---------------------- Forwarded by Mark Guzman/PDX/ECT on 12/12/2000 12:06 
PM ---------------------------


Carla Hoffman
12/12/2000 06:28 AM
To: Tim Belden/HOU/ECT@ECT, Robert Badeer/HOU/ECT@ECT, Jeff 
Richter/HOU/ECT@ECT, Phillip Platter/HOU/ECT@ECT, Mike Swerzbin/HOU/ECT@ECT, 
Diana Scholtes/HOU/ECT@ECT, Sean Crandall/PDX/ECT@ECT, Matt 
Motley/PDX/ECT@ECT, Mark Guzman/PDX/ECT@ECT, Tom Alonso/PDX/ECT@ECT, Mark 
Fischer/PDX/ECT@ECT, Monica Lande/PDX/ECT@ECT
cc:  
Subject: DJ Bonneville: Elec Emergency Putting Water System At Risk; DJ T 
ransalta Stops Pwr Sales To Cal-ISO; Questions Credit


---------------------- Forwarded by Carla Hoffman/PDX/ECT on 12/12/2000 06:37 
AM ---------------------------
   
	Enron Capital & Trade Resources Corp.
	
	From:  "Pergher, Gunther" <Gunther.Pergher@dowjones.com>                      
     12/12/2000 06:23 AM
	

To: undisclosed-recipients:;
cc:  
Subject: DJ Bonneville: Elec Emergency Putting Water System At Risk; DJ T 
ransalta Stops Pwr Sales To Cal-ISO; Questions Credit


13:16 GMT 12 December 2000 DJ Bonneville: Elec Emergency Putting Water
System At Risk
(This article was originally published Monday)

   By Mark Golden
   Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--The Bonneville Power Administration - which manages
the federal hydroelectric generating system in the northwest U.S. - may not
have sufficient water to meet its power and fish obligations this winter and
spring, a spokesman said Monday.
"The way it's shaping up now, we are very concerned. We've had one of the
driest Novembers on record, and a very dry December," said Bonneville
spokesman Mike Hansen.
"Given the situation in California and that we are currently having to run
the system outside of the guidelines established by biological opinion (for
fish in the river), we have some concerns for later on this winter for power
and for fish flows this April," Hansen said.
Due to the strains on the system, Bonneville has told the California
Independent System Operator and northwest utilities that Bonneville can
supply extra electricity only in emergencies where rolling blackouts are
otherwise imminent. Thursday, Bonneville rushed to California's rescue only
after the ISO declared its first-ever Stage 3 emergency, and blackouts were
avoided.
Water in the federal system's main storage reservoir, Coulee dam, is at
1,272 feet. The maximum capacity of the reservoir is 1,290 feet, and the
project is incapable of generating electricity when the water level falls to
1,208 feet.
Even though the current storage level is much closer to full than empty, the
normal operations target something close to a full reservoir by the end of
December. Grand Coulee storage has fallen 14 feet since Nov. 1, during a
time when it is normally rising.
What's more, every gallon of water that rushes through the system's turbines
generates a lot more electricity when it falls from higher elevations than
from lower ones, so Grand Coulee is losing efficiency as it drafts down.
"Drafting at Grand Coulee and Libby dams doesn't mean we won't be able to
meet our obligations for fish flow. But it presents a riskier operation.
Everytime you draw them down, and combine them with cold weather, the
probability of meeting those flow requirements drops," Hansen said.
Normally, Bonneville is able to buy excess electricity from California
utilities during the fall. However, California's economic boom has raised
electricity demand there so much that the state has become a perpetual
importer.
Water levels in Grand Coulee and the smaller federal dams are normally
drafted down from January to April to generate power and make room for the
coming spring snow melt.
"We have certainly been drafting more than we had planned for at this
point," Hansen said.
If temperatures fall so low that regional utilities cannot meet their
customers demand for electric heating, Bonneville will step in to avoid
blackouts. But each time that happens in the early part of the heating
season, it raises the possibility that Bonneville will be unable to help in
February or March.
Bonneville manages its system to achieve many goals: avoiding floods, trying
to improve fish populations, recreation and power, which has the lowest
priority except in an electric supply emergency. The hydropower operator is
pretty much always concerned about meeting those various and often contrary
obligations.
On a five-alarm scale, "We run at about two-and-a-half alarm averaged over
the year. If it gets to be as cold as the weather forecast says, we'll be in
a four- and-a-half or five real quick," Berry said
Bonneville is losing out financially by selling electricity to utilities and
the California. Under its federal tariff, it cannot ask for more than $68 a
megawatt-hour from the ISO, for example, though the ISO usually offers
$250/MWh.
But wholesale market prices skyrocketed to $3,000/MWh Friday in the
Northwest, and they have been running above $250/MWh for more than a week.
Bonneville may find itself buying power in March at extremely high market
levels in a couple of months - because it is being forced to rescue
California so frequently now.
The difference could mean a hundreds-of-million-dollar federal subsidy for
California, even though Bonneville's priority obligation is to Northwest
utilities according to its federal charter.
As a result, Bonneville has also provided the ISO with electricity under
exchange deals, whereby the ISO will supply Bonneville with megawatts at
some later time. Those deals could make the ISO's already strained financial
situation worse if power market prices continue to rise through the winter.
By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.com
   (END) Dow Jones Newswires  12-12-00
1316GMT Copyright (c) 2000, Dow Jones & Company Inc
13:15 GMT 12 December 2000 DJ Transalta Stops Pwr Sales To Cal-ISO;
Questions Credit
(This article was originally published Monday)
LOS ANGELES (Dow Jones)--Transalta, an investor-owned utility based in
Alberta, Canada, stopped selling power to the California Independent System
Operator at 6 p.m. PST Monday (0200 GMT Tuesday) because it fears the grid
operator won't be able to pay, market sources told Dow Jones Newswires.
For about eight hours Monday, Transalta sold the ISO 400 megawatts of power
from its Centralia generating station in western Washington state at $1,000
a megawatt-hour, the source said. The 1,000 MW will cost the ISO about $3.2
million.
The cost of producing electricity at the 650-MW Centralia plant is about
$14-$15/MWh, company officials said.
Because the ISO, which manages electricity reliability in the state, was
buying a large quantity of power in the spot market, Transalta questioned
the ISO's credit-worthiness.
A Transalta spokesperson wasn't immediately available for comment Monday.
Transalta could resume sales to the ISO at a later date. Representatives
from the ISO wouldn't comment.
To illustrate just how dire the supply situation in California is, other
power suppliers, including British Columbia Hydro & Power Authority (X.BCH)
subsidiary PowerEx, have requested that the ISO secure a letter of credit
from one of the state's three investor-owned utilities before any
transactions take place. Last week, Edison International (EIX) unit Southern
California Edison did just that, issuing a letter of credit to PowerEx for
$23 million.
Steve Maviglio, press secretary to California Gov. Gray Davis, confirmed
with Dow Jones Newswires that he received a telephone call from Transalta
saying the company planned to stop selling power to the grid operator Monday
evening.
The ISO has since called a stage-two power emergency and requested that
Pacific Gas & Electric Co. interrupt about 400 MW of power to large
industrial customers who get reduced rates in exchange for having their
power cut during peak demand periods.
-By Jason Leopold and Mark Golden, Dow Jones Newswires; 323-658-3874;
jason.leopold@dowjones.com
(END) Dow Jones Newswires 12-12-00
1315GMT Copyright (c) 2000, Dow Jones & Company Inc


G_nther A. Pergher
Senior Analyst
Dow Jones & Company Inc.
Tel.  609.520.7067
Fax. 609.452.3531

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