Trust And Antitrust
The New York Times, 06/24/01

Looking at E-Business From Both Sides Now
The New York Times, 06/24/01

Getting Serious About Earth-Friendly Energy
Los Angeles Times, 06/24/01

ENERGY CRUNCH / Power players lay blame / Deregulation creators defend their 
actions
The San Francisco Chronicle, 06/24/01

USA: California power refund talks begin Monday at FERC.
Reuters English News Service, 06/24/01

PGE CRITICIZES ELECTRICITY PRICE LIMITS
Portland Oregonian, 06/24/01

India: Calcutta HC rejects EMC plea
Business Line (The Hindu), 06/24/01

India: DPC lenders unhappy with S&W report
Business Line (The Hindu), 06/23/01

Enron CEO gets pie in face
Press Trust of India Limited, 06/23/01

POWER POLLUTION NO LAUGHING MATTER
South Florida Sun-Sentinel, 06/23/01

San Francisco Tourists Just Roll with the Outages
Contra Costa Times - Walnut Creek, California, 06/23/01

El Paso Awaits Decision as Generators Prepare to Face Lawsuits
Bloomberg, 06/23/01

Alleged Power Overcharges May Be Less Than Calif Argues
Dow Jones Energy Service, 06/22/01





Editorial Desk; Section 4
Reckonings
Trust And Antitrust
By PAUL KRUGMAN

06/24/2001
The New York Times
Page 13, Column 1
c. 2001 New York Times Company

When the European Commission indicated it was likely to block the proposed 
merger between General Electric and Honeywell, American politicians from 
George W. Bush on down cried foul, with some alleging that the decision was 
politically motivated. They're almost certainly wrong about that, but it is 
true that the E.C.'s case against the merger is far from watertight. Mario 
Monti, Europe's competition referee, may have made a bad call on this play. 
Nonetheless, our politicians should lower their voices. Mr. Monti is one of 
the good guys in today's global economy. He should not be made the target of 
attempts at political intimidation.
To put the G.E.-Honeywell affair in context, you need to realize that this 
case is a triple switcheroo: it contradicts not one but three pieces of 
conventional wisdom. 
First, the conventional view is that globalization weakens governments, 
because it forces them to compete for private investment. Broadly speaking, 
this view is right. (Conventional wisdom usually is.) There are, however, 
exceptions to the rule, and antitrust policy is one of those exceptions. In 
today's world, no company can compete effectively unless it can operate 
freely on both sides of the Atlantic -- which it can do only with a green 
light from antitrust authorities in both the United States and Europe. The 
result is that instead of eroding the power of those authorities, 
globalization has extended their reach: American regulators can block 
European mergers, and vice versa. 
Second, this case inverts traditional roles. Until recently, only the U.S. 
seemed to take antitrust policy seriously. Europeans might have U.S.-style 
legislation on the books, but they often seemed to feel that cartels, like 
extramarital affairs, were nothing to worry about as long as the participants 
were discreet -- and they were scornful toward puritanical Americans who 
insisted on enforcing the letter of the law. Lately, however, Europe has 
gotten serious about antitrust, giving the competition commissioner broad 
powers to block mergers and investigate allegations of anticompetitive 
behavior. Mr. Monti, an American-trained university professor who assumed 
that office in 1999, has used those powers aggressively. General Electric and 
Honeywell are by no means the first companies to find Mr. Monti blocking what 
they thought was a done deal. 
Was Mr. Monti right to block this particular deal? It's a complicated issue. 
Let's just say that the case against this merger is similar to the case for 
breaking up Microsoft, though it seems a lot weaker. On the other hand, you 
don't need as strong an argument to block a merger as you do to break up a 
going concern. We're in a gray area, with the precise shade of gray a matter 
of opinion. 
Even if you disagree with Mr. Monti's opinion, however, his sincerity is not 
in doubt. The best answer to those who claim that this is really a 
protectionist ploy is Mr. Monti's track record: he has repeatedly shown 
himself willing to oppose the demands of powerful European interest groups. 
Why would he suddenly become a tool of protectionists? 
And that leads us to the third switcheroo. Europeans are accustomed to cozy 
cohabitation between politicians and businessmen; Americans tend to insist on 
at least the appearance of an arms-length relationship. But just at the 
moment when the Europeans have placed competition policy in the hands of a 
sternly upright professor, the United States has acquired an administration 
that seems oblivious to normal concerns about conflict of interest. 
It's not yet clear whether the Bush administration really is a government of, 
by and for big corporations to an extent not seen since Warren G. Harding was 
president, or whether it just looks that way. But the stories keep 
accumulating. Intel's chief lobbyist says that his highly inappropriate 
meetings with Karl Rove were ''quite useful'' to its merger case -- and Mr. 
Rove didn't even get a slap on the wrist. According to the outgoing chairman 
of the Federal Energy Regulatory Commission, the head of Enron offered to 
support him at the White House if he changed his policy positions. And it 
took three months -- and a sharp prod from Jake Tapper at Salon -- before 
Treasury Secretary Paul O'Neill honored his promise to sell his Alcoa stock. 
As a consumer, I'm not sure I trust these people to protect me from the 
market power of giant corporations. 
And so it's nice to know that Mr. Monti is out there, looking after my 
interests.

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

Money and Business/Financial Desk; Section 3
BOOK VALUE
Looking at E-Business From Both Sides Now
By FRED ANDREWS

06/24/2001
The New York Times
Page 6, Column 1
c. 2001 New York Times Company

BOOKS about e-business have proliferated over the last year. Undeterred by 
the dot-com crash and financial travails of many Internet companies, business 
publishers have turned to churning out an ever-widening array of guides to 
help well-established companies prosper on the Web. 
The books range from simplified manuals to weighty analyses of the dynamics 
of e-business ventures. Here are two examples at opposite ends of the 
spectrum: ''D2D: Dinosaur to Dynamo'' by David Stauffer (John Wiley & Sons, 
$27.95), and ''Place to Space: Migrating to E-Business Models'' by Peter 
Weill and Michael R. Vitale (Harvard Business School Press, $35).
At first blush, ''D2D'' is a once-over-lightly account, a scissors-and-paste 
recycling of other books and the business press, duly footnoted, to be sure. 
The pages are salted with so many diverting lists, special boxes and 
eye-catching headlines (''Why the Web Can Be Farmer-Friendly'') that the main 
text is an annoying weave through an obstacle course. With short paragraphs 
and lots of space between lines, the book cried out to be skimmed. 
But Mr. Stauffer, who has written books about America Online and Cisco 
Systems and many articles explaining how companies have adapted to the 
Internet, has assembled a fascinating menagerie of 20 businesses that have 
taken to e-business with great success. His brief histories include the 
obligatory e-favorites -- Enron, General Electric, Charles Schwab -- as well 
as peers like Ford Motor and Bertelsmann. But he also tells you about Snap-on 
Inc., DoveBid industrial auctioneers, the Antevia Inc. relocation service and 
Powell's Books of Portland, Ore., a thriving ''independent'' whose 
68,000-square-foot flagship is one of the nation's largest bookstores. 
Powell's began in 1970, buying lightly used textbooks for next to nothing and 
reselling them at substantial mark-ups. Now a $36 million business, Powell's 
has found its Web site ideal for matching a used, rare or out-of-print title 
from its enormous holdings with someone, somewhere, who wants to buy it. 
Unlike Amazon.com, its famous competitor, Powell's makes money online (and 
has done so from Day 1). Its annual sales volume of $232,000 per online 
employee is higher than Amazon's. And what happens to books that customers 
return to Amazon? Powell's buys them, at nearly 80 percent off the cover 
price. 
Further afield, Tesco, the huge supermarket chain in Britain, has become a 
leading Internet grocery by tying its Web delivery service to its local 
stores. Snap-on, of Kenosha, Wis., sells high-quality tools for auto 
mechanics through 6,000 franchisees who drive its distinctive white vans; the 
company solved its ''channel conflicts'' by paying franchisees for Internet 
sales as though they had made the sales themselves. DoveBid, an $80 million 
appraiser and auctioneer of used business and industrial equipment, has 
pioneered simultaneous live and Web auctions. 
Like a baseball scout who prefers the honesty of minor league ball, Mr. 
Stauffer pays these less prominent players refreshing respect. Though he 
commonly relies on second-hand material, he is scrupulous with footnotes and 
credits. His judgments are not bad, and in more than half the histories he 
adds his own interviewing. Each chapter opens with a capsule company profile 
and closes with ''Leader's Lessons,'' the author's observations. 
A final chapter on ''what it takes to make it'' is nothing out of the 
ordinary. Mr. Stauffer says the digital world requires a ''vocal and 
unflagging'' chief executive. He also says a company needs ''bricks and 
clicks that don't discriminate'' -- in other words, don't think of online and 
offline as separate markets. His other advice: provide added services and 
follow the rule that it's better ''to be fast than to be right.'' 
The book concludes with 60 offhand homilies on e-business success. No one 
will accuse ''D2D'' of being profound. 
But what's not to like about an all-star team that makes room for tiny 
Quality Transmission Service, a $400,000, six-employee operation in Tempe, 
Ariz.? Its founder, Bob Jones, built a shoestring Web site that has become a 
model for local businesses. His ''Ask Bob'' feature attracts 10 or 12 
questions a day. The Web site has lured customers from 35 miles away (the 
shop's normal reach is 10 miles) and reliably brings in two or three new 
customers a week -- a 15 to 20 percent increase for Mr. Jones's business. 
''PLACE TO SPACE,'' more academic than other e-biz books, offers as clear an 
explanation of the anatomy of e-business as one could expect. From extensive 
study, the authors have concluded that all e-business can be reduced to one 
or another of eight basic building blocks, which then combine into more 
complex companies, like atoms forming a molecule. 
Mr. Weill is director of the Center for Information Business Systems at 
M.I.T.; Mr. Vitale is dean and director of the Australian School of 
Management at Sydney. Their strength is not originality but the clarity and 
thoroughness of their analysis. 
Their eight building blocks, which they call ''atomic e-business models,'' 
are already part of the digital vocabulary. The array includes 
direct-to-customer sales (Amazon, for instance); full-service providers (GE 
Supply); shared infrastructure (reservation systems); virtual communities 
(Motley Fool); portals, auctions and aggregators (Yahoo and eBay), and 
content providers (AccuWeather and Morningstar). 
The book devotes a methodical chapter to each, dissecting what each way of 
doing e-business assumes, how it works, what holds it together. A tutorial 
follows on infrastructure, distribution channels and market segments. The 
authors cover core competencies, strategic objectives and sources of value. 
Eventually, this extensive learning is distilled into seven pages of tables, 
laying bare the logic of all eight models and enumerating, say, nine factors 
critical to a direct-to-customer business like Amazon's or three core 
competencies for running a virtual community like iVillage. 
Some readers may like the crisp schematics that accompany the text. Others 
may mistake the drawings for an attack plan for multiple-warhead nuclear 
missiles. The schematic of an Internet-based investment business has six big 
arrowheads on the left, three on the right, all menacing a big black 
rectangle, along with smaller arrows and dotted lines. 
No question, this book is homework. Thankfully, the authors leaven the 
abstract, didactic parts of their work with abundant examples from a 
half-dozen cogent case studies. Among the cases are Reuters, CDNow, GE Supply 
and, especially interesting, Lonely Planet, the Australian publisher of 
travel guides for vagabonds. 
From one lone title 30 years ago (''Across Asia on the Cheap''), Lonely 
Planet has prospered to about 600 titles, 400 employees and 65 million 
Australian dollars (about $34 million) in revenue for 2000. Its Web site 
draws three million daily hits, reflecting the attraction of the Thorn Tree 
chat room, where travelers keep in touch and exchange tips by posting 1,500 
messages a day. Lonely Planet also offers global voice mail and CitySync, a 
digital download of guides to major cities. It has undertaken the ambitious 
job of converting all its guides, maps and detailed research to accessible 
digital form. 
Even on this solid base, e-business raises tough questions for Lonely Planet. 
How can it make money from the two million fans of its Web site? Should it 
try? How should it handle ''channel conflict'' and balance sales from the 
Internet with its traditional retailers' interests? 
As its rule of thumb, Lonely Planet looks for some assurance that it will get 
a 50 percent gross margin before embarking on a new guide. The authors ask 
whether e-business ideas are ever firm enough to meet that hurdle. And most 
intriguing, the authors write that Lonely Planet has ''a huge opportunity'' 
to reinvent the travel guide by customizing digital guides to a traveler's 
itinerary and tastes, with digital updates delivered along the way. 
THOUGH newly published, ''Place to Space'' is already dated. The authors 
refer to the ''partial'' fall of dot-coms but not to the later convulsions. 
The book continually describes (but does not necessarily praise) e-ventures 
long since laid low. What reader would suspect that Motley Fool just 
announced its second round of layoffs this year or that Hearst narrowly 
rescued iVillage from Nasdaq delisting? The book notes that in four months, 
Priceline.com signed up nearly 500,000 customers for its ultimately 
disastrous Web-based grocery service. ''The approach seems popular,'' the 
authors observe. 
Though every book risks obsolescence from events, their study gives little 
hint of the coming tempest. Reading ''Place to Space'' is like watching a 
video visit to the zoo without knowing that the lion, the walrus and most of 
the monkeys have died. The book's explanatory value still stands, but the 
dot-com massacre does raise questions about what some examples actually 
exemplify. 
Still, the book has endearing touches. At one point, the authors explain the 
remarkable success of Asian airlines in putting bickering aside and building 
Abacus, a joint computer reservation system. The decision to cooperate rather 
than compete, they say, ''was probably motivated by a combination of fear and 
greed.'' How often do you find candor like that?

Photos 

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

Business; Financial Desk
JAMES FLANIGAN
Getting Serious About Earth-Friendly Energy
JAMES FLANIGAN

06/24/2001
Los Angeles Times
Home Edition
C-1
Copyright 2001 / The Times Mirror Company

The growing concern about global warming--even President Bush concedes the 
need to reduce carbon dioxide emissions--promises a shift to nonpolluting 
energy sources and new attitudes toward environmental investment in industry 
in the years ahead. 
Change will be more gradual than dramatic, perhaps a 20% rise in use of wind 
and solar power to generate electricity and the beginnings of commercial use 
of fuel cells to drive cars and trucks by 2010.
Nonpolluting, renewable energy will still make up less than 7% of total U.S. 
energy consumption 10 years hence, predicts the Energy Department. But trends 
will be established in this decade. 
Business will base investment on environmental concerns as never before. 
Reminders that the Earth's temperature will rise for the next 50 years no 
matter what we do now will bolster development of energy-efficient machines 
and industrial processes. 
The chemical firm DuPont Co., for example, aims to reduce emissions of 
greenhouse gases--carbon dioxide and methane--by 65% over this decade. Also 
by 2010, DuPont hopes to rely on renewable sources for 10% of its energy use. 
That 10% estimate may not sound heroic, but it's based on the expectation 
that renewable energy will be cost-competitive with oil, natural gas and 
coal, says Paul Tebo, DuPont's vice president for environmental and health 
policies. "It's important that renewables become cost-competitive because 
investing in them if they're uneconomic creates other problems," Tebo says. 
Where does the business of renewable energy stand today? Wind power is 
attracting a lot of investment and will grow rapidly in the next few years. 
Solar power now boasts $2.7 billion in annual sales worldwide; only 25% of 
those sales, however, are in the U.S. 
Fuel-cell development is intense, with every major automotive company backing 
research and testing pilot projects for on-board power plants in which 
hydrogen energy drives the car and most of the exhaust is clean water. By 
2008, vehicles propelled by fuel cells will be used by early adopters, as 
hybrid cars are today, says Dan Sperling, head of the Institute for 
Transportation Studies at UC Davis, a major center of fuel-cell research. 
More than $1.5 billion will be invested this year in projects to generate 
electricity from wind power, says Randy Swisher of the American Wind Power 
Assn. in Washington. That's double the previous highest investment total. 
Investment is growing because wind power has become efficient. A single 
windmill generator today is capable of doing the work of 10 windmills of the 
1970s, when wind-power experiments began. 
Wind generation can deliver electricity at 3 cents to 6 cents a 
kilowatt-hour, promising a $15 to $30 electric bill for the average home that 
uses 500 kilowatt-hours per month. 
In addition, wind-power projects are being encouraged by a federal tax credit 
of 1.5 cents per kilowatt-hour to the investing companies. 
FPL Energy, a subsidiary of Florida's FPL Group, and Enron Wind Corp., a 
subsidiary of Enron Corp., are the largest companies in wind generation. But 
mostly it is a business of small firms and investment partnerships. 
Zilkha Renewable Energy, a privately held Houston firm, will be involved in 
$100 million worth of wind-power projects this year in Iowa, Pennsylvania, 
California and Britain, often in partnership with Denmark's EnXco Inc. 
Denmark gets 15% of its electricity from wind power, a typical percentage for 
European countries, which are more environmentally conscious than the U.S. 
Solar energy is still comparatively expensive, producing electricity from 
photovoltaic cells at 20 cents to 30 cents a kilowatt-hour. That would equate 
to monthly electric bills of $100 to $150 for the average home. 
Solar energy can be produced more cheaply by vast solar arrays in desert 
areas. This method, called thermal, can produce power at 10 cents a 
kilowatt-hour today, says Avi Brenmiller, chairman of Solel Solar Systems, an 
Israeli firm that built a giant solar thermal plant in California's Mojave 
Desert. 
An irony is that Israel, a largely desert country, does not use a lot of 
solar power to date--mostly because conventional fossil-fuel power has been 
cheaper, Brenmiller says. Brenmiller looks for new solar projects to be 
launched in the U.S. and abroad as a result of uncertain energy prices and 
availability. 
The main cost of solar energy is the capital needed to build panels of solar 
cells on roofs of homes and buildings and on farms to run irrigation. "After 
the plant is built, the cost of fuel--the sunlight--is essentially zero," 
observes Marwan Masri, director of renewable energy for the California Energy 
Commission. 
State and federal grants of up to half the capital cost encourage solar 
projects. Masri is working with home builders to install solar cells in all 
homes in new subdivisions, so the cost of providing energy can be amortized 
over 30 years along with the home mortgages. 
Meanwhile, solar energy powers buildings, traffic lights and irrigation 
projects around the world, with Japan and Germany using more solar energy 
than the U.S. 
BP Solar, a division of BP; Kyocera Corp. of Japan; and Siemens of Germany, 
which owns the former Westinghouse Electric Corp. in the U.S., are global 
leaders in solar. 
But the technology of solar cells, akin to that of semiconductors, is still 
under development. Small firms, such as Evergreen Solar Inc. of Marlboro, 
Mass., and AstroPower Inc. of Newark, Del., are working on cheaper and more 
effective ways to make solar cells, reports analyst James LoGerfo of Banc of 
America Securities. 
In fuel cells, Xcellsis, a joint venture of DaimlerChrysler, Ford Motor Co. 
and Ballard Power Systems Inc., has developed fuel-cell engines based on 
methanol and gasoline for demonstration models being tested in Germany and 
the U.S. 
Fuel cells that derive hydrogen from gasoline, methanol or natural gas are 
less environmentally ideal than improved models that will appear later in the 
decade. 
But, clearly, new industries that will change the way the world lives are 
taking their first big steps. And concerns about global warming that are 
giving these industries a push today won't diminish in the years ahead. 
Climate change that will add 2.5 to 10 degrees to the Earth's temperature 
over the next 50 years is already assured because of heat from past emissions 
that is stored in the world's oceans, reports UC Irvine Chancellor Ralph J. 
Cicerone, a renowned atmospheric scientist, who headed a recent study of 
global warming for President Bush. 
As temperatures mount, so will sentiment and pressure for new thinking on 
energy, environment and the world economy. 
* 
James Flanigan can be reached at jim.flanigan@latimes.com.


PHOTO: More than $1.5 billion is expected to be invested this year in 
wind-power projects.; ; PHOTOGRAPHER: Zilkha Renewable Energy Co.; PHOTO: 
Zilkha Renewable Energy of Houston is at work on this wind-power project in 
California's Altamont Pass area.; ; PHOTOGRAPHER: Zilkha Renewable Energy Co. 

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


NEWS
ENERGY CRUNCH / Power players lay blame / Deregulation creators defend their 
actions
Robert Salladay
Chronicle Sacramento Bureau

06/24/2001
The San Francisco Chronicle
FINAL
A.1
(Copyright 2001)

Five years after dismantling California's energy markets, former Gov. Pete 
Wilson says he's proud of his role in deregulation and is "stunned and 
outraged" that his successor tries to pin the blame on him. 
Former state Senate President pro tem Bill Lockyer, now the state attorney 
general, is both contrite and vengeful, recently saying he wanted to put a 
powerful energy executive -- and friend of President Bush -- in prison with 
an amorous cellmate named Spike.
Former Assembly Speaker Curt Pringle, presently a lobbyist, now forwards 
e-mail jokes to fellow Republicans with Davis re-election slogans, including: 
"Davis in 2002: Your bridge to the 18th century." 
These were the leaders who brought deregulation to California. As they engage 
in deflections and defenses one year after the state plunged into crisis, 
their comments also highlight a newer debate over unintended consequences, 
the role of the federal government in making things worse, and the 
neglectfulness of subsequent politicians. 
For his part, Wilson has become increasingly angry at the Davis 
administration's "offensive and unfair" claims that Wilson and the 
Legislature got the state into this mess. 
"I'm afraid they have reached the conclusion that the response has been too 
little, too late to avoid what will be hundreds of hours of blackouts, and 
that they better find a way to blame somebody else," Wilson said. 
Davis, he said, has blamed "the new administration in Washington, the old 
administration in Sacramento, power providers. It's interesting, because 
there was not a peep out of the lieutenant governor (Davis) at the time 
during what I thought was a fairly active and public debate. He was hardly 
without a voice, but he certainly was without comment." 
Wilson said Davis' performance over the past year called into question Davis' 
1998 campaign slogan. "I used to laugh when he talked about being the 
best-trained, best-prepared candidate in history," Wilson said. "But what the 
hell." 
DEREGULATION BILL 
A tiny legislative committee that was dominated by state Sen. Steve Peace, 
D-El Cajon, and then Assemblyman James Brulte, R-Rancho Cucamonga, wrote the 
deregulation bill in 1996. Corporate lobbyists and utilities also had 
tremendous sway over the legislation. Pringle, Lockyer and Wilson steered the 
legislation their way. 
The bill was a reaction to movements under way at the California Public 
Utilities Commission and in the federal government. The bill essentially 
unbundled the big utilities' monopoly over power, separating control of 
selling, marketing and producing energy. 
It also was supposed to cut rates 10 percent and pay utilities hundreds of 
millions of dollars for investments they'd made in nuclear power and other 
energy plants. 
Wilson said Davis should, in fact, be grateful that the 1996 deregulation 
bill encouraged power companies to expand into California. He contends that 
without the measure, the state would be faced with a regulated market and 
10,000 fewer megawatts of power -- and more blackouts. 
DAVIS' COMPLAINTS 
Davis has continually said that California failed to build power plants in 
the 12 years before his administration. In truth, seven smaller power plants 
were built during Wilson's eight years, and deregulation started the process 
on a host of others that are now being approved more quickly by the Davis 
administration. 
"We wanted to entice investors," Wilson said. "You can't do that if they're 
not allowed to compete." 
Wilson acknowledges that the state misread exactly how quickly California 
would grow. During the high-tech boom, Silicon Valley built acres of "server 
farms" to supply the Internet that accounted for a large amount of the 
increase in new power usage in California. 
Peace has point-blank blamed executives at Cisco Systems. He has said they 
should be thrown in jail for simultaneously supplying the server-farm boom 
and opposing the building of a power plant in Santa Clara County. Cisco 
opposed the 600-megawatt plant, it said, to protect the health and welfare of 
its employees nearby. 
Wilson doesn't go as far as Peace in wanting to jail people. And he's not 
willing to accuse out-of-state generators of price-gouging, in part because 
"blanket condemnation" may scare away further investment in California -- and 
it ignores that some municipal utilities in California charge high prices as 
well. 
"If they find that people have in fact manipulated the market," Wilson said, 
"then they ought to come down hard on them." 
LOCKYER'S HARDER LINE 
As attorney general, Lockyer has opened an investigation into whether power 
companies have conspired to push up electricity prices and gouge consumers. 
Unlike Peace and Wilson, Lockyer is unwilling to defend the 1996 legislation 
and deregulation. 
"If I could repeal it and start all over again, I think that I would," he 
said. 
But even Lockyer acknowledges that the Legislature needed to do something in 
1996. That's because it appeared inevitable that the utilities and corporate 
interests would get some form of deregulation through the state PUC and the 
federal government, which had already opened up the natural gas market. 
"Our energy experts thought the PUC was doing it in a way that was overly 
friendly to big business and would have ended up having residential customers 
subsidizing big business," Lockyer said. "The efforts were made to try to 
figure out how to make the market competitive without tilting toward big 
business." 
The real killer in deregulation, Lockyer contends, is that neither the 
Legislature (himself included) nor the governor paid enough attention to the 
supply end. That allowed a handful of firms to have near-total control over 
power output, Lockyer said. Peace has called this the "domestic equivalent of 
OPEC in the West." 
Lockyer has been busy demonizing power firms as well. He still faces 
criticism for telling the Wall Street Journal his plans for Kenneth Lay, 
chairman of the Texas energy trader Enron Corp.: "I'd love to personally 
escort Lay to an 8-by-10 cell that he could share with a tattooed dude who 
says, 'Hi, my name is Spike, honey.' " 
Lockyer, who told The Chronicle he was directing his comments to the East 
Coast financial establishment, toned down a bit in a more recent interview. 
"The system works well. It doesn't work when there is illegal activity and a 
handful of companies that control the whole market," Lockyer said. 
And then there is Pringle, who generally has escaped questioning for his role 
in getting the 1996 measure passed. 
Pringle said he had little impact on the legislation, relying instead on 
Brulte. 
But he puts some blame on consumer groups that offered Proposition 9 in 1998, 
which set out to roll back much of the deregulation measure. 
Wilson has charts from the state energy commission showing the application to 
build plants spiked up after the measure was defeated. "At the most critical 
moment," Pringle said, "when we were trying to suck development into the 
state, you had trepidation." 
Wilson, Lockyer and Pringle have been relatively silent on the matter when 
compared with Peace. 
Peace has been waging his own relentless war, both defending the 1996 
legislation and accusing the federal government of "creating a flawed 
national model of electricity deregulation and then (failing) to confront the 
consequences." 
The real culprit is far more complicated than just Proposition 9, Peace 
contended in a recent letter to Bush. 
The state PUC, he said, ordered utilities in the early 1990s to build more 
plants, but the utilities got federal regulators to overrule the order. 
Among other things, he said, the federal government uncritically adopted a 
flawed plan separating the West's transmission system from the generation of 
electricity. That allows generators to extort the grid operator by 
threatening to withhold power, he added. 
Pringle said he can't even attempt to get as detailed as Peace when it comes 
to explaining what went wrong. 
"Everyone has a degree in which they need to stand up, but the people in 
charge today are in charge of fixing it," Pringle said. "If you want to go 
around the rosy and say did Republicans blow something? Yeah. Did Wilson? 
Yeah. Lockyer, Brulte, Peace? Yeah. The consumer associations? We're all 
tagged."


PHOTO (5); Caption: (1) Bill Lockyer, state attorney general, raked energy 
CEOs., (2) James Brulte, assemblyman, helped craft deregulation., (3) Curt 
Pringle, ex-Assembly speaker, scorned Davis., (4) Steve Peace, state senator, 
wants Cisco Systems execs., (5) Pete Wilson, ex- governor, rapped Gov. Gray 
Davis. 

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



USA: California power refund talks begin Monday at FERC.
By Chris Baltimore

06/24/2001
Reuters English News Service
(C) Reuters Limited 2001.

WASHINGTON, June 24 (Reuters) - California officials looking to win some 
payback from power generators who have reaped huge profits from selling 
electricity to the state and its utilities get an opportunity this week to 
prove their case and push for up to $9 billion in refunds. 
A Federal Energy Regulatory Commission (FERC) administrative law judge 
overseeing refund settlement talks in California's power market said Friday 
the energy firms that sold electricity in the state will probably have to pay 
back overcharges of "several billion dollars."
In an interview with Reuters, Judge Curtis Wagner, the head FERC 
administrative law judge who will preside over the 15-day conference starting 
Monday, said California Gov. Gray Davis' claim the state was owed $9 billion 
was excessive. 
"I think that's high," Wagner said when asked about Davis' figure. 
"I'm hoping to come up with a settlement of the issue of a refund of 
overcharges - if there are overcharges. My sense is that there probably are," 
he said. 
FERC clarified late on Friday that the settlement talks are not limited to 
possible California refunds, but may also focus on settling past accounts 
related to other power sales in the Pacific Northwest. 
Enron Corp. , Mirant Corp. , Duke Energy Corp. , Williams Cos. , Reliant 
Energy Inc. and Dynegy Inc. are among the producers that FERC could compel to 
make refunds. The companies have said they did nothing wrong. 
Davis, the California Public Utilities Commission and the state's 
investor-owned utilities will join in the negotiations at FERC headquarters 
in Washington. If no agreement is reached, Wagner will have seven days to 
make a recommendation to the five FERC commissioners on the refund issue. 
The chasm of opinions between the two sides is huge. Davis says power 
companies like Duke and Enron collectively owe his state $9 billion in 
refunds for overcharges, a far cry from the $130 million in refunds FERC has 
so far approved. 
Reliant is one of the energy companies that bought power plants divested by 
California utilities as a condition of the state's ill-fated deregulation 
plan. Along with firms like Dynegy and Enron, it sold power from those plants 
to the state for rates at up to $1,000 a megawatt hour. 
ENERGY FIRMS BALK AT REFUND DEMAND 
Energy producers have balked at Davis' $9 billion figure. 
"Obviously we don't agree with figure," said a spokeswoman for Reliant 
Energy. "We don't think it's anywhere close to that magnitude." 
A Dynegy spokesman said $9 billion was excessive, and Dynegy was "willing to 
discuss any reasonable proposals that will lead to a long-term solution." 
Davis has painted the energy companies as modern-day robber barons looking to 
"bilk" his state out of millions of dollars. 
"California has been a cash cow to a lot of energy companies ... that have 
done extraordinarily well," the California governor said last week during 
Senate testimony. 
Davis said he based his figure on a study by the California Independent 
System Operator's Department of Market Analysis, which said wholesale prices 
exceeded "reasonable competitive market levels" by about $6.7 billion between 
May 2000 and February 2001. Extended through May 2001, that amount is closer 
to $8.9 billion. 
"Refunds are ... a primary vehicle to provide relief" to high energy prices, 
Davis said at a Senate hearing Wednesday. "They should be repaid." 
Davis accused FERC commissioners of being "asleep at the switch" for not 
taking prompt action on refunds. 
As part of FERC's price mitigation plan adopted last week to rein in rampant 
prices in the California wholesale power market, the agency required all 
public utility buyers and sellers to participate in the conference. 
All California generators, investor-owned utilities, some municipal utilities 
and state officials from the Public Utility Commission and Davis' office will 
attend, Wagner said. 
The administrative law judge said reaching an agreement in the 15-day period 
scheduled for the conference was "going to be tight." 
"But it's something we need quick action on," he added. "Sometimes it's best 
to have a short time period to do something." 
Wagner is also separately hearing the California Public Utilities 
Commission's complaint accusing El Paso Corp. of improperly sharing 
information with its natural gas marketing arm to boost the price of natural 
gas deliveries to California. 
The judge has found himself at the center of a political whirlwind over the 
role U.S. regulators should take to head off the California energy crisis. 
The White House has repeatedly rejected price caps, while Democrats insist 
they are the only way to shield rate payers from prices ten times higher than 
usual. 
"The political arena is not making it any easier," Wagner said, though he 
said no lawmaker had contacted him directly on the issue.

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


BUSINESS
PGE CRITICIZES ELECTRICITY PRICE LIMITS
GAIL KINSEY HILL of the Oregonian Staff

06/24/2001
Portland Oregonian
SUNRISE
F01
(Copyright (c) The Oregonian 2001)

Summary: The utility says the federal action could make Oregonians the losers 
this winter 
When federal regulators set price limits last week on wholesale electricity 
in the West, they intended to buffer rate increases for consumers and ease 
energy shortages in the region.
They may have failed on both counts, at least in the Northwest, according to 
Oregon's largest utility. 
"Oregonians could well be losers," said Fred Miller, executive vice president 
of Portland General Electric, which serves 728,000 residential and business 
customers in the state. 
PGE officials were so disturbed by the Federal Energy Regulatory Commission's 
order that on Friday they faxed a letter to Oregon's congressional delegates 
warning that the provisions could increase the likelihood of shortages in the 
Northwest this winter, hamper conservation efforts and discourage developers 
from building new power plants. 
PGE may be the commission's harshest critic in the Northwest. By late last 
week other utility officials were still sorting through the 50-page order the 
commission posted Tuesday, trying to figure out whether the order bore good, 
bad or inconsequential news. 
PacifiCorp, Oregon's second-largest utility, declined to comment until 
officials had thoroughly reviewed the order. 
Some hoped for relief from high-cost power purchases. Others fretted over a 
bad situation made worse. But none of the utility officials interviewed by 
The Oregonian embraced the order as a sure- fire antidote to energy shortages 
and rising retail rates. 
PGE serves about 40 percent of the state's electricity customers, primarily 
in the populous northern Willamette Valley. The utility, a subsidiary of 
power marketer Enron Corp., has opposed price caps ever since policy-makers 
began bandying about the idea some months ago. 
Under the commission's order, price limits move up or down based on the 
operating costs of the least efficient gas-fired power plant called into 
service in California during a declared power emergency. 
The floating cap is a relatively tame approach to price controls, but PGE 
still doesn't like it. 
"If you freeze prices, you're going to get more demand and less supply," the 
very responses utilities have been trying to counter, Miller said. 
During the past year, PGE benefited from high-priced markets. It bought more 
power than it needed to serve customers, then sold the excess at a profit. 
The strategy is not s sure thing. PGE could have lost money. But it came out 
ahead, and it used the proceeds to waylay rate increases. 
While utilities throughout the Northwest were raising rates by double digits, 
PGE was holding steady. 
"We bought long," Miller said. "That's how we avoided rate increases." 
Miller has another big worry. This winter. The regulatory commision's order 
links the price caps to the operating costs of the least efficient gas-fired 
plant operating in California during electric emergencies. In nonemergency 
times, the limit falls to 85 percent of that price. 
That means the lower price likely will prevail in winter, when demand 
slackens in California but rises in the Northwest. Miller maintains the lower 
price could discourage suppliers from selling into the region, which 
increases the likelihood of shortages in the Northwest. 
"Maybe what's most irksome," said Miller, "is that we essentially have turned 
over our future this winter to the Californians." 
Then, there's B.C. Hydro, a power provider that often sells large amounts of 
power to the Northwest in the winter. The price controls may not apply to the 
Canadian utility, and Northwest buyers may be forced to pay top dollar for 
the imports they often need in winter months. 
In its letter to congressional delegates, PGE says it will contact FERC "and 
suggest ideas on how the Western energy scenario can be improved but without 
unfairly transferring these problems to PGE's customers." 
In addition, Miller expects developers who have announced plans to build 
power plants may pull away because prices no longer justify the investment. 
PGE, Miller said, may scrap two small projects capable of adding about 70 
megawatts to the electricity grid. 
Debating benefits 
When federal regulators issued their order, they said the entire West would 
soon feel the benefits of more stable prices. 
"The commission's goal remains to fix dysfunctional markets and to ensure 
that markets regain their competitive footing as quickly as possible," said 
Curt Hebert Jr., chairman of the Federal Energy Regulatory Commission' 
Responses from other utility officials in the Northwest varied, but none 
predicted an easing of rates for consumers. 
"We have a mixed reaction to it," said Mark Crisson, Tacoma Power's director 
of utilities. "At least they finally did something, but, at this point, it's 
too little too late." 
Tacoma Power, a municipal utility, was among the first to feel the hit of 
high electricity prices, which began their infamous rise in May 2000. Caught 
short of electricity as dry weather depleted water needed for hydro-powered 
generators, Tacoma rushed to the short term, or "spot" market to cover 
customer demand. On one memorable December day, after colder temperatures set 
in, it paid almost $3,000 a megawatt-hour, 100 times the usual rate. 
Six months ago, the utility raised rates by 50 percent on average, said Mike 
Crisson, Tacoma Power's director of utilities. At the same time, it pushed 
for price caps but got nowhere. 
"We needed them right away," Crisson said. "Here we are, six months later and 
they're half-measures." 
In the meantime, Tacoma Power, reduced its dependence on the spot market by 
locking in long-term contracts, Crisson said. 
Other utilities in the region took similar action. 
"We're pretty much protected," said Neil Neroutsos, a spokesman for Snohomish 
County People's Utility District, Washington's second largest utility. 
Seattle City Light, governed and operated by the city, is Washington's 
largest utility. 
Snohomish raised its rates by 35 percent Jan. 1. 
Eugene Water and Electric Board locked in some longer-term contracts to 
reduce its reliance on the wholesale market and could actually lose money on 
the strategy. If the utility ends up with a surplus and has to sell the extra 
power on the market, the caps could make the transactions money-losers, said 
Scott Spettel, the utility's power and planning manager. 
Even so, Spettel expects the price controls to help more than hurt. 
"All in all, lower prices are good for consumers," he said. 
Waiting on BPA 
Many Northwest utilities, particularly ones that are government-. or 
member-owned, rely heavily on Bonneville Power Administration for electricity 
and haven't yet heard whether the federal caps will affect new BPA rates to 
take effect Oct. 1. 
BPA, a federal agency based in Portland, markets almost half the electricity 
consumed in the Northwest. It will announce its new rates, which could jump 
by more than 75 percent, late this week. 
"The order's fairly complex," said Steve Oliver, vice president of bulk power 
for BPA. "We're still taking a look." 
This summer, BPA will neither buy nor sell much power on the spot market and, 
therefore, rarely will deal with the price limits. 
Another factor dulling the effect of the regulatory action is the market 
itself. Earlier this year, spot prices routinely hit $200 to $300 a 
megawatt-hour. They recently dropped to below $100 a megawatt- hour and have 
stayed below triple-digit territory. 
The weeks ahead likely will put the caps to the test. When hot summer days 
sweep through California, spot prices are expected to rise as rapidly as the 
mercury. 
Energy experts project that Federal Energy Regulatory Commission'sprice 
limits will hold prices to about $130 to $150 a megawatt hour. The 
projections assume natural gas prices don't spike again. 
You can reach Gail Kinsey Hill at 503-221-8590 or by e-mail at 
gailhill@news.oregonian.com.

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



India: Calcutta HC rejects EMC plea

06/24/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

KOLKATA: Mr Justice Prabir Kumar Samanta of the Calcutta High Court rejected 
the petition of Electrical Manufacturing Co Ltd (EMC) seeking a directive 
from the court to strike down an order of the lower court. 
A Civil Judge (Senior Division) of the Sealdah Court vacated an ad-interim 
order relating to repayment of loan granted by Enron India Pvt Ltd to EMC to 
the tune of Rs 6 crore for constructing a transmission line under the 
Maharashtra State Electricity Board.
- Our Bureaus

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



India: DPC lenders unhappy with S&W report

06/23/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

MUMBAI, June 22. LENDERS to Dabhol Power Company have asked the engineering 
consultant, Stone and Webster (S&W), to rework its report on the cost 
implications of mothballing the Dabhol power project. 
The lenders were not happy with the consultants for having delayed the 
report, it is learnt. Also, the costs were not ratified by Enron.
They have reportedly written to S&W asking it to have a relook at the options 
available and rework the figures. 
According to sources, the lenders were not satisfied with the costs of 
various options worked out by the consultant. Lenders are still deliberating 
on a remedy that could be best in the current situation. 
According to some reports, S&W had estimated the cost of completing the 
project at around $400 million. However, the figure could not be confirmed. 
The consultant was mandated to compute the cost of three alternatives - 
suspend the project as it stands now without any penalties, mothball the 
incomplete project, or complete the project with lenders' funds and then 
mothball it. At present, 92 per cent of the project is complete. 
The termination of the agreements by construction contractors had almost 
ruled out the first option. However, the lenders reportedly were not happy 
with Enron too for "contributing" to the delay. 
The sources say there is also a possibility that Enron may try to persuade 
the contractors to reconsider their decision as the lenders are open to all 
options. 
Lenders feel that if the consultant had given a thorough report on time, some 
arrangement could have been chalked out. S&W was supposed to complete the 
report in a week from June 7. That would have enabled the lenders to reach a 
concrete decision on funding the rest of the project. Indian lenders have not 
met or formally discussed the issue after the Singapore meeting on June 5 and 
6. 
- Dinesh Narayanan

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


Enron CEO gets pie in face

06/23/2001
Press Trust of India Limited
(c) 2001 PTI Ltd.

Washington, June 22 (PTI) Enron Chief Executive Officer Jeffrey Skilling was 
hit on the head with a pie as he defended energy companies against the 
criticism that they created an energy shortage and profiteered from it during 
a speech at the Commonwealth Club of California. 
Skilling wiped the pie, which had been heaved by activist Francine Cavanaugh, 
and carried on with the speech. Cavanaugh was detained but not arrested.
US Senate candidate and consumer activist Medea Benjamin said Cavanaugh was 
from an international pie-throwing group called the Biotic Baking Brigade. 
The group has thrown pies at several notable figures, including Microsoft 
co-founder Bill Gates and Mayor Willie Brown. 
Enron has come under fire after accusations from Californian Governor Gray 
Davis and State officials for allegedly forcing electricity prices skyward by 
holding back supply. 
Enron and other companies have denied such charges. They claim that the State 
and State-based utilities owe them billions in unpaid bills. 
(THROUGH ASIA PULSE) 23-06 2001

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


EDITORIAL
POWER POLLUTION NO LAUGHING MATTER

06/23/2001
South Florida Sun-Sentinel
Broward Metro
14A
(Copyright 2001 by the Sun-Sentinel)

Mr. Lowe's cartoon on the very important issue of power plants was very 
irresponsible and played only for laughs. 
Anyone in his right mind would not place three power plants, two of which 
will burn dirty diesel fuel (Enron's), in an urban area, within two miles of 
each other.
There are hospitals, schools, homes, community centers, nursing homes, etc., 
under the shadow of a combined seven 80-foot smokestacks spewing out their 
poison. 
There are much better options: such as cleaner plants spread out over a much 
larger area. Florida Power & Light and the Broward County Commission have 
stated that Florida has enough power for the next 10 years. A moratorium 
hopefully will be put in place for one year to wait for the 20/20 study. What 
is the rush? Is it because Enron, a megabusiness along with their strong 
political presence (the White House and governor's mansions) has a complete 
disregard for the people? 
Maybe the next very funny cartoon by Lowe will be a few babies choking while 
the smokestacks are burning. Humor is important, but let him know the facts 
before he uses his barbs. 
Ann Mantell 
Coconut Creek

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


San Francisco Tourists Just Roll with the Outages
Jasmine Kripalani

06/23/2001
KRTBN Knight-Ridder Tribune Business News: Contra Costa Times - Walnut Creek, 
California
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World 
Reporter (TM)

SAN FRANCISCO--Tourists are constantly asking the gift shop manager at Coit 
Tower if a blackout could occur while they ride the elevator to the top of 
the 210-foot fire hose nozzle-shaped landmark. 
"They're serious when they ask it. I always tell 'em, `We got the last guy 
out in only three days,'" said Walt Lo.
Tour guides, hotel managers and gift shop clerks in the Bay Area have 
developed a sense of humor about the California energy crisis. But for many 
visitors the perception of blackouts conjures up images of streets without 
traffic lights and people trapped in elevators. 
Before leaving their Indiana suburb for vacation, Mike and Lisa Bonahoom 
worried about what was ahead, but not enough to stop them from booking a 
three-night stay at the room designed by former Grateful Dead frontman Jerry 
Garcia in the Hotel Triton. 
"The perception in the Midwest is that (Californians) don't have lights," 
said Mike Bonahoom. 
Lisa, added: "We heard news reports that they shut the lights off every day 
(at a set time) in order to save electricity, and people would plan their day 
around that I worried about getting stuck in an elevator for hours, but I 
didn't mention any of this to the kids." 
It's a fear California's travel and tourism commission is taking so seriously 
that it has handed a public relations firm about a half-million dollars to 
plan an advertising campaign that will convince the rest of the world that 
it's still safe to travel to the Golden State. 
Communications director Fred Sater blames visitors' fears on the media's use 
of the term "rolling blackout." 
"`Planned outage' or `power interruption' -- that's the correct phrase," he 
said. Sater believes "rolling blackout" inaccurately implies long periods of 
darkness across the state. 
The San Francisco visitors bureau has taken a less expensive approach. It has 
posted a letter and Frequently Asked Questions list on its Web site 
(www.sfvisitor.org) that assures potential visitors that emergency services 
are still available and that they won't get stuck on an amusement park ride. 
But all the warnings in the world wouldn't have done much good on Thursday at 
about 1:10 p.m. when the lights in parts of San Francisco flickered, then 
went out for about an hour. 
Pacific Gas & Electric said 7,000 of its customers were without power and 
attributed it to a bad cable between Broadway and Vallejo on Mason Street. 
One of those customers included a souvenir shop near Fisherman's Wharf. 
Kathy Joy had to wait several minutes before she could complete a sweatshirt 
purchase. The cashier rushed to the front of the store with her solar-powered 
calculator in hand and returned with a total. 
"That'll be $19.90," Sharon Stevenson told Joy and added that she could only 
accept cash. Joy had the cash. 
Other stores, many of which mistook the outage for a blackout, were forced to 
shut down their businesses. 
Sean Farber, a sales manager at Studio 39, a video-making business in which a 
person's body is transposed on a backdrop of the Golden Gate Bridge, took 
advantage of the power outage to express his political viewpoint by posting a 
sign that read: "Thanks to PG&E, Enron, and George W Bush We will be closed 
until 3:00." 
Others saw the outage as an entrepreneurial opportunity. 
"Hey, folks, there's a rolling blackout. You might as well go on a Bay 
cruise," a tour operator loudly offered. 
Many didn't even notice the hourlong power outage. 
Two visitors from Naples, Fla., who were in town for the NASCAR races, 
noticed the darkened businesses only after a reporter pointed it out. 
"Well, if this means I can't get into the pub, I will be very upset," said 
Craig Barrero, who was clad in shorts and toting a video recorder. 
Other tourists said the only time the energy crisis has affected them is when 
they're ready to check out of their hotel room. 
When Robyn and Ben Reeve from Australia walked into their room at the Hilton 
on Fisherman's Wharf, they found the usual amenities: tightly tucked linens 
between mattresses and the bathroom towels symmetrically draped over a brass 
bar. 
The Reeves also found a letter from the general manager informing them that 
they would have to pay a $2.85 energy tax per night.

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


El Paso Awaits Decision as Generators Prepare to Face Lawsuits
2001-06-23 11:56 (New York)

El Paso Awaits Decision as Generators Prepare to Face Lawsuits

     (For more on California's energy crisis, see {EXTRA <GO>}

     Washington, June 23 (Bloomberg) -- El Paso Corp., the owner
of the biggest network of interstate natural-gas pipelines, is the
first company to face a public hearing on charges of manipulating
California energy prices. It likely won't be the last.
     U.S. Administrative Law Judge Curtis Wagner is to decide by
Sept. 24 on allegations that El Paso held natural gas off the
California market to boost prices. The U.S. Federal Energy
Regulatory Commission can accept or reject Wagoner's ruling.
     The case was brought by the state's two biggest utilities and
the California Public Utilities Commission, which also is working
with state Attorney General Bill Lockyer on a civil lawsuit
against power producers. Lockyer plans to convene a grand jury
next month to investigate claims that the generators withheld
electricity to drive up prices.
     ``You're getting the attorney general and the CPUC looking at
potentially going into court,'' said Mark Easterbrook, an analyst
with Dain Rauscher Wessels. ``Investors just don't want to deal
with this uncertainty.''
     The Standard & Poor's Utilities Index, whose members include
generators Mirant Corp., Duke Energy Corp. and Reliant Energy
Inc., has fallen 8 percent in the past month. The S&P Natural Gas
Distributors & Pipe Lines Index has dropped 17 percent. It
includes El Paso and energy traders Enron Corp., Dynegy Inc. and
Williams Cos.
     California's electricity prices rose more than ninefold in
the first quarter from a year earlier, and state officials
forecast that shortages during hot weather may bring as many as 30
days of blackouts through August.
     Generators have repeatedly said they didn't break the law,
blaming high prices on rising demand and a lack of new supply. No
major power plants have been built for a decade in California.
     ``These investigations are built around some sort of odd
theory of market manipulation, and we did absolutely no such
thing,'' Mirant spokesman Chuck Griffin said. ``Our dealings have
been above-board and according to the rules that were established
before we were even in the market.''

                           Common Theme

     Both El Paso and the generators are accused of withholding
supplies to drive up prices. Lockyer says power companies held
back electricity under the guise of routine plant maintenance,
forcing utilities to pay soaring prices for megawatts that
remained on the market.
     The El Paso case stems from the Houston-based company's sale
of California-bound pipeline capacity to its merchant-energy unit.
Plaintiffs allege the El Paso unit withheld the billion cubic feet
of space to drive up natural-gas prices in California. Gas is used
to fuel many of the state's power plants.
     FERC economists testified on behalf of the CPUC and the
utilities, PG&E Corp.'s Pacific Gas & Electric and Edison
International's Southern California Edison. California gas prices
ranged from $11.79 to $18.80 per thousand cubic feet by December,
compared to $4 to $7 elsewhere in the U.S., a FERC study showed.
     ``At least part of the FERC staff took seriously the idea
that a firm could establish market power and raise prices,'' said
Severin Borenstein, director of the University of California's
Energy Institute, who isn't involved in the El Paso trial.

                            Gas Prices

     El Paso argues that gas prices surged because the state's
electricity shortage spurred generators to run their plants almost
nonstop, and utilities' credit risk increased as they ran out of
cash buying power at soaring prices.
     Judge Wagner finished hearing testimony this week on the
market-manipulation charge. He is now investigating claims that El
Paso's merchant-energy unit unfairly won the 15-month pipeline
contract.
     Whatever the outcome, the hearings may educate California
investigators about energy trading. State deregulation of energy
markets has boosted profits for trading companies that buy and
sell electricity and natural gas.
     ``California is learning how to understand the energy
markets,'' said Michael Aguirre, a former prosecutor handling two
lawsuits against power companies, one for California Lieutenant
Governor Cruz Bustamante. ``The learning curve has been a very
steep one.''



Alleged Power Overcharges May Be Less Than Calif Argues
By Jason Leopold

06/22/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

OF DOW JONES NEWSWIRES 
LOS ANGELES -(Dow Jones)- Nearly every energy company, including municipal 
utilities, that has the ability to supply California with electricity has 
allegedly overcharged the state tens millions of dollars over the course of a 
year, according to the state's power grid operator.
But the $9 billion total in alleged overcharges detailed by Gov. Gray Davis 
to the U.S. Congress this week may have been overstated by more than $2 
billion, according to documents obtained by Dow Jones Newswires. 
Generators whose wholesale power prices are regulated by the Federal Energy 
Regulatory Commission, or FERC, allegedly overcharged the state $2.1 billion 
from May to September 2000 and $2.6 billion between October and February, 
according to the ISO. FERC can order refunds only from October onward because 
of a federal law that requires a filing for refunds to be made within 60 days 
of the purchases, according to FERC. The ISO began appealing for refunds in 
December, claiming the alleged overcharges were a result of market power, or 
the ability to boost wholesale prices above competitive levels. 
However, a $1 billion alleged overcharge by Sempra Energy Trading Corp. and 
San Diego Gas & Electric, both units of Sempra Energy (SRE), was deleted by 
the ISO, according to the documents. The ISO wouldn't explain the reason it 
erased the company's alleged overcharge. 
Generators said Davis's numbers "didn't add up" and maintained that they 
didn't overcharge the state. 
The ISO said it planned to recalculate the figures but the agency didn't 
discredit Davis's refund estimate. 
Some of the numbers calculated by the ISO are much higher than the companies' 
entire earnings for 2000, according to earnings statements. 
Energy companies with the largest overcharges between May 2000 and February, 
as alleged by the ISO: 
British Columbia Power Exchange Corp.: $439 million 
Aquila Inc. (ILA): $48 million 
Automated Power Exchange: $16 million 
Calpine Corp. (CPN): $236 million 
Coral Power LLC: $27 million 
Duke Energy Corp. (DUK): $804 million 
Electric Clearinghouse Inc. (DYN): $530 million 
Enron Corp. (ENE): $39 million 
El Paso Corp. (EPG) : $29 million 
Idaho Power (IDA): $28 million 
Portland General Electric: $44 million 
Puget Sound Energy: $24 million 
Reliant Energy Inc. (REI) $750 million 
Mirant Corp. (MIR), formerly Southern Co., $753 million 
Sempra Energy Trading Corp. (SRE): $82 million (this number has been 
eliminated by the ISO) 
Williams Cos. (WMB) $860 million 
-By Jason Leopold, Dow Jones Newswires; 323-658-3874; 
jason.leopold@dowjones.com

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