. 
He plans to appoint one or two top executives, fairly quickly, to the Office of the Chairman to help guide that growth. The appointee(s) will be on the shortlist of those who eventually will be considered for CEO. 
Mr Lay is considering Stan Horton, chairman and CEO of Enron Transportation Services; Mark Frevert, chairman and CEO of Enron Wholesale Services; Greg Whalley, president and chief operating officer of Enron Wholesale Services; David Delainey, chairman and CEO of Enron Energy Services; and John Sherriff, president and CEO of Enron Europe. 
"There is no big rush on this CEO appointment," Mr Lay says. "The board has made it very clear that we are going to take our time. I have extended my contract through 2005. I'll stay that long if needed. I'll stay longer if needed." And he will continue to review the ranks for the best replacement during that period. 
In the meantime, Mr Lay will have to grapple with controversies in its Indian, California and broadband operations. 
Enron is embroiled in a legal dispute with an Indian state electricity board over a power project, India's biggest foreign investment. It is among several energy traders facing questions in California over accusations of a manipulation of power prices - charges it denies. 
The group has also been hit hard from poorly performing broadband operations. But perhaps even more pressing is the stock price, which has fallen more than 55 per cent since the start of the year. 
Mr Lay said he would do the best he could to stop the free-fall, spending as much time as possible meeting portfolio managers and analysts to make sure people understand the growth potential of the company. 
Enron's main profit centre is its North American operations, where its energy wholesale business is key. But he notes the company is transferring its business model to other countries in Europe and eventually to Japan, as well as to industrial markets, including coal, steel and pulp and paper. 
Because of the company's rapid growth, many analysts say they remain confused about facets of the new "Enron model" - something Mr Lay is eager to rectify. 
"The business model is basically a matter of physical volumes delivered," Mr Lay says. "Physical volumes of natural gas, electricity, coal, metals, whatever, but physical volumes delivered . . . We're doing the very same thing that the physically integrated company is doing, but we're doing it, in many cases, with other people's assets." 
Those assets include everything from pipelines to power plants to transmission lines to coal freighters. Enron owns some and leases or rents others. 
"The customer wants to buy so much natural gas or electricity, and we deliver it," Mr Lay says. "And we deliver it at the lowest possible price and in the most reliable way possible. That is how we are competitive." 
Copyright: The Financial Times Limited

NATIONAL NEWS: HSE statement on fatal blast NEWS DIGEST 
Financial Times; Aug 24, 2001
By PRESS ASSOCIATION: AGENCY MATERIAL

HSE statement on fatal blast 
A massive power station blast in which three men died and a fourth was badly injured happened during a planned maintenance operation, the Health and Safety Executive said today. 
The HSE has completed the first stage of its investigation into the fatal explosion at the Teesside power station, owned by Enron Power Operations, earlier this month, and revealed it happened while voltages were adjusted in the plant's electrical system. 
A statement released by the HSE said: "Throughout the investigation, HSE inspectors have had the full co-operation of Enron managers and employees. 
"The generation of electricity resumed on August 19 and HSE is now preparing a report for the coroner to assist with the preparation of the inquests." 
A final decision on whether to bring any criminal proceedings will not be made until after the inquests are completed. 
A statement continued: "The next stage of HSE's investigation will include consideration of whether there are lessons which can be learned by the electricity industry to minimise the risk of this type of incident happening again elsewhere." 
The Teesside site, which opened eight years ago, is a 1,875 MW plant which generates electricity for the National Grid using North Sea gas. Press Association 
Copyright: The Financial Times Limited


Enron's Lay Raises Possibility of Sanctions on India (Update1)
2001-08-24 02:26 (New York)

Enron's Lay Raises Possibility of Sanctions on India (Update1)

     (Adds analyst's, negotiator's comments in eighth, 12th
paragraphs.)

     Houston, Aug. 24 (Bloomberg) -- Enron Corp. Chief Executive
Kenneth Lay said the Indian government could be subject to U.S.
sanctions unless the top energy trader and its partners recover $1
billion they invested in an Indian utility, the Financial Times
reported.

     Enron owns 65 percent of Dabhol Power Co., which runs the $3
billion power plant, India's biggest foreign investment. It is
owed $64 million by the Maharashtra State Electricity Board, its
sole customer, in unpaid bills for 8 months. The board in May
stopped buying power, saying it's too expensive.

     ``Ken didn't make any kind of threat,'' Enron spokesman Mark
Palmer said, adding that Lay was responding to a question about
what might motivate the Indian government to help break the
deadlock.

     Palmer said the company hasn't been in contact with the Bush
administration regarding any form of U.S. sanctions against India.
Spokesmen for both the White House and the State Department said
they knew of no request from Enron for such action to be taken.
Lay was a major donor to the Bush campaign.

     Enron began looking to sell its stake in the project after
the negotiation panel failed to get other buyers for its power.
Eight Indian states said they would buy electricity but at less
than half the price charged by Dabhol. Enron said it has invested
$875 million in the project and is ready to sell to the government
its stake at cost.

     ``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,'' Lay said in the Financial Times.

                          Nuclear Weapons

     Enron spokesman John Ambler said that while Lay stopped short
of saying that India has expropriated Enron property, the company
would consider it expropriation if it was denied recovery of its
costs after asset values were diluted by government action.

     ``First, Enron's assets haven't been expropriated yet. And
expropriation is not even allowed under the Indian law,'' said
R.K. Pachauri, director at Tata Energy Research Institute. ``The
power purchase agreement has provisions to solve any dispute. You
can't toss that (the contract) aside.''

     Pachauri was on a five-member panel that suggested ways to
reduce Dabhol's power tariff. He quit after the committee was
asked by the Maharashtra state government to renegotiate the
project as well.

     The Clinton administration imposed sanctions against India
and Pakistan in May 1998, after the two traditional enemies tested
nuclear weapons within days of each other.

     The sanctions were partially lifted in late 1999. The
Washington Post quoted Deputy Secretary of State Richard Armitage
saying earlier this month that the Bush administration and
Congress were planning to begin work in September to accelerate
lifting the sanctions. No final decision has been announced.

     ``The dispute (between Enron and Maharashtra) is a commercial
one and has nothing to do with the economic sanctions'' on India,
said Madhav Godbole, who headed a committee set up to resolve the
payment dispute. ``The parties are governed by the power purchase
agreement'' that provides for arbitration as a way to solve the
dispute.

     Shares of Houston-based Enron fell 30 cents to $36.96. They
have fallen 56 percent so far this year.



Enron Plans To Buy UK Hatfield Colliery - FT

08/24/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

LONDON -(Dow Jones)- Enron Corp. (ENE) is interested in buying Hatfield, a U.K. colliery near Doncaster in north Yorkshire, and is in talks with AES Corp. (AES) to supply coal to that company's 3,870-megawatt Drax plant, the Financial Times reported Friday. 
Enron declined to comment on the report.
Industry experts estimate that reserves at Hatfield, totaling 15-23 million metric tons, will cost GBP45 million to exploit. 
Hatfield is an 80-year-old mine that was due to be closed Tuesday, but was rescued by government funds to be maintained for a restart. Before going into liquidation on Aug. 13, its operators were negotiating a contract to supply coal to Drax. 
U.K. Coal, the largest operator of deep mines in Britain, may develop a mothballed colliery at Thorne, but pressure to cut costs has ruled out a purchase of Hatfield. 
Coal has enjoyed a renaissance in the U.K. power industry this year as the price of gas, the fuel with which it competes most directly, has stayed stubbornly high. 
In addition, many of the larger coal-fired plants subdivide into units that offer more flexibility than corresponding gas-fired plant. These are consequently able to dominate the higher-value end of the power market under the New Electricity Trading Arrangements introduced in March. 
Officials at AES did however confirm contact with Enron over Hatfield. 
"We have a strong relationship with Enron and they have, in a preliminary discussion, expressed interest in long term deals to supply coal, if they buy Hatfield," said John Levons, Commercial and Fuel Business Leader at Drax. 
"We can contract with domestic producers because the plant is fully fitted with desulphurization equipment, so the higher content of sulphur doesn't affect us as much," he added. 
Since AES purchased the plant one year ago, around 90% of Drax's coal comes from domestic sources, and all new contracts are with domestic producers. 
Drax is a modern station that could be operational for 30 to 40 years. 
-By Sarah Spikes, Dow Jones Newswires; +44-(0)20-7842-9345; sarah.spikes@dowjones.com

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

Orange County, Calif., Real Estate Trust Is in Front of Energy Conservation
Kate Berry

08/24/2001
KRTBN Knight-Ridder Tribune Business News: The Orange County Register - California
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM)

Tony Duplisse is pointing at perhaps the ugliest light fixture ever to illuminate a palm tree. 
"There's no light coming out, and it's just not very pleasant to look at, said Duplisse, standing near the swimming pool at Toscana, an apartment complex in Irvine where rents run $1,200 to $1,800 a month.
Duplisse has a list of 2,000 light bulbs, fixtures and signs on the 566-unit property that will be replaced or tossed in the trash. 
"Look at this," he said, pointing to an innocuous exit sign, lighted red at high noon. "We've got 350 signs like this, and this is just one property. 
It's unbelievable. 
Conservation by consumers and businesses is one of the primary reasons California has breezed through the summer with no rolling blackouts. 
That's why companies like Chicago-based Equity Residential Properties Trust , whose chairman is billionaire Sam Zell, created a funky new job -- "utility czar" -- putting one man in charge of trimming millions of dollars from the company's power bills. 
"I didn't set out to be the utility czar," said Duplisse, an Oklahoma native and former semipro rugby player. "When my boss sent out the e-mail naming me utility czar, I knew I was in for an endless barrage of ribbing." 
Duplisse got tapped for the job this year after he saved the real estate investment trust a tidy sum on water bills at 75 properties in Arizona. 
Other large apartment owners in Orange County, including ArchStone Communities and Western National Group, both of Irvine, are taking similar steps to cut costs. 
When politicians and big energy users touted the 1996 deregulation law, they said it would lower energy costs. But that hasn't happened in California. Instead, deregulation has pushed prices higher and been a boon for a burgeoning industry known as energy services. 
The same generators and marketers that sell or swap power with California -- Enron Corp., Duke Energy and Dynegy Inc. -- have created separate business units to sell products and advice to corporations, hotels, apartment complexes and retail chains that want to lower energy costs. 
"This is just the beginning of the industry," said Craig Goodman, president of the National Energy Marketers Association, a trade group that lobbies for full deregulation of the energy and natural-gas markets. "There are strong margins and savings in cutting energy costs, both for the energy marketers and for companies." 
Duplisse, who previously worked for Walden Residential Properties in Dallas, believes the energy crisis, which is sweeping the country along with hot weather, forces conservation. "If you combined lighting, gas and water savings over the last few years, we'd be saving hundreds of thousands of dollars," he said. 
During a one-day stop in California recently, Duplisse toured nearly 14 properties owned by Equity Residential, driving from Burbank to Valencia to Bakersfield, then back to Los Angeles and Orange County. The company owns seven Orange County properties, including Merrimac Woods in Costa Mesa, Regency Palms in Huntington Beach and Villa Solana Apartments in Mission Viejo. 
With 78 properties in Southern California, Equity Residential also is cashing in on rebates paid by taxpayers for installing energy-efficient lights. 
As utility czar, Duplisse takes bids from contractors who do the work of replacing lights and changing fixtures. For example, by replacing just one halogen light in a swimming pool -- which are energy gluttons -- with a metal halide, a high-powered fuel source, the company saves $30 a year. 
The new light also lasts longer and typically generates more light. 
Duplisse's team of five managers-turned-energy experts track the number of lights at each property, the wattage levels, and the savings achieved by replacing them. 
Multiply those savings by thousands of lights, and the money saved will probably make the risk-averse shareholders of Equity Residential sit up and take notice. 
"In terms of the scope of energy, there's nothing bigger," Duplisse said, explaining how replacing light bulbs at Toscana will cut $87,000 from the property's yearly electricity bill. 
After California, the energy team will move on to the Pacific Northwest in an effort to get ahead of an expected natural-gas crisis there this winter. 
The team expects to canvass the company's 983 properties in 36 states over several years. 
What does he think of the deregulation? Duplisse shakes his head. 
"I'm real apolitical. I can't make heads or tails of it," he said. Then he held up a copy of USA Today, with a blaring headline: "Energy Crisis? What Energy Crisis?" 
"We're smart enough to know better," he said.

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

Energy Company Begins Construction of Power Plant in Bakersfield, Calif., Area

08/24/2001
KRTBN Knight-Ridder Tribune Business News: The Bakersfield Californian
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM)

Calpine Corp., the San Jose-based power company, said Thursday construction is under way for the 750-megawatt Pastoria Energy Center in Kern County. 
Thirty miles south of Bakersfield, the $400 million project is located on property leased from the Tejon Ranch Corp. The project is expected to be on-line in the summer of 2003, the company said.
"Pastoria is the latest in a series of Calpine projects intended to provide near- and long-term solutions to the power crunch in the West," said Calpine senior Vice President Jake Rudisill. The plant becomes the fourth largest power plant now under construction in Kern, which has ample land in close proximity to the state's transmission grid. Pastoria would supply power for 750,000. 
The California Energy Commission licensed the Pastoria project in December 2000, and construction activities may require as many as 800 workers. The facility will feature three General Electric gas combustion turbines in combined-cycle with two steam turbines. The plant previously was proposed by Enron Corp. before Calpine took it over. 
Once the facility is on-line, Calpine will employ 30 to 35 full-time professionals with an annual payroll in excess of $1.7 million. Calpine will manage all aspects of the energy center, including engineering and design, construction, fuel supply, operations, and power marketing. 
Calpine has launched the largest power generating initiative in California. Building upon an existing 2,400 megawatts of in-state generation, Calpine has 2,030 megawatts of energy centers under construction and has announced the development of almost 3,300 megawatts of additional California generation capacity. 
By the end of 2005, the company says, Calpine will generate 12,000 new megawatts in California.

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


City Light & Power Executives Say Company May Bid For Edison International
By Jason Leopold and Andrew Dowell

08/24/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

DOW JONES NEWSWIRES 
LOS ANGELES -- Privately owned City Light & Power Inc., a company that operates and maintains the street lights in Long Beach, Calif., is considering making a bid for Edison International, parent company of the state's second largest utility, City Light & Power executives said overnight Thursday.
Denver-based City Light & Power could announce its intentions as soon as Monday. Chief Executive William F. Simmons flew to Sacramento Thursday to begin lobbying California lawmakers, the executives said. 
City Light & Power is being advised by Bear Stearns and Salomon Smith Barney, which have valued Edison International (EIX) at $5.6 billion, or $17.18 a share, executives said. 
City Light expects to bid for the entire company -- which includes insolvent utility Southern California Edison and unregulated unit Edison Mission Energy -- although it could sell off some assets later. City Light & Power is investigating whether it could raise financing for the transaction, which would have to be done in cash. 
Edison had a market cap of $4.62 billion, or $14.18 a share, at Thursday's close. 
In 1999, City Light & Power teamed up with Enron Corp. (ENE) to support a plan by City Manager Henry Taboada for Long Beach to buy Edison's distribution system. The city ultimately decided instead to negotiate a better deal with Edison. 
In the mid-1990s, City Light won a $60 million contract to operate and maintain the city of Long Beach's street lights for 25 years. Long Beach is Southern California Edison's largest service area, with 175,000 customers generating roughly $250 million a year for the utility in 1999. 
Enron made an aborted effort to compete for retail customers in California in the late 1990s. Enron spokeswoman Karen Denne said the company wasn't involved in any plan to bid for Edison. 
An Edison spokesman said the company wouldn't comment on the proposed plan. 
Write to Jason Leopold at jason.leopold@dowjones.com 
Copyright (c) 2001 Dow Jones & Company, Inc. 
All Rights Reserved

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

Finding out cause of blast

08/24/2001
The Northern Echo
03
Copyright (C) 2001 The Northern Echo; Source: World Reporter (TM)

DETAILS have been officially released on the cause of the fatal electrical explosion at the Enron power station which killed three workers. 
Health and Safety Inspectors have completed the first stage of their investigation into the explosion on August 8 at the Teesside site.
The investigation has revealed that during a planned maintenance programme, part of the power station was shut down and the electrical power was redistributed to support the rest of the station. 
The voltages in one of the electrical systems was adjusted so a circuit breaker could be closed. 
At the time of the shutdown, employees were working to alter the voltage across a large transformer and the two operations at the same time resulted in an explosion and fire. The plant was shut down and did not resume producing electricity until Sunday, August 19. 
The next stage of the investigation will consider whether any lessons can be learnt from the accident to prevent it happening again. 
One man is still in hospital with serious burns following the explosion.

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

India Govt Gives Lenders 2 Wks To Resolve Enron Dispute

08/24/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI (AP)--The Indian government has given financial institutions two weeks to develop a plan to resolve the dispute with Enron Corp. (ENE) over India's largest foreign investment project, newspapers reported Friday. 
Houston-based Enron has said it wants to sell its 65% stake in the 90% complete Dabhol Power Co. project for a minimum of $1 billion.
The $2.9 billion project has been idle since May 29, when its only customer, the Maharashtra State Electricity Board, stopped drawing power and paying bills because of what it said were exorbitant prices established in a seven-year-old contract. 
Finance Secretary Ajit Kumar met with executives of the Industrial Development Bank of India and other banks on Thursday and gave the deadline for a plan to avoid the case ending up in an international arbitration court, The Financial Express and Business Standard reported. 
The Express said the plan is to include an out-of-court settlement with lenders and promoters, rescheduling of loans to make the project attractive to new investors, and lower prices for electricity produced by the plant. 
The Express quoted the development bank's executive director, V.P. Singh, as saying the lenders would act as intermediaries between the seller and prospective electricity buyers, to get the production restarted. 
Enron has said the sellout deal must involve no loss to the Houston company, or to it's two co-investors, General Electric Co. (GE) and Bechtel Corp., which each have a 10% stake in the 740-megawatt plant that produces electricity from naphtha. 
The state utility holds a 15% stake in the project. 
Construction has halted on the second phase, to run on liquefied natural gas. The project, including an LNG terminal 210 miles south of Bombay, was designed to generate 2,184 megawatts as the world's largest natural gas-fired power plant.

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


Indian government gives lenders two weeks to resolve Enron power company dispute, to avoid arbitration

08/24/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

NEW DELHI, India (AP) - The government has given financial institutions two weeks to develop a plan to resolve the dispute with Enron Corp. over India's largest foreign investment project, newspapers reported Friday. 
Houston-based Enron Corp. has said it wants to sell its 65 percent stake in the 90-percent complete Dabhol Power Co. project for a minimum of dlrs 1 billion.
The dlrs 2.9 billion project has been idle since May 29, when its only customer, the Maharashtra State Electricity Board, stopped drawing power and paying bills because of what it said were exorbitant prices established in a seven-year-old contract. 
Finance Secretary Ajit Kumar met with executives of the Industrial Development Bank of India and other banks on Thursday and gave the deadline for a plan to avoid the case ending up in an international arbitration court, The Financial Express and Business Standard reported. 
The Express said the plan is to include an out-of-court settlement with lenders and promoters, rescheduling of loans to make the project attractive to new investors, and lower prices for electricity produced by the plant. 
The Express quoted the development bank's executive director, V.P. Singh, as saying the lenders would act as intermediaries between the seller and prospective electricity buyers, to get the production restarted. 
Enron has said that the sellout deal must involve no loss to the Houston company, or to it's two co-investors, General Electric and Bechtel Corp., which each have a 10 percent stake in the 740-megawatt plant that produces electricity from naphtha. 
The state utility holds a 15 percent stake in the project. 
Construction has halted on the second phase, to run on liquefied natural gas. The project, including an LNG terminal 210 miles south of Bombay, was designed to generate 2,184 megawatts as the world's largest natural gas-fired power plant. 
(lak)

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

RWE interested in Enron's Azurix or E.ON's Gelsenwasser - report

08/24/2001
AFX News
(c) 2001 by AFP-Extel News Ltd

ESSEN, Germany (AFX) - RWE AG is interested in buying Enron Corp's Houston- based water unit Azurix or E.ON AG's Gelsenwasser AG, reported Handelsblatt citing sources close to the company. 
RWE is the world's third largest water company, with 50 mln customers, behind French companies Suez Lyonnaise des Eaux and Vivendi SA, the paper said.
If RWE bought Azurix, which has nearly 1.5 bln dm of sales, it would strengthen its market position in the US, in which it is already represented through its unit Thames Water PLC. 
However, RWE would also have to give up Azurix's UK unit Wessex Water, said Deutsche Bank analyst Lueder Schumacher. The British regulatory authorities would not welcome any further expansion by RWE into the UK, although as a consequence, Enron would have to lower the price for Azurix significantly, Schumacher said. 
RWE has already said it wants to expand its international activities in the short term. 
"We expect that water will become the most profitable area in the group and will contribute the largest amount to earnings," chief financial officer Klaus Sturany said to analysts. 
RWE is also considering as a second possibility, the takeover of E.ON's Gelsenwasser as it believes the cartel authorities would not raise any objections because of the fragmented nature of the German market. 
E.ON itself was interested in Azurix a year ago but was scared off by the high price wanted by Enron, Handelsblatt said. E.ON is also more interested in strengthening its electricity and gas business at the moment, the paper added. 
das/ob For more information and to contact AFX: www.afxnews.com and www.afxpress.com

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



India ONGC Confirms Bid For Enron Oil Field Stake

08/24/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

SINGAPORE -(Dow Jones)- India's state-owned Oil & Natural Gas Corp. (P.ONG) confirmed Friday that it has bid for U.S. energy major Enron Corp.'s (ENE) 30% stake in the Panna-Mukta and Tapti oil and natural gas fields. 
A New Delhi-based ONGC spokesman declined to say how much it had bid, although a report from the Press Trust of India earlier this month said ONGC had bid US$400 million.
"As far as our interest is concerned, we made a bid," the spokesman told Dow Jones Newswires. 
However, he added that ONGC's bid fell short of what Enron had anticipated. "Their expectation is higher," he said. 
Enron is unlikely to settle for anything less than US$600 million for its stake in the venture, the PTI report said. 
The spokesmen for both India's Reliance Industries Ltd. (P.REL) and ONGC said their companies had expressed interest in buying out Enron in the Panna-Mukta and Tapti oil and gas fields, but declined to give details about the price they were willing to pay, the report added. 
U.S. energy firm Marathon Oil Co. is also keen on acquiring Enron's stake in the two oil and gas fields, the report said. 
ONGC holds a 40% stake in the fields, which currently produce around 29,000 barrels of crude oil a day. The remaining 30% is owned by Reliance. 
-By Sri Jegarajah, Dow Jones Newswires; 65-415-4066; sri.jegarajah@dowjones.com -0- 24/08/01 09-02G

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

INDIAN LENDERS TO COME UP WITH PACKAGE FOR DABHOL POWER

08/24/2001
Asia Pulse
(c) Copyright 2001 Asia Pulse PTE Ltd.

NEW DELHI, Aug 24 Asia Pulse - A viable package will be worked out within a fortnight by leading lenders for early settlement of the issue over the Enron-promoted Dabhol Power project. 
The committee of lenders Industrial Development Bank of India (IDBI), ICICI and State Bank of India (SBI), would also prepare a "roadmap" for Dabhol Power Company (DPC) after the US promoter exits from the US$2.9 billion project.
"FIs will come out with a package in a fortnight," the Power secretary, A K Basu, told reporters after the meeting of lenders with Finance Secretary Ajit Kumar and other government officials. 
(PTI) 24-08 1555

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

RWE May Make Bid for Azurix, Gelsenwasser, Paper Says (Correct)
2001-08-24 01:59 (New York)


     (Corrects spelling of Azurix in first paragraph.)

     Essen, Germany, Aug. 24 (Bloomberg) -- RWE AG, the German
utility that bought Thames Water Plc for $9.8 billion last year,
may bid for Enron Corp.'s Azurix Corp. water unit, Handelsblatt
said, citing unidentified people close to the company.

     Buying the U.S. company would add about 1.5 billion deutsche
marks ($700 million) in annual sales, the newspaper said. Azurix
also owns Wessex Water of the U.K., which RWE would probably have
to sell for antitrust reasons, the paper said, citing analysts.

     RWE has said it's exploring acquisition possibilities in
Europe and overseas to expand outside its home market. Still, RWE
may also be interested in acquiring Gelsenwasser AG, a German
water company majority-owned by E.ON AG, Handelsblatt reported.

     Chief Executive Dietmar Kuhnt, whose Thames Water purchase
last year was the No. 2 cross-border European utilities takeover,
wants to take the company beyond the German power market, where
growth is limited and increasing competition hurt earnings.



Enron May Buy U.K. Coal Mine From Liquidator, FT Reports
2001-08-24 01:34 (New York)


     London, Aug. 24 (Bloomberg) -- Enron Corp. of the U.S., the
top energy trader, may buy Hatfield colliery, near Doncaster,
northern England, which went into liquidation on Aug. 13, the
Financial Times reported, citing an unidentified person close to
the situation.

     The mine was due to be capped and abandoned on Tuesday, but
on Wednesday the U.K. government agreed to provide a 200,000-
pound ($290,000) grant to keep the shafts ventilated and drained
for four weeks, the newspaper said.

     Hatfield Coal Co., the private company that owned the mine,
went into liquidation after failing to obtain loans needed to
increase output, the FT said. It had been negotiating a contract
to supply coal to the nearby Drax power station, owned by AES
Corp. of the U.S.

     Enron was talking to Hatfield before it collapsed and is
still interested, the paper said. It's restarted talks with AES.
U.K. Coal Plc, Britain's biggest coal-mining company, has ruled
out buying Hatfield, the FT said.

     Britain's power industry burned 18 percent more coal in the
first five months of this year, after a 14 percent rise in 2000,
according to David Price, who edits the magazine Coal U.K.


Enron's Portland General Seeks Power Rate Increase, WSJ Says
2001-08-23 23:54 (New York)


     New York, Aug. 23 (Bloomberg) -- Enron Corp.'s Portland
General is among utilities requesting that retail electricity
rates be increased as wholesale power prices drop in the western
U.S., the Wall Street Journal reported.

     Enron joins Puget Energy Inc. and Avista Corp. in asking that
prices be increased to cover the cost of supplying electricity
earlier this year, when wholesale prices soared. Lower wholesale
prices means they can't recoup those costs by selling excess
electricity they now have, the Wall Street Journal reported.

     Portland General bought power last winter for delivery in
late summer at $200 to $250 a megawatt hour, the paper reported,
citing Robin Tompkins, a lawyer for the company. Portland General
is asking for a record 30 percent increase in residential rates
and an increase of as much as 60 percent for businesses, the Wall
Street Journal reported.

     Avista is seeking a 36.9 percent increase for rates in
Washington and 14.7 percent for power in Idaho. Puget Energy's
Puget Sound Energy has asked proposed a plan to Washington state
regulators that would raise customers' bill and allow it to
recover $84 million for power bought this year.



USA: Enron says not seeking U.S. sanctions against India.

08/23/2001
Reuters English News Service
(C) Reuters Limited 2001.

HOUSTON, Aug 23 (Reuters) - U.S. energy giant Enron Corp. said on Thursday it had not approached the U.S. government with a view to obtaining sanctions against India in its dispute over the $2.9 billion Dabhol power plant project. 
"We have not pursued requests for any kind of government sanctions," said Enron spokesman John Ambler.
Ambler was commenting on a report in the online edition of the Financial Times that said Enron has threatened India with new U.S. sanctions unless the company and its partners get back the full $1 billion in costs they incurred in building the plant. 
"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," Enron Chairman and Chief Executive Officer Ken Lay told the newspaper in an interview. 
Enron said earlier this month that it would be willing to sell its majority stake in Dabhol Power Co. for $1 billion, which it said represented the costs that it and partners General Electric Co. and Bechtel Group Inc. had incurred. 
"If they try to squeeze us down to something less than cost then it basically becomes an expropriation by the Indian government," Lay told the Financial Times. 
Another Enron spokesman, Mark Palmer, said the company had not made any type of request for help in the dispute from the U.S. government, nor filed a formal complaint. 
"We may have briefed somebody but we have not asked for any help...Nothing has been expropriated," he said. 
Palmer said Lay has not discussed the Dabhol dispute with President George W. Bush. Lay has supported Bush since his days as Texas governor and has maintained close ties with him since he has been in the White House. 
Palmer said the comments attributed to Lay in the Financial Times were accurate but were made only after Lay explained at length that he believed Indian authorities had every reason to resolve the dispute to the satisfaction of both sides. 
Dabhol Power Co., in India's Maharashtra state, has been locked in a long and bitter dispute with its sole customer, a state-owned utility, over high tariffs and payment defaults. 
In a visit to India last month Assistant Secretary of State for South Asian affairs Christina Rocca said efforts were under way to scrap economic sanctions Washington imposed on India in 1998 in protest at India's nuclear tests, but she took a swipe at the country's investment climate. 
She took India to task for protectionist trade policies, its investment climate and its failure to provide an effective system for the protection of intellectual property. 
She said the problems clouding India's investment climate could be summed up with a five-letter word, "Enron". It would be difficult for international investors to view India favorably until the Dabhol dispute was resolved, she said.

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

Energy Glut Fears Put Power Firms' Finances In Focus
By Christina Cheddar
Of DOW JONES NEWSWIRES

08/23/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW YORK -(Dow Jones)- As energy industry insiders continue to fret that power generators may be building too many plants, bankers and other advisers have begun telling power companies to take a hard look at how they manage their cash. 
"Overcapacity" is the latest concern to befall the power industry, leading Barron's to suggest in a recent cover story that the country might be headed for an electricity glut.
Bankers working with major wholesale power companies are telling them to better manage their assets. In particular, the bankers are taking a hard look at how power companies plan to sell the power a new plant will generate. They're also looking at how cash is allocated to back-up credit exposure in the event a trading partner defaults or the market turns, as well as at how the companies fund projects at other business units. 
"As the giddiness of the 'build it and they will come' mentality fades, the ability to finance new power plants gets a little tougher," said Gerald Keenan, a partner at PricewaterhouseCoopers who specialized in energy company strategies. 
Banks are getting stingier with extending credit in light of the growing number of loan defaults, Keenan added, particularly in the telecommunications sector. 
So far, the more cautious environment isn't affecting largest power trading companies, but smaller energy trading companies may be having a harder time allocating capital among their businesses, advisers said. 
Some of the larger firms involved in power trading include Enron Corp. (ENE), American Electric Power Co. (AEP), Reliant Resources Inc. (RRI), PG&E Corp. (PCG) and Duke Energy Corp. (DUK). Smaller names with less than 1% market share include Sempra Energy (SRE), FPL Group Inc. (FPL), DTE Energy Co. (DTE) and Avista Corp. (AVA). 
"The internal competition for capital, which fuels the company's need for external capital, has been heightened by the significant amount of capital required for active energy trading businesses," said Nick Lewis, head of CIBC World Markets' power technology and growth investment banking business. 
And though rating agencies may not do formal research on some of the smaller power trading firms, they follow them enough to know the risks to these companies. John Kennedy, associate director of utilities, energy and project finance ratings at Standard & Poor's said smaller trading firms often lack the geographic diversity and asset bases that are associated with high credit quality. 
Cash Concerns And Transmission Woes, Too 

The news is even more dire for online energy exchanges such as Houston Street Exchange and RedMeteor.com because venture capital has dried up for these firms, and the companies are not yet profitable, said Michael Walker a senior manager at CapGemini Ernst & Young's energy trading practice. 
According to industry consultants, surprisingly large amounts of capital are required to build power trading businesses. 
"The problem is the (power) market is not particularly liquid or transparent," said Phil Giudice, a vice president at Mercer Management Consulting. He said energy trading companies, particularly the smaller ones, must always be careful about what market positions they are taking because the losses can tally quickly if the market turns. 
Additional risk also arises from bottlenecks that occur when transmission lines make it impossible to move power from one region to another. Those bottlenecks also make it more difficult to assess the supply needs of a region. 
"Increasingly, analysts and bankers are looking at companies in the generation and trading business who are more sophisticated in their ability to manage and optimize risk, and are viewing generation assets as financial options," said David Johnson, a partner at Andersen's risk consulting practice in Houston. 
Johnson said he expects the sophisticated traders will be the ones who will be successful in obtaining credit even as funding conditions become more strict. 
-By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar@dowjones.com

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