ZE Power Group Inc.
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                          ENERGY VIEWS

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           Changing Perspectives on the Energy Industry
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                   ARE YOU ACTING PRUDENTLY?

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The Energy industry seems to be in a somewhat tenuous state. As
credit and accounting standards have come unglued the integrity
of the biggest players is called into question. Accounting firms
have claimed their accounting practices to be "creative and
aggressive" while their clients claim that there actions were
"not unethical", with apparent stress on the "not" part. One now
battered marketer has been specifically accused of "suspending
the rules of corporate ethics and perhaps even put corporate
morality on vacation".

Words like scandal, allegations, suspicions and cover-up have
become rank in the industry. CEOs have been asked to leave their
positions, executives have been forcibly terminated while another
commits suicide; and the investigations continue, including
criminal ones. The situation is sobering.

It seems like these last few years have been full of bubbles
bursting as we all collectively share a cold bath of economic
reality. The techs tumbled and the stock markets followed, the
electricity market (at least in California) imploded, real bombs
are exploding all over the place and the mightiest energy
marketer has fallen; and it won't be getting back up. The biggest
bankruptcy in US history will definitely leave its mark on all of
us. To think, we thought the troubles of PG&E and the Cal-PX was
big news.

Arthur Levitt, former SEC boss, suggests that "Enron's collapse
did not occur in a vacuum ... (and was) ... was partly a result
of a culture of gamesmanship among go-go businesses that believe
it's okay to bend the rules". This is a fundamental folly of the
industry as people with limited energy knowledge (and integrity) 
play games with other peoples money and not understanding or
caring about the consequences. It is not surprising that the
stock value of other marketers is also beginning to plummet.

So the question of the day is: are you acting prudently? It is
insufficient to assume that might is right or size is protection.
Contracting with the largest does not secure your contract; no
more than using the largest accounting firm ensures your books
are right. We all leave a paper trail and that trail is visible
in a moonless night during a California forced blackout, even if
you order your accounting firm to delete the emails and shred the
"evidence".

In working with our clients, we have come to see that information
does not receive its due respect. Perhaps it's the fault of the
Internet and the information overload factor, but not respecting
information is costly. We have witnessed "lost deals" and poor
follow-up. We have seen the cost of not rigorously following
corporate trade, risk credit procedures and surely we have seen
the result of blind faith in the big guys. To this end we
actively support our clients to equip themselves to effectively
manage large amounts of market information.

Energy market participants, more so than perhaps other
industries, must heed the requirement for prudence. For many
prudence is a forgotten tradition from the franchise days.
Prudence in competitive markets, which all energy markets are to
some degree, means a lot more now than it did in the franchise
era. We are all under the purvey of the public, the investor and
the regulators. Not to recognize this fact can have severe
economic ramifications. Prudence now means having trade, risk and
credit policies and procedures, having the tools to manage and
analyze data and foremost, developing the ability to internally
make the right judgment calls.

Call us to see how ZE PowerGroup can help your organization to
manage its operation in uncertain markets.  For more information
visit http://www.ze.com or call Paul Seo at 604-244-1672 or by 
email mailto:paul@ze.com

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      Having the Information and Doing Nothing About It
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It seems evident that Anderson, the government and Enron itself,
had privy to a lot of financial data that clearly indicated the 
eventual collapse of Enron.

*  Andersen contemplated dropping Enron as a client nearly one 
   year ago because of concerns due to Enron's accounting
   methodology.
*  The White House oversaw a study in October 2001 of economic
   repercussions of an    Enron collapse.
*  Sherron Watkins, a senior Enron Executive, wrote to Enron's
   chairman, Ken Lay, "I am incredibly nervous that we will
   implode in a wave of accounting scandals." last August 2001"
*  The writing was clearly on the wall but most were unable to
   react to the intelligence. It    all comes down to the
   lemming factor; we can see the cliff but just cannot
   avoid jumping.

Many in the industry suffer badly from the chronic inability to
react in a timely manner. This failure often results in severe
negative economic impacts. Either policy is not in place to allow
affirmative reaction or staff does not adhere to the policies
that exist.

Good corporate policy is the corner stone of sound market
participation

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                    About ZE Energy Views
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In our continuous efforts to serve the industry, we have
developed "Energy Views" as a platform to communicate with the
industry on a regular basis in order to relate issues and views
we believe to have industry wide relevance. We hope you find
benefit from reading the emails. Any and all feedback is welcome.


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                       ZEPG Products
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ZE Market Analyzer & Data Management Suite

http://www.ze.com/pdf_documents/data-manager_suite.PDF
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Fully customizable automated data importers and a sophisticated
web based market analysis tool used to view, extract and analyze
industry data.


ZE Forward Price Views

http://www.ze.com/pdf_documents/FPC_Jan29-2002.PDF
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Mid and long-term Energy Forward Price Views that support
decision processes by providing access to rigorously developed
probabilistic price views and the market expertise embedded in
them.


ZE Credit Risk Manager

http://www.ze.com/pdf_documents/CRM_Jan29-2002.PDF
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Determines corporate specific counter-party credit limits as well
as clients' own credit(transactional) limits, through analysis of
a series of industry specific parameters.


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                   About ZE PowerGroup Inc.
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ZE PowerGroup is a strategic consulting firm that was
incorporated to serve the emerging needs of an electric industry
in transition. ZE PowerGroup now offers a full spectrum of
services, from strategic planning and implementation through to
technical analysis and energy trade and transaction software
development.

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