Enron: Withdrawing 300 MW From Summer Peaking Program
Wednesday, November 1, 2000 02:18 PM	

	
	
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	(Corrected 1:59 pm)
	
	NEW YORK (Dow Jones)--In response to new California power market rules 
proposed Wednesday by the U.S. Federal Energy Regulatory Commission, Enron 
Corp (ENE, news, msgs) has canceled some new generator projects it was 
discussing with the state's electric grid operator, Enron said. 
	The generators that are no longer financially feasible would have amounted to 
300 megawatts of new generation installed in California next spring, Enron 
said. The company, however, continues to negotiate other new generator 
projects with the California Independent System Operator. 
	The FERC Wednesday proposed limiting the California Power Exchange's price 
setting mechanism to $150 a megawatt-hour. The preliminary order could become 
a federal mandate by the end of the year, after the FERC takes comments from 
the public, or it could be modified. 
	Enron and 13 other companies, meanwhile, are in final negotiations with the 
ISO for the new peaking capacity for next summer. The ISO plans to pay a 
total of $255 million a year for three years to the power companies for 
installing the new generators, which the power companies will own. 
	In addition, California's three investor-owned utilities would pay the 
generators for any electricity the new generators produce. Pricing for the 
power would likely be based on the daily price set by the state-chartered 
CalPX. 
	"There's too much uncertainty that we would be able to recover the cost 
associated with those specific projects. For the purposes of making capital 
commitments, we view this as a $150 price cap," Enron's Mark Palmer said. 
	Earlier Wednesday, the ISO's chief operating officer, Terry Winter, expressed 
concern that FERC's proposed new rules could jeopardize some of the projects. 
	FERC's proposals Wednesday are the result of a two-month investigation of 
California's wholesale electricity market, where prices this summer were 
three times what they were a year earlier. To meet the state's rising demand 
for power, California's three utilities have paid billions of dollars more 
than anticipated to independent power producers in order to keep the lights 
on. 
	By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.com 
	Quote for referenced ticker symbols: EIX, ENE, PCG, SRE
	
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